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Tuesday, March 5, 2013

What Material to Expect on the CPA Exam


We all know that there are four parts to the CPA Exam, but do you know what content is covered on each parts of those exams? While the four parts of the CPA Exam cover a great deal of information on many different accounting topics, chances are some information will appear that you have learned in your accounting and business classes so I hope you were paying attention! This fourteen hour exam is like the cumulative test that you never had to take and pass in order to graduate from college. The CPA Exam seems like a daunting task, but we’ve created a crash course on what material appears on each part of the exam. You’re only four parts and fourteen testing hours away from becoming a CPA!

AUD, you guessed it, covers auditing! In 2011, the AICPA introduced content to the exam which covers International Financial Reporting Standards, what everyone knows as IFRS. You can expect to see IFRS appear on the AUD portion of the exam. How will this come into play on the four hour AUD portion of the exam? Expect to be able to distinguish between IFRS and GAAS. 70% of the content on AUD is derived from Auditing and Attestation which will include Internal Controls Testing and Audit Reports and Opinions. Be prepared to be tested on professional responsibilities as this will account for 20% of your score. What is covered on the last 10% of AUD? 10% of your score will come from Accounting and Review Services.

FAR, another four hour exam, tends to be the section that students struggle the most with. This section of the exam covers the most information which is why we often recommend that you start with this part first. After you pass FAR you will feel accomplished and ready to tackle the remaining sections of the exam. You might experience flashbacks to college as material from Intermediate Accounting I and Intermediate Accounting II cover 80% of this portion. Within that 80%, you will be tested on leases, bonds and pensions, and the difference between IFRS and GAAP. Many universities either offer non-profit accounting courses as an elective or not at all. Yet, 20% of your score on the FAR portion of the exam is based off of your knowledge of Governmental and Not-for-Profit Accounting.

REG is the only part of the exam where you will not be tested on IFRS. 60% of REG tests your knowledge of taxes including individual taxes and partnerships. Business Law, Ethics & Legal Responsibilities comprise the other 40% of REG. Specifically, brush up on corporate taxation such as s-corps and c-corps and the AICPA Code of Professional Conduct.

The final portion of the CPA Exam is the three hour BEC exam. Chances are you took a Cost Accounting course in college, and guess what? It’s back! Financial & Operations Management (Cost Accounting) makes up 35% of your score on BEC. In addition to the resurgence of Cost Accounting, 30% of BEC is made up of Corporate Governance & Strategic Planning, 15% is Information Systems & Communications and the final 20% will cover micro and macroeconomics. Will you see IFRS on the BEC portion of the exam? Yes! The written communication portion of this exam will likely cover IFRS and the globalization of business.

While this all may sound a little bit overwhelming, just take it section by section. You have 18 rolling months to complete all four parts. Start with the one that you are most skeptical of and go from there. The only things standing in your way to CPA are four exam and fourteen testing hours!

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