Uniform Certified Public Accountant Examination
The Uniform Certified Public Accountant Examination is the examination administered to people who wish to become U.S. Certified Public Accountants. 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.
The CPA Exam is developed, maintained and scored by the American Institute of Certified Public Accountants (AICPA) and administered at Prometric test centers in partnership with the National Association of State Boards of Accountancy (NASBA).
Until the mid-1990s, the Uniform CPA Exam was 19.5 hours in duration and administered over two and one-half days. It consisted of four subject areas (sections) which were tested in five sittings: Auditing (3.5 hours); Business Law (3.5 hours); Accounting Theory (3.5 hours); and Accounting Practice (Part I & Part II; 4.5 hours each). Although Accounting Practice Parts I and II were given in separate sittings, the two scores were combined for grading purposes. The exam was administered twice per year: on the first consecutive 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 were allowed at that time).
In 1994, the exam was restructured into a four-section, two-day exam. The subject matter was reorganized, primarily between Accounting Theory and Accounting Practice (Parts I and II). In addition, innovative machine-scorable test questions were incorporated to better assess the skills needed by CPAs to protect the public. For the first time, proprietary electronic calculators were provided to CPA candidates for the two new accounting sections. The four new sections were:
- Business Law and Professional Responsibilities
- Accounting and Reporting – Taxation, Managerial, and Governmental and Not-for-Profit Organizations
- Financial Accounting and Reporting – Business Enterprises
Until 1996, completely new versions of the CPA Exam were prepared and administered twice each year (May and November). After each administration, all questions and the keyed responses (correct answers) were published and available for purchase. Candidates were able have their actual examination booklets mailed to them the day after the exam. (Prior to fax machines, candidates could leave the examination room with their test booklets.) Beginning with the May 1996 administration, the exam became non-disclosed. Almost all exam material was now kept secure so that many high-quality questions could be reused. Although this is common practice in the world of large-scale testing, it was a policy decision that was momentous at the time, and made only after extensive comments were elicited from all key stakeholders, such as the 55 boards of accountancy, members of the CPA profession, accounting educators, CPA candidates, and testing professionals. By deciding to release only a small portion of each exam — to help candidates prepare for the examination experience — high quality exam material could be reused. This made it possible for the first time to use statistical techniques for test equating and to use criterion-referenced passing scores. Maintaining a large database of secure examination materials also made it possible for the CPA Exam to later transition to a computer-based administration format in 2004.
Since April 5, 2004, the exam has been administered only by a computer in secure testing centers. In addition to the knowledge CPAs require, the CPA Exam assesses important skills CPAs are expected to have. This includes the ability to use authoritative database software and electronic applications such as word processing and spreadsheets. Professional business writing skills are also assessed. In July 2009, the one millionth administration of the computerized CPA exam was recorded.
Currently, the testing year is divided into four "windows" consisting of three months. Each three-month window is divided into two consecutive months of allowed testing followed by one month where tests may not be administered. During each three-month window, the candidates may take one or more sections, but may take each section only once.
The exam has been reduced in time to a fourteen-hour exam, and the sections have been reorganized as follows:
- Auditing and Attestation (4.0 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 and 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 and Concepts (3.0 hours): (BEC) – This section covers knowledge of business structures, economic concepts, financial management, information technology, and planning and measurement.
The Uniform CPA Exam tests primary understanding and the ability to apply authoritative literature — such as auditing and accounting standards, the Uniform Commercial Code, and the Internal Revenue Code — that are universally adopted by all U.S. jurisdictions, or that are federal in nature. Every effort is made to avoid asking about subject matter that may have different correct answers in different jurisdictions.
Here is a summary of the topics which are tested in each section of the examination:
Auditing and attestation
- 12-16% engagement acceptance and planning
- 16-20% entity and internal control
- 16-20% procedures and evidence
- 16-20% reports
- 12-16% accounting and review services
- 16-20% professional responsibilities
Financial accounting and reporting
- 17-23% concepts
- 27-33% accounts and disclosures
- 27-33% transactions
- 8-12% governmental
- 8-12% not-for-profits
- 15-19% ethical and legal responsibilities
- 17-21% business law
- 11-15% federal tax process
- 12-16% gain and loss taxation
- 13-19% individual tax
- 18-24% taxation of entities
Business environment and concepts
- 16-20% corporate governance
- 16-20% economics
- 19-23% finance
- 15-19% IT
- 10-14% strategic planning
- 12-16% operations management
Multiple-choice questions represent 60% of the total score for three of the four exam sections, with the exception of Business Environment and Concepts (BEC), while the other 40% consists 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.
