CPA Exam Structure

Structure of the CPA exam

For anyone wanting to become a CPA, the CPA Exam is an unavoidable and sizable challenge. The exam is challenging not only because of how much time, money, and effort it takes to pass, but also because it consists of many different parts. However, you can simplify the process of passing by getting a strong grasp on the overall structure of the CPA Exam.

Table of Contents

Exam Purpose

The CPA Exam is an imposing trial for CPA candidates because it serves a significant purpose. The CPA Examination is designed to measure professional competence in auditing, business law, taxation, and accounting. It also tests related business skills to assess candidates’ knowledge, the ability to apply such knowledge skillfully and with good judgment, and a thorough understanding of professional responsibilities and ethics. Passing this exam validates and confirms your professional accounting education and your competence to practice in a highly specialized field.

CPA Exam Sections

The CPA Exam features four sections:

Candidates must sit for and pass each of these four sections in order to pass the CPA Exam. Total testing time for each section is four hours.

Topics of CPA Exam Sections

The four sections of the CPA Exam cover different areas of accounting.

The CPA Exam blueprints reveal that Auditing and Attestation focuses on the following accounting topics in four different areas.

  • Area I – Ethics, Professional Responsibilities, and General Principles (15-25%)
  • Area II – Assessing Risk and Developing a Planned Response (20-30%)
  • Area III – Performing Further Procedures and Obtaining Evidence (30-40%)
  • Area IV – Forming Conclusions and Reporting (5-15%)

The blueprints also introduce the topics of Business Environment and Concepts.

  • Area I – Corporate Governance (17-27%)
  • Area II – Economic Concepts and Analysis (17-27%)
  • Area III – Financial Management (11-21%)
  • Area IV – Information Technology (15-25%)
  • Area V – Operations Management (15-25%)

According to the blueprints, Financial Accounting and Regulation involves the following topics:

  • Area I – Conceptual Framework, Standard-Setting, and Financial Reporting (25-35%)
  • Area II – Select Financial Statement Accounts (30-40%)
  • Area III – Select Transactions (20-30%)
  • Area IV – State and Local Governments (5-15%)

Finally, the blueprints specify these topics for Regulation:

  • Area I – Ethics, Professional Responsibilities, and Federal Tax Procedures (10-20%)
  • Area II – Business Law (10-20%)
  • Area III – Federal Taxation of Property Transactions (12-22%)
  • Area IV – Federal Taxation of Individuals (15-25%)
  • Area V – Federal Taxation of Entities (28-38%)

Content of CPA Exam Sections

Along with offering a summary of the topics of each CPA Exam section, the CPA Exam blueprints take a more detailed look at the content of the sections. The overviews provided here are abridged, but replicates of the overviews included in the CPA Exam blueprints appear at the end of this article.

Subject Matter for Auditing and Attestation (AUD)

The AUD section will test engagements in accordance with professional standards and/or regulations by the

  • American Institute of CPAs (AICPA),
  • Public Company Accounting Oversight Board (PCAOB),\
  • U.S. Government Accountability Office (GAO),
  • Office of Management and Budget (OMB), and
  • U.S. Department of Labor (DOL).

Candidates are expected to demonstrate knowledge and skills related to

  • Audits of issuer and nonissuer entities;
  • Attestation engagements for issuer and nonissuer entities;
  • Preparation, compilation, and review engagements for nonissuer entities; and
  • Reviews of interim financial information for issuer entities.

