CPA Hot Topic and Breaking News—Exam Changes for 2017

The CPA exam is going to have many changes in 2017. The changes culminate in an exam that is more difficult with questions that test candidates at higher levels of knowledge.

In the field of education, there are multiple levels of knowledge (listed from lowest to highest): Remembering, Understanding, Application, Analysis, Evaluation, and Creation. The current CPA exam tests at the Remembering, Understanding, and Application levels of knowledge. Beginning in 2017, the CPA exam will also test candidates at the Analysis and Evaluation levels of knowledge via new, more difficult multiple-choice and simulation questions.

So, as a CPA candidate, you’re probably wondering what these fancy educational terms potentially mean to you. To put it into perspective, we’ll demonstrate the levels of knowledge with accounting examples. The remembering level (the lowest level) is the ability to repeat back what one has been taught. For example, remembering that the IRS allows for a building to be depreciated over 39.5 years demonstrates the remembering level of knowledge.

At the next level, understanding, the CPA candidate should be able to not only repeat what has been taught but also comprehend the principles and theory behind the knowledge. For example, being able to explain to a client the mechanics (or journal entries) of depreciating a building over 39.5 years demonstrates the understanding level of knowledge.

The application level is where a CPA candidate not only understands the theory, but also can apply what has been learned and perform in accordance with that knowledge. This is the level tested by the current task-based simulations. The ability to make a journal entry for depreciating a building and compile the effects on the balance sheet would demonstrate the application level of knowledge.

The next two levels of knowledge, analysis and evaluation, can ultimately be combined into one basic idea: A CPA candidate will need to be able to associate various learned elements with other segments or blocks of learning or accomplishments. Questions that test a CPA candidate’s abilities to reconcile, conclude, or evaluate scenarios are evaluating the highest levels of knowledge. For example, uncovering an understatement of ending inventory during an audit should make a CPA candidate conclude the client may be trying to understate profits by overstating cost of goods sold and thereby defer tax liabilities to a later period. The auditor should also be concerned that the client may try to understate profits in other ways, such as by not recognizing sales or overstating other expenses in the current period. Thus, further auditing in these areas may be warranted. This type of inter-correlating information and knowledge demonstrates these higher levels of knowledge. I refer to these higher levels of knowledge as being able to answer the “so what” questions. If you can explain why something is important or not important, then you have reached the analysis and evaluation levels of knowledge.

Remember that these advanced cognitive skills are not currently tested on the CPA exam. Beginning in 2017, though, all 4 sections of the CPA exam will test at the analysis level, and the Auditing & Attestation section will also have questions testing at the evaluation level. Therefore, this is a really big step for the AICPA and it demonstrates that the questions on the CPA exam will become much more difficult.


Through 2016YesYesYesNoNoNo

Remembering Understanding Application Analysis Evaluation Creation
Beginning 2017 Yes Yes Yes Yes Yes (AUD only) No

Besides the changes in difficulty discussed above, the other significant changes slated to be released in 2017 are (1) the exam will be longer, (2) there will be task-based simulations in BEC in addition to written communications, and (3) there will be a new type of simulation called a Document Review Simulation. Frankly, all of these changes will likely be easier for candidates to contend with than the new questions testing higher levels of knowledge.

Every CPA candidate and potential candidate should attempt to get the exam behind them before the CPA exam changes in 2017. However, if you don’t have time to take the exam before it changes, rest assured that Gleim will have materials that can help you pass efficiently.

Garrett Gleim

Gleim CPA Review