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CBTe - Launch on January 1, 2011 Update on Uniform CPA Exam . APLG/FSA 2010 Annual Seminar February 14, 2010 Elaine Rodeck, Ph.D., CPA, CA, MBA Director of Examinations Strategy. Overview of Current CPA Exam. 2. Background – Protection of the Public Interest.

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CBTe - Launch on January 1, 2011 Update on Uniform CPA Exam

APLG/FSA 2010 Annual Seminar

February 14, 2010

Elaine Rodeck, Ph.D., CPA, CA, MBA

Director of Examinations Strategy

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Background – Protection of the Public Interest

Content Design for CPA Exam:

Knowledge and skills required for entry-level CPAs for protection of public interest

Criteria for determining knowledge/skills included on CPA Exam:

Relevance to work of entry-level CPAs

Importance to work of entry-level CPAs

Frequency of use by entry-level CPAs


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Background – Purpose of CSOs/SSOs

Content Specification Outlines (CSOs) and Skill Specification Outlines (SSOs)

Statements of knowledge and skills measured by the CPA Exam

Ensures testing is consistent across Exam administrations

“Blueprint” for the type of questions that can be asked

Ensures every version reflects the required distribution of knowledge & skill components

Provides candidates with information regarding what can be tested


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Practice Analysis - Background

In its oversight role, Board of Examiners must ensure the Exam is consistent with knowledge and skills requirements of entry-level CPAs

2008 Practice Analysis identified changes in important knowledge and skills for entry-level CPAs since the last practice analysis was completed (2000)

Multi-year process that began in 2006

Complete details of Practice Analysis, including Technical Report & Appendices, are on AICPA website, www.cpa-exam.org


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Practice Analysis – Method

Survey developed using input from the prior survey (2000) and augmented based on contributions from practicing CPA’s

Target sample was individuals who supervise entry- level CPAs

Sample was drawn from CPAs certified between 2-15 years

Invited AICPA members and licensees submitted by State Boards of Accountancy to volunteer to participate.

2,023 of 3,079 eligible AICPA members (66%) responded to the survey

71 of 75 eligible licensees from State Boards (95%) participated


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Practice Analysis - Survey Process

Survey participants were presented with 45 knowledge, task, and skills statements and asked to indicate:

Relevance to entry-level CPAs

For relevant statements, importance and frequency were evaluated

In total, over 450 statements were included on survey


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Practice Analysis – Development of CSOs

Exam Subcommittees met in September 2007 to develop CSO recommendations - survey results and judgment

Content Committee met in October and November 2007 to:

Review Subcommittee recommendations regarding CSOs and related weightings, and revise/finalize draft CSOs

Develop draft SSOs based on survey data and research performed by cognitive scientists with input from CPAs

Content Committee presented CSO recommendations to BOE in January 2008

After modifications, revised CSOs were approved in March and released as Exposure Draft in May 2008


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Exposure Draft

Draft CSOs exposed for comment during May-July 2008

50 responses received from various stakeholders, e.g.:

State Boards & State CPA Societies

Educators, Academic Associations, Review Course Providers

CPA firms, PCAOB, Individuals

Content Committee met in September 2008 and considered every comment

CSOs and weightings were adjusted accordingly

Content Committee revised CSO recommendations to BOE in October 2008.


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Exposure Draft – Inclusion of IFRS on CPA Exam

Of the 50 comments received for the Exposure Draft, 1/3 specifically discussed IFRS; majority of IFRS comments supported inclusion on the Exam

When the BOE released the CSOs/SSOs in December 2008, it was with the understanding that in 2009 the Content Committee would recommend updates related to IFRS


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IFRS on the CPA Exam – Steps to Revised CSOs/SSOs

Content Committee and Exams Team have been monitoring the roll out of IFRS in US and assessing impact of IFRS on entry-level practice

Exams Team performed in-depth research of IFRS and consulted with experts, which resulted in proposed revisions to the CSOs related to inclusion of IFRS

Content Committee met in May 2009 to consider Exam Team’s recommendations re IFRS

Content Committee recommended to BOE at May 2009 meeting that the updated CSOs reflect inclusion of IFRS - BOE approved CSOs


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IFRS on the CPA Exam – Use of IFRS by Entry-Level CPAs

CPAs who work for companies in the US that are owned by foreign IFRS entities (prepare reporting packages)

CPAs who work for companies in the US that own foreign entities reporting in IFRS (convert IFRS financials to US GAAP)

Auditors who audit companies that report in IFRS, or who audit their subsidiaries who report in IFRS


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IFRS on the CPA Exam – Need to be “Bilingual”

IFRS is already entry-level practice and many CPAs are now using IFRS

US GAAP is likely to continue for some time


Entry-level CPAs will need to be “bilingual” and able to work under both US GAAP and IFRS

Content on the Exam will likely include both US GAAP and IFRS for some time


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New CSOs – AUD (cont.)

Key provisions in the AUD CSOs related to IFRS include the following:

Candidates are expected to demonstrate knowledge and awareness:

International Auditing & Assurance Board (IAASB) - role in establishing International Standards on Auditing (ISAs)

Differences between ISAs and US Auditing Standards

International Ethics Standards Board for Accountants (IESBA) - role in establishing International Federation of Accountants (IFAC) Code of Ethics for Professional Accountants.

Related independence requirements when auditing a U.S. company that supports an audit report based on auditing standards of another country, or ISAs


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New CSOs – FAR (cont.)

Key provisions in the FAR CSOs related to IFRS include the following:

Candidates are expected to:

Identify and understand the differences between financial statements prepared on the basis of US GAAP and under IFRS

First-time adoption of IFRS related to financial reporting, presentation and disclosures in general-purpose financial statements

Various FAR CSO “Groups” and “Topics” were modified from the December 2008 version of the CSOs to the reflect the inclusion of IFRS


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New CSOs – REG (cont.)

Due to the substantial uncertainty at this time relative to the US tax ramifications of the potential use of IFRS by US companies, the REG CSOs were not modified to reflect IFRS

REG CSOs may be modified in the future to reflect IFRS


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New CSOs – BEC (cont.)

Key provisions in the BEC CSOs related to IFRS include the following:

Candidates are expected to:

Demonstrate an understanding of globalization on the business environment

Explain the underlying economic substance of transactions and their accounting implications

Various BEC CSO “Topics” were modified from the December 2008 version of the CSOs to reflect the inclusion of IFRS


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Recent BOE Decisions

January 1, 2011 – CBT-e launch date and the date of implementation of new CSOs/SSOs (with IFRS)

Section Lengths under CBT-e:

AUD to be shortened by 30 minutes (to 4 hrs.)

BEC to be lengthened by 30 minutes (to 3 hrs.)

Total testing time for 4 sections to remain the same – 14 hours


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Thank you!