CPA Exam Changes
Each year, the AICPA approves various changes and updates to the CPA Exam, altering pre-existing sections, adding new topics and occasionally removing older ones. Read through the timeline below to learn about the upcoming CPA Exam updates and subscribe to our newsletter to ensure you stay on top of all of the latest changes to the CPA Exam.
Read the 2021 CPA Blueprints
The CPA Exam Blueprints are created by the American Institute of Certified Public Accountants (AICPA) to help CPA candidates know what skills and content topics will be tested on the CPA Exam. Read the blueprints to know what you need to study!Explore CPA Blueprints
2022 CPA Exam Changes
The time is now. Take the first step towards CPA Exam success!
As the accounting profession evolves, the CPA Exam must do the same. The exam remains relevant as a measure of the knowledge and skills newly licensed CPAs must have in order to practice their profession and protect the public interest efficiently and effectively.
The UWorld Roger CPA Review course is rooted in the AICPA CPA Exam Blueprints, which is the framework for all the exam content. Our expert educational team consists of practicing CPAs and accounting educators who are dedicated to ensuring students are thoroughly prepared for success on the most up-to-date information.
We encourage candidates to try UWorld Roger CPA Review for 7-Days free. This includes access to the highest-quality practice CPA Exam questions, the industry’s most dynamic lectures, and our signature SmartPath Predictive Technology. Plus, all course aspects are also available on our fully-featured mobile application.
2022 CPA Exam Changes
There are no content updates for BEC or FAR for the 2022 CPA Exam. Changes to AUD and REG are outlined below.
AUD
The quick summary of changes to AUD for 2022 are:- SASs No. 134 – 140 primarily deal with updates to the audit report for non-public companies and amendments to align other sections of the audit standards accordingly.
- SSARS No. 25, Materiality in a Review of Financial Statements and Adverse Conclusions, changes some of the rules applicable for reviews under the Statements on Standards for Accounting and Review Services.
Detailed View of Changes
SAS No. 134, Auditor Reporting and Amendments, Including Amendments Addressing Disclosures in the Audit of Financial Statements, revises:- The sample engagement letter
- The audit report for nonissuers. Various changes include:
- Reordering the report to be similar to a PCAOB audit report, which starts with the auditor’s opinion and is followed by the basis for opinion section
- Requiring a separate section in the report when substantial doubt about the entity’s ability to continue as a going concern exists
- Expanding the auditor’s responsibility section of the report
- Communicating key audit matters (KAMs) in the report (in a separate section) when the auditor is engaged to do so
- Additional inquiries of the predecessor auditor regarding related party relationships/transactions and significant unusual transactions
- An additional inquiry of management and others regarding significant unusual transactions
- Additional examples of fraud risk factors
- Additional procedures to perform with respect to related parties
- The auditor’s responsibilities with respect to other information included in an annual report
- The definition of an annual report for such purposes
- GAAS integrated audits (ie, reporting on internal control in conjunction with a financial audit)
- Reviews of interim financial information
- Government compliance audits
- Requires the accountant to determine materiality for the financial statements as a whole, and design and perform review procedures to address all material items
- Permits the expression of an adverse conclusion in a review engagement
- Requires the review report to include a statement that the accountant is independent
REG
The REG section of the CPA Exam will see the following temporary tax provisions expire with 2021, and prior rules will become testable again:Consolidated Appropriations Act items
- 100% charitable contributions limit for individuals
- 25% of ATI charitable contribution limit for corporations
American Rescue Plan Act (ARPA) items
- Increases in the Child Tax Credit to $3,000 per child under age 18 and $3,600 per child under 6
- Increases in the Child and Dependent Care Credit to $4,000 for one child and $8,000 for two or more
- An increase in the employer dependent care exclusion to $10,500
Timeline of CPA Exam Changes
Latest CPA Exam Information
2021 CPA Exam Changes
The time is now. Take the first step towards CPA Exam success!
