1. The New Computerized CPA Exam Presentation for Beta Alpha Psi by Teresa Gordon Oct. 27, 2004

2. Historic change!  Last paper and pencil exam was November 5-6, 2003  CBT launched on April 5, 2004  Last paper and pencil exam was November 5-6, 2003  CBT launched on April 5, 2004

3. Reasons for change  Based on “practice analysis” Entry-level accountants need to be able to examine a business situation and identify what, if any, accounting issues or auditing or business risks might be involved Need fundamental professional knowledge But also need the ability to Analyze Organize Communicate  Based on “practice analysis” Entry-level accountants need to be able to examine a business situation and identify what, if any, accounting issues or auditing or business risks might be involved Need fundamental professional knowledge But also need the ability to Analyze Organize Communicate

4. The Old Exam  The pencil & paper exam: 15.5 hours long over a two-day period Given twice a year in May and November 4-function calculator provided You could “condition” by passing two parts and getting a minimum on the remaining parts  The pencil & paper exam: 15.5 hours long over a two-day period Given twice a year in May and November 4-function calculator provided You could “condition” by passing two parts and getting a minimum on the remaining parts

5. The New CPA Exam  Computer-based  On-screen 4-function calculator  Taken at Prometrics testing center  Can be taken one section at a time  Tests higher level skills  Includes simulations in which candidates will use databases, spreadsheets, and basic word-processing  New content on general business knowledge  Computer-based  On-screen 4-function calculator  Taken at Prometrics testing center  Can be taken one section at a time  Tests higher level skills  Includes simulations in which candidates will use databases, spreadsheets, and basic word-processing  New content on general business knowledge

6. Comparison of SKILL Definitions  Computer Based Exam Analysis Judgment Communication Research Understanding  Computer Based Exam Analysis Judgment Communication Research Understanding  Pencil Based Exam Understanding Application Evaluation

7. CPA EXAM – When Can You Take It? Windows – 2 months every Quarter Jan. Feb. April May July Aug. Oct. Nov. 124 1234 OpenClosed April – MayJune July – AugustSeptember October – NovemberDecember January – FebruaryMarch OpenClosed April – MayJune July – AugustSeptember October – NovemberDecember January – FebruaryMarch

8. Impact on Candidates  Candidates have more flexibility in terms of scheduling to test  Candidates can focus study on a section(s) as they feel comfortable  Can take one or more sections within a month, window or longer period  Take it anywhere However, you apply for the exam in the state in which you want to be certified  Candidates have more flexibility in terms of scheduling to test  Candidates can focus study on a section(s) as they feel comfortable  Can take one or more sections within a month, window or longer period  Take it anywhere However, you apply for the exam in the state in which you want to be certified

9. Score Reporting  Initially, advisory grades reported to State Boards at the end of each window  State Boards of Accountancy distribute grades Frequency of release to State Boards of Accountancy should increase within a year  AICPA wanted Pass/Fail Scores Only Some States pass/fail Some states issue scores zero to 99 Grades haven’t been sent out promptly enough so far – hopefully that will improve over time  Initially, advisory grades reported to State Boards at the end of each window  State Boards of Accountancy distribute grades Frequency of release to State Boards of Accountancy should increase within a year  AICPA wanted Pass/Fail Scores Only Some States pass/fail Some states issue scores zero to 99 Grades haven’t been sent out promptly enough so far – hopefully that will improve over time

10. Complete One Part at a Time  Must complete all 4 sections within 18 Month Rolling Time Period  If you fail a part in one of the testing windows, you can’t take that part again during that window

11. Granting of Credit  Each section can be taken individually and in any order  Credit for a passed section(s) retained for 18 months  No minimum score requirement for failed sections  Each section can be taken individually and in any order  Credit for a passed section(s) retained for 18 months  No minimum score requirement for failed sections

12. Completing the Exam:  Testing Windows – Is 18 months enough time to complete? Jan. Feb. April May July Aug. Oct. Nov. 124 1234

13. 2004 Scores Released  April 5 – May 31, 2004 Results are In! First testing window 22,601 parts taken Average pass rate 45% Pencil & Paper Exam was about 33% per part Pass rate info for July/August testing window not yet available, no information yet on pass rates for different parts  Candidate Procrastination 57,000 sections approved, but not yet scheduled Why is this happening?  April 5 – May 31, 2004 Results are In! First testing window 22,601 parts taken Average pass rate 45% Pencil & Paper Exam was about 33% per part Pass rate info for July/August testing window not yet available, no information yet on pass rates for different parts  Candidate Procrastination 57,000 sections approved, but not yet scheduled Why is this happening?

