CPA Exam Review News Blog

CPA Exam Content Changes: What's Eligible for Testing in Q1 2018?

 Yaeger CPA Review wants to make sure you are prepared for the 2018 CPA exam changes. There are two types of changes:

  1. AICPA blueprint and representative task updates
  2. Content changes resulting from accounting standards updates, regulation changes, etc.

Here's what you need to know for each section of the CPA exam.

Business Environment and Concepts (BEC) 

Blueprint:

BluePrint7.png

No representative task changes per AICPA change summary. All blueprint changes go into effect Jan 1, 2018.

Content:

Information Technology: Topics will vary by exam. Topics that you may see on your exam in 2018 include:

  • Automation
  • Big Data, data analytics, and data visualizations
  • Blockchain and cryptocurrencies (e.g., bitcoin)
  • Cloud operations and data storage
  • Cybersecurity
  • Digital business models

Don't worry, Yaeger CPA Review will cover all of these topics in our 2018 textbooks!

Hint: Also, keep an eye out for the updated COSO ERM (Enterprise Risk Management) framework that's expected to be published in September 2017. This would be eligible for testing on the CPA exam in Q2 2018.

Regulation (REG)

Blueprint:

No change to task changes. References clarified to say "Internal Revenue Code of 1986, as amended, and "Treasury Regulations" (not just "Regulations").

Content:

TBD for Q1 2018. But, here's what will change later this year (2017):

  • Eligible in 17Q3: Regulation D, Rules 504 and 505
    • Rule 504 amended to increase aggregate amount of securities offered and sold in any twelve-month period from $1 million to $5 million. (See highlighted amount in the chart below.)
    • Rule 505 removed 
      • Recall that Rule 505 was an exemption from the registration requirements of the federal securities laws.Reg D.png
  • Eligible in 17Q4: Executive order
    • President Trump signed an executive order promoting free speech and religious liberty.
      • Directs the IRS not to enforce a provision in IRC sec. 501(c)(3) that bars tax-exempt organizations from engaging in certain types of political activity
  • Eligible in 17Q4: Final regulations issued
    • Section 987
      • Rules for determining the taxable income or loss of a taxpayer with respect to a qualifying business unit with a functional currency other than the U.S. dollar
    • Foreign Account Tax Compliance Act (FATCA) regulations 
      • Rules for individuals living outside U.S. to report specified foreign financial assets to IRS and Financial Crimes Enforcement Network (FinCEN)
  • Eligible in 17Q4: District Court Cases
    • Adam Steele, et. al. v. United States of America
      • Requires tax return preparers to have preparer tax identification number (PTIN), but can't charge for these numbers.
    • James C. Sexton, Jr. and Esquire Group, LLC v. Karen L. Hawkins, Director of Office of Professional Responsibility, IRS
      • Court held that you can still prepare tax returns or offer tax advice if suspended from "practice before the IRS" since these activities don't meet that definition.

Financial Accounting and Reporting (FAR)

Blueprint:

AICPA eliminated Area 1, C, 4 (Statement of Functional Expenses) and all associated task statements.

AICPA removed the phrase "unrestricted, temporarily restricted and permanently restricted" from representative tasks related to the net asset balances of nongovernmental, not-for-profit entities. 

Content:

Lots of changes in Q1 2018:

  • Revenue Recognition (ASU 2014-09, 2015-14, 2016-08, 2016-10, 2016-12, 2017-05, 2017-10)
  • Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01)
  • Not-for-Profit Entities (Topic 958): Presentation of Financial Statements of Not-for-Profit Entities (ASU 2016-14)
  • Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15)
  • Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01)
  • Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory (ASU 2016-16)
  • Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18)
  • Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (ASU 2017-07)
  • Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting (ASU 2017-09)

Hint: Changes to Leases (Topic 842): ASU 2016-02 will not be tested until Q1 2019.

Audit (AUD)

Blueprint:

While it seems like there are lots of small changes, it's all basically one clarification -- all tasks that deal with internal controls  throughout the blueprint were updated to say "including an audit of an entity’s internal controls" rather than an "examination."

Content:

 The Auditing Standards Board released some new pronouncements (superseding and amending some of the old ones):

  • SAS 132, The Auditor’s Consideration of an Entity’s Ability to Continue as a Going Concern (AU-C 570)
    • Supersedes SAS 126
  • SAS 133, Auditor Involvement With Exempt Offering Documents
    • Amends AU-C 560 & AU-C 925
    • Deals with exempt offerings (e.g., securities exempt from registration under the Securities Act of 1933)
  • The Auditor’s Report on an Audit of Financial Statements when the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards (PCAOB release 2017-001)
    • Everything testable except "critical audit matter section" that isn't approved by SEC yet.