As the accounting profession evolves, the CPA Exam must do the same. The exam remains relevant as a measure of the knowledge and skills newly licensed CPAs must have in order to practice their profession and protect the public interest efficiently and effectively.
The UWorld Roger CPA Review course is rooted in the AICPA CPA Exam Blueprints, which is the framework for all the exam content. Our expert educational team consists of practicing CPAs and accounting educators who are dedicated to ensuring students are thoroughly prepared for success on the most up-to-date information.
We encourage candidates to try UWorld Roger CPA Review for 7-Days free. This includes access to the highest-quality practice CPA Exam questions, the industry’s most dynamic lectures, and our signature SmartPath Predictive Technology. Plus, all course aspects are also available on our fully-featured mobile application.
October 2021 CPA Exam Changes
AUD
- Updated for SSAE No. 19, Agreed-Upon Procedures Engagements
- SSAE No. 19’s most notable changes include:
- Eliminates the requirement to get an assertion from the responsible party
- Allows the practitioner to assist in developing the procedures as long as the engaging party acknowledges the appropriateness of the procedures prior to the issuance of the report
- Allows the procedures to be developed over the course of the engagement
- Eliminates the requirement for intended users to take responsibility for the sufficiency of the agreed-upon procedures
- Allows a general-use report to be issued
- SSAE No. 19’s most notable changes include:
FAR
- Updated for ASU 2021-03, Intangibles—Goodwill and Other (Topic 350): Accounting Alternative for Evaluating Triggering Events
- ASU 2021-03 provides an additional accounting alternative to help simplify and reduce the cost of goodwill accounting for private and not-for-profit entities. Under this new alternative, they can perform the required triggering event evaluation to test for impairment as of the end of the reporting period, rather than having to monitor for triggering events and performing such evaluations throughout the reporting period.
REG
- Updated for American Rescue Plan Act (ARPA)
- ARPA has various minor changes that could be testable on the exam, such as:
- Increasing the Child Tax Credit to $3,000 per child under age 18 and $3,600 per child under 6*
- Increasing the Earned Income Credit limit for investment income to $10,000
- Increasing the Child and Dependent Care Credit to $4,000 for one child and $8,000 for two or more*
- Increasing the employer dependent care exclusion to $10,500*
- Expanding the exclusion for discharge of indebtedness to cover qualified student loans
- ARPA has various minor changes that could be testable on the exam, such as:
July 2021
AUD & BEC
- Increased emphasis on:
- Understanding automated business processes and the related risks and controls,
- The importance of having a digital and data-driven mindset as well as the use of data analytics, and
- System and Organization Controls reports on controls over financial reporting at a service organization (ie, SOC 1 reports).
Download our 2021 CPA Exam Changes Infographic.
Download our 2021 CPA Exam Changes Infographic. Learn more about what to expect on the exam in 2021.January 2021
There are only minor changes to the CPA Exam for January 2021. More robust changes were originally expected, but they have been delayed due to the pandemic.
