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Introduction to Certified Public Accountant (CPA) Exam

Passing all four sections of the Uniform CPA Test is one of the first steps to being a licensed CPA. The CPA Exam is a computer-based examination conducted by the AICPA, consisting of four parts evaluating the minimum knowledge and skills needed by a CPA. The new version of the exam takes 16 hours in total.

While each state/jurisdiction has its particular criteria for obtaining a CPA license, they all require the CPA Exam to be passed by an applicant, and you have 18 months to complete all four sections of the CPA Exam (the clock starts ticking after you pass the first section), so be aware of scheduling and preparing.

The exam contains the following four main parts which are further described in details in the following section:

• Financial Accounting and Reporting (FAR)
• Auditing and Attestation (AUD)
• Regulation (REG)
• Business Environment and Concepts (BEC)

See the CPA practice exams to get a know-how of how these sections are divided. The AUD section offers questions based on professional obligations, ethics, risk assessment in the production of plan responses, the performance of procedures and facts, and drawing conclusions and reporting of accounting information. The BEC chapter discusses topics related to corporate governance, economic concepts, and interpretation, financial management, IT, and operations management. The FAR section consists of questions that emphasize the conceptual structure and financial reporting, the selection of accounts of financial statements, the selection of transactions, and the application of state and local governments to accounting work. The REG section consists of topics that concentrate on ethics, federal tax practices, professional obligations, business law, federal property transaction taxation, federal individual taxation, and federal agency taxation.

Topics of Certified Public Accountant (CPA) Exam

The CPA Exam test consists of four, four-hour sections. You must clear all four sections within 18 months with a minimum score of 75 on each part. The core topics for each of the four sections are listed below. These contents are likely to be used for the examination. However, on any particular delivery of the test, other similar topics could also appear.

It is recommended that, where possible, the applicant uses these contents and/or other resources to provide background information on the exam objectives. The syllabus for the Certified Public Accountant (CPA) Exam is listed below with detail of each section and their topics:

1. Auditing and Attestation (AUD)

Objectives covered by this section:

Developing a Planned Response & Assessing Risk (20 to 30%)

• Assessing and identifying the risk of material misstatement
• Planning an engagement
• Materiality
• Debtor-creditor relationships
• Entity's internal control
• Specific areas of engagement risk

Professional Responsibilities, Ethics & General Principles (15 to 25%)

• A firm's system of quality control
• Communication with component auditors
• Engagement documentation
• Nature and scope
• Communication with management
• Ethics and professional conduct

Obtaining Evidence & Performing Further Procedures (30 to 40%)

• Performing specific procedures to get evidence
• Sampling techniques
• Written representation
• Acquisition and disposition of assets
• Subsequent events
• Internal control deficiencies and misstatements

Reporting and Forming Conclusions (15 to 25%)

• Reports on attestation engagements
• Reporting on compliance
• Review service engagements
• Other reporting considerations
• Reports on auditing engagements

2. Regulation (REG)

Objectives covered by this section:

Federal Tax Procedures, Professional Responsibilities, and Ethics (10 to 20%)

• Licensing and disciplinary systems
• Federal tax procedures
• Legal duties
• Responsibilities in tax practice

Business Law (10 to 20%)

• Government regulation of business
• Business structure
• Contracts
• Agency
• Debtor-creditor relationships

Federal Taxation of Property Transactions (12 to 22%)

• Acquisition and disposition of assets
• Determination of taxable estate
• Gift tax annual exclusion
• Estate and gift taxation
• Gift tax deductions
• Cost recovery

Federal Taxation of Individuals (15 to 25%)

• Passive activity losses
• Filing status
• Gross income
• Computation of tax and credits
• Computation of tax and credits
• Alternative Minimum Tax
• Reporting items from pass-through entities

Federal Taxation of Entities (28 to 38%)

• Liquidation of business entities & tax treatment of formation
• S corporations
• Partnerships
• Limited liability companies
• C corporations
• Trusts and estates
• Tax-exempt organizations

3. Financial Accounting and Reporting (FAR)

Objectives covered by this section:

Standard-Setting, Conceptual Framework, and Financial Reporting (25 to 35%)

• Public company reporting topics
• Conceptual framework
• Standard setting and conceptual framework for nonbusiness entities
• General-purpose financial statements
• Standard setting for non-business entities
• Special purpose framework

Select Financial Statement Accounts (30 to 40%)

• Investments
• Cash and cash equivalents
• Intangible assets
• Income taxes
• Property, plant, and equipment
• Compensation benefits
• Inventory
• Long-term debt

Select Transactions (20 to 30%)

• Derivatives and hedge accounting
• Business combinations
• Nonreciprocal transfers
• Leases
• Differences between IFRS and U.S. GAAP
• Research and development costs
• Subsequent events
• Fair value measurements
• Contingencies and commitments
• Foreign currency transaction and translation
• Accounting changes and error corrections
• Software costs

State and Local Governments (5 to 15%)

• Government-wide financial statements
• Comprehensive Annual Financial Report (CAFR)
• State and local government concepts
• Specific types of transactions and events: calculation, measurement, presentation in a governmental entity, and valuation

4. Business Environment and Concepts (BEC)

Objectives covered by this section:

Corporate Governance (17 to 27%)

• Internal control frameworks
• Regulatory frameworks and provisions
• ERM (Enterprise Risk Management) frameworks

Economic Concepts and Analysis (17 to 27%)

• Financial risk management
• Market influences on business
• Economic business cycles

Financial Management (11 to 21%)

• Working capital
• Capital structure
• Financial valuation methods

Information Technology (15 to 25%)

• Systems development of maintenance
• Information security/availability
• IT governance
• Processing integrity
• Role of information technology business

Operations Management (15 to 25%)

• Planning techniques
• Performance management
• Cost accounting
• Process management

CPA AA Exam Overview:

CPA AA Exam Syllabus Topics: