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ACCOUNTING CERTIFICATION PROGRAMS
2.1   Accounting Certification Programs

2.1  ACCOUNTING CERTIFICATION PROGRAMS

OVERVIEW

The CPA (Certified Public Accountant) exam is the grandparent of all the professional accounting examinations. Its origin was in the 1896 public accounting legislation of New York. In 1917, the American Institute of CPAs (AICPA) began to prepare and grade a uniform CPA exam. It is currently used to measure the technical competence of those applying to be licensed as CPAs in all 50 states, Guam, Puerto Rico, the Virgin Islands, the District of Columbia, and an ever-expanding list of international locations.

The CIA (Certified Internal Auditor), CMA (Certified Management Accountant), and EA (IRS Enrolled Agent) examinations are relatively new certification programs compared to the CPA. The CMA exam was first administered in 1972 and the first CIA exam in 1974. The EA exam dates back to 1959. Why were these certification programs begun?  Generally, the requirements of the CPA designation instituted by the boards of accountancy (especially the necessity for public accounting experience) led to the development of the CIA and CMA programs. The EA certification was created for persons specializing in tax.

Purpose

The primary purpose of professional exams is to measure the technical competence of candidates. Competence includes technical knowledge, the ability to apply such knowledge with good judgment, comprehension of professional responsibility, and ethical considerations. Additionally, the nature of these examinations (low pass rate, broad and rigorous coverage, etc.) has several important effects.

  1. Candidates are forced to learn all of the material that should have been presented and learned in a good accounting educational program.
  2. Relatedly, candidates must integrate the topics and concepts that are presented in individual courses in accounting education programs.
  3. The content of each examination provides direction to accounting education programs; i.e., what is tested on the examinations will be taught to accounting students.

Should you become certified?

Certification is important to professional accountants because it provides
  1. Participation in a recognized professional group
  2. An improved professional training program arising out of the certification program
  3. Recognition among peers for attaining the professional designation
  4. An extra credential for the employment market/career ladder
  5. The personal satisfaction of attaining a recognized degree of competency

These reasons hold particularly true in the accounting field due to wide recognition of the CPA designation. Accountants and accounting students are often asked if they are CPAs when people learn they are accountants. Thus, there is considerable pressure for accountants to become certified.

A newer development is multiple certifications, which is important for the same reasons as initial certification. Accounting students and recent graduates should look ahead and obtain multiple certifications to broaden their career opportunities. The table of selected CIA, CMA, EA, and CPA examination data below provides an overview of these accounting examinations.

 

EXAMINATION CONTENT

The content of certification examinations is specified by the respective governing boards with lists of topics to be tested. In the Gleim CIA, CMA, EA, and CPA review materials, the content tested is divided into subtopics we call study units. A study unit is a more manageable undertaking than an overall part of each exam. The listings of study units below provide an overview of the scope and content of these exams.

 

THE CIA EXAM

LISTING OF CIA REVIEW STUDY UNITS

Part 1:  Internal Audit Basics

Part 3:  Internal Audit Knowledge Elements

  1.   Mandatory Guidance
  2.   Independence, Objectivity, and Due Care
  3.   Control:  Types and Techniques
  4.   Control Frameworks and Fraud
  5.   Sampling
  6.   Data Gathering and Data Analysis
  7.   Reporting, Work Papers, and Evidence
  1.   Governance
  2.   Risk Management
  3.   Organizational Structure and Processes  
  4.   Business Processes and Risks
  5.   Communication
  6.   Structural Analysis within an Industry
  7.   Industry Evolution and Environments
  8.   Strategic Decisions
  9.   Organizational Behavior
  10.   Leadership and Conflict Management
  11.   IT Security and Application Development
  12.   IT Systems
  13.   IT Systems and Business Continuity
  14.   Basic and Intermediate Concepts of Financial Accounting

  15.   Advanced Concepts of Financial Accounting and Financial Statement Analysis

  16.   Finance
  17.   Managerial Accounting I
  18.   Managerial Accounting II
  19.   Global Business Environment
  20.   Legal, Economic, and Regulatory Issues
Part 2:  Internal Audit Practice
  1.   Strategic and Operational Roles of Internal Audit
  2.   Establish Risk-Based Internal Audit Plan
  3.   Assurance and Compliance Engagements
  4.   Financial, Environmental, and Consulting Engagements
  5.   Plan and Supervise Engagements
  6.   Communicate Results and Monitor Outcomes
  7.   Fraud Risks and Controls

According to The IIA, the CIA is a “globally accepted certification for internal auditors” through which “individuals demonstrate their competency and professionalism in the internal auditing field.”  Successful candidates will have gained “educational experience, applicable knowledge, and business tools that can deliver a positive impact in any organization or business environment.”