REG
- Removal of most CARES Act changes
- Exam Topic: Individual and Corporate Taxation
FAR
- ASU 2018-14—Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans
- ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes
A Sampling of Changes Coming to the CPA Exam
Topics to be Expanded on the Exam
Digital and Data-Driven Mindset and Other Technological Impacts- AUD
- Business processes and internal controls
- Use of SOC 1 reports
- IT system infrastructure
- Data flows
- Effect of general and application controls on the completeness and reliability of data
- Use of automated tools and data analytics in the audit
- Skepticism and judgment in analyzing data
- Business processes and internal controls
- BEC
- Business processes and internal controls
- Understanding the importance of SOC 1 reports for outsourced IT functions
- Use of data and business intelligence
- Data governance
- Data management
- Data relationships
- Working with data (extraction, transformation, and loading)
- Business processes and internal controls
Topics to be Removed from the Exam
- IFRS (FAR)
- Estate Tax (REG)
Changes in Content and Skill Weighting on July 1, 2021 Blueprints
- AUD
- Content Weighting
- Area II, Risk Assessment and Planning, increased by 5%
- Area IV, Reporting, decreased by 5%
- Skills Weighting
- Shifting from Remembering & Understanding to Analysis by 5%
- Content Weighting
- BEC
- Content Weighting
- Area I, Corporate Governance, increased by 3%
- Area II, Economics, decreased by 2%
- Area III, Financial Management, decreased by 1%
- Skills Weighting
- No change
- Content Weighting
- No weighting changes for FAR and REG
2020 CPA Exam Changes
October 2020
FAR
- CARES Act (Coronavirus Aid, Relief, and Economic Security)
- Exam Topic: Accounting for Income Taxes (Net Operating Losses)
- Change in Definition of Accelerated Filer & Nonaccelerated Filer
- Exam Topic: Reporting the Results of Operations (SEC Reporting Requirements)
REG
- CARES Act (currently only applicable for Q4 of 2020)
- Exam Topic: Individual and Corporate Taxation
- Change in Definition of Accelerated Filer & Nonaccelerated Filer
- Exam Topic: Federal Securities Regulations
FAR Changes on the 2020 CPA Exam
Financial Instruments – Credit Losses (ASUs 2016-13, 2018-19, 2019-05) — The credit loss (ie, bad debt) changes are pervasive and complicated. These changes remove more bright-line rules that accountants are used to and require more judgment, and in some cases data analytics, to develop expectations for credit losses. Here’s some of the basics:
- This represents a switch from an incurred credit loss model to a current expected credit loss (CECL) model to reflect economic downturns in the financial statements faster (ie, earlier recognition).
- The new model estimates expected credit losses over the lifetime of the asset for more credit risk transparency.
- Estimates can be based on historical information, current conditions or reasonable and supportable forecasts (eg, predictive data analytics).
- The new guidance applies to assets measured at amortized cost (eg, receivables and held-to-maturity debt securities) and available-for-sale (AFS) debt securities, as well as finance leases and off-balance-sheet credit exposures (eg, financial guarantees).
- When expected credit losses increase, an allowance for credit losses (ie, a contra-account) is booked at the reporting date to adjust the value of the asset, and credit loss expense is recognized on the income statement.
- When expected credit losses decrease, the allowance for credit losses is decreased, and a credit loss expense is reversed on the income statement.
- Such assets are written off when they are entirely uncollectible.
Goodwill (ASU 2017-04)
The second step in the goodwill impairment test (ie, calculating the implied fair value of goodwill) has been eliminated for simplification purposes.Now you basically just compare the fair value of the reporting unit with its carrying value. If fair value is less than carrying value, then goodwill is impaired and a loss should be recognized.
- Aligns the accounting treatment of implementation costs incurred in a cloud computing arrangement that is treated as a service contract with the requirements to capitalize implementation costs incurred with respect to internal-use software.
- Expands the private company accounting alternative for variable interest entities (VIEs) to provide an election not to apply the regular VIE GAAP guidance when certain criteria are met.
- Statement No. 87 provides a single model for lease accounting (ie, all leases are essentially finance leases, with limited exceptions).
- Statement No. 89 provides clarification on accounting for interest cost incurred before the end of a construction period.
- Intangibles (ASU 2018-15)
- Variable interest entities (ASU 2018-17)
- GASB Updates
Further Breakdown of FAR 2020 CPA Exam Changes
Expected Credit Loss Model (ASC 326-20)
What assets will be affected by this change?
- Accounts receivable (A/R), financing receivables, finance leases, held-to-maturity (HTM) debt securities, available-for-sale (AFS) debt securities, and other off-balance sheet credit exposures (eg, financial guarantees).
How is each type of asset affected by the change?
