CPA Exam: Assessing Entry-Level Skills and Knowledge, Study Guides, Projects, Research of Accounting

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Uniform CPA Examination

Practice Analysis

NASBA Annual Meeting

October 2013

Colleen Conrad, CPA and Craig Mills, Ed.D.

Purpose of the CPA Exam ! To assess important knowledge and skills required for entry- level CPAs for the protection of the public interest ! Criteria for determining knowledge/skills included on CPA Exam:

• Relevance to work of entry-level CPAs
• Importance to work of entry-level CPAs
• Frequency of use by entry-level CPAs ! Periodically assess entry-level work to determine whether the Exam needs to change to match entry-level practice
• There is evidence that change is needed

“The Committee believes that the following attributes are essential for a successful CPA”

! The ability to think critically

! A keen analytical sense

! Effective communication skills, both written and

oral

! A foundation of technical knowledge in accounting

theory, auditing, principles, finance, tax, business

law and management principles

! Well developed research skills

! High ethical standards

4 New York State Society of CPAs (NYSSCPA). 2008 Quality Enhancement Policy Committee of The New York State Society of CPAs

Greatest Strength/Weakness of Recent Graduates?

Area Strength Weakness

Analytical thinking 4% 26%

Communication skills 0% 32%

Technical accounting knowledge 2% 3%

Information technology skills 56% 0%

Work ethic 2% 37%

Energy level 4% 2%

Global cultural awareness 9% 0%

Ability to work in teams 23% 0%

Ethical standards 0% 0%

Valerie C. Milliron THE ACCOUNTING EDUCATORS’ JOURNAL, Volume XXII 2012 pp. 43- Report from a forum and survey sponsored by California Society of CPAs

Did you feel prepared immediately after graduation in each of the following areas: YES NO Item Description 93% 7% Ability to work in teams 92% 8% Ethical standards 87% 13% Work ethic 86% 14% Energy level 78% 22% Communication skills 75% 25% Information technology skills 67% 33% Analytical thinking 58% 42% Global cultural awareness 57% 43% Technical accounting knowledge Valerie C. Milliron THE ACCOUNTING EDUCATORS’ JOURNAL Volume XXII 2012 pp. 43- Report from a forum and survey sponsored by California Society of CPAs

What Does This Make Us Think?

! Technical knowledge remains important

! Possible increase in assessment of analytical skills

! Possible increase in assessment of communication

skills and assessment of more forms of

communication (e.g. listening)

! The CPA Exam may need to take more advantage of

test questions like the task based simulations and

other kinds of performance testing

The Direction of Measurement

! Evidence Centered Design is taking a more

cognitive approach to test development.

• What does a person have to know or be able to do?
• What behavior would provide evidence that a person knows this or can do it?
• What task can be designed to gather the evidence?

! Performance testing is becoming much more

common

• Successfully performing a task demonstrates whether candidates have the foundational knowledge and the skill to apply it.

New Question Formats ! AICPA is researching new question formats

• Access authoritative literature to figure out how to complete a financial report
• Listening comprehension
• Edit a document (written communication and content) ! Programme for International Student Assessment will include assessment of collaboration skills in 2015 ! Common Core has resulted in research on data interpretation questions and many other skills ! Progress is being made on scoring written content ! ETS iSkills

What is a Practice Analysis? ! A project designed to

• Document the scope of entry-level practice
• Identify how entry-level practice is changing
• Provide data to define the structure of the CPA Exam and the content and skills that will be tested
• Serve as the foundation of the validity and legal defensibility of the Exam
• Allow the Exam to remain current as changes in the profession and measurement occur ! Conducting the practice analysis and setting the passing score are the two most important responsibilities of the BOE
• NASBA and AICPA work closely together on both when they occur ! The practice analysis consists of six phases.

Phases of the Practice Analysis

1. Practice Analysis Exploration

v Interviews, focus groups, and other activities ü Understand activities performed by entry-level CPAs ü Identify skills required to perform the activities ü Learn which skills are increasing and decreasing in importance ü Provide data to define the subset of skills to be tested

2. Practice Analysis Confirmation

v Survey supervisors to verify the findings from Exploration v Leveraging NASBA’s ALD when possible

Phases of the Practice Analysis

4. Exposure of proposed changes

v Develop Exposure Draft and invite comments

5. Finalize design of revised CPA Exam

v Evaluate comments and revise design as needed

6. Announce new exam – CBT

v Structure v Length v Test Specifications v (knowledge and skills to be tested) v Psychometric Model

Exploration Takes a Broad View

! Understand the full scope of entry-level work

! Evaluate which elements are important for the

protection of the public.

! Consider only those elements that are important for

the protection of the public for inclusion on the CPA

Exam

Entry-­‐Level Prac<ce

Public Protec5on Not Public Protec5on CPA Exam

Practice Analysis - Staff Project Team

! Executive Sponsors

• Craig Mills, AICPA
• Michael Decker, AICPA
• Ed Barnicott, NASBA

! Business Owner

• Joe Maslott, CPA, CGMA

! Project Manager

• Joanne Lindstrom, PMP

! Team Members

• CPAs
• Psychometricians
• Communications professionals (NASBA and AICPA)

BOE Governance ! BOE Sponsor Group

• Rick Niswander, CPA (BOE Chair)
• Wendy Perez, CPA (BOE Past Chair)
• Mari DeVries, CPA (Content Chair)
• Jacqueline Leighton, Ph.D. (Psychometric Oversight Committee)
• Amy Sutherland, CPA (Content Committee)
• Jimmy Corley, CPA (State Board Committee) ! Sponsor Advisory Group
• 10-12 Members
• Representing Key Stakeholders such as
• NASBA
• State Boards
• National Regulators
• Educators
• Public Firms
• Business and Industry