THE CPA EXAMINATION: AN OVERVIEW AND PREPARATION INTRODUCTION
1.1  Follow These Steps to PASS the Exam
1.2  Purpose of the Exam
1.3  American Institute of Certified Public Accountants (AICPA)
1.4  National Association of State Boards of Accountancy (NASBA)
1.5  State Boards of Accountancy
1.6  CPA Exam for International Candidates
1.7  Subject Matter -- AICPA and Gleim
1.8  When to Take the Exam
1.9  Where to Take the Exam
1.10  Pass Rates
1.11  Exam Costs
1.12  The Gleim System for CPA Success
1.13  Steps to Become a CPA

CBT-e Exam
Gleim Section Title
Auditing
Business
Financial
Regulation
AICPA Formal Title
Auditing & Attestation
Business Environment & Concepts
Financial Accounting & Reporting
Regulation
Acronym
AUD
BEC
FAR
REG
Exam Length
4 hours
3 hours
4 hours
3 hours
Testlets:
 
Multiple-Choice
3, 30 questions each
3, 24 questions each
3, 30 questions each
3, 24 questions each
Task-Based Simulations
1 with 7 TBS
0
1 with 7 TBS
1 with 6 TBS
Written Communications  
0
3
0
0

This study unit will give you an overview of the CPA exam and outline our suggested method of preparation.

1.1  FOLLOW THESE STEPS TO PASS THE EXAM

  1. Scan this Gleim How to Pass the CPA Exam: A System for Success and note where to revisit later in your studying process to obtain a deeper understanding of the CPA exam and how to prepare for it.
    1. How to Pass the CPA Exam: A System for Success has seven study units:

      Study Unit 1: The CPA Examination: An Overview and Preparation Introduction

      Study Unit 2: AICPA Content Specification Outlines and Skill Specification Outlines

      Study Unit 3: Content Preparation, Test Administration, and Performance Grading

      Study Unit 4: Multiple-Choice Questions

      Study Unit 5: Task-Based Simulations and Written Communications

      Study Unit 6: Preparing to Pass the CPA Exam

      Study Unit 7: How to Take the CPA Exam

    2. Additionally, the AICPA requires that all candidates review the tutorial and sample tests at www.aicpa.org.
  2. BEFORE you begin studying, you may wish to take a Diagnostic Quiz at www.gleim.com/QuizCPA or use our Gleim Diagnostic Quiz App for iPhone, iPod Touch, and Android.
    1. The Diagnostic Quiz includes a representative sample of 40 multiple-choice questions and can help determine which section of the exam you want to take first and/or how much time you need to devote to studying particular topic areas.
    2. When you are finished, you can access a Review Session and consult with a Personal Counselor to better focus your review on any areas in which you have less confidence.
  3. Follow the steps outlined in Study Unit 6, Subunit 7, “How to Use the Gleim Review System.” This is the study plan that our most successful candidates adhere to. Study until you have reached your desired proficiency level (e.g., 75%) for each study unit.
    1. As you proceed, be sure to check any Updates that may have been released.
      1. All online components will be updated automatically.
      2. Updates for the printed book can be viewed at www.gleim.com/CPAupdate, or you can have them emailed to you.
    2. Review this How to Pass the CPA Exam: A System for Success and become completely comfortable with what will be expected from you on test day.
  4. Shortly before your test date, take an Exam Rehearsal (complimentary with the CPA Review System) at www.gleim.com/RehearseCPA.
    1. The Gleim Exam Rehearsal is designed to emulate the CPA test-taking experience at Prometric.
    2. This timed and scored exam tests you not only on the content you have studied, but also on the question-answering and time-management techniques you have learned throughout the Gleim study process.
    3. When you have completed the exam, consult with your Personal Counselor to discuss where you should focus your review during the final days before your exam (question-answering techniques, time management, specific content areas, etc.).
  5. Take and PASS your selected section of the CPA exam!
    1. When you have completed the exam, please contact Gleim at www.gleim.com/feedbackCPA with your suggestions, comments, and corrections. We want to know how well we prepared you for your testing experience.
 
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1.2  PURPOSE OF THE EXAM

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.

 
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1.3  AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS (AICPA)

The AICPA is the national professional organization of CPAs in particular and professional accountants in general. The AICPA determines/prepares the content and scoring of the Uniform Certified Public Accountant Examination. Study Unit 3, Subunit 3, contains more information.