- A/R, HTM debt securities, & finance leases:
- Estimate losses over life of asset with pools of assets that have similar risk profile assumptions to capture risk, even if the risk is remote.
- Management should have a reasonable forecast of economic conditions and documentation to support this.
- For assets that are purchased having a significant credit deterioration since issuance, an allowance needs to be recorded at acquisition.
- Significant new disclosures will be required in statements.
- AFS debt securities:
- No longer consider the length of time an instrument has been impaired in model.
- Record an allowance for credit losses instead of a reduction in amortized cost basis.
- Limit credit losses to excess of amortized cost over fair value.
- Reduce allowance for credit risk improvements and reverse credit loss expense in the income statement.
How will it affect the financial statements?
- Credit losses are recognized earlier than they would have been under current GAAP.
- Income becomes more volatile as credit loss expense is recognized.
- More processes and controls need to be implemented by management to consistently pool assets and determine conditions that affect their model. Even if management doesn’t expect the allowance to change significantly, they need to have a repeatable and understandable process to how they came to that conclusion. Documentation in the notes to financials will be required.
- More data will need to be collected and included in the model to help management decide how to identify information that can be used in developing the reasonable and supportable forecast, whether internal or external, to estimate the expected credit losses.
What are the key differences between the old incurred loss model and the new expected credit loss model?
- Instead of reporting losses that have been incurred as of the balance sheet date, credit loss expense is now recognized for credit losses that are expected over the life of the asset. Since this recognition of losses will now flow through the income statement, earnings will likely become more volatile.
- Pooling of assets that share a common risk profile is required with the new model, whereas current GAAP permits but doesn’t require this. Management discretion on what assets to pool together comes into play. This also means that where a single asset may not have had any expected credit losses, the pool of similar assets could.
- Economic conditions are considered in both current GAAP and the new model. The new model also includes management’s expectations of future economic conditions. This is another area where more judgment is required.
- The result of the new model should show up on the balance sheet as what management thinks is the net amount that will be collected on the asset.
Implementation considerations for the expected credit loss model:
- Components of amortized cost include unpaid principal balance, accrued interest, unamortized discounts / premiums, foreign exchange adjustments, and fair value hedge accounting adjustments.
- Limited historical loss information may be available for amortized cost other than unpaid principal balance.
- Processes and controls will need to be developed for gathering data for the components of amortized cost that haven’t been historically captured.
- Pools of similar assets based on risk profile will need to be reviewed at each measurement date to confirm they still share risk attributes and belong to the same pool. This review and any changes will need to be documented.
- Losses need to be reflected over the asset’s contractual life.
- Included: expected prepayments and contractual extensions.
- Excluded: expected extensions, renewals and modifications.
- It may be hard to determine contractual life on assets that have no stated maturity like A/R and credit card receivables. Management will also need to determine if a loan refinance with the same lender would be considered a prepayment.
- Management judgment will be required to determine:
- The method that is most appropriate for determining credit losses. A variety of methods may be used, including the discounted cash flow method, loss-rate methods, roll-rate methods, probability-of-default method, and aging schedules.
- Designation of pools of assets with similar risk profiles. Risk of default is understandable but may also include specific asset risks for the company or the company’s appetite for more or less risk based on its individual tolerance.
- Key economic variables used in model.
- Selection of reasonable and supportable forecast period.
- Determination of how to select the estimate used—is it a single most likely outcome or a weighted average outcome based on probability?
- Support adjustments to historical loss information and reversion methodology to the historical loss model past the reasonable and supportable forecast period of the expected loss model.
- Is it worth managing all this data or can an external source of data be used?
Reference article:https://www.ey.com/publication/vwluassetsdld/technicalline_04486-181us_creditlosses_4october2018/$file/technicalline_04486-181us_creditlosses_4october2018.pdf?OpenElement
Goodwill (ASU 2017-04)
- The only step in determining goodwill impairment will be the current 1st step of the impairment determination: comparing the fair value of a reporting unit with the carrying amount. If the cost is greater than fair value, the goodwill impairment charge equals the difference up to the amount of goodwill allocated.