As of 2011, BEC is the only section that contains written communication task simulations. This measures the ability of CPA candidates to be able to write effective and coherent standard business English. Prior to 2011, written communication tasks were contained in all four sections of the exam.
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 60%, and simulations (case studies) 40% of the score. In Business Environment and Concepts (BEC), multiple-choice questions account for 85% of the score and three written communication task simulations account for 15% of the score (which went into effect in 2011).
During the examination, candidates may take a break after completing a "testlet" (either a set of multiple choice questions or a simulation). Once a testlet is completed, however, the candidate is not allowed to return to it, so it is not possible to use the "break 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. Different candidates (even taking the examination at the same time) may therefore receive a completely different examination. This variance is accounted for in the scoring.
The multiple-choice questions within each section of the CPA Exam are administered in three blocks, called testlets. Each testlet contains operational and pretest questions. Operational questions are scored, while pretest questions are not scored. Instead, a candidate’s response to a pretest question is used to evaluate the question’s statistical performance. A majority of the questions are operational questions; however, pretest questions are mixed into the exam and are not identified as pretest questions. From the candidate’s perspective, pretest questions are indistinguishable from operational questions. Pretest questions that meet certain statistical criteria are used as operational questions on future exams. This strategy for pretesting questions is common practice in high-stakes testing.
Levels of difficultyEdit
Multiple-choice testlets vary in difficulty—there are two levels: medium and difficult. Within the testlets, items often vary substantially in their difficulty levels, but across testlets, those labeled difficult contain harder questions on average than testlets labeled medium. Every candidate receives a medium testlet first. Succeeding testlets can be either medium or difficult, depending on a candidate’s performance. The scoring procedures take the difficulty of all questions into account so that candidates are scored fairly regardless of the difficulty of the testlets they take.
The score represents the candidate's overall performance on the identified examination section. Scores are reported on a numeric scale of 0 to 99, with 75 as the passing score. The scale does not represent "percent correct." A score of 75 indicates examination performance that reflects a level of knowledge and skill required for the protection of the public.
Per NASBA's website, completed tests are sent to the AICPA for scoring. The Examination Section ID only is used for identification. When the candidate's performance has been scored, NASBA receives the scores for processing. The scores are subsequently forwarded to Boards of Accountancy for their approval and release. Each board of accountancy maintains its own process and schedule of releasing the scores to candidates.
How exam content is selectedEdit
Before appearing on the CPA Exam, all operational and pretest questions have passed through several extensive and rigorous subject matter reviews to ensure that they are technically correct, have a single best or correct answer, are current, and measure entry level content as specified in the Content Specification Outlines (CSOs). The CSOs specify the percentage that each section of multiple-choice questions should be devoted to each content area. The current CSOs were put in effect in 2011 based on the results of a practice analysis and board of accountancy responses to an exposure draft of the recommended CSOs. Operational questions have also been statistically evaluated to ensure they meet the psychometric requirements of the CPA Exam.
The CPA Exam is challenging with pass rates historically below 50%.
Eligibility to sit for the examEdit
In order to sit for the Uniform CPA Exam, a person must be declared eligible to do so by one of the 55 state boards of accountancy in the United States. Requirements of state boards vary, but almost always include a U.S. bachelor's degree and a certain amount of accounting course credits. Additionally, some states require that candidates have completed an additional year of study (which can be either at an undergraduate or graduate level) before sitting for the exam and almost every state requires that the additional year of study be completed before awarding certification. The educational requirement equivalent to five years of full-time study is known as the "150-hour rule" (150 college semester units or the equivalent). NASBA has issued a draft discussion paper outlining the history of, and issues surrounding, the 150-hour education requirement, as well as presenting the arguments, pros and cons, for requiring either 120 or 150 credit hours before allowing CPA candidates to take the Exam.
The steps involved in sitting for the Uniform CPA Examination are as follows:
First time applicantsEdit
- 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 for 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 in order to sit for their examination section within the validity of the NTS.
- On the day of the examination, the Prometric test center receives electronic data from the AICPA to allow the exam to be held.
- 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.
- The AICPA scores the examination and sends the result to NASBA.
- NASBA matches up the score (from the section ID) to the candidate details on the National Candidate Database.
