The CPA Exam is one of the primer professional exams in the country. When the CPA exam was converted to the current computerized format several years ago, many people might have thought the development of the new exam was a one time effort, but that is far from the truth. The CPA exam is continually evolving. Earlier this year, questions about IFRS started to appear on the exam. Given the growing number of U.S. CPAs that are utilizing IFRS because their employers (foreign companies and their U.S. subsidiaries) are using IFRS, it is appropriate to start including the subject on the exam. Another update to the exam was to include task based simulations. These are short simulations akin to a subcomponent of the simulations previously found on the exam, but more focused on how future CPAs are actually expected to perform on the job. An additional benefit of the task based simulations is faster grading which will enable scores to be released quicker starting this quarter.
Instead of scores being released in two rounds, one week before the end of the testing period and two weeks after, scores will be initially released one month after the testing round begins and every two weeks thereafter. This will allow candidates, especially those that take the test early in the testing window to find out their score earlier and then decide if they need to continue studying for the next section of the test or go back and do more work on the previous section. Since the move to the computerized exam, more and more candidates are taking the CPA exam one section at a time during each testing window. The faster release of scores will help these candidates maintain their study schedule and reduce wasted effort.
Another change in the exam is its availability internationally. Candidates must still sign up through a State Board, but they can take the exam in five locations including Japan and several countries in the Middle East. The first international exams were successfully given earlier this year. The AICPA recently announced an additional international location, Brazil, which will begin offering the exam in 2012. Brazil will be a key location in South America allowing not only citizens of Brazil, but also those of other nearby countries to take the exam
The international exam is the same exam given in the U.S. so candidates must be able to proficiently read and respond in English. In addition, candidates must agree to be on a track to CPA licensure through a participating State Board in the U.S. Offering the exam in international locations, however, enables us to continue to expand the global reach of the CPA license. This is an important step in ensuring that the Certified Public Accountant will continue to be one of the premier global accounting credentials.
The AICPA Board met last week. November is the first Board meeting for newly elected members of the Board, but while this was not my first board meeting it still included a first for me. It was my first meeting as Chair of the Audit Committee. It was also the beginning of my last year on the Board. It’s hard to believe I am entering the last year of my service on the Board. While I am now the experienced “old hand,” looking around the board room I am confident that we will continue to be led by talented people with a deep passion for the profession. The Board once again covered a tremendous number of topics from private company financial reporting, to peer review, to activities in the EU related to the “Green Paper” recommendations, to updates from our government and employee benefit plan audit quality centers, as well as an update on the current banking and insurance industry issues and audit risks. As usual I will highlight a few of the areas covered.
The Audit Committee functions just like most audit committees. The Director of Internal Audit reports directly to the audit committee; we are responsible for the engagement and relationship with our external auditor – JH Cohn; and we are very focused on risks and controls not only over financial reporting, but increasingly over compliance and operations. The AICPA has a great Director of Internal Audit. Her department not only provides support to the external auditor, but also audits the CPA Exam process as well as other key internal processes. Audit areas are determined based on a risk analysis and are approved by the audit committee on an annual basis. I could spend this whole blog talking about the audit committee, but instead I will reference you to the AICPA Audit Committee Toolkit. We use this toolkit extensively to help run our audit committee and ensure that we are utilizing best practices in our governance process
The CPA exam was successfully launched internationally earlier this year and additional changes have also been implemented. The exam continues to be one of the preeminent professional examinations and the latest changes are designed to continue to keep it there. For example, the test questions continue to evolve to be even more like the real world. I will go into more detail in a future blog on all of the changes, so be on the lookout for it.
EU Green Paper
I know some of you would question why the AICPA Board spends time covering proposals related to auditing in the European Union. The simple answer is that activities in the EU are providing impetus to PCAOB proposals in areas like mandatory auditor rotation, dual auditing and independence. For example, one of the EU proposals is to ban auditing firms from doing anything other than audits. This is beyond the notion of no client consulting work. It would include no tax work, no valuation work, and other areas of critical knowledge in order to perform an effective audit. Simply put, in this global world, nothing goes on that doesn’t eventually work its way back to impacting the U.S. and therefore the U.S. CPA. The Board is simply taking its responsibility to ensure the long term prospects of the U.S. CPA by looking at things going on in the rest of the world.