- The primary goal of the standard is simplification and providing cost savings to all entities.
- Any loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
- Impairment losses on goodwill can’t be reversed once recognized.
Reference article: https://www.bdo.com/insights/assurance/fasb/fasb-flash-report-february-2017-(1)
Intangibles (ASU 2018-15)
The point of this guidance is to reduce diversity in practice for the costs of implementing cloud computing arrangements or hosting arrangements that are service contracts. Entities that historically capitalized implementation costs for internal use software projects should apply their existing policies and procedures to implementation costs incurred in hosting arrangements that are service contracts.
Customers should apply ASC 350-40 to determine whether to capitalize implementation costs of the cloud computing arrangement or expense them as incurred.
- Only qualifying costs incurred during application development stage can be capitalized. Examples: costs of integrating the hosting arrangement with software on site, coding, configuring, customization, compensation and benefits for employees for time spent on application development activities, and interest costs incurred while implementing the hosting arrangement.
- Other costs are required to be expensed like costs of project planning, training, maintenance after implementation, and data conversion. Overhead costs (general and administrative) and training costs not related to software development or implementing the hosting arrangement can’t be capitalized.
- For multiple element arrangements like training, hosting, maintenance, data conversion, etc. bundled together, companies need to allocate the costs to each element on the relative standalone price for each part of the contract.
- Companies implementing hosting arrangements with multiple modules should accumulate costs and amortization records at the module level so that they can begin amortization at the appropriate time for that module. Documentation of modules, costs, obsolesce, and impairment or abandonment are required.
Reference articlehttps://www.ey.com/publication/vwluassetsdld/technicalline_04271-181us_cloudcomputing_6september2018/$file/technicalline_04271-181us_cloudcomputing_6september2018.pdf?OpenElement
Variable interest entities (ASU 2018-17)
This standard applies to all entities except for public entities, non-for-profit entities, and employee benefit plans qualifying common control arrangements. It creates an alternative accounting policy election to not apply VIE guidance to legal entities under common control. All the following criteria must be met for this election:
- Reporting entity and legal entity are under common control.
- Reporting entity and legal entity are not under common control of a public entity.
- Legal entity under common control is not a public entity.
- Reporting entity doesn’t have a direct or indirect controlling financial interest in the legal entity.
Additional disclosures are required related to the reporting entity’s involvement and exposure to entities with this election. While it doesn’t require consolidation, a combined financial statement presentation is still an option to show combined results for entities under common control. Early adoption is allowed, and entities are required to apply the amendments retrospectively.
Reference article: https://www.cohencpa.com/insights/articles/asu-2018-17-a-private-company-accounting
GASB Statement No. 87
The rule change will make GASB lease accounting similar to FASB lease accounting where substantially all leases will be required to be reported on the balance sheet. Distinctions between operating and finance leases, however, are eliminated.
For Lessees:
- Lease liabilities will be considered long-term debt.
- Lease payments will be financing outflows on the cash flow statement.
- For operating-type leases, rent expense will no longer be reported in the activity statement. Instead, interest expense on the liability and amortization expense related to the asset will be reported.
For Lessors:
- Lessor accounting will mirror lessee accounting—this is different from FASB and IASB.
- Lessor will recognize a lease receivable and a corresponding deferred inflow while still reporting the asset underlying the lease.
- Interest income from the receivable will be recognized using the effective interest method.
- Lease revenue will be recognized through amortizing the deferred inflow over the lease term.
- New rules exclude leases associated with investment assets carried at fair value like investment rental property. This accounting doesn’t change from current treatment.
GASB vs. FASB Differences
- Right-of-use assets may amortize more quickly than liabilities in GASB, which will negatively impact net position. FASB’s treatment has the asset and liability at roughly the same amount.
