CPA Evolution 2024

Effective January 9, 2024, AICPA has introduced a new model for CPA Licensure. The core of the standard CPA exam will now consist of three parts:

Successful candidates (not including  those persons who  qualify for IQEX, as explained below) must pass all three examinations.

In addition, anyone who does not qualify for IQEX (the International Qualifying Examination), must now pass an additional examination in ONE of the three following areas:

For the first time, AICPA is recognizing specialization within its exam structure and is moving away from the old “one size fits all” model. Most of the more complex areas relating  to accounting, auditing, and taxation, previously tested within the CPA exam structure have been shifted over to the three new modules.

AICPA has entered into reciprocal arrangements that make it fairly straight-forward for many professional accountants from other countries to obtain a U.S. CPA. These agreements are predicated on the fact  that these professionals already have sufficient training in accounting and auditing and are generally proficient in at least one of Business analysis and/or Information systems.

The one area where qualified professionals from other countries must show competency is with respect to Regulation.

 IQEX = Regulation

What does this mean for IQEX candidates effective starting is 2024? Actually,  in one sense, the exam could be considered “easier” because the number of complex topics has been significantly reduced. In fact, in general terms, it might be said that the goals the  examination have been set to ensure that successful candidates are capable of preparing or assessing personal, corporate and partnership returns (except, perhaps, in very extraordinary circumstances).

However, as you will see shortly, the skills that will need to be displayed, especially in the Simulations that will account for 50% of one’s grade, are quite a bit more sophisticated than before. (Simulations are discussed in detail further on in this introduction.)

Qualifying for IQEX

NASBA (National Association of State Boards of Accountancy) has established Mutual Recognition Agreements (MRAs) with the following countries that enable you to qualify for the IQEX:

IQEX (REG) is a 4-hour examination. A new “Blueprint” was released in January 2023. This Blueprint is discussed a bit later on and a link to display/print a copy is included after these introductory notes.

IQEX is now comprised of 2 equal multiple-choice question “testlets” with a total of 72 questions in all and three testlets containing (2+3+3) 8 “task-based simulations”. These are sometimes condensed case studies which require the candidate to perform some basic analysis to either derive the answers and/or support the reasoning behind them. All the simulations pertain to the taxation sections.

Of the 72 multiple-choice questions, 12 will not count. They are “pre-test” questions that AICPA will evaluate for future exam suitability. You will not know which questions are “pre-test” so you should treat each question as being important. If a question appears to be strange, you should not panic there is a good chance that it will not count. In addition, one of the eight simulations is also “pre-test”. You should budget your time carefully. The multiple-choice component and the simulations each count for 50% of your grade. A passing overall score is 75% or better.

Here is a quote from AICPA that confirms that the intent of IQEX/REG is to test the ability of candidates to test the ability of candidates to prepare and review tax returns:

You should allocate about 15 minutes for each simulation and about 1.5 minutes (or a bit less to allow for time to review your answers) for each multiple-choice question.

The examination allows for a 15-minute break between the first and second simulation testlets. There are also two optional breaks, one after the first multiple-choice testlet and one after the second multiple-choice testlet. However, the timer continues to run during these breaks.

You will be asked for a fingerprint to verify your identification prior to and upon returning from any break. The test center staff will confirm you have completed the testlet prior to your break.

When you return from a break, you will be required to enter your Launch Code in order to continue the examination. Note that breaks lasting more than ten minutes may be reported to NASBA. If you leave the testing room at any time, without exiting the testlet and selecting the break option, you will not be allowed to return.

Even if you do not elect to take a break, each testlet must be finalized before moving on to the next. You will be prompted to answer any questions left blank. You MUST answer all questions since no marks are subtracted for wrong answers. 

When you have completed the last testlet and decide to end the examination, you will again be prompted if any answers have been left blank, unless time has expired.

Once you press the “submit” button, the examination ends, but, before you can log out, you may be asked to complete a short survey.  You may type your responses before exiting.  If there are any perceived errors, irregularities or ambiguities in the questions, these should be noted, although the likelihood of problems would be rare.

Regulation covers knowledge of federal taxation, ethics, professional and legal responsibilities, and business law, and the skills needed to apply that knowledge.

The last section of this introduction is entitled The Solutions Approach. It provides a detailed analysis of how to write the actual computer-based exam and will refer you to the AICPA tutorials that illustrate how the various screens work and how to navigate through them.

About the Author

My Materials and How to Use Them

I have written and passed both IQEX and the Uniform CPA Exam. I have more than twenty years’ experience teaching in IQEX programs. I have therefore designed Regulation notes that summarize those areas most likely to be tested.  At the beginning of each Section, there is an outline of major topic areas. The notes which follow, refer to specific multiple-choice questions that you should review as you read the material to ensure you are comfortable with each topic. At the end of every section, I suggest all the multiple-choice questions you should try during a subsequent review of the material- after you have completed an initial run-through of the entire course.

