CPA Exam Changes and Updated Regulations

Every year the AICPA approves various changes and updates to the CPA exam. In 2022, substantial changes were made to the AUD section of the exam, minor changes were made to REG and FAR, and BEC received no material changes beyond those made in the July 2021 update. You can ensure you are prepared for the exam by taking a closer look at these 2022 and 2021 changes.

Overall, the CPA exam sections will retain the same structure and will still be tested in four 4-hour sections (for 16 hours total).

These sections will continue to assess higher-order skills such as:

• Critical thinking
• Problem-solving
• Analytical ability

Most of the 2022 updates involve:

• Auditor reporting and amendments and related changes
• Additions/revisions of auditing procedures in a wide range of areas including assertions, related party transactions, going concern, and fraud
• American Rescue Plan Act of 2021 changes

Most of the 2021 updates involved:

• Understanding of business processes
• Digital mindset and data analytics
• Increased reliance on SOC 1® Reports on Controls at a Service Organization Relevant to User Entities’ Internal Control over Financial Reporting

AUD 2022 Changes

The AUD section of the 2022 CPA exam has introduced sweeping changes to non-issuer auditor reports and standard setting.

• SAS 134: Auditor Reporting and Amendments, including amendments addressing disclosures in the audit of financial statements.
• SAS 135: Omnibus Statements on Auditing Standards – 2019. Align ASB guidance more closely with the PCAOB by amending:
  • 1.) AU-C 260, Auditors Communication with Those Charged With Governance,
  • 2.) AUC-550, Related Parties, and
  • 3.) AU-C 240: Consideration of Fraud in a Financial Statement Audit.

• SAS 136: Forming an Opinion and Reporting on Financial Statements of Employee Benefit Plans Subject to ERISA;
  • 1.) “limited scope audits” now referred to as “ERISA Section 103(a)(3)(C) Audits,”
  • 2.) New engagement acceptance requirements that must be included in the engagement letter,
  • 3.) For ERISA Plan financial statements, the opinion section of the auditor’s report is presented first followed by
    the basis for opinion section that includes the auditor’s statement of independence,
  • 4.) Auditor must have written representations regarding management’s responsibilities for administering the plan,
  • 5.) Required communications with management and those charged with governance including reportable findings
    (description of finding and effect of the finding on the plan financials).

• SAS 137: The Auditor’s Responsibilities Relating to Other Information Included in Annual Reports,
  • 1.) Clarifies the auditor’s responsibility relating to other information, whether financial or nonfinancial,
    included in an entity’s annual report,
  • 2.)Scope of documents that are subject to procedures,
  • 3.)Auditor to consider whether material inconsistencies exist between other information and the audited financial
    statements.

• SAS 138: Amendments to the Description of the Concept of Materiality,
  • 1.) Materiality description: Misstatements, including omissions, are considered to be material if there is a substantial
    likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on
    the financial statements.

• SAS 139: Amendments to AU-C Sections 800, 805 and 810 to Incorporate Auditor Reporting Changes from SAS 134,
  • 1.) Scope of documents that are subject to procedures,
  • 2.) Auditor to consider whether material inconsistencies exist between other information and the audited financial statements.

• SAS 140: Amendments to AU-C Sections 725, 730, 930, 935, and 940 to Incorporate Auditor Reporting Changes From SAS Nos. 134 and 137,
  • 1.) Aligns AU-C 725 (supplementary information), 730 (required supplementary information), 930 (interim financial
    information), 935 (compliance audits), and 940 (integrated audit with the relevant auditor reporting standards in SASs 134 and
    137,
  • 2.) Aligns AU-C 725 (supplementary information), 730 (required supplementary information), and 940 (integrated audit) with the relevant auditor reporting standards in SASs 134 and 137.

• AUD-ARSC Standard Setting: SSARS 25; Materiality in a Review of Financial Statements and Adverse Conclusions was issued,
  • 1.) Requires accountant to determine materiality for the financial statements as a whole and apply it to procedures,
  • 2.) Allows for the expression of an adverse opinion when financial statements are materially and pervasively misstated,
  • 3.) Requires a statement regarding independence in the review report.

• Content weighting
  • Area II (Assessing Risk and Developing a Planned Response) was increased from 20%–30% to 25%–35%
  • Area IV (Forming Conclusions and Reporting) was decreased from 15%–25% to 10%–20%

• Skill weighting
  • Remembering and Understanding was decreased from 30%–40% to 25%–35%
  • Analysis was increased from 15%–25% to 20%–30%

Other 2021 changes made to the AUD section included:

• Added content relating to the understanding of business processes including consideration of IT systems, IT controls (general and application), manual controls, and transaction-level risks and controls.
• Added content covering audit data analytics at the application and analysis skill levels, incorporating basic data validation, performing analysis on audit data output, and interpreting the results.
• Added content relating to service organizations to enable understanding differences between SOC 1 and SOC 2® engagements and the utilization of SOC 1 reports in audits of user entities.
• Removed content related to opening balances, derivatives, comfort letters, and SEC filings.
• Eliminated analysis or application-level testing of audit plan development, related party identification, litigation, claims, and assessments, and preparation of compliance reports.

Read our free resource to learn everything you need to know about the AUD CPA Exam.

BEC 2022 Changes

The BEC section of the 2022 CPA exam experienced no material changes.

BEC 2021 Changes

The BEC section of the 2021 CPA exam underwent some content weighting changes, but skill weighting remained the same.

