The CPA Exam has undergone several changes in content that have been eligible for testing since January 1, 2019. It’s important to be aware of these changes so that you’re properly prepared on Exam Day. So, we put together a simple, comprehensive list. Here are the top 5 things you need to know about the 2019 CPA Exam.
1. The Tax Cuts and Jobs Act (TCJA) of 2017
The biggest change on the 2019 CPA Exam is the incorporation of the new Tax Cuts and Jobs Act (TCJA) that has been implemented in the Regulation (REG) section. This Tax Reform was passed on December 22, 2017 and is the largest tax revamp to take place within the last 30 years.
Due to the extensive overhaul of tax rules, it has impacted all tax sections and can account for as much as 80% of the REG Exam. Thus, the most significantly affected areas are:
- Individual Taxation (15 - 25%)
- Entity Taxation (28 - 38%)
- Taxation of Property Transactions (12 - 22%)
The second most prominent change on the 2019 CPA Exam is the highly tested topic, Leases (ASU 2016-02, 2018-01, 2018-10, 2018-11, and IFRS 16). This has affected the Financial Accounting and Reporting (FAR) section. Some of the major changes include:
- Elimination of “off-balance sheet financing”-- Operating leases must now be recognized by the lessee on the balance sheet (except for short-term leases of 12 months or less).
- Capital leases are now called “finance leases.”
- IFRS 16 considers all leases to be finance leases that must be recognized on the balance sheet unless they are either short-term or worth $5,000 or less.
?In addition, several bright-line tests have been removed, requiring candidates to use more judgment and making the standard slightly more difficult to apply.
3. Data Analytics
Data analytics has been a trending topic in all areas of the professional world, and the accounting industry is no exception. The CPA Exam Blueprints include an element where it's possible for data analytics to be tested on the 2019 CPA Exam on both the BEC and AUD sections. Starting in July, CPA Candidates will be shown data analytic outputs (for example, visualizations, charts, etc.) and asked to analyze or interpret the data from these outputs. They will be required to draw their own conclusions from the data outputs, similar to what is done in an audit today.
4. Emphasis on Professional Skepticism
Although the 2019 Auditing and Attestation (AUD) Blueprints don’t include any additional or eliminated content areas, what has changed are some revisions to add more detail on professional skepticism. These updates do not change the nature or scope of content eligible on testing for AUD but they do add extra emphasis on the topic. The following are some examples of representative tasks related to these revisions:
- Understanding the concepts of professional skepticism & professional judgment
- Investigating evidence that contradicts or corroborates management explanations, expectations, and other hypotheses throughout an audit or non-audit engagement
Analyzing responses obtained during formal interviews with management and others to ask relevant, effective follow-up questions to understand their perspectives/motivations in an audit or non-audit engagement.
5. Simandhar CPA Review will prepare you to successfully pass the 2019 CPA Exam
Simandhar CPA Review will continue to ensure all our students are fully prepared for the 2019 CPA Exam changes. It’s important to remember that the CPA Exam’s job is to reflect the expectations of a newly licensed CPA, which is influenced by continuously evolving technology that affects the accounting profession. In other words, candidates should expect the CPA Exam to always be evolving to meet industry expectations.
No matter what the changes are, remember you have a partner in all of this. The Simandhar CPA Review team is dedicated to ensuring you are set up for success when facing any Exam changes. And, with our new patent pending Smart Path Predictive Technology™ , our course can provide you with targeted recommendations on where and how to focus your efforts by comparing your progress and performance to those who have passed the CPA Exam. It’s a win-win situation!