Obtain AICPA Student Affiliate membership for FREE! College graduates who have not yet passed the CPA exam may obtain a discounted CPA Candidate membership for $50. Information regarding all memberships can be obtained from the AICPA website at www.aicpa.org.

 
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1.4  NATIONAL ASSOCIATION OF STATE BOARDS OF ACCOUNTANCY (NASBA)

NASBA’s mission is to enhance the effectiveness of state boards of accountancy in meeting their regulatory responsibilities. It is also a major component of the computerized CPA exam. As part of the exam application process, NASBA issues a Notice To Schedule (NTS) to each CPA candidate after completion of an application. While applications may be made and forwarded to individual State Boards, NASBA handles some, or all, of the application process for most State Boards. NASBA also receives all CPA scores from the AICPA and records them in their National Candidate Database before forwarding the grades to individual State Boards, which ultimately send the grades to individual CPA candidates.

 
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1.5  STATE BOARDS OF ACCOUNTANCY

All 50 states (and the District of Columbia, Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands) have an administrative agency that administers the laws and rules that regulate the practice of public accounting. Each of these 55 jurisdictions contracts with the AICPA to use the AICPA’s Uniform CPA Examination.

The rules and procedures for applying to take the exam and becoming licensed to practice public accounting vary by jurisdiction. Accordingly, you should contact your state board for a CPA exam application form. With the form, you will receive that board’s rules, regulations, and directions to you as a CPA candidate.

Visit our website at www.gleim.com/stateboards to access up-to-date State Board CPA requirements. You can find the state boards’ contact information at www.nasba.org.

 
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1.6  CPA EXAM FOR INTERNATIONAL CANDIDATES

August of 2011 was the inaugural offering of the Uniform CPA Examination outside the U.S. The international exam is offered only in English, has the same licensure requirements, and is the same as the current U.S. exam. The international exam is administered during the same testing windows as for domestic test-takers (i.e., Jan/Feb, April/May, July/Aug, and Oct/Nov), and international exam scores will be released on the same timeline as domestic scores. In addition to passing the exam, international candidates must meet educational and experience requirements.

International testing is available in Brazil, Japan, Bahrain, Kuwait, Lebanon, and the UAE. A candidate’s residency status determines his or her testing center eligibility. For example, a citizen or permanent resident of Argentina may take the exam in either the U.S. or Brazil. To see where they can sit for the exam, candidates should consult the International Testing Center Eligibility Table at www.nasba.org/exams/internationalexam/.

The jurisdictions through which candidates can apply to take the CPA exam in an international location can also be found at the NASBA website listed above. Prospective candidates must select the U.S. jurisdiction (i.e., a state board of accountancy) to which they will apply, contact the board of accountancy in that jurisdiction to obtain application materials, and submit the completed applications and required fees as instructed. After receiving the NTS, candidates may then register to take the examination in an international location through the NASBA website.

 
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1.7  SUBJECT MATTER -- AICPA AND GLEIM

The AICPA publishes Content Specification Outlines (CSOs), which outline the subject matter tested on the CPA exam. The CSOs have three levels: areas, groups, and topics.

I.  Area

A.  Group

1.  Topic

The CSOs for each of the four sections of the CPA exam are presented verbatim in Study Unit 2. We have also provided cross-references to the study units and subunits in the Gleim materials that correspond to the CSOs’ coverage.

The listing below contains the CSO areas covered by each section of the CPA exam with the AICPA percentage weighting for each CSO area. NOTE: The AICPA provides ranges, e.g., 17 to 23%. We averaged each range to a single number, e.g., 20%.

Auditing and Attestation
I.
Engagement Acceptance and Understanding the Assignment
14%
II.
Understanding the Entity and Its Environment (including Internal Control)
18%
III.
Performing Audit Procedures and Evaluating Evidence
18%
IV.
Evaluating Audit Findings, Communications, and Reporting
18%
V.
Accounting and Review Services Engagements
14%
VI.
Professional Responsibilities
18%
100%
Business Environment and Concepts
I.
Corporate Governance
18%
II.
Economic Concepts and Analysis
18%
III.
Financial Management
21%
IV.
Information Systems and Communications
17%
V.
Strategic Planning
12%
VI.
Operations Management
14%
100%

Financial Accounting and Reporting
I.
Conceptual Framework, Standards, Standard Setting, and Presentation of Financial Statements
20%
II.
Financial Statement Accounts: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures
30%
III.
Specific Transactions, Events and Disclosures: Recognition, Measurement, Valuation, Calculation, Presentation, and Disclosures
30%
IV.
Governmental Accounting and Reporting
10%
V.
Not-for-Profit (Nongovernmental) Accounting and Reporting
10%
100%
Regulation
I.