The following general topics will be tested:

  • Nature and scope of engagements: (1) audit engagements and (2) non-audit engagements
  • Ethics, independence, and professional conduct
  • Terms of engagement
  • Engagement documentation
  • Communication requirements
  • Quality control
  • Planning the engagement
  • Understanding (1) an entity and its environment and (2) internal controls over financial reporting
  • Assessing risks and planning further procedures
  • Performing engagement procedures and concluding on the sufficiency and appropriateness of evidence obtained
  • Testing the operating effectiveness of internal controls
  • Performing tests of compliance and agreed-upon procedures
  • Evaluating and responding to misstatements due to error or fraud and to internal control deficiencies
  • Obtaining management representations
  • Performing procedures to identify and respond to subsequent events and subsequently discovered facts
  • Identifying the factors that should be considered when
    • Reporting on auditing, attestation, compilation, review, or compliance engagements
    • Performing preparation engagements
    • Assisting in the preparation of reports for these engagements

Subject Matter for Business Environment and Concepts (BEC)

The BEC section tests knowledge and skills necessary to demonstrate an understanding of the general business environment and business concepts in performing audit, attest, accounting and review services, financial reporting, tax preparation, and other professional responsibilities as certified public accountants.

To demonstrate the knowledge and skills associated with the business environment and concepts, the following general topics will be tested:

  • Internal control frameworks and enterprise risk management frameworks
    • Purpose and objectives
    • Components and principles
  • Key corporate governance provisions of the Sarbanes-Oxley Act of 2002
  • Impact of business cycles on industry or business operation
  • Market influences on the business environment
  • Transactions
    • Business reasons
    • Underlying economic substance
    • Accounting implications
  • Factors influencing a company’s capital structure
  • Calculation of metrics associated with the components of working capital
  • Impact of business decisions on working capital
  • Commonly used financial valuation and decision models
  • Governance of information technology operations
  • Information systems used to process and accumulate data and provide monitoring and financial reporting information
  • Appropriate segregation of duties, authorization levels, and data security
  • Inherent risks in disaster recovery and business continuity plans
  • Business operation and use of quality control and performance measures
  • Cost accounting concepts and variance analysis techniques
  • Budgeting and forecasting techniques

Subject Matter for Financial Accounting and Regulation (FAR)

Candidates are expected to demonstrate knowledge and skills related to the financial accounting and reporting frameworks used by business entities (public and nonpublic), not-for-profit entities, and state and local government entities. The FAR section will test standards and regulations issued by the Financial Accounting Standards Board (FASB), the U.S. Securities and Exchange Commission (U.S. SEC), the American Institute of Certified Public Accountants (AICPA), the Governmental Accounting Standards Board (GASB), and the International Accounting Standards Board (IASB).

To demonstrate the knowledge and skills associated with financial accounting and reporting, the following general topics will be tested:

  • FASB
    • Conceptual framework
    • Standards setting process
    • Accounting Standards Codification
      • General-purpose financial statements applicable to for-profit entities, not-for-profit entities, and employee benefit plans
      • Disclosures specific to public companies
      • Select financial statement accounts: for-profit and not-for-profit
      • Select transactions: for-profit and not-for-profit
  • IASB standards
    • Select transactions: differences between IFRS and U.S. GAAP or U.S. SEC
    • Interim, annual, and periodic filing requirements for U.S. registrants
  • AICPA Codification of Statements on Auditing Standards
    • Financial statements prepared under special purpose frameworks
  • GASB
    • Conceptual framework
    • Requirements for state and local governments

Subject Matter for Regulation (REG)

Candidates are expected to demonstrate knowledge and skills related to

  • Federal taxation,
  • Ethics and professional responsibilities related to tax practice, and
  • Business law.

The following general topics will be tested:

  • Ethics and responsibilities in tax practice
  • Licensing and disciplinary systems
  • Federal tax procedures
    • Income taxation
      • Property transactions
      • Estate and gift taxation
      • Tax preparation and planning for individuals
      • Tax preparation and planning for entities, including sole proprietorships, partnerships, limited liability companies, C corporations, S corporations, joint ventures, trusts, estates, and tax-exempt organizations
  • Legal duties and responsibilities
  • Business law
    • Legal implications of business transactions
    • Agency, contracts, debtor-creditor relationships, government regulation of business, and business structure
    • Federal and widely adopted uniform state laws

