- Hello, I'm Roger Philipp of UWorld Roger CPA Review,
and today we're gonna talk about CPA Exam Changes
Now, the Future, and Beyond.
As I mentioned, I'm Roger Philipp
of UWorld Roger CPA Review.
A little background on myself,
I grew up in Los Angeles.
I worked at Deloitte & Touche in Downtown LA
where I got my CPA certificate.
Started teaching CPA review over 30 years ago.
And our job is to help you accomplish your goal
of getting through the CPA exam.
Now Roger Philipp is part of UWorld,
and we've merged together.
And UWorld is a company
that's helped over two million students
prepare for high-stakes exams such as medical,
nursing, finance, law, pharmacy, and now CPA review.
UWorld has invested greatly in the product
bringing you the highest quality multiple choice questions
and task-based simulations
that exactly map the AICPA Blueprints.
We've also upgraded our technology to provide students
with products like our featured mobile application
which is awesome, you can use it anywhere anytime.
We also have a proven track record of over 91% pass rate,
and that's improved dramatically since we've even updated
all of our questions, solutions,
and added a whole bunch of detail.
We also have this product
that we developed called SmartPath,
and SmartPath is great 'cause it makes your studying
more effective, more efficient,
and it'll basically give you questions
in areas that you're weak in
based on the studying you've been doing.
Now today I wanna talk about the CPA exam basics,
what is the exam, why the exam is changing
which again they update every year
but there are also significant changes periodically
which I'll talk about,
the overview of those changes
both now, the future, and way beyond,
and finally starting your CPA journey
which means, hey, how can I get through this CPA exam?
Now some of the CPA exam basics,
there are four parts to the exam,
and those four parts are 16 hours in total,
four hours per part,
and you can go in any order you like.
We have FAR, Audit, REG, and BEC.
FAR is Financial Accounting and Reporting.
That includes your intermediate one, intermediate two,
advanced government, non-profit
squeezed into a fun-filled four-hour exam.
We also have Audit which is planning, internal controls,
substantive testing, IT, audit reports and so on.
We have Regulation which is tax, law, and ethics.
Tax could be individual tax, corporate tax,
S corps, C corps, partnerships, LLCs, LLPs,
and all of that stuff.
And then finally BEC is Business Environment and Concepts
that includes governmental, corporate governance,
internal control, enterprise risk management,
financial management, budgets, operations management, IT,
and your favorite, cost managerial, it's back.
Now on the exam, the way it's currently set up,
50% multiple choice, 50% task-based simulations,
and that's for all three of Audit, FAR, and REG.
As far as BEC which is economics,
cost accounting, and so on,
that's about 50% multiple choice,
35% task-based simulations which are detailed problems
where it could be fill in the blank,
it could be preparing a spreadsheet, things like that,
and then 15% written communication which are essays.
So there are generally three essays of which two are graded
and the essays are only in the BEC exam.
Now what's the passing score?
75 and above, woo-hoo, I'm a CPA!
74 and below, darn, I came this close to passing.
Once you pass an exam, you keep that part for 18 months.
So that means you pass, pass, pass
as long as you get the last part within 18 months,
you're done.
If not, you don't lose everything,
you just lose that first part.
Again you just gotta get through everything
within 18 months.
So as I always like to tell students,
it's not an IQ test,
it's a test of discipline.
75 and above is passing, 74.
Though 75 feels like a C,
that's all you need to pass the CPA exam.
Now why are these CPA exam changes occurring?
Well, the CPA exam is continuously evolving
and it's doing so in order to meet the skillset needs
of the accounting profession.
And what's exciting about this profession
and what I love as well
is once you get your job, you start working,
you don't get bored because every year
there's new changes, new updates in the profession.
That's also why the exam is changing as well.
The other thing in today's environment
is CPAs are performing more advanced tasks
and complex projects much earlier in their careers.
What I did back at Deloitte
when I started working many, many moons ago
is much different than what you're doing today.
You're doing much more advanced tasks,
therefore you need to have a better handle
on things like Excel and things like technology.
Therefore the CPA exam also has to remain relevant
as a measure of the knowledge and skills
that CPAs need to have in order to practice their profession
both more effectively and more efficiently.
Now we have something called the CPA Exam Blueprints.