Ethics, Professional, and Legal Responsibilities

17%
II.
Business Law
19%
III.

Federal Tax Process, Procedures, Accounting, and Planning

13%
IV.

Federal Taxation of Property Transactions

14%
V.
Federal Taxation of Individuals
16%
VI.
Federal Taxation of Entities
21%
100%

Your authors have divided the overall task of preparing for the CPA exam into 20 study units for each section of the exam. As you will see in the Study Unit 2 cross-references, these study units conform to (or parallel) the AICPA CSOs. Note that the scope of most AICPA areas is broad, resulting in coverage by more than one Gleim study unit. Each Gleim CPA Review book has AICPA CSO/Gleim study unit cross-references listed in an appendix so that you are assured of being completely prepared to PASS.

 
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1.8  WHEN TO TAKE THE EXAM

The CPA exam should be taken immediately after graduation (or while in the last semester of school, if permitted) while your education is still fresh. If you take the exam before taking all relevant accounting and business law courses, you will have to study (rather than review) the relevant subject matter. Courses relevant to the CPA exam include

  1. Intermediate Financial Accounting
  2. Advanced Financial Accounting
  3. Governmental and Not-for-Profit Accounting (may be part of Advanced Financial Accounting)
  4. Economics and Finance
  1. Federal Tax: Individual, Partnership, Corporate, and Estate & Gift
  2. Auditing
  3. Accounting (Information) Systems
  4. Cost and Managerial Accounting
  5. Business Law

Out of the 55 U.S. jurisdictions, 54 have implemented the “150-hour rule,” which requires a bachelor’s degree plus 30 hours to be certified. Only the U.S. Virgin Islands have not passed this requirement. At the time of publication of the 2015 edition, the 150-hour rule is effective for all jurisdictions except Colorado. It becomes effective in Colorado on July 1, 2015.

Thirty-five of the states and jurisdictions that have implemented the 150-hour rule allow candidates to sit for the exam before completing 150 hours:

Alaska
Florida
Maine
New Jersey
Utah
Arizona
Georgia
Maryland
New Mexico
Vermont
Arkansas
Guam
Massachusetts
New York
Virgin Islands*
California
Hawaii
Michigan
North Carolina
Virginia
Colorado
Idaho
Minnesota*
Pennsylvania**
Washington, DC
Connecticut
Iowa
Montana
Rhode Island
West Virginia
Delaware
Kentucky
New Hampshire
South Carolina
Wisconsin

* Requires residency or employment in this jurisdiction to take the exam there.

** Pennsylvania is still an optional 150-hour state but requires 150 hours for licensure.

If you have already graduated and have not signed up to take the CPA exam, do so as soon as possible and start studying.

 
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1.9  WHERE TO TAKE THE EXAM

An important consideration in deciding where to take the exam is continuing professional education (CPE) requirements. Most state boards require CPE to renew a license to practice. Many accountants take the CPA examination, obtain the experience necessary to become licensed to practice public accounting, subsequently leave public accounting, and do not maintain their CPE requirements. If you are not going to practice public accounting or do not need a license to practice public accounting, you may wish to sit for the CPA exam in a state that has a CPA certificate separate from its license to practice and where CPE requirements apply only to the license to practice.

Seven jurisdictions (Alabama, Connecticut, Hawaii, Kansas, Montana, Nebraska, and Oklahoma) issue CPA certificates that are separate from the license to practice. Some of these states do not require public accounting experience to receive the CPA certificate, do not require CPE of their CPA certificate holders, and/or do not require residency to sit for the CPA exam. Contact the individual state board for more information.

Go to www.gleim.com/states to access requirements for each Board of Accountancy. Then, call or check the website of the boards for those states in which you may want to be certified. Communicate your intentions and confirm your expectations in writing, i.e., separate CPA certificate, no experience required for CPA certificate, residency not required, CPE not required of certificate holders, etc.

