CPA Certification – A Ready Reckoner

There’s so much information about the CPA certification online that sometimes it’s difficult to sift out the most relevant parts. For aspiring students this can be problematic and confusing. Not to worry. We at Orbit Institutes have created this guide specifically for you. What exactly does a CPA certification entail? Read our ready reckoner to clarify all your doubts about it. 

The CPA Examination: The Certified Public Accountant(CPA) examination is a computer-based test that comprises four sections. The four sections are:

  1. Auditing and Attestation (AUD)
  2. Financial Accounting and Reporting (FAR)
  3. Regulation (REG)
  4. Business Environment Concepts (BEC)

Syllabus of the CPA Examination: Each section of the examination is designed to test ones expertise in different aspects of finance.

1. Auditing and Attestation (AUD):  These are one of the most important aspects of a CPAs job. Simply put, auditing is the process of examining a company’s financial statements. While attestation is the process of declaring that financial statement as accurate and reliable.

To do an audit one needs to understand how the client’s business functions & the internal checks and balances they have in place. The auditor must also provide an opinion on the basis of certain procedures. The AUD section of the exam, tests all of this. Below is a table that details the areas tested and their weightage.

AUDITING AND ATTESTATION (AUD)

Content Area

Allocation

Ethics, professional responsibilities, and general principles

15–25%

Assessing risk and developing a planned response

20–30%

Performing further procedures and obtaining evidence

30–40%

Forming conclusions and reporting

15–25%

You will be allotted a total of 4 hours to complete this section. To prepare for this section you need to memorize everything from your audit opinion letter to the internal controls.

2. Financial Accounting and Reporting (FAR): This section of the exam is considered the widest. It covers subjects such as aspects of financial reporting, the differences between the GAAP & the IFRS basis and the compilation, evaluation and analysis of financial statements amongst others. The below table broadly shows the weightage given to each section.

FINANCIAL ACCOUNTING AND REPORTING (FAR)

Content Area

Allocation

Conceptual Framework, Standard-Setting and Financial Reporting

25-35%

Select Financial Statement Accounts

30-40%

Select Transactions

20-30%

State and Local Governments

5-15%

The FAR section is 4 hours long. The syllabus is vast and often candidates don’t give themselves enough time to prepare between the other examinations. On average one should schedule 7-8weeks of preparation time before attempting the FAR. To prepare for the FAR make sure you are well-versed with your journal entries.

3. Regulation (REG): This section of the CPA is designed to test you on federal taxation, business ethics and business law. It broadly covers tax concepts, your ability to understand legal responsibilities, tax issues and tax implications. The content area and weightage is as follows:

REGULATION (REG)

Content Area

Allocation

Ethics, Professional Responsibilities and Federal Tax Procedures

10-20%

Business Law

10-20%

Federal Taxation of Property Transactions  

12–22%

Federal Taxation of Individuals

15–25%

Federal Taxation of Entities

28–38%

Remember, the ethics & taxation sections are equally important in this paper. It is important you don’t underestimate either section.

4. Business Environment Concepts (BEC): This section of the CPA tests the candidates understanding of business concepts and their understanding of their responsibilities while making business decisions. The BEC exam covers subjects such as corporate governance, financial management and operations management etc. Below is a detailed table.

BUSINESS ENVIRONMENT CONCEPTS (BEC)

Content Area

Allocation

Corporate Governance

17-27%

Economic Concepts and Analysis

17-27%

Financial Management

11-21%

Information Technology

15-25%

Operations Management

15-25%


The fact that the BEC section of CPA is perhaps the least technical shouldn’t make you underestimate its difficulty. There are also far less task-based simulations & multiple choice questions in this section as compared to the others, making it tough. This section also has a different question format i.e. – Written Communication.

As you can see, the Certified Public Accountant (CPA) examination is not just one exam,rather it consists of 4 different exams. Cracking this exam involves detailed planning & time management which Orbit Institutes can help you with. No matter how one chooses to approach it; the advantage of this certification is that you could achieve it within just a year.

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