14. Content of the Exam 4 Parts

15. EXAM Sections  The computer-based exam: Auditing and Attestation (4½ hours) Financial Accounting & Reporting (4 hours) Regulation (3 hours) Business Environment & Concepts (2½ hours) A total of 14 hours  The computer-based exam: Auditing and Attestation (4½ hours) Financial Accounting & Reporting (4 hours) Regulation (3 hours) Business Environment & Concepts (2½ hours) A total of 14 hours

16. Audit & Attestation  GAAS  Attestation Standards  SSARS  Yellow Book (governmental auditing)  Assurance Services  Integrated with other sections  Sarbanes-Oxley – not until middle of 2005  Utilize database: SAS Professional Standards  GAAS  Attestation Standards  SSARS  Yellow Book (governmental auditing)  Assurance Services  Integrated with other sections  Sarbanes-Oxley – not until middle of 2005  Utilize database: SAS Professional Standards

17. Financial Accounting & Reporting  80% Financial  20% Government/Not-for-Profit (All multiple-choice – plan to add to simulations in 2005) GAAP OCBOA GASB/FASAB SOPs  Use FARS data base  80% Financial  20% Government/Not-for-Profit (All multiple-choice – plan to add to simulations in 2005) GAAP OCBOA GASB/FASAB SOPs  Use FARS data base

18. Regulation of Business  Law 40% Plan to add simulation in 2006 Business Law except Business Organizations Heavy emphasis on: Ethics Professional Responsibilities  Tax 60% Prepare tax return schedules Tax database Code, Regulations and Publication 17  Law 40% Plan to add simulation in 2006 Business Law except Business Organizations Heavy emphasis on: Ethics Professional Responsibilities  Tax 60% Prepare tax return schedules Tax database Code, Regulations and Publication 17

19. General Business Environment & Concepts  Content formerly tested in pencil & paper exam – 30% OLD Measurement (Managerial) 10% Business Structure 20%  General Business Knowledge – 70% NEW Information Technology 20% Economic Concepts 10% Corporate Financial Management 25% Cost Measurement and Pricing 15% Lots on transfer pricing  Content formerly tested in pencil & paper exam – 30% OLD Measurement (Managerial) 10% Business Structure 20%  General Business Knowledge – 70% NEW Information Technology 20% Economic Concepts 10% Corporate Financial Management 25% Cost Measurement and Pricing 15% Lots on transfer pricing

20. COMPETENCIES Tested 2004  Test Higher Level of Cognitive Skills  Integration of Knowledge  Communication Skills  Analytical Skills  Use “EXCEL-like” spreadsheet  General Business Knowledge  Data Base Research Skills  Test Higher Level of Cognitive Skills  Integration of Knowledge  Communication Skills  Analytical Skills  Use “EXCEL-like” spreadsheet  General Business Knowledge  Data Base Research Skills

21. Registration  National Candidate Database New system created by NASBA Designed to track each candidate with unique national ID All candidate data maintained within the NCD Ensures only eligible candidates test at appropriate times Secures candidate data, including grades  National Candidate Database New system created by NASBA Designed to track each candidate with unique national ID All candidate data maintained within the NCD Ensures only eligible candidates test at appropriate times Secures candidate data, including grades

22. Applying to take the exam  You will make application to a particular state and pay your fees Eligible candidates will receive a Authorization to Test and Notification to Schedule allowing them to register to sit for exam section(s)  You will make application to a particular state and pay your fees Eligible candidates will receive a Authorization to Test and Notification to Schedule allowing them to register to sit for exam section(s)

23. Registration Problems  NASBA payment coupon – system improved with second window  Some state boards take 6 – 8 weeks to issue an “Authorization to Test” (ATT)  Scores received too late to know if one section is passed before the candidate registers for the next exam section  NASBA payment coupon – system improved with second window  Some state boards take 6 – 8 weeks to issue an “Authorization to Test” (ATT)  Scores received too late to know if one section is passed before the candidate registers for the next exam section

