2015 CPA EXAM CHANGES
Most of the 2015 CPA Exam changes are expected to appear on the Financial Accounting and Reporting (FAR) Exam. Auditing and Attestation (AUD) will have some changes, however, none that will have a large impact on the exam during the four 2015 testing windows. Regulation (REG) and Business Environment and Concepts (BEC) content will go through very minor changes with all of the heavily-tested information remaining the same.
FINANCIAL ACCOUNTING & REPORTING (FAR)
- The AICPA has indicated that understanding the differences between the following Special Purpose Frameworks will now be tested.
- General Accepted Accounting Principles (GAAP)
- International Financial Reporting Standards (IFRS)
- Tax basis of accounting
- Cash basis of accounting
- The FASB modified certain rules to address the needs of smaller companies. There are three specific areas that will be pertinent during the 2015 testing windows. The new “Small GAAP” approaches to the following topics have been developed to simplify the procedure and reduce the cost of accounting for a smaller operation.
- A new approach has been developed for accounting for interest swaps. As a little reminder, interest swaps are derivatives that companies use to “swap” a loan that bears interest at a variable rate into a fixed rate loan.
- A new, simpler, approach has been developed for accounting for goodwill. The new approach reduces the cost of testing for impairment and eventually eliminates goodwill from the small company’s financial statements.
- A new approach has been developed for lease accounting for “Small GAAP” companies. While publicly held companies are required to perform an extensive analysis to determine if the lessor should be included in the financial statements of the lessee as a variable interest entity (VIE), nonpublic companies are now allowed to avoid analyzing a relationship with the lessor that is related and simply account for the lease by applying lease accounting.
- The AICPA is working on a major update to revenue recognition standards that will have a large impact on both the accounting community and the CPA Exam. New International Financial Reporting Standards (IFRS) will come into effect as part of the 2015 CPA exam. However, General Accepted Accounting Principles (GAAP) will be fully updated by approximately 2017. Though the IFRS change is significant, it will mean much more and is likely to be more heavily tested once GAAP is updated. For the 2015 exam, it is important to be familiar with the updated IFRS rules; however, this update will not be as major as the other two FAR updates described above.
AUDITING AND ATTESTATION (AUD)
- A minor update to auditor responsibilities will become a part of the 2015 exam. According to the new standards, the auditor now has additional responsibilities in relation to required supplementary information that accompanies a set of audited financial statements.
- A minor update to external auditor’s ability to use client’s internal auditor will become a part of the 2015 exam. This AICPA update further signifies that if analysis and decision information is obtained from the internal auditor, the ultimate evaluation of all information, at every step, is the responsibility of the external auditor.
- A larger update for the AUD exam relates to the less stringent compilation and review engagements that may be requested if an audit is not required. Minor changes to how compilation and review services are performed and the associated reports are a part of this update. Perhaps the most significant change is the introduction of the accountant’s ability to also assist their clients in preparation of financial statements. Whereas before an accountant could not submit financial statements without providing at least a compilation report, a new set of standards allows the accountant to assist with preparation of financial statements as a nonattest service.
- The 2015 REG update will not represent any changes to the rules and concepts tested on the exam. The update is expected to consist of a few revisions to numerical thresholds and percentages associated with the passing of the Affordable Care Act and elimination of expiring tax law provisions.
BUSINESS ENVIRONMENT AND CONCEPTS (BEC)
- The only potentially significant change to BEC results from provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act that have gone into effect and will be tested during the 2015 testing windows. Sections of Dodd-Frank are already tested as part of the Regulation exam. However, the sections tested on the BEC exam are expected to concentrate on the topic of corporate governance, thus testing a more specific set of laws.