How to Prepare Students Now for the CPA Evolutionby
The new age of accounting is here, and with it comes an updated CPA licensure exam to prepare new accountants for a changing profession. In this article, accounting and finance guru Liz Kolar explains what educators can do now to prepare students for the CPA Evolution model, which will focus more on the technology concepts and updated skill sets future accountants must embrace.
The CPA Evolution initiative that is slated to launch on January 1, 2024, will change the content of the CPA licensure exam from four core components to three core sections: audit, taxation and accounting, with technology and digital acumen incorporated into each. Candidates also will be required to select one of three specialized tracks: Business Analysis and Reporting (BAR), Tax Compliance and Planning (TCP) or Information Systems and Controls (ISC). The Association of International Certified Professional Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) plan to finalize and announce a draft blueprint for the exam in the summer of 2022, at the earliest, before publishing the final blueprint at the beginning of 2023.
The CPA Evolution will affect current college freshmen and sophomores, as they will be the first cohorts to take the new exam. Educators and academics should not wait for the blueprint before updating their curricula and preparing their students, as they can immediately begin to incorporate broad topics and skill sets identified in the CPA Evolution Model Curriculum released earlier this year. Most importantly, educators should incorporate critical thinking, problem solving, data management and analysis, digital acumen, expanded internal controls focus and service organization control (SOC) engagements.
Here is what educators can do now to prepare for 2024, from easiest to most difficult.
Audit-Focused Changes: SOC, Risk, Controls and Systems
The audit section of the Evolution exam will have an increased focus on SOC engagements and business risks, systems and controls. Educators should address these topics at an introductory level in class by discussing the following:
- What are SOC engagements?
- How are they performed?
- What do auditors need to do to assess a SOC report from a service auditor?
- What are the responses if the SOC report identifies control deficiencies with the service organization?
Technology-Focused Changes: Data Analysis and Management and Digital Acumen
Data analysis and management skills are more difficult for educators to build into their curricula. Digital acumen is a new addition to the exam and focuses on candidates’ identification of and ability to respond to emerging technologies in accounting. The Model Curriculum requires candidates to “recall” or “identify” various emerging technologies, trends and applications. Luckily, recalling and identifying is less challenging than “applying” or “implementing,” so these skills are easier to incorporate into a variety of classes.
These learning objectives can be met by explaining various accounting technologies to students and describing their use cases. Students can expand their knowledge by participating in case studies that describe an audit, financial reporting or tax situation, thereby enabling them to identify the best accounting technology to use and explain why that technology is best. For example, students could explain which workflows they would create during journal entry testing on an audit by listing the parameters they would set and what technology they would deploy to perform the test.
Educators need not create a separate course to address data analytics and management skills. Instead, because technology will be integrated across all exam parts, educators should take a similar approach in the classroom and integrate technology and data analysis tools across the curriculum. Introductory classes should begin by incorporating Excel, while intermediate classes should include assignments related to Alteryx, Tableau, Microsoft Power BI or other similarly advanced tools. Robotic process automation tools are perfectly suited to be introduced in audit (e.g., practice control testing over signatures or three-way matches) and tax compliance (e.g., pulling data from the same source for input onto a tax return or schedule). Upper-level courses and graduate courses could expand upon these tools to enhance skills or continue to incorporate the latest emerging technologies to meet the “recall” or “identify” tasks in the Model Curriculum.
Regardless of the approach, educators should not expect their students to become experts overnight in data analytics and digital acumen.
“Some of the highest learning will occur when students work through difficulties on their own and understand the solution enough to walk other students through the problem without the professor,” said Jack Castonguay, vice president of strategic content development at Surgent Accounting and Financial Education.
The breadth of resource guides, videos and instruction manuals offered by providers of emerging technology will give students ample resources to complete tasks without a lot of direct involvement from educators. In fact, faculty can hone students’ problem-solving skills by having them solve the case study, assignment or project on their own using the product’s resources. This independent learning and troubleshooting will further prepare students for the day-to-day demands of working for an accounting firm, as many senior firm staff and partners are unlikely to be experts in the same emerging technologies the frontline staff are using. Firms will expect their employees to take the initiative and learn to adapt, an expectation educators can foster in the classroom.
Skills-Focused Changes: Critical Thinking and Problem Solving
Some of the most sought-after skills are those that are hardest to teach, such as critical thinking and problem solving. To address these skills, educators need to find ways to move beyond strict binary-choice content. Instead of asking for journal entries of an operating lease, give students the fact pattern for the lease and let them determine its classification and annual expense. Or, ask them to determine, given certain debt covenants, how a company would ideally want to structure their lease. These tasks require more critical thinking and less memorization of accounting rules. Additionally, incorporating emerging accounting technologies into the curriculum presents many opportunities for students to problem solve without clear guidance. For these assignments, focus less on the answer and more on the thought process that led the student to the answer, which will hone critical thinking. Understanding the “why” and “how” becomes more important than the “what.”
The CPA Evolution will undoubtedly change which content educators teach, how new content is combined with legacy content and the prevalence of digital acumen and technology content across the curriculum. Educators and faculty can begin making changes to curriculum now to prepare for the new exam in 2024. Bite-sized introductions and self-paced projects will be the most beneficial until the final blueprint is released.
Liz Kolar, CPA, CGMA, is Executive Vice President, Surgent Accounting and Financial Education for Surgent. Prior to her tenure at Surgent, Liz founded Pinnacle CPA Review and co-founded Surgent Kolar CPA Review. Liz began her career in Public Accounting with a Big Four firm auditing financial service clients. She graduated from Pace University...