And in this changing environment,
the AICPA needs a way to communicate
to exam providers and candidates what is on the exam
and what is changing from year to year to year.
That's the purpose of these things called the Blueprints.
And the content framework of the CPA exam
is determined by whom?
By the AICPA.
It maps out the skills and the tasks
that are gonna be tested.
And it was introduced in about 2017,
replaced something called content specification outlines,
and it's updated as the exam requirements require.
So in other words, as exam changes occur in the real world,
that's how they update this Blueprint as well.
And that is kind of the basis
of what our educational team uses
to create our course content,
our questions, our texts, lectures, software,
all of that is based on this thing called
the AICPA Blueprints.
And you'll see a copy of it here, a snapshot of it.
And this is an example for the Audit exam,
and you'll see it's broken down by every topic.
It also indicates the skill level being tested
and the representative task for that skill level.
Now this is based on something
that a lot of your professors use in college
when they're preparing classes and so on
called Bloom's taxonomy of educational objectives.
And what it has is different categories,
you'll see them here,
remembering and understanding,
you've got application, analysis, and evaluation.
Now one of the cool things with this is it also tells us
how certain things may get tested.
If it's remembering and understanding category,
that would generally be a multiple choice type question.
If it's application,
it could be either you're applying it
so let's work through a bond question,
that could be multiple choice
or a TBS, task-based simulation like a problem.
Analysis is gonna be a problem, a task-based simulation.
And evaluation is only in auditing
'cause you're drawing some kind of conclusion, right?
Conclude on the sufficiency and so on.
So that's what they're looking at.
So it kinda talks about the areas that are gonna be tested
and how those areas will in fact be tested.
Now as far as the overview of the changes,
you'll see here a timeline,
and this timeline talks about, okay,
what's happening over the next few years for example,
starting today, October, happening right now,
and we're gonna look at that in just a minute
as far as those changes,
but we're gonna start from today
for REG and for FAR, certain changes,
then we're gonna talk about January 21.
And those are annual changes,
they occur every year.
And these are based on things like
cost of living increases or tax law changes and so on.
The other thing I wanna mention
is there were bigger changes planned
but they were delayed because of the COVID pandemic.
So for example, audit reports was gonna change in 21,
instead they pushed it off to 2022.
That might be a good reason not to wait to sit for the exam.
So I always suggest the sooner you can sit, the better.
You'll see here 21 and 22,
as I mentioned, some audit report changes.
24 is gonna be a significant change to the CPA exam,
and that's one of the things
that I'm gonna talk about in a few minutes.
So if you could squeeze in the exam before 2024,
I encourage you to do so.
So what are some of those exam changes
that are occurring now?
For example in FAR, Financial Accounting and Reporting,
they came out,
remember there's something called the CARE Act,
and you've heard about that probably
for tax and for financial.
The CARE Act stands for
Coronavirus Aid, Relief, and Economic Security Act,
and it was basically set up in order to provide
critical, very important cashflow and liquidity
to businesses during the COVID-19 emergency.
Because again, because of the coronavirus,
new laws came out.
Well, those then show up on the CPA exam.
For example in Financial Accounting,
we talk about accounting for taxes,
we talk about net operating losses,
and you'll learn these when you start studying,
but basically there used to be
the deduction NOL limit of 80%.
They changed it to 100%
so you could take a bigger deduction for 2018, 19, 20.
As far as doing these things,
generally they're carried forward.
There's an exception saying you can carry back
but that's only for years 2018 through 2020.
So again they make it current and say, hey,
this is what's happening in the real world,
those are some of the changes we're gonna see.
Another change is in the definition.
This is regarding SEC reporting.
You have a 10-K and a 10-Q and an 8-K,
and the definition of accelerated, non-accelerated,
and things like that got adjusted.
A 10-K annual audited statements,
a 10-Q quarterly reviewed statements,
an 8-K significant changes in the business,
and that would be due four days after the change
like change in auditor, change in CEO, officers, and so on.
For Regulation, we also have the CARES Act.
It affected charitable contributions.
You could deduct 60% cash contributions.
Now you can do 100% for the year 2020.
Corporate tax, there's charity and there's NOL.
So there's all these different changes,
again I don't wanna get into specifics now,
is the things that we will update for you
as you study with our course,
whatever product you have in front of you,
online, in the materials is current,
what you need for that exam.