- NASBA forwards 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.
A candidate who has previously taken a section of the Uniform CPA Exam is a re-examination applicant. The registration process for re-examination candidates with state boards is normally simpler than that for first-time candidates, 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 record is already in the National Candidate Database, which allows quicker processing by NASBA. Otherwise the process is similar.
The AICPA and NASBA mandate that exam candidates submit to a fingerprinting prior to each exam for identification purposes. According to published AICPA and NASBA reports, all fingerprints collected are immediately transmitted over the Internet to ChoicePoint/Reed Elsevier (Identico Systems) for storage. 1
Fees to sit for the Uniform CPA Exam vary by state. For first time applicants sitting for all four sections, a fee of between USD $550 and USD $850 is typical.
For the state of Georgia for example:
|Initial Application fee||$135.00|
|Auditing and Attestation (AUD)||$195.35|
|Business Environment and Concepts (BEC)||$176.25|
|Financial Accounting and Reporting (FAR)||$195.35|
|Registration Fees (Re-Application)|
|4 examination sections||$105.00|
|3 examination sections||$90.00|
|2 examination sections||$75.00|
|1 examination section||$60.00|
Score reporting timescaleEdit
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 30 June 2006. It is however, unusual for a result to be received so late.
Where a candidate fails a section, it may be re-taken without any penalty other than a re-examination fee and the risk of credits for other sections expiring under the "18-month rule". Re-sitting for a failed section in the same testing window is not permitted.
Rescoring and appealsEdit
A candidate who fails a section may request that the exam be rescored. As of July 2006, the fee for a rescore 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 rescore must be made before the end of July.
Some but not all state boards allow a failed candidate to file a score appeal where the candidate can review the examination section and challenge the response. This involves paying a fee of USD500 and traveling to NASBA offices in Nashville, TN. Under secure conditions, the examination can be reviewed and specific questions can be challenged for a fee of USD100 each. In addition, no material is allowed to be brought in as reference. The deadline for filing an appeal is the same as that for a rescore.
Results of either process take about 8 weeks and are sent by NASBA to the candidate's state board of accountancy. Filing a rescore or appeal application does not prevent the candidate from applying to retake the examination.
Since 1996, the Uniform CPA Exam has been 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.
International Qualification Examination (IQEX)Edit
Certain overseas qualified accountants may sit for the International Qualification Examination (IQEX). This is an alternative to the Uniform CPA Exam. As of July 2006 this eligibility extends to most Canadian, Irish and Australian and the Instituto Mexicano De Contadores Publicos (Mexican Institute of Public Accountants).
There is no specific bar to non-U.S. candidates sitting for the Uniform CPA Examination, however:
- It is now possible to sit for the CPA Exam outside the USA but only in select country locations, which currently include Japan, Brazil, United Arab Emirates, Lebanon, Kuwait, and Canada.
- 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 or Permanent resident (Green card holder).
- By contrast, each state formerly imposed varying requirements on whether a candidate was required to sit for the entire exam. For example, in the 1970s and early 1980s, Louisiana required that first-time candidates sit for all four examination sections. Under the Louisiana rules, the candidate was required to pass at least two sections (with a score of 75 or above) while scoring no less than 50 on any section (the Accounting Practice score was derived by averaging the scores on parts I and II). The rule was later changed to count Accounting Practice I and II as two separate scores for this purpose. Thus, a first time Louisiana candidate who scored a 75 or above on each of the "Auditing," Theory," and "Law" sections of the exam but who scored a 49 or less on "Practice" would have received no credit, and would have been required to re-take the entire exam.
- Occasionally, questions may be asked that reflect the need for CPAs to understand that certain laws and authoritative pronouncements, while not federal in nature, are consistent across all U.S. jurisdictions. Also, though most jurisdictions follow English common law, a few (e.g., Louisiana) have legal systems based primarily on French law. As a result, CPA candidates are warned that in some cases where answers may differ across jurisdictions, the majority rule will apply. In fact, such questions rarely occur, except when the purpose of the question is to assess whether candidates know the areas of law that may not be universal. See generally Uniform CPA Examination: Examination Content Specifications, American Inst. of Certified Public Accountants, p. 11-12 (orig. issued June 14, 2002; references updated Oct. 19, 2005) at 
- "Georgia - Applying for the Uniform CPA Examination". National Organization of State Boards of Accountancy.