The CPA Exam: What You Need To Understand

CPA Exam Format, Content, & Structure

The CPA Exam is broken down into three CORE sections (pass all three) and three DISCIPLINES (pick and pass only one).

Each section is administered by the AICPA for a total of 16 hours tested. Four hours per section.

The three CORE sections are Financial Accounting and Reporting (FAR), Regulation (REG), Auditing and Attestation (AUD).

The three DISCIPLINES are Business Analysis and Reporting (BAR), Information Systems and Controls (ISC) and Tax Compliance and Planning (TCP).

In order to qualify to become a licensed CPA, you must pass all three CORE sections and pick and pass one DISCIPLINE section all within 30 months.

The authoritative exam outline is called the AICPA blueprints and is made up of the areas, topics, sub-topics and representative tasks that each CPA candidate is expected to be able to complete.

Each represenative task is also mapped to a set Skill Level based on Bloom's taxonomy which is how you know what type of question (multiple choice or task-based simulation) you will be asked by task.

 

What are the six sections of the CPA exam?

• Financial Accounting and Reporting (FAR)

• Regulation (REG)

• Auditing & Attestation (AUD)

• Business Analysis and Reporting (BAR)

• Information Systems and Controls (ISC)

• Tax Compliance and Planning (TCP)

Types Of Questions On CPA Exam

There are two types of questions asked on the CPA Exam. It's important to understand what is expected of you when answering these questions and understand the differences between each type.

1) Multiple Choice Questions

For each section of the CPA exam you will be given 2 testlets of multiple choice questions. Each question will have 4 possible answers that you can select from.

These multiple choice questions are designed to test your basic remembering and understanding learning skills.

2) Task-Based Simulations

All six sections of the CPA exam now have TBS or task-based simulations. These questions are designed to re-create real world scenarios you will experience as a CPA.

You will be required to show you understand the topics and concepts asked and to prove you are able to research accounting questions for clients or customers.

These types of questions will test your higher order learning skills such as Analysis and Evaluation.

Format Of The CPA Exam By Parts

Each section of the CPA exam is formatted slightly differently. Here is a breakdown of each section by format so you can know what to expect and how to budget your time on CPA exam day.

FAR, REG & AUD CORE Sections + BAR, TCP & ISC DISCIPLINE Formats

Financial Accounting & Reporting (FAR) , Regulation (REG) and Auditing & Attestation (AUD) are all formatted similarly. You can expect to have 50% of your exam be multiple choice and the other 50% be task-based simulations (TBS).

For each of these sections you will have 2 testlets of multiple choice as follows:

• FAR has 25 multiple choice questions per testlet

• REG has 36 multiple choice questions per testlet

• AUD has 39 multiple choice questions per testlet

• BAR has 25 multiple choice questions per testlet

• TCP has 34 multiple choice questions per testlet

• ISC has 41 multiple choice questions per testlet

Following your multiple choice testlets you will have 3 additional testlets of Task-Based Simulations (TBS) which will contain the following:

• FAR has 7 (2 | 3 | 2 per testlet) task-based simulations

• REG has 8 (2 | 3 | 3 per testlet) task-based simulations

• AUD has 7 (2 | 3 | 2 per testlet) task-based simulations

• BAR has 7 (2 | 3 | 2 per testlet) task-based simulations

• TCP has 7 (2 | 3 | 2 per testlet) task-based simulations

• ISC has 6 (1 | 3 | 2 per testlet) task-based simulations

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What Is The Tested On FAR

Financial Accounting and Reporting is the largest section of the CPA exam and comprehensively covers many different areas of general accounting and reporting.

FAR requires CPA candidates have a strong understanding of US GAAP, primarily covering concepts and standards for financial statements, items on financial statements, various types of transactions, governmental and not for profit accounting standards and reporting for governmental entities.

CPA Candidates will also be expected to apply these concepts and standards as required by any CPA.

FAR is made up of the following primary topics:

• Conceptual Framework and Financial Reporting (25-35%)

• Select Financial Statements Accounts (30-40%)

• Select Transactions (20%-30%)

• State and Local Governments (5%-15%)

Conceptual Framework and Financial Reporting (25-35%)

1) Conceptual framework and standard-setting	2) General-purpose financial statements: for-profit business entities	3) General-purpose financial statements: nongovernmental, not-for-profit entities
4) Public company reporting topics	5) Financial statements of employee benefit plans	6) Special purpose frameworks

Select Financial Statements Accounts (30-40%)

Cash and cash equivalents	Trade receivables	Inventory
Property, plant and equipment	Investments	Intangible assets
Payables and accrued liabilities	Long-term debt	Equity
Revenue recognition	Compensation and benefits	Income taxes

Select Transactions (20%-30%)

Accounting changes and error corrections	Business combinations	Contingencies and commitments
Derivatives and hedge accounting	Foreign currency transactions and translation	Leases
Nonreciprocal transfers	Research and development costs	Software costs
Subsequent events	Fair value measurements	Differences between IFRS and U.S. GAAP

State and Local Governments (5%-15%)

State and local government concepts	Format and content of the Comprehensive Annual Financial Report (CAFR)
Deriving government-wide financial statements and reconciliation requirements	Typical items and specific types of transactions and events in governmental entity financial statements

How Much Time Do You Have To Complete FAR and How Is It Weighted?

