1) Uniform CPA Examination: Past, Present & Future June 2015 Colleen Conrad, CPA – Executive Vice President/COO, NASBA Michael Decker – Vice President, Examinations, AICPA Rick Niswander, CPA – Chair, AICPA Board of Examiners 

2) Our Mission Exam’s role in protecting the public interest Why? Provide reasonable assurance to boards of accountancy that candidates who pass the CPA Exam possess the level of technical knowledge and the skills necessary for initial licensure to protect the public interest. American Institute of CPAs® The Uniform CPA Examination® 2 

3) Why a Practice Analysis? What do we test? Ensures relevancy with and the profession How do we test it? American Institute of CPAs® The Uniform CPA Examination® 3 

4) Exam Evolution 2004   Paper  &  Pencil   Conversion   •â€¯ Release of CBT-e in 2011 •â€¯ Shorter score release timelines •â€¯ Writing in BEC only •â€¯ Four pillars assumed •â€¯ No changes to test administration 2008   CBT-­â€e   •â€¯ Led to the computerization of the Exam in 2004 •â€¯ Creation of the original CBT testing policies and procedures American Institute of CPAs® Next  Version   •â€¯ Assumed nothing •â€¯ Anticipated changes from 10 years of CBT experience The Uniform CPA Examination® 4 

5) Research Project Timeline Full implementation of the new Test Driver, with Excel, in 2018 American Institute of CPAs® The Uniform CPA Examination® 5 

6) What We Learned Critical thinking, problem solving, analytical ability and professional skepticism   Effective communication skills American Institute of CPAs® Content knowledge is the key to protecting the public interest – but alone it is not enough Well-developed research skills A strong understanding of the business environment and processes Ethics and professional responsibilities The Uniform CPA Examination® 6 

7) ITC Results: Key Feedback Support •â€¯ Current Exam structure •â€¯ Assessment of practice-driven concepts via writing Other Comments •â€¯ Extend testing in blackout periods •â€¯ Allow retesting within window •â€¯ Assessment of higher-order skills via integration •â€¯ Exam enhancements with reasonable price and score reporting impact •â€¯ Microsoft Excel as a tool American Institute of CPAs® The Uniform CPA Examination 7 

8) Next Version of the CPA Examination American Institute of CPAs® 

9) Exam Blueprint & Structure American Institute of CPAs® 

10) Content Assessment " Pillars of AUD, FAR, REG and BEC " Enhance blueprints with depth and breadth across topic areas – content & skill level •â€¯ Note that this is significant enhancement to the Exam! " Increased assessment of higher-order skills warrants increased use of task-based simulations " Skill / content allocation will change based upon blueprint and survey results American Institute of CPAs® The Uniform CPA Examination® 10 

11) Leveling of Skills Remember & Understand Application Analysis Evaluation American Institute of CPAs® The perception and comprehension of the significance of an area utilizing knowledge gained. The use or demonstration of knowledge, concepts or techniques. The examination and study of the interrelationships of separate areas in order to identify causes and find evidence to support inferences. The examination or assessment of problems, and use of judgment to draw conclusions. The Uniform CPA Examination® 11 

12) Sample of Action Verbs for Consideration Remember & Understand Application Analysis Evaluation American Institute of CPAs® Identify Classify Recall Explain Categorize Clarify Compare Define Calculate Implement Test Represent Prepare Use Execute Carry out Reconcile Deconstruct Validate Deduce Imply Integrate Distinguish Organize Justify Critique Conclude Judge Detect Verify Recommend Assess The Uniform CPA Examination® 12 

13) FAR Section: DRAFT Blueprint Example Remembering Application Analysis Evaluation Total Area I: Conceptual Frameworks and Financial Reporting (25%) Area II: Select Financial Statement Accounts (35%) 14% 43% 44% 0% 100% 7% 49% 45% 0% 100% Area III: Select Transactions (30%) Area IV: State and Local Governments (10%) 18% 60% 22% 0% 100% 41% 57% 1% 0% 100% Skill Allocation Percentage 15% 52% 33% 0% 100% American Institute of CPAs® The Uniform CPA Examination® 13 

14) FAR Area 1 – Current CSO / SSO View Next Exam Blueprint American Institute of CPAs® The Uniform CPA Examination 14 