- FASB reports lease liabilities as long-term operating payables. GASB has them as long-term debt. This could impact compliance with debt covenants.
- FASB reports straight-line rent expense, and GASB reports interest expense on the liability and amortization expense on the asset. This speeds up expense recognition.
- Statement of cash flows: GASB – capital financing outflows / FASB – operating outflows.
Reference article: https://www.pwc.com/us/en/cfodirect/publications/in-brief/gasb-lease-accounting-rules.html
GASB Statement No. 89
This statement requires state and local government agencies, including public housing authorities, to expense interest during the construction period instead of capitalizing the interest and including it in the asset’s value. The change was made to simplify reporting and show the true cost of borrowing. The benefit of expensing interest has an immediate impact on the income statement instead of amortizing over several years.
Reference article: https://www.bdo.com/insights/business-financial-advisory/pha-finance/%E2%80%8Bgasb-statement-89-accounting-for-interest-costs
2021 CPA Exam Changes Q & A
If you purchase a Roger CPA Exam review course now, you will have access to a fully upgraded course platform once the 2021 CPA Exam changes go into effect in January 2021. All Roger CPA Review students will receive automatic updates to their online course materials for the duration of their course.
Exam content tests the skills that newly licensed CPAs must know to continue to protect the public interest, including:
- Critical thinking, problem solving, analytical ability, and professional skepticism
- Effective communication skills
- Well-developed research skills
- A strong understanding of the business environment and processes
- Ethics and professional responsibilities
2019 CPA Exam Changes
Hello and welcome. My name is Roger Philipp of Roger CPA Review. Today I wanna talk about the top two changes to the CPA Exam in 2019.
We've been working hard to ensure that our 2019 course materials reflect the updates to the CPA Exam provided to us by the AICPA. While there are not structural changes on the exam, there are major content changes happening on the FAR and REG exams that are going into effect January 1st, 2019.
In Financial, Accounting, and Reporting, or in FAR, the big area that changed is leases. In 2016, the FASB issued ASC 842, which updated the accounting treatment of the leases. The goal was to provide more transparency and comparability among companies regarding lease assets and liabilities. To help ensure the transition, the Board allowed entities to adopt both the new lease standard and it wasn't gonna hit the exam or isn't until January 2019, which is now quickly approaching. Some of the changes include balance sheet recognition. Operating leases lasting over 12 months now must be reported on the balance sheet. So before we had what we called an off-balance sheet risk, now they have to be listed in the balance sheet. The new standard creates transparency for investors regarding a company's financial leverage and earnings. With financial statement disclosures, ASC 842 has much more stringent disclosure requirements for both quantitative and qualitative financial statement disclosures. The increased requirements may require companies to improve or implement new systems, procedures, and controls to provide the required disclosure. Lease qualification, long-term leases are now reported on the balance sheet. Short-term leases of 12 months or less are still allowed to be excluded from the balance sheet, but you could include them if you so desire. The new standard dictates that if the lessee does not have the right to control the use of the asset, then the transaction may not qualify as a lease. So that deals with control, so you've got to have the control. With lease payments there is a new revised definition of indirect costs resulting in fewer allowed capitalized costs. Executory costs, like property taxes, insurance, will now be included in lease payments. Regarding a sale leaseback transaction, so you sell it and then you immediately lease it back, to qualify as a sale, the transfer of the asset must adhere to the revenue recognition requirements in ASC 606, which deals with revenue from customers with contracts. When the transaction does not qualify as a sale, it is classified as a financing transaction, so kinda like you borrow the money in more of what we call a note payable.
