Task-Based Simulations Test Higher-Order Thinking on New CPA Exam

In April of 2017, there will be significant changes to the CPA exam. Heralded from the Board of Examiners at the AICPA, these changes, as noted on the AICPA website, “place a greater emphasis on testing a candidate’s higher-order cognitive skills.” 

According to the website, the new exam was “developed through comprehensive research and the input of countless stakeholders committed to strengthening and preserving the profession, … to be current, relevant, reliable and legally defensible, and fulfill the needs of the boards of accountancy in carrying out their licensing responsibility.” 

The 2017 exam will include the most substantial changes since 2004 when the exam became computer-based.

What Changes. What Remains

“While there will still be four parts and the structure will be similar, the most dramatic modifications will be made in the sections that address auditing and Business Environment Concepts (BEC),” explains Joseph D’Adamo. As a senior faculty member at Becker Professional Education, where he teaches the CPA exam review, and an award-winning lecturer in accounting at the University of Rhode Island, Joseph has his finger on the pulse of the new exam. 

Highlights of the changes include lengthening of both the BEC and Regulations sections from three to four hours, matching the other exam sections in length, and “enhanced testing of higher-order cognitive skills including critical thinking, problem-solving, analytical ability and professional skepticism,” notes a September 2015 article in the Journal of Accountancy.  

The section on auditing, for instance, will “test skills of the highest level,” according to the Journal. “Auditors try to access risk and gather evidence to evaluate that risk. Evidence leads to conclusions. “They are trying to make the exam more practical and encourage candidates to think the way they would have to think in practice,” continues Joseph. 

Beyond the auditing section, what might be the single most intense change will be evident in the BEC section, where the format will move away from multiple choice toward more tasked-based simulations. The BEC section will introduce new styles of simulation tasks including access to electronic documents. 

“That will be more like what a CPA does in the real world. The general thinking is that this will make the BEC more difficult, “says Joseph. The newer structure of the BEC section will be composed of 50% multiple choice, 35% simulation, and 15% writing.

What to do?

For recent graduates and their new superiors, it appears that the time is now to take the exam. At URI, most of the students that Joseph has contact with are “going for” the exam.  The most frequent path for these grads starts in public accounting. As with many in the industry, some will migrate to the private sector in years to come. 

“Right now, we are encouraging anyone and everyone to take the exam before April 1st. I tell my students to start with the BEC section and then move to the auditing section,” advises Joseph. “If you have the 120 credit hours, don’t wait. I push students to take at least one section in late August or early September, then try to take the next in early 2017.” He emphasizes that recent grads will reap the benefits of the current exam configuration because it is textbook-oriented.

“Right now the pass-rate is about 55% in the BEC, the highest of the four sections. It won’t be surprising at all if it becomes the lowest pass-rate,” speculates Joseph.

Meanwhile, test preparation providers are working to update their materials in anticipation of the new changes, often meeting on a formal basis with representatives of the Board of Examiners.  In fact, Becker Professional Education offers a “FastPass” which is an intensive course designed to help candidates prepare for the CPA Exam in as little as 12 weeks, instead of months.

What does this mean for the industry?

An April 2016 article from the Journal of Accountancy explains that … “As the business environment has changed, a shift has occurred in the type of work newly licensed CPAs perform. Technical proficiency of accounting, auditing, and tax concepts remains important. Following the AICPA Examinations team’s most recent practice analysis, feedback from the profession indicated that the Uniform CPA Examination should evolve so that it will continue to measure the knowledge and skills a newly licensed CPA uses on the job.”

Expanded testing windows, 15-minute breaks that do not count against total time, and a different scoring timeline are other changes expected for April.

According to Joseph, the CPA exam has evolved over the years with multiple additions that often result in study plans consisting of memorization and regurgitation. “My personal opinion is that new exam will be more realistic. It will all depend on the execution,” summarizes Joseph.  

Please note: 

The AICPA has just released the 2016 CPA Exam Booklet, it is now available online and will benefit those preparing for the Exam prior to the changes in 2017. The 2016 version is much more candidate-focused and features helpful tips and resources for candidates, as well as a side-by-side overview of how the current Exam differs from the next Exam, which launches April 1, 2017.  Click here to get your online version.