24. Taking the Exam Upon completion of check-in, the candidate: is seated at a designated workstation begins the exam after proctor launches the session is monitored by a Test Center Administrator is video taped Upon completion of check-in, the candidate: is seated at a designated workstation begins the exam after proctor launches the session is monitored by a Test Center Administrator is video taped

25. At Completion Upon completion of the examination, the candidate: signs-out collects his/her belongings turns in scratch paper is given a Post Exam Information sheet Upon completion of the examination, the candidate: signs-out collects his/her belongings turns in scratch paper is given a Post Exam Information sheet

26. Problems so far …  Forgetting to bring proper ID  Best to schedule early to get day and time you prefer  Candidates report few problems with Prometric in either scheduling or exam proctoring  Forgetting to bring proper ID  Best to schedule early to get day and time you prefer  Candidates report few problems with Prometric in either scheduling or exam proctoring

27. Examination Format 80% Multiple Choice 20% Simulations 80% Multiple Choice 20% Simulations

28. Examination Format - Multiple-Choice  MC – 3 Testlets  MC 24 - 30 questions each  Across Each Content Specification Area  4 options MC, radio bullet form  MC – 3 Testlets  MC 24 - 30 questions each  Across Each Content Specification Area  4 options MC, radio bullet form

29. Multiple Choice Questions

30. Not the same questions for everyone  Your particular questions will be drawn from a pool of questions Based on content specifications Based on “psychometric” specifications Difficulty level  You will not be allowed to change your answers after you leave each “testlet”  Your particular questions will be drawn from a pool of questions Based on content specifications Based on “psychometric” specifications Difficulty level  You will not be allowed to change your answers after you leave each “testlet”

31. Pretesting  20% of the questions  Not counted in the candidate’s final score  20% of the questions  Not counted in the candidate’s final score

32. Candidate Problems so Far  Identical/similar questions appearing more than once  Time is very tight – esp. for financial accounting and reporting section No time to take a break No clock – just a notation on how much total time you have left  Practice with on-screen calculator Use ten-key pad – much faster than pointing to the keys No commas on calculator  Identical/similar questions appearing more than once  Time is very tight – esp. for financial accounting and reporting section No time to take a break No clock – just a notation on how much total time you have left  Practice with on-screen calculator Use ten-key pad – much faster than pointing to the keys No commas on calculator

33. Examination Format - Simulations  Case-based simulations (25-45 minutes each) test integrated knowledge more closely replicate real world assess research, written communication and other skills  Initially, the simulations will be limited to the following 3 parts Auditing and Attestation Financial Accounting & Reporting Regulation  Case-based simulations (25-45 minutes each) test integrated knowledge more closely replicate real world assess research, written communication and other skills  Initially, the simulations will be limited to the following 3 parts Auditing and Attestation Financial Accounting & Reporting Regulation

34. AICPA Plans  Planning for two full simulation sections in each part of the exam by end of 2005  Simulation Question Types Drop-down selection lists Check boxes Spread sheets (enter, drag & drop, formula) Written communication Research (access to professional literature and other information)  Planning for two full simulation sections in each part of the exam by end of 2005  Simulation Question Types Drop-down selection lists Check boxes Spread sheets (enter, drag & drop, formula) Written communication Research (access to professional literature and other information)

35. Simulations

36. Moving Around in Simulations  Constant Tabs Directions Resource  Constant Tabs Directions Resource  Two Types of Tabs Informational Work Tabs (pencil icon) Gradable concepts Candidates had trouble with some of the simulations Split screen and Minimize did NOT work like Windows Caused some “freeze screens” which took up time which you don’t get back Be sure to check ALL the tabs since necessary facts may be under “resources” tab

37. Simulation Tools  Spreadsheet tool – it is not really Excel!  Word processing tool  Cut, copy and paste  Spellchecker  Four-function calculator  Access to professional literature and other resources  Spreadsheet tool – it is not really Excel!  Word processing tool  Cut, copy and paste  Spellchecker  Four-function calculator  Access to professional literature and other resources

38. Simulations

45. Candidate Problems so far  EXCEL Spreadsheet “like” Activities continue to give candidate problems Formulas don’t work exactly like current versions of Excel Does not have “wizards” to help you write formulas Does not have most functions like present value functions You still have to use “time value of money tables” to do present value problems  Exam typos $4,6005  EXCEL Spreadsheet “like” Activities continue to give candidate problems Formulas don’t work exactly like current versions of Excel Does not have “wizards” to help you write formulas Does not have most functions like present value functions You still have to use “time value of money tables” to do present value problems  Exam typos $4,6005