So what does all of this mean for you? Well, since several bright-line tests have been removed, the update also requires that more judgment be applied. Because we used to have these four criteria for a capital lease, now we call it a finance lease. Now there's five criteria. Things like specialized nature, a purchase option, title transfer, but here is an area where it kinda got a little gray. The term, it says it has to be a major part of the lease, used to say 75%. Payment, substantially all, which used to be 90% of the fair market value. So that's where the bright-line tests kinda come in. So what you're gonna see is you're gonna need more of what we call brain power when addressing these questions on the CPA Exam once these changes go into effect on January 1st, 2019.
Now let's talk a little bit about regulation changes, especially in the area of taxation. This is probably the biggest change that everyone is talking about to the CPA Exam, especially in Regulation. And this is due to what we call the TCJA, which is the Tax Cut Job Acts of 2017. This significantly changed and updated the tax code, which impacts all the sections of tax, which accounts for most as up to 85% of the Regulation exam. This is the section we highly recommend that you take this year in 2018, as it will require you to relearn all that great stuff that you studied in school about taxes, whether it was in university or whether you've been working in the real world, it'll all change.
Here are some, just a few of the examples of the changes.
- There's an increase in the Section 179 deduction. So we talk about deductions for depreciation and bonus depreciation. Used to be about half a million, now it went up to a million, starts to phase out at $2.5 million.
- Increased standard deduction, but the elimination of the personal exemption. So no more personal exemption, dependency exemptions, but your standard deduction is $12,000. Married, filing joint, double or $24,000. Might be a good reason to get married.
- New limitations on property and state taxes, as well as local taxes and also mortgage interest. So your property and state tax and all those are limited to $10,000 max. Your mortgage interest used to be a million one. They dropped it down to $750,000.
- There's also a new deduction of up to 20% for owners of certain pass-through entities, like S-corps, partnerships, and so on. It's called a QBI deduction, or a Qualified Business Income Deduction, which is really nice.
- If we increase the charitable contribution, so if you donate cash, you could instead of 50% of AGI, they increased it to 60% of AGI.
- Entertainment expenses are now disallowed. So we used to do meals and entertainment. Now it's just meals, no more entertainment.
- The new corporate tax rate, a flat tax rate, it went from 35% down to 21%, which is helpful. And that whole purpose was to bring corporations back in the United States. Increased gross receipts test, which allows more entities now to use the cash basis or cash method of accounting. Used to be at $10 million, they increased to $25 million.
So in conclusion, you can see that the CPA Exam content updates to these two areas will be significant. If you need help working these exams into your busy schedule, our new SmartPath Predictive Technology is the most effective way to maximize your study time. Well, it's a data-driven platform that tells you exactly where and how to focus your efforts. It takes the guesswork out of CPA Exam preparation. It's helping candidates pass the exam faster than ever before. They're more effective, they're more efficient. No matter when you decide to take the exam, we have your back and we'll guide you on the SmartPath to CPA Exam success.
Thank you and good luck in your studies.
2019 CPA Exam Changes by Part
Auditing and Attestation (AUD)
Blueprints: The 2019 AUD Blueprints do not include any additional or eliminated content areas. However, there have been revisions to add more detail on professional skepticism and Audit Data Analytics (ADAs). Note that these updates do not change the nature or scope of content eligible for testing.
- Added references to professional skepticism in the section introduction:
- Professional skepticism reflects an iterative process that includes a questioning mind and a critical assessment of audit evidence. It is essential to the practice of public accounting and the work of newly licensed CPAs.
- Added a Topic in Area I, Group B titled “Professional skepticism and professional judgment” with the following remembering and understanding task statements:
- Understand the concepts of professional skepticism and professional judgment.
- Understand personal bias and other impediments to acting with professional skepticism, such as threats, incentives and judgment-making shortcuts.
- Added an analysis representative task statement in Area III, Group A – Performing Further Procedures and Obtaining Evidence - Understanding sufficient appropriate evidence, as follows:
- Investigate evidence that either contradicts or corroborates management explanations, expectations and other hypotheses throughout an audit or non-audit engagement.