Levels of Knowledge

In the development of the CPA Exam, the AICPA has identified 600 representative tasks critical to the role of a newly licensed CPA to protect the public interest. The CPA Exam Blueprints state that, “These representative tasks combine both the applicable content knowledge and skills required in the context of the work of a newly licensed CPA.” Considering the nature of the task, the AICPA has assigned one of the following four skill levels to each of the representative tasks:

Higher Order Skill Levels

Evaluation The examination or assessment of problems and use of judgment to draw conclusions.
Analysis The examination and study of the interrelationships of separate areas in order to identify causes and find evidence to support inferences.
Application The use or demonstration of knowledge, concepts, or techniques.
Remembering and Understanding The perception and comprehension of the significance of an area utilizing knowledge gained.

This table orders the levels from highest amount of skill required to lowest. Therefore, Remembering and Understanding requires the lowest amount of skill, while Evaluation requires the highest amount.

Each section of the CPA Exam assesses the skill levels of candidates to varying degrees. This table shows the amount at which each exam section evaluates each skill level.

CPA Exam Skill Levels

Section

Remembering and Understanding

Application

Analysis

Evaluation

AUD

30-40%

30-40%

15-25%

5-15%

BEC

15-25%

50-60%*

20-30%

FAR

10-20%

50-60%

25-35%

REG

25-35%

35-45%

25-35%

*Includes written communication

Types of Questions

Each CPA Exam section is divided into five testlets. Each testlet is dedicated to a specific type of CPA Exam question.

  • Multiple-choice questions account for 50% of the total score in all four sections. Multiple-choice questions (MCQs) contain a stem (the question) and four answer choices (response items). One answer choice is correct and three answer choices (distractors) are incorrect or incomplete. Only one answer choice is the best response to the question stem.
  • Task-Based Simulations account for the other 50% for AUD, FAR, and REG and the another 35% for BEC. Task-Based Simulations are constructive response questions with information presented either with the question or in separate information tabs. Question responses may be in the form of entering amounts or formulas into a spreadsheet, choosing the correct answer from a list of answers in a pop-up box, completing accounting or tax forms, or reviewing and completing or correcting a draft of a document. The type of Task-Based Simulation that requires candidates to review a document using various resources is a Document Review Simulation. In the AUD, FAR, and REG exam sections, you will also have to complete a Research task, which requires you to research the relevant authoritative literature and cite the appropriate guidance as indicated. You will not have to complete a Research task in BEC.
  • Written Communication Tasks only appear in BEC and account for the final 15%. In a WC, you must write your response in the form of a business memo rather than choose your answer from a list of possible options or fill in a few words or numbers. The business memo you write must address the needs and concerns of the party designated in the provided scenario in the manner that a CPA in the field would do so.

The AICPA contracts with third parties to produce multiple-choice questions, Task-Based Simulations, and Written Communications. Exam questions are vetted and deemed in line with the psychometric qualities of question testlets and exam versions, which must grade and score each exam equitably on a comparative basis.

As part of the question-vetting process, non-graded pre-test questions are included among the scored operational questions within each testlet. You will not know which questions are pre-test and which are operational (nor should you care). You must answer every question as if it is a scoring opportunity.

Each section of the CPA Exam contains 12 pretest multiple-choice questions and 1 pretest Task-Based Simulation. BEC also contains 1 pretest written communication task.

Format of CPA Exam Sections

Each CPA Exam features five testlets, and depending on the section, these testlets present a particular number of MCQs, TBSs, and WCs.

