Accounting

CPA Exam Shifts Focus to "Critical Thinking"


Proposed changes to the CPA exam announced yesterday are focusing on “higher-level skills” for accountants including professional skepticism.

That is welcome news to accounting educators who have been advocating for more “critical thinking” to be included in industry exams.

“To the extent that material can be developed to appropriately assess these skills, mastery of these constructs is of significant importance to the quality of individuals pursuing an accounting profession,” said Cynthia Jeffrey, PhD, Dean's Faculty Fellow in Accounting at Iowa State University.

Yesterday, the American Institute of CPAs (AICPA) released an exposure draft on proposed changes to the Uniform CPA Examination. According to a statement, the changes to the exam “will be designed to enhance the testing of higher order cognitive skills that include, but are not limited to, critical thinking, problem solving, analytical ability and professional skepticism.”

“These professionals are being asked to perform more advanced tasks and work on complex projects early in their accounting careers,” said Michael Decker, vice president of examinations at the AICPA in a statement. “The proposed evolution of the CPA Exam is in line with what is required of newly licensed CPAs to protect the public interest in today’s dynamic economy.”

While Jeffrey said it was difficult to comment on changes to the exam without the specifics on how they will be implemented, the focus on critical thinking skills is something accounting academics and private market employers are focusing on for newly minted accountants.

“Too often, students think that detailed technical knowledge, such as calculating EPS, identifying capital vs. operating leases, or accounting for derivatives, constitute the difficult part of accounting,” Jeffrey said.  “While that is indeed challenging material to learn, students - and those entering the profession - need to understand that at that point, the truly hard parts have already been done.”

Jeffrey explained that key decisions -- such as determining whether a transaction should be recognized as revenue in the current period, whether an expenditure is a capital expenditure or a revenue expenditure, and how various transactions map to the elements of the financial statements.-- are part of those “critical thinking” elements not currently tested or completely understood by students.

In fact, Iowa State in in the process of developing a course that “draws together all of the things students have learned in a single course” on tax, managerial, financial, systems, and auditing, and ties them to a segment on codes of conduct and professional judgment.

“These skills are very important for accountants to develop, and demonstrating a level of competency both ensures that students are aware of the importance of these higher-order cognitive skills and encourages faculty to continue their efforts to incorporate these skills into the classroom,” Jeffery added.

The AICPA said the exposure draft  will serve as the basis for the next version of the CPA Exam, launching in 2017, and that the comment period runs through Nov. 30.