 
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1.10  PASS RATES

Pass Rates on the CPA Exam*
Candidates
 
2014
 
2012
2013
(Q1 and Q2)**
 
AUD
46.9
45.9
48.3
BEC
52.8
55.8
55.9
FAR
48.0
48.3
46.0
REG
42.2
48.5
50.5

*Both domestic and international pass rates are included.

**Pass rates for Q3 and Q4 had not yet been released at time of printing.

For more recent pass rates, check our website at www.gleim.com/CPAPassRates.

The implication of these pass rates for you as a CPA candidate is that you have to be, on average, in the top 45% of all candidates to pass. A major difference among CPA candidates is their preparation program. You have access to the best CPA review material; it is up to you to use it. Conversely, if you do not apply the suggestions in How to Pass the CPA Exam: A System for Success, you will be at a disadvantage to the tens of thousands of candidates who pass with Gleim. Even if you are enrolled in a review course that uses other manuals, you will benefit with the Gleim Premium CPA Review System.

 
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1.11  EXAM COSTS

Cost estimates, which vary from state to state, appear below. Some states offer lower fees if you apply for all four sections at the same time. However, note that in most states, your NTS expires after 6 months. You should only apply for those sections you plan to take within the next 6 months. To determine your current State Board fee, see www.gleim.com/states.

Auditing
Business
Financial
Regulation
TOTAL
NASBA
$  18.00
$  18.00
$  18.00
$  18.00
$  72.00
AICPA
90.00
90.00
90.00
90.00
360.00
Prometric
82.35
63.25
82.35
63.25
291.20
Picture Fee
5.95
5.95
5.95
5.95
23.80
Subtotal
$196.30
$177.20
$196.30
$177.20
$747.00
State Board Fees
??
??
??
??
??
Total Costs
??
??
??
??
??
 
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1.12  THE GLEIM SYSTEM FOR CPA SUCCESS

The following is an abbreviated description of the information that is covered throughout the rest of this How to Pass the CPA Exam: A System for Success.

The Preparation Process -- In order to be successful on examinations, you need to

  1. Become familiar with the exam process, including the exam’s purpose, coverage, preparation methods, format, administration, grading, and pass rates
  2. Conceptualize the subject matter tested
  3. Perfect your question-answering techniques
  4. Plan and practice exam execution
  5. Develop the confidence you need to succeed!

 
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1.13  STEPS TO BECOME A CPA

Once you have reviewed all of the information in Subunits 1.1 through 1.12, you are ready to begin taking the steps to become a CPA. Use the checkpoints below to keep yourself on track and to make sure you do not omit any important steps. If you would like, check off the boxes as you progress to give yourself a sense of accomplishment regarding the huge undertaking you have embarked upon.

1
Become knowledgeable about the exam and decide which section you will take first.
2
Purchase the Gleim Premium CPA Review System to thoroughly prepare for the CPA exam. Commit to our systematic preparation for the exam as described in our review materials, including How to Pass the CPA Exam: A System for Success.
3
Set up your Study Planner in Gleim Online to design a personalized study schedule that meets your needs. Then, communicate with your Personal Counselor to ensure you are studying effectively. Call (888) 874-5346 or email personalcounselor@gleim.com.
4
Determine the board of accountancy (i.e., state) to which you will apply to sit for the CPA exam (discussed in Subunit 1.9).
5
Obtain, complete, and submit your application form, including transcripts, fees, etc., to your State Board or NASBA. You should receive a Notice To Schedule (NTS) from NASBA in 4 to 6 weeks.
  1. A NTS is valid for a specific period established by the boards of accountancy. Only apply for the section(s) you will sit for during this time as you will forfeit your fees for sections not taken.
6
Schedule your test with Prometric (online or by calling your local Prometric testing site). Schedule 30 to 45 days before the date you plan to sit for the exam.
7
Work systematically through the study units in each section of the Gleim Premium CPA Review System (Auditing, Business, Financial, and Regulation).
8
Sit for and PASS the CPA exam while you are in control, as described in Study Unit 6. Gleim Guarantees Success!
9
Enjoy your career and pursue multiple certifications (CIA, CMA, EA, etc.), recommend Gleim to others who are also taking these exams, and stay up-to-date on your continuing professional education with Gleim CPE. Additional certifications are appreciably easier to earn after recently passing the CPA exam, and they open many other doors of opportunity.
 
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