A major research initiative is underway that will help shape the future of the Uniform CPA Examination® (CPA Exam). If you work in public accounting, business and industry, academia, or even for yourself, you’ve likely noticed that the accounting profession is rapidly changing.
CPAs face new challenges
Advanced technology is changing how businesses operate — many businesses are more data-driven than ever before. Data analytics is fundamentally changing the way auditors collect and document audit evidence and make decisions. As technological developments continue, auditors must expand their technical knowledge and skills and revise audit planning and testing procedures to perform effective and efficient audits. These changes extend beyond auditing and expand to nearly all parts of the accounting profession.
Financial reporting and operational environments have increased in complexity in many companies. For example, the proliferation of estimates and complex valuations is impacting financial reporting and related disclosures. There’s also a consistent debate around tax reform that inevitably leads to significant changes in the tax code. Additionally, both auditing and financial accounting standards are evolving in response to changes in the business and regulatory environment.
CPAs need institutional knowledge, foundational skills and enhanced technical proficiency to identify and analyze business and financial issues.
The gateway to the profession
The public interest is protected when only qualified individuals are licensed as CPAs. To address the technological advances, increased complexity of reporting and business operations, changes in the tax code and the regulatory environment, the CPA Exam must remain current and relevant. The AICPA Examinations team conducts research and collaborates with members of the profession to ensure that it does.
As part of the AICPA Examinations team’s ongoing efforts to maintain the validity, reliability and relevance of the CPA Exam, practice analyses are periodically conducted to learn about the current state of the profession and the work of newly licensed CPAs. This research is reliant on input from accountants — you are in the best position to comment on what influences the work of your newest CPAs and the skills needed to perform at the highest level.
Building on the foundation of the 2016 research, the 2019 Practice Analysis assesses the impact of audit data analytics and technology on the work performed by newly licensed CPAs. As members of the AICPA’s Board of Examiners (BOE), we had firsthand experience conducting and assessing the research through meetings, focus groups, content ranking and confirmation panels. During this thorough process, the team engaged with volunteer subject matter experts and more than 300 supervisors of newly licensed CPAs (nlCPAs). Their feedback was invaluable.
The research findings informed updates needed to maintain CPA Exam alignment with professional practice, and confirmed that technology is dramatically affecting audit planning and execution and the nature of professional services. Further, the research indicated that understanding how technology impacts the work of a nlCPA is of greater importance than understanding a particular technology. Newly licensed CPAs will need to be able to:
Understand business processes — automated aspects, risk identification, and internal control mapping — from inception to completion
Increase of the reliance on System and Organization Controls for Service Organizations: Internal Control over Financial Reporting (SOC 1®) reports
Perform with a digital and data-driven mindset, excelling at data analytics
Using data analytics as an example, the proposed changes to the CPA Exam are important because the emergence of technological advancements in data accessibility and audit data analytics allow accountants and auditors to take a deeper dive into company operations. The CPA Exam must focus on testing analytical and critical thinking skills.
Since aspects of understanding the business (including technology) are currently assessed in both the Auditing and Attestation (AUD) and Business Environment and Concepts (BEC) sections of the CPA Exam, those sections reflect the most change. The AUD section generally is more focused on risk assessment, data analysis and testing of internal controls. The BEC section includes governance and the design of internal controls, including those related to a company’s accounting information systems, whether in-house or outsourced.
The 2019 Practice Analysis sought to identify where the CPA Exam may have been insufficiently focused. The research identified content that could be removed or revised in each of the four CPA Exam sections. Confirmation panels surveyed supervisors of nlCPAs about their level of agreement with the proposed changes to the CPA Exam, and the final recommendations were reviewed and approved by the BOE. This is where you come in.
Your feedback is essential
Aspiring CPAs are enthusiastic about beginning their careers, and we want to fan that flame and make sure they attain the necessary technical knowledge and skills for licensure. Input from licensed CPAs is essential to enhance the CPA Exam’s validity, reliability and relevance.