The AICPA and NASBA have announced plans to introduce a new CPA Exam by January 2024. The so-called “CPA Evolution” initiative will alter the overall format and content of the CPA Exam to better reflect the competencies needed for tomorrow’s CPAs in the evolving global business landscape.

To best serve the accounting profession, the AICPA and NASBA have analyzed business trends and quantified the skills that future CPAs must possess. Therefore, the CPA Exam will be altered to ensure that these skills are tested to protect the public.

Future of the Accounting Profession

Since the AICPA first administered the CPA Exam, the accounting profession has changed drastically. For example, CPAs must follow significantly more codes and standards than just a few decades ago. Just look at some stats since 1980:

• CPAs must now follow 3 times as many pages in the Internal Revenue Code.
• There are 4 times as many accounting standards to follow.
• And, there are more than 5 times as many auditing standards to follow.

The volume of foundational knowledge needed for CPAs to succeed in today’s business world continues to evolve and grow. The CPA Exam needs to reflect that growth.

The AICPA (American Institute of Certified Public Accountants) and NASBA (National Association of State Boards of Accountancy) have noted a critical trend in the accounting profession. In the past, entry-level accountants did a lot of grunt work pushing numbers. However, today, many firms outsource that work, allowing their accountants to do higher-level work. Plus, grunt work is often assigned to paraprofessionals now. Modern accounting software is affecting the field, too, as programs can now automatically make calculations that once required a lot of number crunching. Tomorrow’s CPAs will be expected to handle more intense financial analyses from day one, even in entry-level positions.

Tomorrow’s CPAs

Even if you’re a new CPA, your firm will probably expect you to demonstrate high levels of analytical skills. According to data collected by the AICPA and NASBA, tomorrow’s CPAs will need the following:

• High levels of problem-solving, critical thinking, and analytical skills
• Abilities to be skeptical and apply professional judgment as appropriate
• Knowledge of standard business practices, including the concepts of risks and controls
• Data analysis
• Data management
• Skills required for System and Organization Controls (SOC)

CPA Evolution

The Players

Since the CPA Evolution is such a significant undertaking, many different organizations and groups of professionals will be involved. AICPA and NASBA are leading the cause. For the past 3+ years, they have been gathering feedback from more than 3,000 stakeholders, including the following:

• Academics and instructors in university accounting programs
• Boards of Accountancy in all 55 US jurisdictions
• CPAs with active licenses
• CPA firms of all sizes (small, medium, and large)
• Federal regulators
• Technology experts

The Process

First, the AICPA and NASBA have been exploring the skills and abilities that will be needed by future CPAs.

Next, the CPA Exam and the accompanying Uniform CPA Examination Blueprints will be revised to reflect these skills. The final content and exam length will be determined only after administered practice exams to volunteers. At this point, the AICPA and NASBA anticipate that the updated CPA Exam will be available by January 2024.

As the last step, the AICPA and NASBA will conduct a gap analysis of the new exam content compared to the content covered by most university accounting programs. If needed, the organizations will work with academics to review university programs so that their graduates will be adequately prepared to pass the CPA Exam and enter the accounting profession.

Core-Plus-Discipline Model

The AICPA and NASBA have stated that the revised CPA Exam will follow a “Core-Plus-Discipline Model.” The CPA Exam will continue to test candidates’ competencies in accounting, auditing, tax, and technology. However, in addition to these core areas, candidates will be expected to demonstrate more in-depth knowledge in one of three areas:

• Business reporting and analysis
• Information systems and controls
• Tax compliance and planning

Although the 2024 exam format still hasn’t been finalized, it seems that the new CPA Exam will still follow the 4-part format as the existing exam. The first 3 parts will be for the “core” material, while the 4th part will cover the “discipline” material.

Changes to the Format

Even though the new CPA Exam will be in 4 parts, we don’t yet know the exact number of questions. However, it doesn’t seem that multiple-choice questions, task-based simulations, or written communications are going away anytime soon. Also, based on information released by the AICPA and NASBA, the new exam is expected to last about 16 hours, with 4 hours for each part.

We don’t know yet what the AICPA will label each section of the 4-part CPA Exam. But the first 3 parts will probably cover material similar to the existing AUD, BEC, FAR, and REG sections.

Although we know that the 4th part will test your deeper discipline knowledge, we aren’t sure what that test will look like in terms of the number of MCQs, TBS, or whether it will have written communications. But you’ll likely see questions specifically written to gauge your in-depth skills in specific topics you’ll encounter as a future CPA.

One CPA License

If you’ve read any of the AICPA or NASBA announcements, you might have noticed the mention of “one CPA license.” To clear up any misconceptions about this note, let’s go over the significance of this statement.

The Core-Plus-Discipline Model will require CPA candidates to select a discipline for their 4th exam part. But still, regardless of which discipline test candidates pass, there will still be one CPA license.

So, for example, if a candidate passes the “tax compliance and planning” discipline exam, that candidate will still apply for a CPA license, not some new “CPA-tax license.” Once you pass your discipline exam, you won’t have to get a job in that discipline or even mention it in your professional title. However, you’ll be able to demonstrate to a potential employer that you have specialized knowledge in public accounting.

What Does This Mean for You?

The CPA Evolution initiative will lead to revised content on the CPA Exam by January 2024. The Core-Plus-Discipline Model means that candidates will be required to prove their competencies in specialized areas and have generalized skills in public accounting. Basically, the result could be a more difficult CPA Exam. The discipline-specific test could be the hardest since candidates must demonstrate in-depth knowledge. And if you don’t already have some sense of that deep knowledge before you start your CPA journey, that could mean longer study times to pass all 4 exam parts.

So, if you’re considering the CPA credential but haven’t sat for any exams yet, I strongly encourage you to start studying now and take the exam before January 2024. We won’t know the difficulty level of the new exam for a while, but it seems unlikely that the CPA Exam will be getting easier. Start your CPA journey now while still knowing the nature of the course ahead of you.

Transition Period

The period between now and the release of the new exam in 2024 will be a transition period. Here’s how the transition could affect you:

• If you’re planning to pass all 4 sections of the CPA Exam before January 2024, nothing will change.
• If you’re passed some—but not all—CPA Exam sections at the time the new exam is released, the AICPA and NASBA will continue to allow you to take the “old” exam and pass those sections for licensure. We don’t yet know how long this transition period will last.
• If you haven’t passed any exam sections before January 2024, you’ll need to sit for the “new” exam.

Final Thoughts

This is not the first time the AICPA has modified the CPA Exam, and I’m sure it won’t be the last. It’s important that the exam continues to reflect the skills candidates will need to effectively and safely serve the public. We will announce more details about the 2024 CPA Exam as soon as we have them.