Many of the multiple-choice exam questions tend to be repeated from year-to-year.  As you know, IQEX/ Regulation is now offered throughout the year in major centers. To discourage cheating, there are several different IQEX exams.  The results are curved in case one paper is more difficult than another.

How to Guide

If you have any issues or questions be sure to checkout the FAQ section or contact [email protected]

More on Pretest Items

As I mentioned, pretest items are used to develop future examinations; they are NOT used in computing examination scores. Each testlet, whether it is comprised of multiple-choice questions or task-based simulations, may include pretest items.

The directions at the beginning of the examination state: “Some of the multiple-choice questions and/or task-based simulations you will receive are pretest items. These items do not count toward your final score. You will not know which items are scored and which are pretest questions.”

Each year, I receive a number of complaints about questions that are based on topics not emphasized in the USCPA-NOW notes, but, when the results are released, about 92% of my registrants pass.  Nevertheless, please understand that you may find 10 or 12 questions that come to you from “left field”.  Just do the best you can.  I assure you that these notes cover all the topics on the new Blueprint. In many cases, I try to provide guidance on what should reasonably be considered when trying to establish the relative importance of the specific topics.  Obviously, I have no control over what actually appears on the actual exam(s).

Note that, while the examinations have been “non-disclosed“ for many years, there are only a finite number of ways to test specific issues.

Less is More

There are two schools of thought concerning situations where course notes are prepared for sale.  The first subscribes to the notion that, to justify the cost, students should be “snowed under” with reams of extraneous paper, CDs, and videos, and flash-cards that may well confuse and paralyze the user, who then does not know where to even begin.

The second school of thought believes, as I do, that “less is more”.  The notes you have on your screen have been carefully crafted. They contain exactly what I believe you will need to learn to pass IQEX with flying colours.

Ongoing Support from Me

The objective of the notes is to present all the required material in such a manner that you will understand everything fully by the time you have completed your initial run through. You should also have a clear-cut picture of the amount of study time you will need to successfully confront IQEX.  Towards the conclusion of this introduction, there is an analysis of the IQEX Syllabus and Grading Structure that outlines average study-time requirements.

To ensure your success, your course fee includes reasonable email/telephone support from me.  Please wait until you have completed a full first reading of the notes and have attempted the recommended multiple-choice questions interspersed within each section before establishing contact with me. 

Taking the Examination

Although AICPA sets the IQEX Exam, NASBA is the entity that administers it. You should be aware that NASBA may require a recent passport photograph to be appended to your application form.

Once your application is approved, you will receive a Notice to Schedule (NTS). The Notice to Schedule is open for six calendar months.  If you encounter study-time problems, you may consider deferring the scheduling of your exam until the next testing period.

The examination is taken at one of the Prometric Centers which are located in most large U.S. and Canadian cities. Your NTS will include a seven-digit candidate number and a 1-800 number to call in order to schedule a time to take the exam. As an alternative, you can book your time-slot online at https://www.prometric.com/test-takers/search/cpa.

Although the exam itself is 4 hours in duration, you will need to book a 4.5-hour time window.  The additional 30 minutes is the time allowed to enter your examination section identification number (Launch Code), read the introductory screens, and complete the survey at the end of the examination. It is not additional testing time.

I recommend that you write in the morning and leave a whole day free in the unlikely event of a computer glitch.

If there is no Prometric Center near your residence, take care to arrange your travel so that you are well rested.  Even if the Center is relatively close, pay attention to potential adverse weather or traffic conditions.

When you arrive at the Center, you will be directed to a waiting room.  You will be assigned a small locker for your personal effects. Because of technological advances and general post-9/11 paranoia, they will take your photograph and a fingerprint. When you take a bathroom break, you will again be fingerprinted to ensure that you haven’t arranged to substitute someone else to complete the exam in your stead.

You must have your NTS with you and two forms of ID- one with a picture. A driver’s license and a major credit card will suffice.  The name on the NTS and the ID must correspond exactly.  The NASBA website contains a litany of prohibited items that may not be taken into the exam.  Notable examples include any food or drink, jewellery such as pendant necklaces, large earrings, wallets, purses, and watches.  Most important of all NO WEAPONS ARE ALLOWED!   If you choose to enter the testing area with a jacket or sweater, you must wear it at all times.

