The AICPA has released revisions to the CPA Exam blueprints that will become testable on January 1, 2019. Most of the changes are tweaks to align the Blueprints with new rules, regulations, and laws. Because all review providers take the Blueprints into account when developing their materials, there’s really nothing for you to worry about. At Gleim, our review products begin with the Blueprints so you can rest assured we cover them.
However, if you’re curious how this affects the exam, then we’ll walk you through the changes. Remember, just because a few Representative Tasks change doesn’t mean you’ll definitely see a question about them. In other words, the task changes for AUD and FAR are so small that most candidates wouldn’t notice a difference between taking either section in November 2018 or January 2019. And, for BEC, that is absolutely true because there are zero Blueprint changes to BEC. Changes to the REG Blueprints reflect the Tax Cuts and Jobs Act’s (now P.L. 115-97) drastic impact on U.S. tax law.
Below, we run through the changes by section for your convenience.
REG will go through some significant changes due to The Tax Cuts and Jobs Act (TCJA). Many of these new concepts introduced by the TCJA relate to corporations and are so new that most CPA candidates will be starting from square one when studying them.
There are changes to terminology in Groups, Topics, and Representative Tasks to remove terms and concepts made obsolete by the TCJA. Most notably, personal exemptions are no longer applicable, and the Alternative Minimum Tax is being removed from several tasks. The AICPA has also added Representative Tasks to existing Groups and Topics to cover new concepts from the TCJA.
These Representative Tasks were added:
- Calculate the qualifying business income (QBI) deduction for federal income tax purposes.
- Recall relationships meeting the definition of dependent for purposes of determining taxpayer filing status.
- Identify situations where the base erosion and anti-abuse tax (BEAT) would apply.
- Identify factors that would qualify income as Foreign Derived Intangible Income (FDII).
- Define the components of Global Intangible Low-Taxed Income (GILTI).
These Representative Tasks were removed:
- Recall relationships qualifying for personal exemptions reported on federal Form 1040 — U.S. Individual Income Tax Return.
- Identify the number of personal exemptions reported on federal Form 1040 — U.S. Individual Income Tax Return given a specific scenario.
- Calculate alternative minimum taxable income and alternative minimum tax for a C corporation.
These items were revised:
|2018 Blueprints||2019 Blueprints|
|Area III, Group B, Task 3||Compare the tax benefits of the Section 179 expense deduction vs. the regular tax depreciation deduction.||
|Compare the tax benefits of the different expensing options for tax depreciation for federal income tax purposes.|
|Area IV, Group F||Filing status and exemptions||
|Area V, Group C, Topic 1||Computations of taxable income (including alternative minimum taxable income), tax liability and allowable credits||
|Computations of taxable income, tax liability and allowable credits|
|Area V, Group C, Task 3||Calculate credits allowable as a reduction to regular and alternative minimum tax for a C corporation.||
|Calculate the credits allowable as a reduction of tax for a C corporation.|
|Area V, Group C, Task 7||Analyze the impact of potentially expiring net operating and/or capital losses during tax planning for a C corporation.||
|Analyze the impact of net operating and/or capital losses during tax planning for a C corporation.|
|Area V, Group E, Task 18||Calculate the revised basis of partnership assets when making a Section 754 election due to a transfer of a partnership interest for federal income tax purposes.||
|Calculate the revised basis of partnership assets due to a transfer of a partnership interest for federal income tax purposes.|
The new blueprints add more detail on the topic of professional skepticism, which is already a testable topic, to underscore the AICPA’s focus on this aspect of external auditing. The AICPA added this to the AUD section introduction of the CPA Exam Blueprints: “Professional skepticism reflects an iterative process that includes a questioning mind and a critical assessment of audit evidence. It is essential to the practice of public accounting and the work of newly licensed CPAs.”
The following Representative Tasks were added to the Blueprints:
- Understand the concepts of professional skepticism and professional judgment.
- Understand personal bias and other impediments to acting with professional skepticism, such as threats, incentives and judgment-making shortcuts.
- Investigate evidence that either contradicts or corroborates management explanations, expectations and other hypotheses throughout an audit or non-audit engagement.
- Analyze responses obtained during structured or informal interviews with management and others, including those in non-financial roles, and ask relevant and effective follow-up questions to understand their perspectives and motivations in an audit or non-audit engagement.
- Modify planned procedures based upon new information, such as inconsistent explanations, new evidence and environmental cues, to achieve audit objectives in an audit of an issuer or a nonissuer.
These revisions will not affect the scope of how professional skepticism is tested but rather clarify for candidates the nature of its testability on the exam.
The new Blueprints expand coverage for ASU 2016-14. There is one new Representative Task for not-for-profit accounting:
Adjust the notes to the financial statements to correct identified errors and omissions.
The BEC Blueprints have not changed. The last major changes to BEC occurred for the 18Q3 testing window and mostly reflected the revised COSO ERM framework that was testable earlier in the year.
Pass before the changes come!
While there are a few changes that make the exam easier—the absence of personal exemptions and the Alternative Minimum Tax—most of these changes make the exam more difficult, particularly for topics regarding corporations. Our number 1 piece of advice we can give to anyone taking the CPA Exam is to take REG in 2018, before these changes take place.
For the other three exam sections, you have two options: 1. pass all the Exam sections before January 1, 2019; or, 2. choose a review provider that will give you all the updated content you need to pass any time. Gleim is that review provider. Our streamlined update system allows you to pick which version of the exam you’ll sit for, and study according to those Blueprints. The Premium Gleim CPA Review System features our Access Until You Pass® Guarantee that will put your mind at ease. Learn more about Gleim CPA Review today.