• Content weighting
  • Area I (Enterprise Risk Management, Internal Controls, and Business Processes) increased from 17%–27% to 20%–30%
  • Area II (Economics) decreased from 17%–27% to 15%–25%
  • Area III (Financial Management) decreased from 11%–21% to 10%–20%

Other changes made to the BEC section included:

• Extensive revision of Area I, formerly “Corporate Governance” and now titled “Enterprise Risk Management, Internal Controls, and Business Processes,” to incorporate new content areas and add analysis-level skill testing.
• Added accounting and financial reporting information systems content including tools and software, business process controls, transaction flows, and key risk identification.
• Added data management and relationships content that covers topics related to data governance, extracting, transforming, and loading data, and visualizations.
• Added SOC 1® reports content relating to user entity’s perspective including consideration of the period covered and any complementary user entity controls.

Read our free resource to learn everything you need to know about the BEC CPA Exam

FAR 2022 Changes

The FAR section of the 2022 CPA exam did not undergo large changes but did update content related to Debt with Conversion and Other Options, Warrants to Purchase Common Stock, and Conduit Debt Obligations.

• FASB ASU 2020-06: Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,
  • Embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives or that do not result in substantial premiums accounted for as paid-in-capital.

• FASB ASU 2021-04: Earning Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (a consensus of the FASB Emerging Issues Task Force),
  • Clarifies the accounting requirements for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange to reduce diversity in practice.

• GASB 91: Conduit Debt Obligations – provides a single method of reporting conduit debt obligations by issuers to eliminate diversity in practice.

FAR 2021 Changes

Content and skill weighting remained the same for the FAR section of the 2021 CPA exam.

Notable 2021 changes to the FAR section included:

• Removing content related to discontinued operations, going concern, compensated absences, retirement benefits, and the differences between IFRS and U.S. GAAP.
• Removing application-level testing of content related to derivatives and hedge accounting.

Read our free resource to learn everything you need to know about the FAR CPA Exam.

REG 2022 Changes

The REG section of the 2022 CPA exam updated content related to the American Rescue Plan Act of 2021.

• American Rescue Plan Act of 2021:
  • Third round of stimulus checks ($1,400 individuals and $2,800 joint filers, $1,400 for qualifying dependents);
  • Extended federal unemployment benefits to 9/6/2021,
  • Expanded child tax credit ($3,600 per child under 6 and $3,000 per child 6 to 17) with direct monthly payments to taxpayers;
  • Expanded dependent care credit (up to $8,000 for one child and $17,000 for two or more children);
  • Expanded earned income credit (up to $1,502 in 2021);
  • Forgiven student loan debt excluded from gross income for 2021 – 2025.

REG 2021 Changes

Content and skill weighting remained the same for the REG section of the 2021 CPA exam.

Notable 2021 changes to the REG section included:

• Removing groups and topics that are no longer vital for newly licensed CPAs to know such as estate taxation, federal securities regulation (i.e., the ‘33 and ‘34 Acts), alternative minimum tax, trust income and deductions, and content related to obtaining and maintaining tax exempt status.
• Eliminating analysis-level testing of net operating losses and capital loss limitations.

Read our free resource to learn everything you need to know about the REG CPA Exam.

In a couple of years, the CPA licensure model will be fully updated to reflect the evolving skills and competencies needed to be successful in accounting. These upcoming changes are called the CPA Evolution.

With the CPA Evolution, the CPA exam will be restructured and updated to a Core + Discipline Licensure Model. In this model, the core elements that everyone will be tested on are accounting, auditing, tax, and technology. And candidates will also get to choose one of three discipline areas to demonstrate deeper knowledge.

These discipline areas are:

• Tax compliance and planning
• Business analysis and reporting
• Information systems and controls

The CPA exam will still have four parts, it will just be updated to include the three core parts plus one discipline-specific part. The exam will continue to be 16 examination hours total. There will be no designation of which discipline area you chose.

The newly structured CPA exam is projected to launch in January 2024, so depending on when you plan to schedule your CPA exam, the CPA Evolution may or may not affect you as it relates to the CPA exam.

Wondering how long you should study for the CPA exam? Our answer is roughly 400 hours—give or take 100 hours depending on your education, how long you’ve been out of school, work experience, etc.

Want to pass the CPA exam quickly? Be sure to check out our blog on how to pass the CPA exam in 3 months.

The knowledge and skills needed to succeed as a newly licensed CPA (nlCPA) change over time as the industry changes and different regulations, laws, codes, etc., are updated. In order to ensure the CPA exam is preparing nlCPAs properly and testing on relevant skills and knowledge, the AICPA revises the CPA exam to ensure nlCPAs are being prepared adequately.

These revisions can be large or minor and can include anything from adding new topics to removing outdated information, to improving the testing experience.

The CPA Exam Blueprints are documents that outline the minimum knowledge and skills nlCPAs need to be proficient in their industry. These blueprints are used to update the CPA exam as they summarize the scope and content of each section that is covered in the exam.

The most recent CPA Exam Blueprints released by AICPA went into effect July 1, 2021. These changes are what dictated the 2021 CPA exam changes in AUD, BEC, FAR, and REG and new pronouncement changes are what dictated the changes to the 2022 exam.

New blueprints are released yearly or multiple times per year, but fortunately, CPA exam review prep courses like Wiley CPA keep track of these changes and account for them when developing CPA exam study material, so you have less to worry about.

As you review the changes to the 2022 CPA exam, you are probably wondering how prepared you are to sit for the exam. Well, we have good news because you can take Wiley’s Free CPA Practice Exam to see exactly where you stand. Developed in consultation with subject matter experts from Wiley CPA Exam Review, this free CPA practice exam is helpful for both individuals considering taking the CPA exam and those currently studying for the exam.