The way it�s going to be changing, and if you look at this next slide, you�ll see
here for example, that auditing is 4 hours, BEC becomes 3 hours.
So, you have auditing, of which I�ll talk about the content in just a minute, and you
have FAR, REG and BEC.
But, again, noticing here its still 14 hours in total and you still have that 18 month
window.
As far as the breakdown of what is going to be included on each exam, you�ll notice
here, we�ve got on the left side of the slide, you�ll have the current content,
and on the other side you�ll have the new content.
As far as the current content, planning the engagement, internal control, documentation,
review communications.
On the other side, the new content deals with engagement and acceptance.
It deals with understanding the entity, but it also includes here internal control.
So, what they�re looking at is understanding the entity and the environment, about 16 to
20%.
So, that�s going to increase.
A little more detailed testing on internal control.
They�re also going to bring some of that into the BEC exam, as well.
You�ll notice dropping down, accounting and review services, SSARS, statements on
standards for accounting and review services, reviews, compilations, things like that.
That�s going to be much more heavily tested.
Also, professional responsibilities, ethics, independence, that�s an area that as it
relates to audit, they�re going to bring back from regulation back into audit.
. Now, the reason I say back into, back in the day when I took the e...when I was your
age, I sound like your parents...when I took the exam, we had those topics covered in audit.
Then they restructured the exam several times, in 2004, they said, �Hmm...Let�s move
those areas over to regulation.� Now, they realized, �You know what?
Professional responsibilities, independence, ethics, as it relates to an audit, let�s
pull that back into the audit section.
So, to kind of summarize some of these changes, you�ll see internal control and SSARS are
increasing as far as the percentage that they�re going to make up the exam, moving professional
responsibilities, independence and ethics from REG back into audit.
Also, because the exam is hopefully going more global, and we�ll talk about IFRS as
well, what it talks about here is much more international accounting issues.
For example, international ethics standards, international auditing and insurance, international
federations of account, differences between ISA and US auditing standards.
So, again, it�s going much more global.
That means I have to include all this new information in the audit section as well as
doing a little bit of reshuffling as well.
As far as the FAR exam, now, with FAR, when you look down at the current content versus
the new content, there's not a lot of huge changes in percentages, however they're going
to be adding all this IFRS, which I'll talk about momentarily.
As far as government and at the meeting, they said, �You know,� they were thinking of
reducing it, they said, �You know, we're going to keep it the same.� So, you'll notice
here at the bottom, governmental accounting is still 8 to 12%.
You�ll also notice non-profit and non-profit accounting is 8 to 12%.
So, these were 2 areas where they were considering, �Hmm...Maybe we�ll reduce them.� You
know what?
Now, they're going to show up, but the other thing too, they�re still going to show up,
in the past, they've yet generally been multiple choice.
In the future, everything is eligible for problems, everything is eligible in BEC, for
written communication essays.
So, even areas that weren't consistently tested in the past, as a problem, as a simulation,
now, chances are they will start showing up, which I'll expand on momentarily.
So, to summarize some of those points for FAR, you'll notice here, identifying and understanding
the differences between US GAAP and IFRS, which is international financial reporting
standards, also being able to adopt it.
So, in other words, first year, we're using IFRS.
What did we do last year?
Comparative statements.
How do you make the adjustments and so on?
The other thing, too, you need to be able to identify the differences in the definitions,
the recognition and measurement and the presentation and disclosure between US GAAP and IFRS.
For example, revenue recognition, right, we have long-term construction contracts.
What is it?
Percentage of completion, completed contract, that�s what we use for GAAP.
IFRS says, �Hey, you know what?
We�re only going to use percentage of completion, completed contract.� Inventories, for example,
with inventories, we have FIFO, LIFO, weighted average, moving average, our favorite, dollar
value LIFO.
IFRS says, �You know, fight the LIFO.
We're not going to have LIFO, we're just going to use FIFO.� It talks about valuation differences.
What is it?
Lower cost or market.
What�s it going to be under IFRS?
Lower of cost or NRV, net realizable value.
So, there's these changes.
So, what that means is, I'm currently going through and making all of these adjustments
because I need to teach you not only what is currently generally accepted accounting
principles, then I need to take every area and say, how is this suggested, how was it
change under IFRS.
So, that's where I need to walk you through, to make sure you�re understanding all the
different rules based on the kinds of questions they are going to use and they did say starting
first window 2011, chances are, they're going to start introducing some of the IFRS types
of questions.
As far as the regulation exam, regulation changes.
Now, when you look through that, you'll notice at the top there, it mentions ethics and professional
responsibilities, then it says ethics, professional, legal responsibilities pertaining exclusively
to tax.
Why?
Because the things that related to audit now got shifted back into the audit exam.
You'll also notice business law.
It says business law, including new business structure.
Now, the business structure, this is something that was in the BEC exam.
So, it was in the BEC exam, however the taxation of business structure is in regulation.
So, back in my exam, we had those together, then they broke them apart.
Now, they�re going back to the old way, and saying, �Let�s put them back together,�
which makes sense because in regulation, you get the taxation.
Remember, regulation is tax and law.
So, in this exam, you're getting what is...how do you form a corporation, an S Corp, a C
Corp, a partnership, LLP limited partnership, LLC.
So, it talks about the formation.
We also talk about the taxation.
Well, up in the past we had how to form it in BEC.
Now, they're putting the formation and the taxation together, which makes sense.
You'll notice property percentage is increasing slightly, individual taxes are increasing
as well.
So, to kind of summarize some of these changes, you'll see here, regulation, and this is an
important issue, is not really affected by IFRS at this time, and one of the things that
came up at the meeting, is they said, �You know, because of the US�s hesitation to
adopt IFRS, we don't want to re-adjust the tax code yet and so on.
Let's kind of wait and see the fallout.� So, IFRS will probably be...the one area they
won't hit at this time is regulation, although they did say the content may be modified to
reflect it in the future.
So, again, once they get all these changes in audit, FAR and BEC, then I can see them
going back and adding some stuff into regulation.
As far as property and individual tax, a little bit more heavily tested.
Also, as I mentioned, it now includes business structures, which, again, business structures
is how do you form a partnership, corporation, S Corp lesser than or equal to 100 shareholders
and so forth.
As far as BEC, now, BEC, you�ll notice here, the business structure is...a lot about of
that is getting shifted over as I just mentioned.
You also have corporate governance, and they brought this up at the meeting saying, �You
know what?
Because of all the worldwide global issues, we want to cover more areas on governments
and internal control,� which talks about executive compensation monitoring...so, they're
actually bringing a lot of internal control, about the internal control components and
so on.
They�re bringing control environment, risk assessment, control activities, information
monitoring, all of that in, still leaving it in auditing but also, bringing it into
the BEC area.
You'll notice economics is becoming more heavily tested as well.
We cover micro-, macro-, but we're also looking more into the globalization of economics.
IT, information technology, is becoming less heavily tested.
I'm sure most of us are like, �Woo!
That's nice.� So, instead of 22 to 28, it�s going to drop to 15 to 19%.
They're also adding more information in the area of operations management because there
is some of that on the exam currently...they're adding...making it more robust.
So, to summarize, you'll see here, added corporate governance and added corporate governance
and internal control, executive compensation, monitoring devices, internal control framework,
added other areas as well, and this is just a sampling of what they're adding.
For example, enterprise risk management, called ERM, added more information on operations
management, expanded economics, reduced IT and moved business structures out from BEC
to regulation.