15) DRAFT - Section Skill Allocation Area   Remember  &   Understand   ApplicaAon   Analysis   EvaluaAon   AUD 30%  -­â€  40%   30%  -­â€  40%   15%  -­â€  25%   5%  -­â€10%   FAR 10%  -­â€  20%   50%  -­â€  60%   25%  -­â€  35%   -­â€   REG 25%  -­â€  35%   35%  -­â€  45%   25%  -­â€  35%   -­â€   BEC 15%  -­â€  25%   50%  -­â€  60%*   20%  -­â€  30%   -­â€   *10% - 20% will be Written Communication American Institute of CPAs® The Uniform CPA Examination® 15 

16) Examples of Higher-Order Tasks " Evaluate evidence through the use of observation and inspection procedures in an audit or non-audit engagement. " Verify the ending inventory balance by observing the performance of inventory counting procedures, inspecting the inventory, and performing test counts. " Investigate debt covenant violations and determine their impact on the financial statements and the notes to the financial statements. American Institute of CPAs® The Uniform CPA Examination® 16 

17) Assessing Written Content " BOE support: Continue to test separately •â€¯ Writing / grammar •â€¯ Content knowledge •â€¯ Higher-order skills (application, analysis, evaluation/conclusion) " Writing will continue to be tested and scored using current model that considers whether the written communication is (i) on topic (ii) organized and (iii) grammatically correct " Continue research on automated scoring of essays American Institute of CPAs® The Uniform CPA Examination® 17 

18) Exam Design American Institute of CPAs® 

19) Exam Time – pending final blueprints Section Current Time Proposed Time* AUD 4 hours [4 hours] FAR 4 hours [4 hours] REG 3 hours [4 hours] BEC 3 hours [4 hours] 4 sections 14 hours [16 hours] *16 hours is subject to change as we finalize section blueprints and the Exposure Draft American Institute of CPAs® The Uniform CPA Examination® 19 

20) Excel Implementation " Implement Excel as a tool for candidates in 2018 •â€¯ Replaces generic spreadsheet •â€¯ Candidates may use basic or advanced Excel skills to complete a problem " Excel skills will not be directly assessed " Continue internal research on: •â€¯ Excel spreadsheets embedded in an item •â€¯ Excel spreadsheets as an item American Institute of CPAs® The Uniform CPA Examination® 20 

21) Test Administration American Institute of CPAs® 

22) Test Administration Model* (potential changes) " Extend testing to the 10th of the black-out month •â€¯ •â€¯ •â€¯ •â€¯ Allow up to 5 days of emergency window** if possible Adds 40 – 60 days of testing annually Windows do not end near major holidays (Thanksgiving, etc.) Allows testing in March, June, September and December " Allow re-testing of a failed section within a window •â€¯ Create policy that candidate cannot register for re-test until he/ she has received score •â€¯ Candidates may only take the same section 2x per window * Changes require review and approval by NASBA, AICPA, Prometric, and Boards of Accountancy ** Emergency window use requires approval by NASBA, AICPA and Prometric American Institute of CPAs® The Uniform CPA Examination® 22 

23) Price* " ITC response reflected understanding and acceptance of a reasonable price increase with appropriate added benefits " Exam fees are likely to increase •â€¯ •â€¯ •â€¯ •â€¯ •â€¯ •â€¯ Excel implementation Increased item development costs Increased software development costs Potential additional testing / seat time NASBA Gateway system enhancements Flat to down candidate section volumes * Changes require review and approval by NASBA, AICPA, Prometric, and Boards of Accountancy American Institute of CPAs® The Uniform CPA Examination® 23 

24) 2015 – 2017 Path to the Next CPA Exam American Institute of CPAs® 

25) Finalize in 2015-2016 Blueprints Structure Design Exam content and skills outline Exam sections, item distributions Exam test scoring, length, forms American Institute of CPAs® Administration Testing windows, timeline for testing The Uniform CPA Examination® 25 

26) Call to action: Last opportunity to comment Exposure Draft Contains blueprints, structure, design and administration of Next CPA Exam Public Comment September – November 2015 American Institute of CPAs® The Uniform CPA Examination® 26 

27) Exposure Draft: What Do You Think? Is the next version of the Exam on the right track? Was anything missed? What are your thoughts for continual improvement of the Exam post Q2 2017? American Institute of CPAs® The Uniform CPA Examination® 27 

28) American Institute of CPAs® The Uniform CPA Examination® 28 

29) Questions? American Institute of CPAs® The Uniform CPA Examination® 29