46. Authoritative Literature  All simulations will include a research component  Candidates will be required to access authoritative literature: FASB – Current Text and Original Pronouncements AICPA Professional Standards Tax Database Code, Regulations and Publication 17  All simulations will include a research component  Candidates will be required to access authoritative literature: FASB – Current Text and Original Pronouncements AICPA Professional Standards Tax Database Code, Regulations and Publication 17

47. Research  FARS for Financial Accounting & Reporting and AICPA Professional Standards for Audit free for 6 months – students must register on www.cpa-exam.org after they obtain an exam ID (NTS) www.cpa-exam.org  Tax for Regulation – what to use to practice?  None for Business Concepts – planned for early 2006; Could begin “Communications” as early as second quarter of 2005  FARS for Financial Accounting & Reporting and AICPA Professional Standards for Audit free for 6 months – students must register on www.cpa-exam.org after they obtain an exam ID (NTS) www.cpa-exam.org  Tax for Regulation – what to use to practice?  None for Business Concepts – planned for early 2006; Could begin “Communications” as early as second quarter of 2005

48. Authoritative Literature

54. Recommendations  Each database works a little bit differently  Practice the part of the exam you will be taking A LOT so you will be familiar with how everything works before you get there  Bad speller? Use spell checker in communications tab if you are not finding anything in the database matiriality will not bring up anything on materiality!  Each database works a little bit differently  Practice the part of the exam you will be taking A LOT so you will be familiar with how everything works before you get there  Bad speller? Use spell checker in communications tab if you are not finding anything in the database matiriality will not bring up anything on materiality!

55. Written Communication  Most simulations will require a written communication question  Must demonstrate knowledge of the content or answer will not be scored If what you write is not “on target” to the issues, no points will be awarded  Will be scored for writing skills Do not use abbreviations or acronyms A “bullet” type format will not be accepted Looking for standard prose (complete sentences)  Most simulations will require a written communication question  Must demonstrate knowledge of the content or answer will not be scored If what you write is not “on target” to the issues, no points will be awarded  Will be scored for writing skills Do not use abbreviations or acronyms A “bullet” type format will not be accepted Looking for standard prose (complete sentences)

56. Simulations

57. Candidate Preparation  Candidates need assistance learning technical material  Candidates should practice with database and computerized platform before attempting the real thing www.cpa-exam.org  Many review courses offered within time blocks  Candidates need assistance learning technical material  Candidates should practice with database and computerized platform before attempting the real thing www.cpa-exam.org  Many review courses offered within time blocks

58. Important Web Sites  http://www.cpa-exam.org http://www.cpa-exam.org  http://www2.state.id.us/boa/HTM/cpaexa m.htm or your State Board of Accountancy http://www2.state.id.us/boa/HTM/cpaexa m.htm  www.prometric.com www.prometric.com  www.nasba.org www.nasba.org  http://www.cpa-exam.org http://www.cpa-exam.org  http://www2.state.id.us/boa/HTM/cpaexa m.htm or your State Board of Accountancy http://www2.state.id.us/boa/HTM/cpaexa m.htm  www.prometric.com www.prometric.com  www.nasba.org www.nasba.org

59. Candidate Resources www.cpa-exam.org www.cpa-exam.org  CBT Tutorial available on www.cpa-exam.orgwww.cpa-exam.org Provides guided tour of revised exam Demonstrates look and feel and available tools Allows users to try functionality themselves  Two full sample exams for each part planned for early 2005 Condensed set of multiple choice and simulations Will be downloadable from website Replicate look and feel of CBT www.cpa-exam.org www.cpa-exam.org  CBT Tutorial available on www.cpa-exam.orgwww.cpa-exam.org Provides guided tour of revised exam Demonstrates look and feel and available tools Allows users to try functionality themselves  Two full sample exams for each part planned for early 2005 Condensed set of multiple choice and simulations Will be downloadable from website Replicate look and feel of CBT

60. How to Prepare Students for the Computerized CPA Exam Debra R. Hopkins, CPA, CIA Director Northern Illinois University CPA Review dhopkins@niu.edu Thanks to Debra Hopkins who gave a Wiley Net-Cast Presentation on this topic