CPA Exam Structure

Section

AUD

BEC

FAR

REG

Total MCQs

72

62

66

76

Testlet 1

36

31

33

38

Testlet 2

36

31

33

38

Scoring Weight

50%

50%

50%

50%

Total TBSs

8

4

8

8

Testlet 3

2

2

2

2

Testlet 4

3

2

3

3

Testlet 5

3

0

3

3

Scoring Weight

50%

35%

50%

50%

Total WCs

0

3

0

0

Testlet 5

0

3

0

0

Scoring Weight

N/A

15%

N/A

N/A

Total Testing Time

4 hours + 15 min break

4 hours + 15 min break

4 hours + 15 min break

4 hours + 15 min break

Exam Format

Passing the CPA Exam involves sitting for one exam section at a time. When sitting for a section of the CPA Exam, candidates will have four hours of total testing time. However, time spent at the testing site will be at least four and a half hours because the process of taking the exam involves a few preliminary and closing steps. Therefore, the format of the CPA Exam is as follows:

CPA Exam Format

Task

Welcome/Launch Code

Confidentiality /Section Information

First MCQ Testlet

Optional Break

Clock Runs

Second MCQ Testlet

Optional Break Clock Runs

First TBS Testlet

Standard-ized Break

Clock Stops

Second TBS Testlet

Optional Break Clock Runs

Third TBS Testlet

(WC in BEC)

Survey

Time

5 minutes

5 minutes

4 hours and 15 minutes

5 minutes

The standardized 15-minute break that candidates can take after the first and second TBS testlet will be available during each section of the CPA Exam. This break will be optional and will not count against testing time, but it will not be offered again, even if a candidate declines to use it. If candidates click the button on their computer screens that allow them to take the break, the exam clock will stop when the break begins and will restart after 15 minutes elapses, even if the candidate has not returned or started the second TBS testlet. Using the standardized break does not deny candidates the option to take other breaks between testlets, but these other breaks will count against testing time.

Benefits of Exam Emulation

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Overview of CPA Exam Section Content Areas

The CPA Exam blueprints report that the content of the different sections of the CPA Exam covers the following topics specifically.

Auditing and Attestation (AUD)

Ethics, Professional Responsibilities, and General Principles: 15-25%

  • Nature and scope of engagements
    • Audit engagements
    • Non-audit engagements
  • Ethics, independence, and professional conduct
  • Terms of engagement
  • Engagement documentation
  • Communication requirements
  • Quality control

Assessing Risk and Developing a Planned Response: 20-30%

  • Planning the engagement
  • Understanding an entity and its environment and understanding internal controls over financial reporting
  • Assessing risk and planning further procedures

Performing Further Procedures and Obtaining Evidence: 30-40%

  • Analytical procedures
  • Observation and inspection
  • Recalculation and reperformance
  • Testing the operating effectiveness of internal controls
  • Performing tests of compliance and agreed-upon procedures
  • Evaluating and responding to misstatements

Forming Conclusions and Reporting: 15-25%

  • Reporting on auditing
  • Reporting on attestation
  • Reporting on compliance
  • Performing preparation engagements
  • Assisting in the preparation of reports

Business Environment and Concepts (BEC)

Corporate Governance: 17-27%

  • Knowledge of the purposes and objectives of internal control frameworks and enterprise risk management frameworks
  • Identifying the components and principles of internal control frameworks and enterprise risk management frameworks
  • Identifying key corporate governance provisions of the Sarbanes-Oxley Act of 2002

Economic Concepts and Analysis: 17-27%

  • Knowledge of economic concepts and analysis that would demonstrate an understanding of the impact of business cycles on an entity’s industry or business operation
  • Determining market influences on the business environment, such as globalization
  • Determining business reasons for and the underlying economic substance of transactions and their accounting implications
  • Understanding financial risks and the methods for mitigating the impact of these risks

Financial Management: 11-21%

  • Assessing the factors influencing a company’s capital structure, such as risk, leverage, costs of capital, growth rate, profitability, asset structure, and loan covenants
  • Calculating metrics associated with the components of working capital, such as current ratio, quick ratio, cash conversion cycle, turnover ratios
  • Determining the impact of business decisions on working capital
  • Understanding commonly used financial valuation and decision models and applying that knowledge to assess assumptions, calculate the value of assets, and compare investment alternatives