Passing this exam validates and confirms your professional work experience and requires your complete dedication and determination. The benefits include higher salary, increased confidence and competence, and recognition as a member of an elite group of professionals.

The CIA exam is computerized to facilitate testing. Part 1 consists of 125 multiple-choice questions and lasts 2.5 hours, while Parts 2 and 3 each contain 100 multiple-choice questions and last 2 hours.

The first two parts of the CIA exam focus on the theory and practice of internal auditing. The body of knowledge of internal auditing and the auditing skills to be tested consist of

  1. The typical undergraduate auditing class as represented by auditing texts
  2. Internal auditing textbooks
  3. Various IIA (Institute of Internal Auditors) pronouncements
  4. Reasoning ability, communications and problem-solving skills, and dealing with auditees in an audit context (i.e., the questions will cover audit topics but test audit skills)

Part 3 of the exam ensures that internal auditors are conversant with topics, methodologies, and techniques ranging from individual and organizational behavior to economics.

NOTE:  The IIA has significantly changed the structure of the CIA exam from four parts to three. Please visit www.gleim.com/accounting/cia/exam-transition-2013 to learn about the changes to exam structure and content tested.

Purchase Gleim CIA Review System - www.gleim.com/cia

 

THE CMA EXAM

LISTING OF CMA REVIEW STUDY UNITS
Part 1:
Financial Planning, Performance, and Control
1. 

Ethics for Management Accountants and Cost Management Concepts

2. 
Cost Accumulation Systems
3. 
Cost Allocation Techniques
4. 

Operational Efficiency and Business Process Performance

5. 
Budgeting Concepts and Forecasting Techniques
6. 
Budget Methodologies and Budget Preparation
7. 
Cost and Variance Measures
8. 

Responsibility Accounting and Performance Measures

9. 

Internal Controls -- Risk and Procedures for Control

10. 

Internal Controls -- Internal Auditing and Systems Controls

Part 2:
Financial Decision Making
1. 
Ethics for the Organization and Basic Financial Statements
2. 
Ratio Analysis
3. 
Profitability Analysis and Analytical Issues
4. 
Investment Risk and Portfolio Management
5. 
Financial Instruments and Cost of Capital
6. 
Managing Current Assets
7. 

Raising Capital, Corporate Restructuring, and International Finance

8. 
CVP Analysis and Marginal Analysis
9. 
Decision Analysis and Risk Management
10. 
Investment Decisions

The CMA exam consists of two parts:  (1) Financial Planning, Performance, and Control and (2) Financial Decision Making. Both parts consist of 100 multiple-choice questions and two 30-minute essay questions.  A total of 4 hours is allowed for the completion of a part (3 hours for the multiple-choice, 1 hour for the essays).

According to the IMA, the “CMA is the advanced professional certification specifically designed to measure the accounting and financial management skills that drive business performance.”

In their Resource Guide, the ICMA explains that through the certification test, “the requirements of the CMA Program . . . recognize those who can demonstrate that they possess a sufficient degree of knowledge and skills in the areas of management accounting and financial management. In this way, the ICMA helps identify practitioners who have met certain predetermined professional standards.”

We have arranged the subject matter tested on the CMA examination into 10 study units for each part. Each part is presented in a separate book. Both of these books contain review outlines; prior CMA exam questions, answers, and answer explanations; and essay questions.

The CMA exam has broader coverage than the CPA exam in several areas. For example:

  1. CMA topics like risk management, finance, management, and marketing are covered lightly, if at all, on the CPA exam.
  2. The CMA exam focuses very heavily on internal decision making, such as special orders and capital budgeting, whereas the CPA exam is concerned with external reporting.
  3. The CMA exam tests business ethics but not business law.

CMA questions are generally more analysis-oriented than CPA questions. On the CPA exam, the typical requirement is the solution of an accounting problem, e.g., consolidated worksheet, funds statement, etc.

