If you’ve ever thought about becoming a Certified Public Accountant, you’ve probably heard of the CPA exam. But what is the CPA exam, and why is it so important?
Firstly, it’s important to recognize that it’s difficult. Pass rates in Q1 and Q2 2024 start as low as 41%.
So naturally, preparation is huge for your success. This article breaks down everything you need to know about the current CPA exam model, its recent changes, and how you can prepare for it.
Key Takeaways
- Critical for CPA Licensure: The CPA exam is a must-pass for earning your license and advancing your accounting career.
- New Exam Structure: The 2024 CPA Evolution initiative introduced a core plus discipline model, adding flexibility to the exam.
- Four Sections: The exam covers three core sections and one discipline section. Core sections cover topics in auditing, financial accounting, and regulation.
- Discipline Choices: Candidates will choose one specialization from Business Analysis and Reporting (BAR), Tax Compliance and Planning (TCP), and Information Systems and Controls (ISC).
- 30-Month Deadline: You must pass all exam sections within 30 months once you’ve passed the first section, or you risk losing credit for the passed sections.
What is the CPA Exam?
The CPA exam, or more formally the Uniform CPA Examination, is a rigorous assessment designed to evaluate the knowledge and skills of individuals looking to become a CPA. Administered by the American Institute of Certified Public Accountants (AICPA) and state boards of accountancy, this exam is one of the final steps to a CPA licensure and is known for its difficulty.
The CPA exam isn’t just one test. It consists of multiple sections covering a wide range of accounting topics, from financial accounting to tax compliance and business analysis. Passing the CPA exam is essential if you want to earn your certification, which allows you to work as an accountant and opens the door to many career opportunities.
The Structure of the CPA Exam
As of 2024, the CPA exam follows a new core plus discipline model introduced by the CPA Evolution initiative. This new structure is designed to better reflect the modern skills required of CPAs in today’s accounting profession.
Core Sections
All CPA exam candidates are required to take and pass these three core sections, which cover fundamental knowledge every CPA needs:
- Auditing and Attestation (AUD)
- Financial Accounting and Reporting (FAR)
- Taxation and Regulation (REG)
Discipline Sections
After completing the core sections, candidates choose one discipline section based on their area of interest or career goals. The three available discipline sections are:
- Business Analysis and Reporting (BAR)
- Tax Compliance and Planning (TCP)
- Information Systems and Controls (ISC)
The core plus discipline model allows CPA candidates to demonstrate both foundational skills and specialized knowledge, aligning with the demands of the modern accounting profession.
How Does the CPA Exam Work?
When you sign up to take the CPA exam, you’ll need to complete all four sections within 30 months. You don’t have to take all sections at once, and in fact, many candidates spread out the sections over time.
Here’s a quick breakdown of what you can expect:
- Each section lasts four hours and includes multiple-choice questions and task-based simulations.
- You’ll receive a score between 0 and 99, with a passing score of 75.
- If you pass one section but don’t finish the others in 30 months, you’ll lose credit for the passed section and have to retake it.
Since the CPA exam covers such a broad range of topics, you’ll need to demonstrate greater skills in areas like financial accounting, business structures, tax implications, and processing integrity.
Key Sections of the CPA Exam
To help you prepare for the CPA exam, here’s a deeper dive into the three core and three discipline exam sections. For more detailed information and topic breakdowns, the American Institute of CPAs offers CPA exam blueprints.
1. Auditing and Attestation (AUD)
The AUD section focuses on the principles and procedures of auditing. It covers topics like:
- Audit processes and evidence collection
- Risk assessment
- Internal controls
2. Financial Accounting and Reporting (FAR)
The FAR section covers financial accounting standards and practices. It covers topics like:
- Financial accounting standards set by the Financial Accounting Standards Board (FASB)
- Recognition, measurement, and reporting of financial statement accounts
- Governmental and nonprofit accounting principles and reporting requirements
3. Regulation (REG)
The REG section focuses on laws, taxes, and ethics. It covers topics like:
- Federal tax compliance and planning
- Business law
- Professional ethics for accountants
4. Business Analysis and Reporting (BAR)
The BAR section focuses on business analysis, financial reporting, and how businesses communicate their financial health. It covers topics like:
- Business structures and reporting standards
- Data analysis and interpretation
- Financial reporting for public and private companies
5. Information Systems and Controls (ISC)
The ISC section focuses on technology systems, data security, and internal controls. It covers topics like:
- Data integrity and security
- System controls and processes
- Technology concepts related to financial data
6. Tax Compliance and Planning (TCP)
The TCP section primarily focuses on federal tax planning and compliance, with limited emphasis on state tax laws. It covers topics such as:
- Federal tax compliance: Understanding and applying federal tax regulations
- Tax implications for different business structures: Primarily within the federal tax framework
- Strategies for tax planning and compliance: Focused on federal tax strategies and best practices
Choosing the Best Discipline For Your Career Path
Unsure which discipline section is the best choice for your career? Here are some examples.