You will be asked to sign a non-disclosure form to prevent you from telling anyone about the actual questions.  Note, again, that there are several IQEX exams, presumably comparable in level of difficulty.  Therefore, if you do tell someone the details of a question or two (or vice-versa) the chances are that the other person may not have those same questions on his or her exam.

You will be led to a computer terminal surrounded by room dividers.  Testing rooms are equipped with cameras and microphones.

After an orientation tutorial, you will be asked to press a key that signals the start of the exam.  You must be careful not to take more than 10 minutes perusing the introductory screens or the examination will automatically terminate.  When you begin the exam, a small box will appear in the corner of your screen with a countdown from 240 minutes.

You will be provided with two double sided, laminated, colored sheets called “noteboards,” as well as a fine point marker for making notations. You will be directed to write your examination Launch Code (from your NTS) on your noteboards. You will be required to return the noteboards to the test center staff when your examination is complete. If you need additional writing space, you may request additional noteboards from the test center staff, but you must first turn in the original noteboards you received in order to get a new supply. You must not bring any paper or pencils to the workstation in the testing room.  An in-system calculator will be provided. A separate calculator will not be provided, and you may not bring a calculator.

As I mentioned, the exam is broken down into two equal multiple-choice “testlets” totalling 72 multiple choice questions. The questions appear one-at-a-time on screen and are all single-subject.   Unfortunately, they are not grouped by subject area.  You answer by positioning the cursor within a small circle next to the desired answer (A, B, C, D) and then clicking the mouse.  This action “fills in” the circle.  Clicking again in the same location “clears” the circle if you change your mind and opt for another choice.  You may NOT access research materials to answer these questions.  If there are any perceived errors, irregularities or ambiguities in the questions, these should be noted, although the likelihood of problems would be rare.

CPA Exam Testing Windows

Effective July 1, 2020 the AICPA has eliminated previous “testing windows and IQEX is now offered on demand on a continuous basis.

Joining a State Board- Go to ACCOUNTING EDU.ORG and Search IQEX by State

Once you have been advised that you have passed IQEX, you become eligible to join a State Board.  Most states recognize IQEX with the following exceptions:

Alaska, Connecticut, Delaware, Hawaii, and Rhode Island

Unless you have a compelling reason to join a particular Board, I recommend that you consider Illinois or Arizona. Whereas Illinois now requires 120 hours of CPE every three years, there is no reason why courses and seminars attended outside the U.S. should not qualify. Arizona recently came “on board” and appears to provide relatively straight-forward requirements. www.accountingedu.org is an excellent place to start your research.

You should note that, in the United States, one does not have to article with a CPA firm to obtain a CPA designation. Holding a CPA diploma does not necessarily convey the right to sign audit reports.  If you wish to obtain this right, you must join the relevant State Board and ensure that its education and experience requirements are met.

You should also be aware that the Uniform CPA Examination is NO LONGER comprised of entry-level tests.  However, all IQEX questions are single-subject and do not require the skills often needed to pass other professional exams. Canada, for example,  grades its CPA candidates on their skills in identifying, defining and ranking problems in situations where the candidate is not specifically directed.  In other words, it is often necessary to read between the lines and focus on major issues to pass.  The Canadian exams also require candidates to solve problems analytically, exercise professional judgement, evaluate alternatives, and propose solutions.  Communication skills are also graded.

Do not expect to be able to adequately prepare U.S. tax returns after you have mastered this course and have passed IQEX.  I recommend that you take a tax course such as the one offered by THEINCOMETAXSCHOOL.COM to obtain a good working knowledge of personal income tax.  If you would like to prepare corporate or partnership returns, they also offer a program through the above website, but I believe you will need the hands-on experience that one gets in a U.S. CPA firm or the tax department of a large corporation.

The IQEX Syllabus and Grading Structure/ Approximate study-time requirements

Below is a link to  the IQEX Blueprint as prepared by AICPA.  I offer the synopsis below for ease of reference. Obviously, your study time will be dependent on whether you have prior knowledge of Business Law and/or U.S. Federal Taxation.  Assuming you have no prior knowledge about any of the topics, the table below is an estimate of average time requirements after an initial run-through of the material.

The Solutions Approach to Taking the Examination

The AICPA Blueprint

The AICPA Blueprint may be accessed using the link below:

Key Points for the Solutions Approach

THE AICPA TUTORIALS AND THE SAMPLE EXAMINATION ARE DISCUSSED AT THE END OF THIS SECTION. DO NOT LOOK AT THESE BEFORE YOU HAVE LEARNED ALL THE TECHNICAL MATERIAL IN THIS COURSE.