You are given 4 hours to complete the exam. When being graded your exam will be weighted as follows:

• 50% Multiple Choice

• 50% Simulations

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What Is The Tested On REG

Regulation is the 2nd largest section of the CPA exam and comprehensively covers many different areas of taxes and business law.

Regulation is made up of the following topics:

• Ethics, Professional Responsibilities, and Federal Tax Procedures (10-20%)

• Business law (10-20%)

• Federal Taxation (60-80%)

 

Ethics, Professional Responsibilities, and Federal Tax Procedures (10-20%)

Ethics and responsibilities in tax practice	Licensing and disciplinary systems
Federal tax procedures	Legal duties and responsibilities

Business Law (10-20%)

Contracts	Agency
Business structure	Debtor-creditor relationships
Government regulation of business

Federal Taxation (60-80%)

Federal taxation of individuals	Federal taxation of entities
Federal taxation of property transactions

How Much Time Do You Have To Complete FAR and How Is It Weighted?

You are given 3 hours to complete the exam. When being graded your exam will be weighted as follows:

• 50% Multiple Choice

• 50% Simulations

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What Is The Tested On AUD

Auditing and Attestation (AUD) is considered by many to be the most difficult section of the CPA exam.

It comprehensively covers many different areas of auditing and attestation as follows:

Auditing and Attestation is made up of the following topics:

• Ethics, Professional Responsibilities and General Principles (15-25%)

• Assessing Risk and Developing a Planned Response (20-30%)

• Performing Further Procedures and Obtaining Evidence (30-40%)

• Forming Conclusions and Reporting (15-25%)

Ethics, Professional Responsibilities and General Principles (15-25%)

Nature and Scope of Audit and Non-Audit Engagements	Ethics, Independence and Professional Conduct	Terms of Engagement for Audit and Non-Audit Engagements
Requirements for Engagements Documentation	Communication with Management and Those Charged with Governance	Communication with Component Auditors and Parties Other Than Management and Those Charge with Governance
A Firm’s System of Quality Control, Including Quality Control at the Engagement Level

Assessing Risk and Developing a Planned Response (20-30%)

Planning an Engagement	Understanding an Entity and Its Environment	Understanding an Entity’s Internal Control
Assessing Risks Due to Fraud	Identifying and Assessing the Risk of Material Misstatement and Planning Further Procedures Responsive to Identified Risks	Materiality
Planning for and using the Work of Others, Including Group Audits, the Internal Audit Function and the Work of a Specialist	Specific Areas of Audit Risk

Performing Further Procedures and Obtaining Evidence (30-40%)

Understanding Sufficient Appropriate Audit Evidence	Sampling Techniques	Performing Specific Procedures to Obtain Evidence
Specific Matters that Require Individual Attention	Misstatements and Internal Control Deficiencies	Written Representations
Subsequent Events and Subsequently Discovered Facts

Forming Conclusions and Reporting (15-25%)

Reports On Auditing Engagements	Reports On Attestation Engagements	Accounting and Review Service Engagements
Reporting On Compliance	Other Reporting Considerations

How Much Time Do You Have To Complete AUD and How Is It Weighted?

You are given 4 hours to complete the exam. When being graded your exam will be weighted as follows:

• 50% Multiple Choice

• 50% Simulations
  

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What Is The Tested On BAR

COMING SOON

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What Is The Tested On TCP

COMING SOON

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What Is The Tested On ISC

COMING SOON

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Ethics Exam

Depending on your state, you may be required to complete Ethics training in order to become a licensed CPA. The most popular Ethics Course is the AICPA's Professional Ethics: The AICPA's Comprehensive Course.

It is an open book self study CPE program that can be completed at any point in your exam.

NOTE: Not all states require you to take the CPA exam, and some require specific Ethics exams other than the exam mentioned above.

In general, you are required to pass your ethics exam within two years preceding initially applying for your CPA certificate.

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Next Step In The CPA Exam Process...

Before you get overwhelmed by the massive amount of information tested on the CPA exam, let's discuss what the CPA exam can do for your career.

By passing the CPA exam you automatically set yourself apart from all other accountants.

There are approximately 646,000 active CPA in the United States, so by passing the CPA exam you are part of an elite group of accountants.

The CPA exam is also a universally recognized certificate which will make transitioning to a different career or industry much easier than if you were not a CPA.

There are other non-tangible benefits to becoming a CPA but the biggest tangible result is the monetary advantage you will have over your peers.

It has been shown that CPA's typically make $1,000,000+ over their careers than their non-CPA counterpart.

If you want to be the best accountant you can be, then passing the CPA exam is a no brainer.

Your next step needs to be find the best CPA review course for you.

This is going to be a significant investment and the last thing you want to do is "cheap" out on a course that doesn't give you the tools you need to pass the CPA exam on your first try.

Take our CPA Exam Study Personality Quiz to get started

OR

You can visit our Top CPA Review Courses Comparison page to determine all your options.

Once you have found a CPA review course then it's time to sign up for the CPA exam and start learning HOW to study for the CPA exam.

Here's my step by step CPA exam application process and 21 study tips and strategies to get you started!

Finally, if you have a fear of failure (or have failed a section of the CPA exam) here are my best strategies you can steal to help you overcome failing the CPA exam.