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
Exam Section
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.

Candidate Alert! Major Changes to CPA Exam in 2017
The CPA exam will significantly change in 2017. The changes will result in a more difficult exam, presenting questions that test candidates at higher levels of knowledge–which is exactly how Gleim has been preparing candidates all along. Nevertheless, Gleim advises you to pass all four sections before these changes take effect.
Gleim will release a thoroughly updated CPA Review System with plenty of time for you to fully prepare for the new exam, should you not have time to pass it before then.
Overview of Changes*
  1. Multiple-Choice Questions and Task-Based Simulations will become more difficult. Candidates will be tested on higher-order cognitive skills, such as critical thinking, problem solving, analytical ability, and professional skepticism.
  2. All sections will include Task-Based Simulations.
You can count on Gleim to provide you with all of the latest information on these 2017 exam changes as it becomes available. Learn more now at www.gleim.com/cpa2017.
*Note that Gleim had originally published this section with the Document Review Simulations (DRS) listed as one of the changes coming in 2017. However, the AICPA has since announced that the DRS will appear on CPA exams beginning July 1, 2016.

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.
    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 (included with the CPA Review Systems).
    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.

 
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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.

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. To see where they can sit for the exam, candidates should consult the NASBA website.

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.

Requirements for education in order to sit for the CPA exam vary by state or jurisdiction; some states require only a minimum of 120 credit hours in order to sit. Check with your state or jurisdiction board for more information.

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.

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
 
2013
2014
2015
 
AUD
45.9
46.4
47.3
BEC
55.8
55.5
56.5
FAR
48.3
47.6
46.8
REG
48.5
49.4
49.4

*Both domestic and international pass rates are included.

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

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 the total cost, which includes application and administration fees in addition to examination fees, refer to your jurisdiction’s website and application materials.

 
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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 your online course 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 and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation).
8
Sit for and PASS the CPA exam.
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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