Is technology testing coming to the CPA Exam? With the AICPA issuing Maintaining the Relevance of the Uniform CPA Examination, the probability grows, seemingly by the day. Further, given how CPAs use technology today, some would argue that including some technology focus on the Exam is overdue. Accordingly, in this article, you will learn about some of the key drivers associated with adding technology to the CPA Exam.
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CPA Exam Practice Analysis Highlights Need For Technology Training
Beginning in early 2019, the AICPA began work on the CPA Exam Practice Analysis project. The purpose of this project was to assess the type of work newly licensed CPAs perform. Subsequently, the results of the analysis were evaluated to determine if the current Exam aligns with today’s work environment.
On December 23, 2019, the AICPA issued a research document based on the Practice Analysis project. One part of the document is an Exposure Draft that outlines proposed changes to the CPA Exam. Additionally, a second component of the document is an invitation to comment on the changes outlined in the Exposure Draft. Accordingly, the AICPA will accept responses to the Exposure Draft and the Invitation to Comment through April 30, 2020.
Maintaining the Relevance of the Uniform CPA Examination
As previously mentioned, in December 2019 the AICPA issued a document that summarized the Practice Analysis project. This document – Maintaining the Relevance of the Uniform CPA Examination – includes the Exposure Draft and Invitation to Comment mentioned above. Importantly, this document also includes some key findings associated with the Practice Analysis. And it is these key findings that reveal the potential need to include technology on the Exam. Further, four key findings illustrate the potential need to test for technology competency on the Exam. Following is a summary of each of these four findings.
Understanding the Business
The report indicates that newly licensed CPAs need to understand the businesses they serve. Further, this need extends to operations, information systems, key business processes, how data flows through the business, and the need for internal controls to mitigate risks. Because technology permeates each of these issues, newly licensed CPAs to must understand technology systems and related controls – skills that many may not currently possess.
Digital and Data Driven Mindset
Data and data analytics are everywhere, facilitating the digital and data-driven mindset. Further, advances in technology make it increasingly common to extract data from systems and incorporate this data into reports and analyses. Unfortunately, some newly licensed CPAs lack skills in these areas. This, of course, leads to errors in reports and relying upon inefficient manual procedures in reporting processes. Therefore, the AICPA plans to add test based simulations to the Exam beginning October 1, 2020 to test for competencies in this area.
Reliance on SOC-1 Reports
More businesses than ever outsource substantial portions of their technology functions. Accordingly, auditors often rely on SOC 1 reports to assess controls over the outsourced technology. Therefore, to help ensure that newly licensed CPAs possess the skills necessary to interpret SOC 1 and similar reports, this will be a point of emphasis on the AUD and BEC sections of the exam in the future.
Technology Used By Newly Licensed CPAs
Recognizing that CPAs – including newly licensed CPAs – frequently rely on Excel, future versions of the Exam will include test based simulations to verify competencies in this area. Specific topics to be included in this area include data transformations and analyses, along with data manipulation skills. Further, although the Exam has historically been agnostic with respect to specific tools used by CPAs, the prevalence of Excel in the accounting market demands its use in assessing competencies surrounding data analytics and spreadsheets.
Where Do We Go From Here?
In sum, the report includes recommendations for 46 specific changes to the Exam. Although it is beyond the scope of this article to detail each of these changes, suffice to say that many of them relate to technology and the four specific findings discussed above.
The AICPA invites all interested parties to comment on the Practice Analysis and the proposed changes to the Uniform CPA Examination. The comment period is open through April 30, 2020. Accordingly, if interested, you should send comments to practiceanalysis@aicpa.org.