- Revised the analysis representative task statement in Area III, Group C, Topic 3 – Performing Further Procedures and Obtaining Evidence – Performing specific procedures to obtain evidence - Inquiry of management and others, as follows:
- Analyze responses obtained during structured or informal interviews with management and others, including those in non-financial roles, and ask relevant and effective follow-up questions to understand their perspectives and motivations in an audit or non-audit engagement.
- Added an analysis representative task statement in Area III, Group C, Topic 6 – Performing Further Procedures and Obtaining Evidence – Performing specific procedures to obtain evidence - All other procedures, as follows:
- Modify planned procedures based upon new information, such as inconsistent explanations, new evidence and environmental cues, to achieve audit objectives in an audit of an issuer or a nonissuer.
- Revised the 3rd bullet under the Area II description:
- Assessing Risks and Planning Further Procedures — Identifying and assessing risks of misstatement due to error or fraud and developing appropriate engagement procedures, including understanding and calculating materiality and considering specific engagement risks, as well as incorporating concepts such as audit data analytics, group audits, using the work of the internal audit function and the work of specialists.
- Revised the 1st sentence in the description of Area III:
- Area III of the AUD section blueprint covers performing engagement procedures and concluding on the sufficiency and appropriateness of evidence obtained, including performing specific types of procedures (e.g., analytical procedures, analytical procedures using audit data analytics, observation and inspection, recalculation and reperformance); testing the operating effectiveness of internal controls; performing tests of compliance and agreed-upon procedures; understanding and responding to specific matters that require special consideration (e.g., accounting estimates, including fair value estimates); evaluating and responding to misstatements due to error or fraud and to internal control deficiencies; obtaining management representations; and performing procedures to identify and respond to subsequent events and subsequently discovered facts.
- Revised the application representative task statements in Area II, C, 4:
- Identify and document an entity’s key IT general and application controls, their impact on the audit of an entity’s financial statements, including an audit of an entity’s internal controls, and consider the effect of these controls and manual controls on the completeness and reliability of an entity’s data.
- Perform and document tests of an entity’s key IT general and application controls, their impact on the audit of an entity’s financial statements, including an audit of an entity’s internal controls, and consider the effect of these controls and manual controls on the completeness and reliability of an entity’s data.
- Added an analysis representative task statement in Area II, E, 3:
- Assess risks of material misstatement using audit data analytic outputs (e.g., reports and visualizations) to determine relationships among variables and interpret results to provide a basis for developing planned audit procedures.
- Added an analysis representative task statement in Area III, C, 1:
- Perform analytical procedures using outputs from audit data analytic techniques to determine relationships among variables and interpret results in an audit or non-audit engagement.
- Added two analysis representative task statements in Area III, C, 6:
- Determine the attributes, structure and sources of data needed to complete audit data analytic procedures.
- Use audit data analytic outputs to determine relationships among variables and interpret results to meet objectives of planned procedures in an audit or non-audit engagement.
Content: The AUD section of the Exam will see some slight adjustments in content for 2019, including:
- PCAOB release 2017-001, The Auditor’s Report on an Audit of Financial Statements when the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards—Eligible for testing Q3 2018 (except for critical audit matters, which is eligible for testing in Q3 of 2019).
- SSARS No. 24, Omnibus Statement on Standards for Accounting and Review Services —2018—Eligible for testing in Q3 2019.
- Government Auditing Standards—2018 Revision (Yellow Book)—Updates related to performance audits are eligible for testing in Q3 of 2019 (Updates related to financial audits, attestation engagements, and reviews of financial statements are eligible for testing in Q3 of 2020).
2019 CPA Exam Changes Q & A
Exam content tests the skills that newly licensed CPAs must know to continue to protect the public interest, including:
- Critical thinking, problem solving, analytical ability, and professional skepticism
- Effective communication skills
- Well-developed research skills
- A strong understanding of the business environment and processes
- Ethics and professional responsibilities