Uniform Certified Public Accountant Examination

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The Uniform Certified Public Accountant Examination (Uniform CPA Exam) is the examination administered to most people who become Certified Public Accountants in the United States.

The Uniform CPA Exam was developed and is maintained by the American Institute of Certified Public Accountants (AICPA), and is administered by the National Association of State Boards of Accountancy. The CPA exam is used by the regulatory bodies of all fifty states plus the District of Columbia, Guam, Puerto Rico, the U.S. Virgin Islands and the Northern Mariana Islands.

Contents

[edit] History

Until the 1990s, the CPA exam was a nineteen and a half (19.5) hour test given over a three day period, consisting of four subject areas which were tested in five parts: Auditing (3.5 hours); Business Law (3.5 hours); Theory (3.5 hours); and Practice I & II (4.5 hours each). The exam was given the first Wednesday, Thursday and Friday in May and November of each year. Test takers were allowed to use only paper and pencil (no electronic calculators or computers of any kind).

In the 1990s, the exam was converted to a two day exam, in four sections (with electronic calculators being allowed):

[edit] Computer Based Examination

Since April 5, 2004 the exam has been entirely computer based. Research skill as well as use of word processing and database software is required.

The year is divided into four "windows". In each three-month window the candidates can take any number of the sections, once for each section on a window, in the first two months (January and February, April and May, and so on).

Each credit for a passed section is valid for 18 months. Thus, a candidate must pass all four sections within an 18-month period. If all four sections are not passed within an 18-month period, sections passed outside the 18-month period must be retaken.

The computer based examination is administered by Thomson Prometric. Since the computer based examination was introduced in 2004, there is in general no longer a requirement to sit for the Uniform CPA Exam in the same state as the state for which one is a candidate.

[edit] Sections

The sections have been reorganized as follows:

  • Auditing & Attestation (4.5 hours): (AUD) – This section covers knowledge of planning the engagement, internal controls, obtaining and documenting information, reviewing engagements and evaluating information, and preparing communications.
  • Financial Accounting & Reporting (4.0 hours): (FAR) – This section covers knowledge of concepts and standards for financial statements, typical items in financial statements, specific types of transactions and events, accounting and reporting for governmental agencies, and accounting and reporting for non-governmental and not-for-profit organizations.
  • Regulation (3.0 hours): (REG) – This section covers knowledge of ethics and professional responsibility, business law, Federal tax procedures and accounting issues, Federal taxation of property transactions, Federal taxation – individuals, and Federal taxation – entities.
  • Business Environment & Concepts (2.5 hours): (BEC) – This section covers knowledge of business structures, economic concepts, financial management, information technology, and planning and measurement.

The Uniform CPA exam tests on a federal basis. Questions are not asked about laws, accounting rules or taxes that operate in a specific U.S. state.

[edit] Testing methodology

Multiple-choice questions comprise approximately 80% of the exam, while the other 20% consist of simulations. Accounting knowledge is tested in simulations through a variety of tasks, some of which require searching databases, completing written communication exercises, and working with spreadsheets and forms. The skills that simulations are intended to measure are: analysis, judgment, communication, and research.

In all simulations, candidates are presented with a situation and instructed to write a letter or memorandum on a specific topic.

Written communication responses are scored on the basis of three criteria:

  • Organization - structure, ordering of ideas, linking of ideas one to another.
  • Development - presentation of supporting evidence.
  • Expression - use of standard business English.

Responses that do not address the assigned topic are not scored.

In Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), and Regulation (REG), multiple-choice testlets account for 70% and simulations (case studies) 30% of the score. The 30% simulation portion is further divided into 10% for written communication and 20% for all other parts of the simulation. In Business Environment and Concepts (BEC), multiple-choice questions account for 100% of the score, although AICPA do plan to introduce simulations later in 2006, or during 2007.

During the examination, candidates may take a break after completing a "testlet" (either a set of multiple choice questions or a simulation). However, once a testlet is completed it is not possible to return to it, so it is not possible to use the time to improve one's score by looking up answers. The clock continues to run during breaks.

The "bank" of questions is much larger than the set presented to each candidate, hence different candidates (even taking the examination at the same time) may receive a completely different examination. This is accounted for in the scoring.

[edit] Adaptive testing

The Uniform CPA exam uses adaptive testing for the multiple choice component. In general, candidates are first presented with a multiple choice testlet of average difficulty. If the score is high, then questions presented in the second and third testlet may be more difficult. However, more raw points are available from answering difficult questions as opposed to easy ones.

The AICPA believes that adaptive testing allows the competence of a candidate to be assessed with fewer questions than would be required for a static, or non-adaptive testing methodology.

[edit] Scoring

The score represents the candidate's overall performance on the identified examination section. Scores are reported on a numeric scale of 0-99, with 75 as the passing score. The scale does not represent "percent correct." A score of 75 indicates examination performance reflecting a level of knowledge and skills that is sufficient for the protection of the public.

The New York State Board for Public Accountancy does not allow scores to be reported in numeric terms. Instead, New York candidates for the Uniform CPA exam receive only a "pass" or "fail" notification from that state board. This pass/fail convention was updated in November of 2006. Scores are now posted on Nasba's website as they become available[citation needed]. In order to use this service, you must have the section ID number from your Notice to Schedule.

[edit] Eligibility to sit for Uniform CPA Exam

In order to sit for the Uniform CPA Exam, a person must be declared eligible to do so by one of the 55 U.S. State Boards of Accountancy.

Requirements of state boards vary, but usually consist of a U.S. bachelors degree in accounting plus an extra year's study (which can be either at undergraduate or graduate level). The requirement for 5 years full time equivalent study is known as the "150 hour rule" and has been adopted by the majority of state boards.

