As part of your preparation for the CPA Exam, you will need to understand what the CPA Exam sections are and what topics they will focus on. While many people have heard of the test itself before they begin studying to take it, they may not be as familiar with the separate four sections that they will need to pass in order to gain CPA licensure. Finding out what is covered by each area is the first step. Many people are unaware of the importance of understanding how everything ties together.
To complete the entire CPA Examination, you need to pass these four sections, each divided by major topic:
- Auditing and Attestation (AUD)
- Business Environment and Concepts (BEC)
- Financial Accounting and Reporting (FAR)
- Regulation (REG)
The exam consists of four separate sections, each with four hours to complete the test.
Auditing and Attestation (AUD)
The AUD portion of the Certified Public Accountant Exam evaluates what newly accredited CPAs should be able to do when they are performing:
- Audits of non-issuers and providers (including governmental entities, not-for-profit entities, employee benefits, etc.).
- Issuer and non-issuer interactions regarding attestation (including evaluation, review, and more).
- Prep work, compilation, and evaluation of interactions for non-issuer entities and evaluation of interim monetary info for issuer entities.
A newly certified public accountant is also required to demonstrate expertise and skills related to professional duties such as ethics in the workplace, ability to work on their own, critical thinking, etc. Developing critical thinking is an iterative process that involves a focus on the evidence and thoughtful evaluation when performing an audit. This is essential to the practice of public accounting and the work of newly licensed CPAs.
Business Environment and Concepts (BEC)
A prospective certified public accountant must demonstrate the following expertise and abilities when taking the BEC section of the CPA Exam:
- Audit, attestation, accounting, and evaluation services
- Financial reporting
- Tax obligation prep work
- Various other expert responsibilities
Financial Accounting and Reporting (FAR)
FAR examines a CPA candidates expertise in monetary bookkeeping and reporting structures used by business entities (public as well as non-public), not-for-profits, and state and local governments.
A set of monetary accounting and reporting frameworks is suitable for analysis on the FAR portion of the CPA Exam, including the following:
- Financial Accounting Standards Board (FASB)
- United States Securities and Exchange Commission (U.S. SEC)
- American Institute of Certified Public Accountants (AICPA)
- Governmental Accounting Standards Board (GASB)
- International Accounting Standards Board (IASB)
The REG portion of the Certified Public Accountant Exam requires test takers to demonstrate knowledge and skills regarding:
- United States federal tax
- U.S. ethics and professional duties related to tax practice
- U.S. business legislation
Total pass rates hover around 50%. This is part of why the Certified Public Accountant Exam is considered one of the most difficult professional certifications you can earn, and why it is so well regarded.