1. Business Analysis and Reporting (BAR)
This section focuses on business analysis, financial reporting, and interpreting financial data. It’s great for those who want to dive deep into corporate finance, mergers and acquisitions, or financial statement analysis.
Career paths:
- Financial Analyst
- Corporate Accountant
- Controller
- Chief Financial Officer (CFO)
- Internal Auditor
2. Tax Compliance and Planning (TCP)
The TCP section primarily focuses on federal tax planning and compliance, with less emphasis on state tax laws. This section covers key areas of federal tax requirements, including tax implications for various business structures. Candidates can expect TCP to provide in-depth coverage of federal tax strategies and compliance responsibilities rather than a broad overview of state tax regulations.
Career paths:
- Tax Advisor
- Corporate Tax Accountant
- Public Accountant in Taxation
- Tax Manager
- IRS Agent or Tax Auditor
3. Information Systems and Controls (ISC)
This section is for those interested in the intersection of accounting and technology. It focuses on managing information systems, data integrity, and internal controls, which are critical for maintaining secure financial processes.
Career paths:
- IT Auditor
- Risk Management Specialist
- Systems Accountant
- Cybersecurity Auditor
- Consultant for Enterprise Resource Planning (ERP) Systems
Regardless of the chosen discipline section, all candidates earn the same CPA licensure, allowing them to practice in any area of accounting without restriction.
Conclusion
The CPA exam is a major milestone for anyone looking to become a licensed CPA. The CPA Evolution initiative has revamped the exam, making it a critical milestone for licensure and career advancement in accounting.
The 2024 update introduces a core-plus-discipline model, covering essential topics in auditing, financial accounting, and regulation while allowing candidates to specialize in Business Analysis and Reporting, Tax Compliance and Planning, or Information Systems and Controls. With a 30-month deadline to complete all sections, the new structure aims to better prepare future CPAs for a dynamic and evolving industry.
FAQs
The CPA exam, or Uniform CPA Examination, is a multi-part test that candidates must pass to earn a CPA license. It assesses your knowledge in areas like financial accounting, tax compliance, and auditing.
The exam offers three mandatory sections, including auditing and attestation, financial accounting and reporting, and regulation. You also must choose one of three specialized disciplines, including business analysis and reporting, tax compliance and planning, and information systems and control.
The 2024 CPA exam has a new structure that includes three core sections and one discipline section. This change, part of the CPA Evolution initiative, is designed to better reflect the skills modern accountants need.
The CPA Evolution initiative is a project led by the AICPA and the National Association of State Boards of Accountancy (NASBA) to update the CPA licensure model and exam. The goal is to ensure that newly licensed accountants have the skills needed for today’s business environment.
You have 18 to 30 months to complete all four sections of the CPA exam once you pass your first section. If you don’t pass all the sections within that time frame, you’ll lose credit for any sections you passed earlier and have to retake them.
While you don’t necessarily need one, CPA review courses can help you to know what to study, take realistic practice exams, and so much more to help you pass the exam on your first try, saving you money on retake fees and getting your CPA sooner.
You can take the CPA exam year-round during open CPA testing windows, with no more blackout periods as of 2025.
To apply for the CPA exam, submit your transcripts and fees through your state board or NASBA, then wait for your Notice to Schedule to book each section.
It takes about 7 to 10 years to become a CPA, including your degree, 150 credits, the CPA exam, and work experience.
Most candidates spend $1,000 to $1,300 on CPA exam fees alone, not including prep courses or licensing costs.
Missouri CPA requirements include 150 credit hours, passing all CPA exam sections, one year of experience, and an ethics exam to qualify for licensure.
Yes, CPAs make approximately 10% to 15% more than non-certified accountants on average, reflecting their advanced qualifications and expanded career opportunities.
