So you’ve survived all those technical accounting courses, advanced courses, systems, auditing, cost, and tax, and now you’re ready to take the big exam. But perhaps in those intermediate or advanced courses, you didn’t receive enough exposure to research in the accounting standards, the auditing standards, or the tax code. This post is provided to quickly bring you up to speed on the research component of the CPA exam.
Research Components On The Exam
There are three different research components on the computer-based CPA exam. Research is tested separately in the:
- Financial Accounting and Reporting (FAR)
- Auditing and Attestation (AUD)
- Regulation (REG)
Therefore, you must be knowledgeable and skilled with each of these info bases. In each of the three areas (FAR, AUD, and REG), the research requirements and the info bases are completely different. The info bases contain information from several sources: the Financial Accounting Standards Board (FASB), the Public Company Accounting Oversight Board (PCAOB), the American Institute of Certified Public Accountants AICPA), and the US Treasury Department.
It is important to outline a reasonable set of goals in preparing for the research component on the CPA exam. You should develop a quick study strategy for attaining these goals:
- First, a candidate must become familiar with the commercial info bases or the hard copy of the professional literature.
- Second, it is essential to link this knowledge to already existing technical knowledge.
- Finally, you and every candidate must learn to use the interface of the CPA exam.
Knowing the interface and search commands will save valuable time on the CPA exam.
As you study, think strategically about which questions are most likely to be asked. The current CPA exam does not require that you solve a challenging or complex case; the exam requires that you solve a mini case by locating a specific definition or rule in the literature.
Keep in mind: The exam will not ask for a candidate’s opinion; it will ask a research question that has one correct answer.
Many candidates believe they can rely on keyword searches during the exam. The problem with keyword searches is that they produce too many results to sort through and read during the exam’s limited time. Therefore, success on the research component is more likely if one is familiar with certain standards, and the researcher knows approximately where to look for the answer. I will bring you to explore the overview and organization of the authoritative literature for FAR, AUD, and REG on my next post so that candidates have a good understanding of where certain information is located in the literature.
For the financial accounting standards, the text will take an historical perspective to look at the pronouncements. It is easier to find information if you have an overview of when certain standards were issued, and when certain topics were hot issues in the business environment. Knowing the structure of the standard is important for moving through the pronouncement quickly.
You [and other candidates] can capitalize on knowing certain accounting jargon that may help find the answer quickly. Practicing research skills will also help strengthen a candidate’s knowledge of the various accounting topics. Therefore, studying research is great for preparing for the exam.
Practicing Research Before The Exam
As indicated earlier, candidates can also obtain free online access to the financial accounting and auditing info bases before taking the CPA exam. The online packet includes the FASB Original Pronouncements, the FASB Current Text, and the AICPA Professional Standards. The FASB Original Pronouncements and Current Text are used in FAR; the AICPA Professional Standards are used in AUD. You must have applied to take the exam and be eligible by their state board of accountancy to register for this free six-month subscription. The AICPA notes that this version of the info bases is also not identical to the version used on the CPA exam. Therefore, it is still important to read the CPA exam tutorial and practice research using the sample exam.
The AICPA will give you access to the FAR and AUD literature when you receive your Notice to Schedule. You may obtain a log-in and a password to access the info bases for FAR and AUD by visiting the AICPA Web site and clicking under “Prepare for the Exam” and “Access to Prof. Literature”. Make sure you keep the e-mail that provides the link to the log-in page, and bookmark the address. If you lose this information, you may find it difficult to locate the log-in page again. As we discussed earlier, at this time, the AICPA has not posted a practice info base for tax.
In addition to the FAR and AUD literature, the AICPA also provides a tutorial for the CPA exam and a sample CPA exam at their Web site. Follow the menus to exam tutorial. You can also go directly to the CPA exam Web page. At the very top of the CPA Examination page, you will see “Tutorial and Sample Exams”. Follow the links on that page to find the tutorial. The CPA Exam Tutorial is great for learning the commands and interface of the exam. This tutorial is a “show and tell” version of the exam. It walks you through the various screens for: entering the exam, answering multiple-choice questions, continuing on to another section of the exam, answering simulation questions, using the calculator and spreadsheet functions, using the research standards, and exiting the exam. The tutorial is very informative, but it is not interactive.
Although the tutorial is wonderful for learning the interface of the CPA exam, seeing the exam interface and using it are two different things. Just because you read the tutorial does not mean that you will know or remember all the intricate details of how the exam interface works. There is a big difference in thinking you know something, and really being able to do it.
Therefore, you must work the sample exams. No—let me take that a step further. You must explore every button, every function, and every command, and give the sample exam a good workout.
Using FARS On The CPA Exam
In practice, an accountant needs all of these standards for research. However, at this point, not all parts of the info base are accessible or tested on the exam. Currently, the AICPA has included the Original Pronouncements as Amended and the Current Text portions of the info base on the FAR exam. As the CPA Exam evolves over time, the AICPA may choose to expand the info bases to include more testable components. For right now, it is best to be comfortable with the Original Pronouncements as Amended and the Current Text.
When you open the authoritative literature on the CPA exam, you should find two links: the Original Pronouncements as Amended (OPs) and the Current Text (CT). Clicking on one source will limit your keyword search to that portion of the info base. Another way to limit your search is to select a particular standard or group of standards (ARBs or APBs), and perform a “search within.” Therefore, if you are using a keyword search, you can search both the Original Pronouncements and the Current Text simultaneously. Searching the OPs and the CT at the same time sounds fabulous, but it is both good and bad. It’s good because it is a comprehensive search; it’s bad because it provides far too many results to read. I’ve heard and read horror stories of how candidates wasted 30 minutes on the CPA exam doing keyword searches and reading results. You don’t have that kind of time. So, let’s focus on learning our way around!.