Information Technology: 15-25%

  • Understanding the governance of the information technology operations of a business
  • Identifying information systems that are used to process and accumulate data as well as provide monitoring and financial reporting information
  • Determining whether there is appropriate segregation of duties, authorization levels, and data security in an organization to maintain the appropriate internal control structure
  • Identifying business and operational risks inherent in an entity’s disaster recovery/business continuity plan

Operations Management: 15-25%

  • Understanding business operations and use of quality control initiatives and performance measures to improve operations
  • Application of cost accounting concepts and use of variance analysis techniques
  • Utilizing budgeting and forecasting techniques to monitor progress and enhance accountability

Financial Accounting and Reporting (FAR)

Conceptual Framework, Standard-Setting, and Financial Reporting: 25-35%

  • General-purpose financial statements applicable to for-profit entities, not-for-profit entities, and employee benefit plans under the FASB Accounting Standards Codification
  • Disclosures specific to public companies including earnings per share and segment reporting under the FASB Accounting Standards Codification and the interim, annual, and periodic filing requirements for U.S. registrants in accordance with the rules of the U.S. SEC.
  • Financial statements prepared under specific purpose frameworks as described in AU-C Section 800 of the Codification of Statements on Auditing Standards

Select Financial Statement Accounts: 30-40%

  • Financial accounting and reporting requirements in the FASB Accounting Standards Codification applicable to select financial statement accounts
  • To the extent applicable, each group and topic in the area is eligible for testing within the context of both for-profit and not-for-profit entities. If significant accounting or reporting differences exist between for-profit and not-for-profit entities for a given group or topic, such differences are in representative not-for-profit tasks in the blueprints

Select Transactions: 20-30%

  • Financial accounting and reporting requirements for select transactions applicable to entities under the FASB Accounting Standards Codification and the IASB standards
  • To the extent applicable, each group and topic in the area is eligible for testing within the context of both for-profit and not-for-profit entities. If significant accounting or reporting differences exist between for-profit and not-for-profit entities, such differences are in representative not-for-profit tasks in the blueprint

State and Local Governments: 5-15%

  • GASB’s conceptual framework as well as the financial accounting and reporting requirements for state and local governments under the GASB standards and interpretations

Regulation (REG)

Ethics, Professional Responsibilities, and Federal Tax Procedures: 10-20%

  • Ethics and Responsibilities in Tax Practice – Requirements based on Treasury Department Circular 230 and the rules and regulations for tax return preparers
  • Licensing and Disciplinary Systems – Requirements of state boards of accountancy to obtain and maintain the CPA license
  • Federal Tax Procedures – Understanding federal tax processes and procedures, including appropriate disclosures, substantiation, penalties, and authoritative hierarchy
  • Legal Duties and Responsibilities – Understanding legal issues that affect the CPA and his or her practice

Business Law: 10-20%

  • Knowledge and understanding of the legal implications of business transactions, particularly as they relate to accounting, auditing, and financial reporting
  • Areas of agency, contracts, debtor-creditor relationships, government regulation of business, and business structure
    • The Uniform Commercial Code under the topics of contracts and debtor-creditor relationships
    • Nontax-related business structure content
  • Federal and widely adopted uniform state laws and references as identified in the References included in the CPA Exam blueprints

Federal Taxation of Property Transactions: 12-22%

  • Federal taxation of property transactions
  • Topics related to federal estate and gift taxation

Federal Taxation of Individuals: 15-22%

  • Federal income taxation of individuals from both a tax preparation and tax planning perspective

Federal Taxation of Entities: 28-38%

  • Federal taxation of entities including sole proprietorships, partnerships, limited liability companies, C corporations, S corporations, joint ventures, trusts, estates, and tax-exempt organizations, from both a tax preparation and tax planning perspective