Different Sections Of The CPA

For becoming a successful certified public accountant (CPA), the Uniform CPA Examination is one of the essential criteria. Though it is merely one of the criteria used by the 55 state jurisdictions in US to provide CPA licensure, it is a highly important one. One cannot hope to become a licensed accountant without clearing this exam.
Besides the importance of the exam, the high passing score makes it challenging for candidates. Understanding the test breakdown becomes the first step towards clearing the exam successfully. By doing so you

  • understand the relative importance of topics by understanding the breakdown of the syllabus,
  • become aware of the skills tested in the exam and thus concentrate efforts where required,
  • recognize which topics have not been covered in as much detail in your qualifying course and consequently study those,
  • understand how your performance reflects in your score and
  • understand the testing items and consequently prepare for them.

What does Uniform CPA Examination test candidates for?
The process of formulating the testing items takes long and extensive research is done for it. The initial stage involves defining what is to be tested. There are skills and knowledge that are required by entry level public accountants, to successfully take the plunge into the profession and shoulder the responsibilities related with it. The exam is prepared by experts in three fields:

  • accountants who draft, review and finalize test materials,
  • psychometricians or experts in the science of testing who devise, develop and execute test materials and
  • experts in the fields of test development who plan and develop test questions.

The following are the key skills tested through the exam:

  • Communication: The skill of expressing information through oral and written means.
  • Research: The skill of locating and utilizing appropriate information.
  • Analysis: The ability to sort out, develop and infer data for taking decisions.
  • Judgment: The proficiency to arrive at a decision.
  • Understanding: The skill to understand the meaning and relevance of a subject.

How are these Skills Tested?
There are two types of testing items in Uniform CPA Examination that are used for testing the above-mentioned skills. The first type of questions used is multiple-choice questions (MCQs) and the second type is simulations.

  • Multiple-choice Questions: These have answer options and the candidate has to select the best answer option. There are two types of multiple-choice questions in every testlet: operational and pretest.

Operational questions are used for calculation of scores while pretest questions are used for testing whether they can be administered in future administrations of the exam. They do not count towards the final score.
There are two levels of difficulty in MCQs: medium and difficult. The difficulty level of the first testlet is medium. If the performance of the candidate in the first testlet is appreciable, he is administered the second testlet of higher difficulty level, else his second testlet is of medium difficulty level.

  • Simulations: These are relational case studies. They are real life work situations presented in a condensed form. They test the candidates’ capabilities to understand real life work related situations and react accordingly. Besides the other skills mentioned above, this section requires that the candidate has basic computer skills, understands spreadsheet and word processing functions, can operate a financial calculator, use electronic tools etc to execute typical financial functions. There is a written communication based portion in each simulation. The candidate is asked to read the description of a situation and write a suitable document. The document could be in the form of a letter or a memo. Unambiguous, comprehensive and professional writing is expected. It could take 30-50 minutes to complete a simulation.

Sections of Uniform CPA Examination
There are five sections in the exam.

  • Auditing and Attestation (AUD): This section contains 3 testlets and 2 simulations and it lasts for 4.5 hours.

This section tests the understanding of auditing procedures, auditing standards accepted in US and principles and skills related with attestation activities.
In this section there are weights attached to five basic engagement tasks:

  • Planning the appointment (22%–28%)
  • Judge internal control in physical and mechanical environments (12%–18%)
  • File information for drawing conclusions (32%–38%)
  • Review the appointment (8%–12%)
  • Organize communications (12%–18%)

2. Financial Accounting and Reporting (FAR): This section contains 3 testlets and 2 simulations and lasts for 4 hours.
This section tests understanding of financial accounting principles and standards that are accepted in the US and the skills desirable to apply the knowledge.
The weights attached to five basic tasks are as follows:

  • Concepts and principles for economic statements (17%–23%)
  • Typical items of financial statements (27%–33%)
  • Specific types of dealings and events in financial statements (27%–33%)
  • Accounting and reporting for governmental units (8%–12%)
  • Accounting and reporting for non-governmental associations (8%–12%)

3.   Regulation (REG): This section contains 3 testlets and 2 simulations and lasts for 3 hours.
This section is meant for evaluation of knowledge of taxation, professional and legal responsibilities, ethics and business law.
The weights attached to six basic tasks are as follows:

  • Principles and professional and legal responsibilities (15%–20%)
  • Business law (20%–25%)
  • Central tax procedures and accounting issues (8%–12%)
  • Central taxation of property transactions (8%–12%)
  • Central taxation—individuals (12%–18%)
  • Federal taxation—entities (22%–28%)

4.   Business Environment and Concepts (BEC): This 2.5 hour long section contains 3 testlets.
This section is meant for judging the knowledge of commercial environment and concepts. This includes understanding of business organization, economic theories, fiscal management, IT (information technology), and planning and measurement.
The weights attached to five basic tasks are as follows:

I. Business organization (17%–23%)
II. Economic theories (8%–12%)
III. Fiscal management (17%–23%)
IV. Information technology (22%–28%)
V. Planning and measurement (22%–28%)

Each set of 24-30 multiple-choice questions is referred to as a testlet. Each testlet of a section shall contain equal number of questions. There are 25 operational and 5 pretest items per testlet in the AUD, BEC and FAR sections and 20 operational and 4 pretest items per testlet in REG section. The difficulty level of BEC testlets does not vary.

The passing score in Uniform CPA Examination is 75 on a scale of 0 to 99. The score weightage attached to each type of testing item is as follows.

  1. Multiple choice questions: 70%
  2. Simulations: 30%

Objective portion: 20%
Written communications: 10%
The scores of different sections are not calculated. Rather, the scores for each type of question are calculated separately. These scores lie between 0 and 100. These scores are then multiplied by weights and added to obtain an aggregate score. The weights of MCQs, simulations and written communications are 0.70, 0.20 and 0.10 respectively. The aggregate scores are then mapped to a scale of 0 – 99 for final reporting.

Some Important Points
Owing to the format of the examination, there are some points that one needs to keep in mind.

  • You need to plan your examination time by planning the time you take to complete a test section. Give priority to simulations and then concentrate on the testlets. You are recommended to keep 35 minutes for each REG simulation and 45 minutes for each AUD and FAR simulation.

  • Take the sample tests available at www.cpa-exam.org and understand the test software well before you go to take the exam. The staff at the test center shall not help you with it.
  • There is no penalty for wrong answers in MCQs. This enables you to make educated guesses while attempting the test.
  • The score required for passing is quite high and so one needs to concentrate on the exam. It determines the course of your professional life and hence holds a lot of importance.
  • The different test sections and the syllabus covered in each are to be understood well. This helps you gain focus and direct your efforts.

The format of Uniform CPA Examination is different from that of any other tests you must have taken so far. It is vital for you to gain enough practice to handle the pattern and prepare exclusively for the exam. Hence, you need to prepare with full dedication to clear this crucial exam and achieve your career dreams.


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