Alright, let's talk about
the CPA exam changes in the future.
Now we have something called the Practice Analysis,
and every few years the AICPA sits down and they say,
okay, what are the skillsets
that are required by the profession?
And it gives an opportunity for the stakeholders,
generally the firms, to provide feedback.
And they'll say to us, look,
this is what a second-year CPA needs to be able to do,
because that's how the CPA exam is based,
generally it says what does a second-year CPA do?
These are the skills they need.
And we set this up in order to ensure
that the CPA exam reflects the skills
that the firms wanna see in you.
So these are the skills
they're looking for in you, the new hire.
Now the Practice Analysis results in a new Blueprint,
and we have a new Blueprint coming out soon.
What happened is is it stems from about 2019
they did this Practice Analysis,
they talked to the firms, they talked to professors,
they see what's going on in the real world,
and they realized that technology
is changing business and the accounting profession.
Because of that, they need to focus
on critical knowledge and skills
especially increasing and adding more technology.
So some of the changes for, an example here July 21,
and these are especially in Audit and in BEC,
we're looking at technology and especially as it produces
a significant amount of data,
and the new data needs to be controlled,
it needs to be understood,
it needs to be verified.
So we need to understand the digital mindset,
in other words, how the data is structured,
how it's extracted, how you get it,
the analysis of that data, data governance,
judgment in analyzing the data.
You also need to understand data analytics.
Data analytics means we're analyzing data
in order to draw a conclusion.
And that will help us when we look at that data,
it helps us reveal trends in the data
that helps us make decisions to make a smoother company.
Technological impacts on the business processes,
the internal controls, general and application controls
which we'll talk about in detail
in the Audit portion of the exam.
So as you can see here, technology is becoming
even more heavily-tested in the future.
A couple of other changes, July 21 expected changes here,
the removal of some things,
and as I said, they go through the Practice Analysis
and they said you know what?
A second-year CPA doesn't deal with IFRS that often,
so in the FAR exam, we're gonna get rid of IFRS,
International Financial Reporting Standards.
We have estates and trust taxation,
they said, you know what?
Estates and trusts were up to like
11, 12 million dollars a person.
Most people don't have that so we're gonna get rid of that,
but we'll still leave things like gift tax, right?
You can get 15,000 a person,
married filing joint $30,000.
Feel free to give me a gift anytime.
But the point is that's something
they'll still leave on the exam.
Other things that they're keeping would be FAR,
in FAR, the state and local government.
And the reason I mention this
is 'cause they were thinking of getting rid of these.
These were on the chopping block, right?
You're fired, they were gonna get rid of it.
And then after the Practice Analysis
when they talked to the firms,
they realized you know what?
They need to keep certain things.
So state and local governments, written communication,
those are the essays in the BEC exam.
For a while they were considering getting rid of those,
and they realized you know what?
Let's end up keeping those because it's a skillset
that we need in the real world.
As far as CPA exam changes beyond,
beyond that would be CPA exam evolution.
And the changes in the 2021 are just the start
of addressing the technological shifts in the profession.
So in 2024, they're gonna be adding
even more technology on the exam.
And this is expected.
Now, again, this is several years out
so it can always change.
So there's several years between now and then
for this to occur,
but again it can always change.
But what does that 2024 exam look like?
And this is again as of today,
but just keep checking back with us,
'cause if there's any updates, we'll let you know.
We expect to still have a four-part exam.
We still think it's gonna be 16 hours.
Three parts on the core parts of being a CPA,
and then one part you get a choice on these disciplines.
So the three core exams are gonna include things,
accounting, audit, tax, technology,
so the stuff we currently have, about 12 hours.
The other four hours will be on a discipline.
So four hours of one of your choices,
either compliance and planning
or business reporting and analysis
or information systems and control.
So you can see there that you're gonna get
more of a deep dive into that one area.
Now again there's more to come on this, stay tuned.
But again the AICPA, based on a future Practice Analysis,
may make changes to it again,
but that's currently the way
that that future exam looks to be
starting in January of 2024.
Now that I've motivated you,
I've sat there and I said here's what's changing today,
here's what's changing a little bit tomorrow,
here's what the future looks like,
and you're all sitting there going,
Rog, I'm excited, I'm motivated,
I can't wait to pass the exam.
What do I need to do?
Well, now is a great time to become a CPA.