Purchase Gleim CMA Review System - www.gleim.com/cma

 

THE EA EXAM

LISTING OF EA REVIEW STUDY UNITS
Part 1:  Individuals
Part 2:  Businesses
  1.   Gross Income
  2.   Business Deductions
  3.   Above-the-Line Deductions and Losses
  4.   Itemized Deductions
  5.   Filing Requirements
  6.   Tax Credits
  7.   Basis
  8.   Adjustments to Asset Basis and Capital Gains and Losses
  9.   Business Property, Related Parties, and Installment Sales
  10.   Nonrecognition Property Transactions
  11.   Individual Retirement Accounts
  12.   Gift Tax
  13.   Estate Tax
  1.   Accounting Methods and Periods
  2.   Income and Property Transactions
  3.   Business Expenses
  4.   Other Deductions
  5.   Basis
  6.   Depreciation
  7.   Credits, Losses, and Additional Taxes
  8.   Contributions to a Partnership
  9.   Partnership Operations
  10.   Disposition of a Partner’s Interest
  11.   Corporations
  12.   Corporate Formation
  13.   Corporate Income and Losses
  14.   Corporate Deductions
  15.   Corporate Distributions
  16.   Corporate Liquidations and Redemptions
  17.   S Corporations
  18.   Decedent, Estate, and Trust Income Tax    Returns
  19.   Retirement Plans for Small Businesses
  20.   Exempt Organizations
Part 3:  Representation, Practices, and Procedures
  1.   Practice before the IRS
  2.   Tax Preparers and Penalties
  3.   Representation
  4.   The Collection Process
  5.   Examination of Returns and the Appeals Process
  6.   Tax Authority
  7.   Recordkeeping and Electronic Filing

Enrolled agents are individuals who have demonstrated special competence in tax matters and professional ethics and have been enrolled to practice before the IRS as taxpayers’ agents or legal representatives. Practice before the IRS includes all matters connected with presentations to the IRS relating to a client’s rights, privileges, and liabilities under laws or regulations administered by the IRS. Such presentations include

  1. Preparing and filing documents;
  2. Communicating with the IRS; and
  3. Representing a client at conferences, hearings, and meetings.

The examination covers federal taxation and tax accounting and the use of tax return forms for individuals, partnerships, corporations, trusts, estates, and gifts. It also covers ethical considerations and procedural requirements.

The exam consists of three parts, with 3.5 hours for each part (4 hours total seat time to include tutorial and survey). The questions on the examination are directed toward the tasks that enrolled agents must perform to complete and file forms and tax returns and to represent taxpayers before the Internal Revenue Service. Each part of the examination consists of 100 multiple-choice questions and covers the following tax topics:

Part 1
-
Individuals
Part 2
-
Businesses
Part 3
-
Representation, Practices, and Procedures

Purchase Gleim EA Review System - www.gleim.com/ea

 