In the materials in this course, I have tried to cover all the topics that are likely (or even possible) to be tested. Remember that almost all the people writing REG are recent U.S. college graduates that do not have the level of professional experience that  international CPAs/CAs have. If the examiners decide to test a topic that is likely only encountered in “real life” by specialist tax practitioner, you can safely bet that almost nobody taking the exam will do well on that question. There should never be any reason to panic. Although the overall pass rate of REG is about 55%, over 90% of the IQEX candidates who have taken.

The Blueprint lists all the topic areas and assigns one of the three levels to each.

An example of #1 is knowing the rules for calculating income tax instalments.

An example of #2 is defining a taxpayer’s status for filing a personal tax return. (Married filing jointly, head of household etc.)

ALL THE  TOPICS IN LAW AND ETHICS AS WELL AS THE LESS SIGNIFICANT TAXATION TOPICS ARE COVERED BY THE MULTIPLE- CHOICE QUESTIONS. THERE ARE HOWEVER 14 TOPICS THAT REQUIRE ANALYSIS. THESE ARE THE TOPICS FROM WHICH THE 8 SIMULATIONS WILL BE CONSTRUCTED.

Multiple-Choice Questions

Multiple-choice questions will be presented in two individual testlets of 36 questions each. You can move forward or back until you click the “Exit” button. Once a testlet is exited, you may not return to it.

You may “flag” a question for later review. A four-function calculator with an electronic tape is available as a tool. Question numbers are displayed at the bottom of the screen you may navigate by clicking on a question number.

Task-Based Simulations

THERE ARE NO ESSAYS!

It is highly likely that you will be given four or five different tax form sections and asked to complete them. You will be able to use a calculator on your computer and the “noteboards” that were mentioned in the introduction. You be able to split windows horizontally or vertically to show two tabs on your screen.

Probably, within 2 or even 3 of the simulations, instead of “calculating”, candidates will be asked to:

“Review and resolve discrepancies identified by automated diagnostic and validation checks to ensure the completeness and accuracy of the material reported on a tax return based on the source data used to prepare the return.”

Simulations were introduced for the first time several  years ago. Since the exams are “non-disclosed”, it has been difficult for candidates to study the methodology of the questions and to determine the likely topic areas. The only real preparation involves:

1. Learning the technical material especially in those areas where common sense dictates simulation questions should be presented.
2. Learning how the features of the computer screens operate, so as to be conversant with navigation requirements, such as accessing source information.

In some cases, candidates will see a task-based simulation that provides  potentially relevant sections, paragraphs, or snippets of the authoritative guidance (but not the entire repository of literature). From there, candidates will need to determine what parts of the provided evidence, if any, apply to a given simulation.

Here is a quote from Michael Decker, vice president of examinations at the AICPA who said:

“Increasing complexity in the business world and constant advances in technology have changed the knowledge and skills required of newly licensed CPAs. These professionals are being asked to perform more advanced tasks and work on complex projects early in their accounting careers. The proposed evolution of the CPA Exam is in line with what is required of newly licensed CPAs to protect the public interest in today’s dynamic economy”.

Please note, however, that the more complex aspects of taxation as well as tax planning concepts have now been reallocated to the new Tax Compliance and Planning  examination and are no longer tested as part of REG/IQEX. By concentrating on learning the material in this course, candidates should be able to handle whatever the exam requires.

Any person who sets an examination can create a set of questions that are so easy that (practically) all students will pass. Conversely, an exam can be structured based on obscure material that is so difficult that everyone fails. The object of most exams is to determine a REASONABLE level of knowledge that a successful candidate should possess.

Below is a link to assist you in becoming familiar with simulations

AICPA’s sample CPA REG test questions:

https://www.aicpa-cima.com/resources/article/get-familiar-with-the-cpa-exam-by-practicing-with-our-sample-tests

Tutorials

Before using the sample test, you should view the six videos listed below.

https://www.aicpa-cima.com/resources/video/learn-more-about-the-cpa-exam-software

• Reviewing Exhibits
• Highlight Function
• Cut, Copy & Paste
• Getting the most out of CPA Exam Software
• Your CPA Exam Experience
• Using Microsoft Excel*

The sample test is an online version of the real CPA Exam software. You can practice with a sampling of multiple-choice questions (MCQs)and task-based simulations (TBS). It is important for you to be familiar with the format and functionality of this software before you take your actual Exam at a Prometric test center. Keep in mind that your performance on the sample test is not an accurate depiction of your readiness to take the Exam. Before using the sample test, you should view the tutorial videos.

Scoring the Examination

NASBA will report your score on a numeric scale of 0-99, with 75 as a passing grade . This scale does NOT represent “percent correct.” A score of 75 reflects examination performance that has been judged to represent the knowledge and skills needed to protect the public interest.

Tentative Sore Release Dates