And it's a great time because you've got
great salaries, job security.
It looks prestigious on your resume.
And also as the economy picks up,
the first thing a business needs is a CPA and accountant.
Now we know current circumstances
have been very difficult for a lot of us.
Now is the time to refocus on your goals
and come back stronger than we were before.
So we suggest you start as soon as possible
because research shows
that the closer you are to graduating college,
the better you're gonna perform on the exam.
And I always like people to realize
that this is not an IQ test,
but it's a highly academic exam.
In other words, the way you've been taking exams in college
is part of 50% of exam is multiple choice, right?
In the real world, no one's gonna come up to you
at your audit and go, hey Rog, I have a question.
The second internal control structure element,
is it, A, control environment, B, risk assessment,
C, control, right?
You don't get ABC in the real world,
but 50% of the exam on Audit, FAR, and REG
are multiple choice,
therefore you wanna sit for this exam
as close to that graduation as possible.
You will take the exam
at a testing center called Prometrics.
Now with Prometrics,
they had closed down for a little while during COVID,
then they opened up, and now they've opened up,
they worked out any kinks that existed,
they're ensuring safe testing.
So it is safe to go and take the CPA exam.
Now knowing about all these changes
coming up in July 21 and beyond,
we suggest you take Audit and BEC as early as possible,
maybe even before those changes.
And again as far as the order,
generally, I would say do FAR and then REG and so on.
In this case, you might wanna nail Audit and BEC
in that order out as soon as possible
because there will be some significant changes
and some new material being added to that part.
Now what are we offering you?
The highest quality in CPA exam prep.
We have a team of experts that include practicing CPAs,
we have professors, educators,
and that way we can bring
the highest quality content to you.
What do we offer?
Fully featured mobile app which is great.
You're traveling, you're out and about,
and you go, hey, let me log on and I can do some studying.
We have time-saving technology which is our SmartPath.
And our SmartPath technology
is a software that we've developed
and it's amazing in the sense that it makes it
more effective, more efficient
because it'll keep track of what areas you're studying,
how long you're spending in that area,
how long you're spending on the questions,
which ones you're getting right and wrong,
so it'll keep feeding you questions
until you get the right number of questions
and the right score.
Once you do that, it says, hey, you're ready for this part,
go to the next of 30 bi-parts, let's do the next one.
Because what a lot of us do is we go,
oh, I love accounts receivable,
this is great, I understand it.
Let me do more questions.
We say, no, no, no.
You got it, you're getting an 85%, you're doing great.
Let's move on to bonds and leases
and pensions and deferred taxes
and areas where you might need more time to study.
We also have the industry's best material
partially because we've just invested millions of dollars
in updating, improving, and making
all of our solutions even better.
But the lectures, the questions, the software,
everything you get is top of the line.
We also give you free updates and lifetime access.
And I have students that were my students
five, 10, 20 years ago,
and they go, you know what?
I'm gonna be doing this in the real world.
Let me log on to my course, watch Rog teach it for an hour.
Now I understand it better.
Now I'm ready to jump out into the real world and do it.
We also have great pricing options.
We have payment plans, we offer discounts.
So definitely follow us on social media
because we'll run specials and promotions periodically.
We've also partnered with hundreds of CPA firms,
and the beauty of this is they will cover
the cost of the course for you.
Why would the course do that?
Why would the companies do that?
Because they want you to become a CPA.
When I started at Deloitte, what did they give me?
Nada, okay, nothing.
Now they'll pay for CPA review,
they'll give you a bonus,
they'll pay for your exam fees.
So they really encourage you
to do well to study to properly prepare
because they want you to be a CPA
because it's beneficial not only to them
but it's beneficial to you.
And it's something you want for yourself.
When I die, I'm putting in on my tombstone,
Here lies Rog CPA, fully depreciated, right?
'Cause there ain't nothing left.
Anyway, success can be yours.
This is a goal you need to set and get through.
As I said earlier, if you study, you will pass.
It is not an IQ test.
It's a test of discipline.
Our job is to motivate you to put the hours in
so you will get through the material,
get through the questions and solutions.
That's how you learn it.
To encourage you, to motivate you to get a 75 or above
in order to pass the exam.
Start now and accomplish your goal of becoming a CPA.
Thank you for your time
and have a great career in accounting.