What Are The Different Parts Of A CPA Exam?

Understanding the CPA Exam

The CPA exam is a test that accounting professionals take to become certified public accountants. Composed of four parts, this exam is designed to assess the accounting skills of candidates. Passing all four sections means that you are an expert in accounting and ready for higher-level responsibilities. 

Being a CPA professional is like having access to an elite club of accounting professionals where each CPA wears a cape of credibility and wields the mighty power of financial expertise. The CPA exam is your key to this club. It sets the stage for professional-level roles in accounting, auditing, tax, and finance.

Different parts of a CPA exam focus on a different skill or aspect of accounting. It is crucial to know about these sections to prepare effectively. They are as follows;

• Audit and Attestation (AUD)
• Business Environment and Concepts (BEC)
• Financial Accounting and Reporting (FAR)
• Regulation (REG)

CPA Exam Structure

Audit and Attestation (AUD)

Auditing and Attestation is an important section of a CPA exam. It tests your ability to scrutinize and evaluate auditing processes and assess your knowledge about the different responsibilities of auditors. Moreover, it also checks whether or not you can dissect and understand financial statements.

Topics Covered in AUD:

• Ethics: AUD covers the basic ethical principles for guiding auditors including matters concerning integrity, objectivity, and competence. Complete knowledge of these ethical principles is compulsory for making any ethical decision and to maintain public trust.

• Professional Responsibilities: It is also concerned with the professional responsibilities of auditors including their adherence to legal and regulatory requirements.

• Risk Assessment: AUD touches on the basic CPA exam content areas such as risk management in financial statements. It simply means that it checks your ability to evaluate financial statements.

• Audit Planning: It assesses your ability to develop an effective audit plan. You may be asked to design an audit procedure or examine the one given.

• Gathering Evidence: This involves collecting relevant evidence to support your audit conclusions.

• Reporting Findings: It may simply ask to present the audit report findings to the stakeholders. It will assess your knowledge about different types of audit reports.

Skills Tested in the AUD Section:

• Analytical Skills
• Problem-Solving
• Attention to Detail
• Communication

Tips on How to Approach This Section Effectively:

• Get to know the standards: Visit official government websites such as AICPA and PCAOB to get insights about auditing standards and ethical guidelines. A solid grasp of these concepts will help you in answering AUD questions.  

• Practice: Practice makes perfect, therefore, engage in rigorous exercises of practice questions. Having the pattern at the back of your head will help you glide through the questions easily.

• Understand the Framework: Make sure you have a clear understanding of how various auditing processes work and interact. 

• Use Study Resources: Go through review courses, textbooks, and online resources. Use credible sources particularly the ones that are about the AUD sections.

Business Environment and Concepts (BEC)

Among the CPA exam sections, the Business Environment and Concepts is a section that tests the knowledge of a candidate about the broader business environment in which accounting professionals engage. This section assesses your expertise in business concepts and economic principles.

Topics Covered in BEC:

• Corporate Governance: Corporate governance deals with the practices prevalent in an organization regarding decision-making, ensuring accountability, etc. This also includes the roles of boards of directors, audit committees, and senior management.

• Economic Principles: It covers all the economic factors affecting an organization such as demand and supply, market, and economic indicators.

• Budgeting and Forecasting: Based on the data and market trends, BEC assesses your knowledge about budgets and future forecasting of an organization.

• Financial Analysis: It involves questions about the financial health of a company such as analyzing financial statements or performance metrics. 

• IT Governance: It covers the fundamentals of business IT, and how information technology supports a business.

Skills Tested in the BEC Section:

• Analytical Skills
• Strategic Thinking
• Technical Proficiency
• Communication Skills

Tips on How to Approach This Section Effectively:

• Master the Core Concepts: You need to focus on the main business concepts mentioned in the guidelines of the BEC section. Make sure you have a firm understanding of these concepts.

• Practice Written Communication: Since BEC contains written communication tasks, pay attention to your writing as well. Start by writing business letters and emails. Make sure your writing is clear and formal.

• Use Diverse Materials: Don’t stick to just one type of study material. Engage with various textbooks, CPA review courses, and practice exams.

• Stay Updated on Business Trends: Staying updated with the latest business trends and how they affect organizations will give you valuable insights about solving the BEC section.

Financial Accounting and Reporting (FAR)

Among the CPA exam content areas, financial accounting and reporting, as the name suggests, deals with accounting principles and financial reporting. 

Key Topics Covered in FAR:

• Conceptual Framework: It looks at the principles of financial statements, and the qualitative characteristics of financial information.

• Balance Sheet Accounts: Balance sheet accounts are an integral component of a FAR. Questions concerning balance sheet accounts may ask you about assets, liabilities, equity, etc. 

• Income Statement Accounts: Questions regarding income statement accounts are concerned with revenues, expenses, gains, and losses.

• Governmental Accounting: Government accounting covers areas such as fund accounting and governmental reporting. 

Skills Tested in the FAR Section:

• Technical Proficiency
• Analytical Skills
• Detail Orientation
• Problem-Solving

Preparation Tips for FAR:

• Get to know the framework: A solid understanding of the FAR principles is essential for solving the questions with ease.

• Practice with Complex Simulations: If you’ve ever looked at the CPA exam overview, you might have noticed that the FAR section includes questions that check if you can apply accounting principles to real-world scenarios. Practice accordingly.

• Review Governmental Accounting: This area can be particularly challenging, therefore, check out the details regarding government accounting and reporting. 

Regulation (REG)

Regulation is crucial for anyone interested in extending a career in tax and business law. Following is the breakdown of section 4; regulation;

Topics Covered in REG:

• Federal Taxation: Federal taxation works on three levels. First, it works on an individual level, where you would encounter questions about tax laws affecting individuals. Secondly, you would encounter questions about entities, which are corporations or organizations. The third entity is the estate and gift taxes.

• Business Law: It is concerned with the basics of contracts, agency and employment laws, and business organizations.

• Ethics and Professional Responsibility: Familiarize yourself with professional ethical standards concerned with CPA.

Skills Tested in the REG Section:

• Technical Knowledge
• Analytical skills
• Problem-solving skills
• Attention to detail

Tips on How to Approach This Section Effectively:

• Understanding Complex Tax Laws: REG deals with tax laws, therefore a comprehensive understanding of tax and its principles is essential to answer the questions in this section. You can learn about the tax laws through real-world examples to better understand their application.

• Staying Updated: Tax laws are in constant flux. Be aware of any recent changes in the field.

• Manage Your Study Time: Allocate specific time to your study sessions. Prioritize areas of REG where you feel less confident.

Conclusion

Taking a CPA exam without a solid study plan is just as stupid as diving into the water without safety gear. As you start your journey to become a CPA, it is essential to have a complete understanding of the four mentioned sections. Having a clear strategy in mind is essential before diving into the complex CPA exam. 

Tired of going through the details? What if there was a way to skip all these details and still get top-notch results?  If you are continuously pondering “I wish I could Pay someone to take my online accounting exam?”, your wish is about to come true! 

At Take A Class For Me, you can hire someone to do your online accounting exam for you! Your CPA goals are closer than you think and with us, the journey will be even smoother! Contact us now!