THE CPA EXAM

LISTING OF CPA REVIEW STUDY UNITS
Business Environment and Concepts
Regulation
  1. Corporate Governance
  2. Microeconomics
  3. Macroeconomics
  4. Globalization
  5. Financial Risk Management
  6. Forecasting Analysis
  7. Corporate Capital Structure
  8. Working Capital
  9. Short-Term Financing and Capital Budgeting I
  10. Capital Budgeting II and Corporate Performance
  11. IT Roles, Systems, and Processing
  12. IT Software and Data Organization
  13. IT Networks and Electronic Commerce
  14. IT Security
  15. Strategic Planning and Budgeting Concepts
  16. Budget Components
  17. Performance Measurement and Process Management
  18. Costing Fundamentals
  19. Costing Techniques
  20. Costing Systems and Variance Analysis
  1. Ethics and Professional Responsibilities
  2. CPAs and the Law
  3. Individual Taxation and Gross Income
  4. Self Employment, Farming, and Adjustments
  5. Deductions from AGI, Credits, AMT, and Limitations
  6. Property Transactions
  7. Corporate Taxable Income
  8. Corporate Tax Computations
  9. Corporate Tax Special Topics
  10. S Corporations
  11. Partnerships and Exempt Organizations
  12. Estates, Trusts, and Wealth Transfer Taxes
  13. Federal Tax Legislation, Procedures, Planning, and Accounting
  14. Noncorporate Business Entities
  15. Corporations
  16. Agency and Regulation
  17. Contracts
  18. Sales and Secured Transactions
  19. Negotiable Instruments and Documents
  20. Debtor-Creditor Relationships
Auditing and Attestation
Financial Accounting and Reporting
  1. Engagement Responsibilities
  2. Professional Responsibilities
  3. Planning and Risk Assessment
  4. Strategic Planning Issues
  5. Internal Control Concepts and Information Technology
  6. Internal Control – Sales-Receivables-Cash Receipts Cycle
  7. Internal Control – Purchases, Payroll, and Other Cycles
  8. Responses to Assessed Risks
  9. Internal Control Communications and Reports
  10. Evidence – Objectives and Nature
  11. Evidence – The Sales-Receivables-Cash Cycle
  12. Evidence – The Purchases-Payables-Inventory Cycle
  13. Evidence – Other Assets, Liabilities, and Equities
  14. Evidence – Key Considerations
  15. Evidence – Sampling
  16. Reports – Opinions and Disclaimers
  17. Reports – Other Modifications
  18. Related Reporting Topics
  19. Review, Compilation, and Attestation Reports
  20. Governmental Audits
  1. The Financial Reporting Environment
  2. Financial Statements
  3. Statement of Cash Flows
  4. Income Statement Items
  5. Financial Statement Disclosure
  6. Cash and Investments
  7. Receivables
  8. Inventories
  9. Property, Plant, Equipment, and Depletable Resources
  10. Intangible Assets and Other Capitalization Issues
  11. Payables and Taxes
  12. Employee Benefits
  13. Noncurrent Liabilities
  14. Leases and Contingencies
  15. Equity
  16. Business Combinations and Consolidated Financial Reporting
  17. Derivatives, Hedging, and Other Topics
  18. Governmental Accounting
  19. Governmental Reporting
  20. Not-for-Profit Concepts

The CPA examination is designed to measure professional competence in auditing, business law, taxation, accounting, and related business topics, including

  1. The command of adequate technical knowledge
  2. The ability to apply such knowledge skillfully and with good judgment
  3. An understanding of professional responsibilities

Passing this exam validates and confirms your professional accounting education and requires your complete dedication and determination. The benefits include higher salary, increased confidence and competence, and recognition as a member of an elite group of professionals.

Purchase Gleim CPA Review System - www.gleim.com/cpa

The CPA exam is administered the first 2 months of every calendar quarter (i.e., January/February, April/May, July/August, and October/November) at Prometric testing centers throughout the U.S. and at select international locations. The exam is divided into four sections:  Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). Each section consists of a series of testlets.

You will have three multiple-choice testlets followed by one task-based simulation testlet in Auditing, Financial, and Regulation. For Business, you will have three testlets of multiple choice and one testlet with written communication essays.

  1. Multiple-choice testlets:  There will be three groups of 30 multiple-choice questions given as testlets on Auditing and Financial. On Business and Regulation, there will be 24 instead of 30 multiple-choice questions.
  2. Task-based simulation testlets:  Auditing, Financial, and Regulation will each have six or seven task-based simulations. These simulations will account for 40% of the grade in each exam section.
  3. Written communication testlets:  Business will have one written communication testlet with three essay questions (two graded, one pretest). These questions will account for 15% of the total grade on this section.

 

STEPS TO PASSING CERTIFICATION EXAMS

  1. Become knowledgeable about the exam you will be taking, and determine which part you will take first.
  2. Purchase the complete Gleim Review System to thoroughly prepare yourself. Commit to systematic preparation for the exam as described in our review materials.
  3. Communicate with your Personal Counselor to design a study plan that meets your needs. Call (888) 874-5346 or email personalcounselor@gleim.com.
  4. Apply for membership in the exam’s governing body and/or in the certification program as required.
  5. Register online to take the desired part of the exam.
  6. Schedule your test with the testing center in the location of your choice.
  7. Work systematically through each study unit in the Gleim Review System.
  8. Sit for and PASS the exam while you are in control. Gleim guarantees success!
  9. Email or call Gleim with your comments on our study materials and how well they prepared you for the exam.
  10. Enjoy your career, pursue multiple certifications (CIA, CPA, EA, CMA, etc.), and recommend Gleim to others who are also taking these exams. Stay up-to-date on your Continuing Professional Education requirements with Gleim CPE.
 
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