Upgrading your skills is the only way to compete in today’s competitive job market. If you are not learning new skills or techniques, it is possible that you might not achieve what you had in mind when you started your job. For instance, if you have an accounting background and want to go at the top of the ladder, you need to up your game by doing certifications in your field – in this scenario, going for a CPA exam. This article will talk about all there is to know about the CPA exam. With that said, let’s get right into it.

1. CPA Exam Requirements

Age Requirements

All US states require that students should be at least 18 years of age before applying for the exam.

Academic Requirements

The minimum educational requirement to be eligible for the exam is to have a general bachelor’s degree or at least 120 hours of college credits. Some states do require a bachelor’s degree in accounting or business-related fields and a minimum of 150 hours of college credits. Moreover, some states allow students to sit in the exam before graduation.

Valid Social Security Number

Most states require that students have a valid SS number. States like Illinois, New York, and Wisconsin, among others, however, allow students to take the exam without the SS number. 

To find out more about CPA state requirements, visit the link provided.

2. The CPA Exam Organization

The CPA exam has a total of 276 multiple-choice questions. In addition, it has three writing portions and 28 task-based tests. These get divided into four parts:

• Auditing and Attestation (AUD)
• Financial Accounting and Reporting (FAR)
• Regulation (REG)
• Business Environment and Concepts (BEC)

You will have four hours for each part of the test, with a total of 16 hours to complete the entire exam. Of course, you do not take the entire exam all at once. You complete each section separately and can choose the order in which you take the test. For example, you can take Business Environment and Concepts before Auditing and Attestation (AUD). It is totally up to you. Lastly, you have to pass all four parts of the test within 18 months. 

3. How the CPA Exam is marked?

The American Institute of Certified Public Accountants (AICPA) makes and scores the test. They grade each part of the test on a scale of zero to ninety-nine. You have to score at least 75 or above for each section to pass. 

For the Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), and Regulation (REG) parts of the test, your total score is determined by scores from MCQs and task-based tests. 

For the Business Environment and Concepts (BEC) part of the test, your total gets determined by scores from MCQs, task-based tests, and written communication tasks. The MCQs are worth fifty percent, task-based tests are worth thirty-five percent, and written communication tasks are worth fifteen percent of the total score.

4. Test Sections

Auditing and Attestation (AUD)

The AUD has a total of 72 MCQs and eight task-based tests. It tests your knowledge on:

• Engagements Planning and Reviewing
• Internal Controls
• Obtaining Information
• Documenting Information
• Preparation for communications

You must have knowledge of International Accounting Standards and the differences between international standards for auditing and US standards for auditing. Additionally, you will have to determine unethical practices that violate the professional standards and appropriate responses to those violations. 

The AUD test will also test your knowledge of creating reports for audited financial statements, auditing standards set by the government, internal control, regulations, etc. Lastly, the AUD will test you on the ethics and independence required by the AICPA, the 2002 Sarbanes-Oxley Act, Accountability Office, and the Labor Department.

Financial Accounting & Reporting (FAR)

The FAR section has a total of 66 MCQs and eight task-based tests involving real-life scenarios designed to test your skill. 

It will test your knowledge of the financial reporting process used by business organizations, not-for-profits, and government agencies. It will have questions on how to create financial statements, what to add to them, and the standards required for financial statements for businesses, not-for-profits, and government agencies. In addition, you must create financial statements, balance sheets, income statements, retained earnings statements, equity, cash flow statements, and comprehensive income statements. You must input all the data into ledgers after reviewing source documents.

Regulation (REG)

The REG section has a total of 76 MCQs and eight task-based tests. It covers the ethics and professional responsibility side of accounting. It also includes business law, tax procedures and accounting, alternative minimum tax, estate taxation, gift taxation, and federal taxation for one person, entities, and transactions of properties. 

In order to pass, you must have an understanding of the professional and legal responsibilities of CPAs. You must also have knowledge of the different business transactions and their legal repercussions in relation to accounting, auditing, and financial reporting. Furthermore, you must know the rights, responsibilities, and accountability of:

• debtors
• creditors
• guarantors

Business Environment and Concepts

The BEC is probably the least challenging section of the CPA exam as most people pass it on their first attempt. It has a total of 62 MCQs, four task-based tests, and three written communication tasks, where you will have to write a letter or memo responding to a work situation. The written communication tasks test your:

• writing skills
• organization
• clarity
• conciseness

 In order to pass this section, you must have knowledge of business organization, economic concepts, financial management, and IT. You will get tested on corporate governance, managing financial risks, the procedure for financial management, strategic planning, and operations management. Also, you must know global business economic concepts and the impact they have on a business’s strategy. Additionally, you must know the impact business cycles have on an organization and judge operations and quality control processes to determine and manage costs and performance. 

Furthermore, you must know the rights, duties of:

• Board of directors
• Officers and other employees

Conclusion

Preparing for the CPA exam can be challenging and stressful. This article covers all the requirements for the CPA exam, like the eligibility requirements, testing criteria, and the different test sections and what they cover. Now, you have all the information you need, allowing you to study and prepare for the exam.