Noteworthy exceptions to the "150 hour rule" include:

[edit] Examination process

The steps involved in sitting for the Uniform CPA Examination are as follows:

[edit] First time applicants

  • Apply to one of the 55 state boards to determine eligibility. Some state boards delegate this to NASBA. It is not necessary to apply to sit all four sections of the Uniform CPA Exam (at least one section must be applied for).
  • State Board notifies NASBA of eligible candidate
  • NASBA places candidate on the National Candidate Database and issues a 'Notice to Schedule (NTS). The validity of the NTS is normally 6 months, however a few states issue NTS with a validity of 3, 9, 12 or 18 months.
  • Candidate contacts Prometric to arrange to sit the examination section within the validity of the NTS. This can be done through the Prometric website.
  • On the day of the examination, the Prometric test center receives electronic data from the American Institute of Certified Public Accountants to allow the exam to be set.
  • The exam responses of the candidate are sent back to AICPA, identified only by a section ID number which NASBA has provided to the candidate.
  • AICPA scores the examination and sends the result to NASBA
  • NASBA match up the score (from the section ID) to the candidate details on the National Candidate Database
  • NASBA forward the score to the candidate's State Board (some state boards allow NASBA to report the scores direct to the candidate)
  • State Board forwards the scores to candidates, after conducting its own review.

[edit] Re-examination applicants

Anyone who has sat a section of the Uniform CPA Exam before is a re-examination applicant. The registration process for re-examination candidates with state boards is normally simpler and does not usually require new proof of ID or qualifications. Some state boards allow online registration for re-examination candidates. Additionally the candidate's entry is already on the National Candidate Database, which allows quicker processing by NASBA. Otherwise the process is similar.

[edit] Fees

Fees to sit for the Uniform CPA Exam vary by state, however for first time applicants sitting for all four sections, a fee between USD550 and USD750 is typical. The equivalent re-examination fee is normally about USD50 less.

[edit] Score reporting timescale

The timescale for score reporting depends on:

  • when AICPA forward results to NASBA
  • NASBA processing time
  • state board processing time (unless the state board delegates this to NASBA)

As of July 2006, scores of some applicants who sit for the exam in the first month of a testing window are reported by AICPA sooner, usually in the third week of the second month of that window. For example, some scores of persons who sat for the Uniform CPA Exam in April 2006 were reported in the third week of May 2006. The remaining scores from April 2006, plus the scores from May 2006 attendees, were reported in the last two weeks of June 2006.

Candidates who do not receive a score by the end of the first month after the testing window in which they sat for the exam are advised to contact their state board. For example, all scores of candidates from the April/May 2006 test window should be reported by 31 July 2006. It is however, unusual for a result to be received so late.

[edit] Failed sections

Where a candidate fails a section, it may be re-done without any penalty other than a re-examination fee and the risk of credits for other sections expiring under the "18 month rule". However, it is not possible to re-sit a failed section in the same testing window.

[edit] Re-scoring and appeals

A candidate who fails a section may request that the exam be re-scored. As of July 2006, the fee for a re-score is USD150 for the Business Environment and Concepts section (BEC) and USD200 for the other sections. Application for a re-score must be made by a particular deadline, usually around the end of the first month after the testing window in which the examination was taken. For example, for the April/June test window, an application for a re-score must be made before the end of July.

It is also normally possible to lodge a score appeal (some state boards do not allow this), where a failed candidate can review the examination section and challenge the response. This involves paying a fee of USD500 and travelling to the NASBA offices in Nashville, TN. Under secure conditions, the examination can be reviewed and specific questions challenged for a fee of USD100 each. The deadline for lodging an appeal is the same as that for a re-score.

Results of either process take about 8 weeks and are sent by NASBA to the candidate's state board of accountancy. It is unusual for either re-scores or appeals to result in a changed score for the candidate. Lodging a re-score or appeal application does not prevent the candidate applying to re-sit the examination.

[edit] Confidentiality

The Uniform CPA Exam is a confidential examination. All persons involved with the Uniform CPA Exam, including candidates, must sign a confidentiality agreement not to disclose the contents of specific questions asked.

[edit] International Qualification Examination (IQEX)

Certain overseas qualified accountants may sit for the International Qualification Examination (IQEX) is an alternative to the Uniform CPA Exam. As of July 2006 this eligibility extends to most Canadian, Irish and Australian Chartered Accountants together with Australian CPAs and the Instituto Mexicano De Contadores Publicos (Mexican Institute of Public Accountants).

[edit] Non U.S. candidates

There is no specific bar to non-U.S. candidates sitting for the Uniform CPA Examination, however:

  • It is not possible to take the examination outside the United States and its territories
  • Most states will accept non-U.S. education credentials, however they must normally be evaluated by a member of the National Association of Credential Evaluators. Some states prefer specific evaluators, such as Foreign Academic Credential Services or World Education Services, while the Illinois State Board of Accountancy prefers to conduct credential evaluations itself.
  • Approximately one-third of the state boards require a candidate for the Uniform CPA Exam to be living or working in that state. However, the majority have no residence requirement.
  • A few U.S. states (such as the Alabama State Board of Public Accountancy) require the candidate to be a U.S. citizen

[edit] See also

[edit] External links


  1. ^ As of July 2006, the "eligible jurisdictions" for Chartered Accountants seeking to sit for the Uniform CPA Exam as a Colorado candidate are: Australia *, Bangladesh, Bermuda *, Canada *, England & Wales, India, Ireland *, Pakistan, Scotland, South Africa, Sri Lanka, Zimbabwe. Hong Kong Certified Public Accountants are treated as "Chartered Accountants" for the purpose of this regulation and are also eligible. Those annotated with * may also be eligible for the International Qualification Examination. Details
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