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The general rule is that new pronouncements are eligible for testing 6 months after they are effective, per the AICPA. Here’s a comprehensive list of the 2019 CPA Exam changes that are eligible for testing in the third quarter (Q3) starting on July, 1 2019:
Note: Changes will be denoted by 
Financial Accounting and Reporting (FAR) Changes in Q3 2019
Thankfully, there are no major blueprint (study guide) changes, however there are two content related updates to be aware of:1. ASU 2018-16: Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes
Added a fourth benchmark interest rate for hedge accounting.
- UST rate (direct treasury obligations of US gov't)
- LIBOR swap rate
- OIS (Overnight Index Swap) rate based on the Fed Funds effective rate
- [SIFMA (Securities Industry and Financial Markets Association) municipal swap rate]
Per ASU 2018-20, the lessor can elect to treat sales taxes as lessee costs and exclude the amount of tax from both the revenue and lease receivable.
Previously, the lessor would need to evaluate if the lessee or lessor is the primary party obligated to pay the underlying tax to determine recognition. If the lessor is obligated to pay the tax, and the election is not made, the tax amount is recognized by the lessor as lease revenue and as an expense when paid.
Regulation [REG] Changes in Q3 2019
As with FAR, there’s nothing truly "substantive" in Q3 2019, thank goodness! TCJA was hard enough! All changes are to help you understand what's already being tested more clearly.
Three representative tasks have been clarified:
1. OLD: Calculate the direct and indirect ownership percentages of corporation stock to determine whether there are related parties for federal income tax purposes.
NEW: Calculate the direct and indirect ownership percentages of corporation stock [or partnership interests] to determine whether there are related parties for federal income tax purposes.
2. OLD: Recall assets includible in a decedent’s estate for federal estate tax purposes.
NEW: Recall assets includible in a decedent’s [gross] estate for federal estate tax purposes.
3. OLD: Recall allowable estate tax deductions in a decedent’s estate.
NEW: Recall allowable estate tax deductions [for federal estate tax purposes.]
In addition, actual dates will be used (01/12/19 vs. 01/12/X9) if necessary to answer (think alimony or NOL).
Auditing and Attestation [AUD] Changes in Q3 2019
The AUD section has both blueprint and content updates this quarter:
1. Representative task updates - add completeness & reliability:
OLD: Identify and document an entity’s key IT general and application controls, including their impact on the audit of an entity’s financial statements, including an audit of an entity’s internal controls.
NEW: Identify and document an entity’s key IT general and application controls, their impact on the audit of an entity’s financial statements, including an audit of an entity’s internal controls, [and consider the effect of these controls and manual controls on the completeness and reliability of an entity’s data.]
OLD: Perform and document the tests of an entity’s IT general and application controls, including controls relevant to the audit of an entity’s financial statements, including an audit of an entity’s internal controls.
NEW: Perform and document tests of an entity’s key IT general and application controls, [their impact on the audit of an entity’s financial statements], including an audit of an entity’s internal controls, [and consider the effect of these controls and manual controls on the completeness and reliability of an entity’s data.]
2. There are new representative tasks for data analytics and visualizations as they relate to an audit.
NEW-ADDED: Assess risks of material misstatement using audit data analytic outputs (e.g., reports and visualizations) to determine relationships among variables and interpret results to provide a basis for developing planned audit procedures.
NEW-ADDED: Perform analytical procedures using outputs (e.g., reports and visualizations) from audit data analytic techniques to determine relationships among variables and interpret results in an audit or non-audit engagement.
NEW-ADDED: Determine the attributes, structure and sources of data needed to complete audit data analytic procedures. Use audit data analytic outputs (e.g., reports and visualizations) to determine relationships among variables and interpret results to meet objectives of planned procedures in an audit or non-audit engagement.
3. The remaining parts of PCAOB Release 2017-001, Auditor’s Report on an Audit of Financial Statements when the Auditor Expresses an Unqualified Opinion and Related Amendments to PCAOB Standards are newly eligible for testing in Q3 2019.
Critical audit matters (CAMs) are defined as a matter that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective, or complex auditor judgment.
If CAM is identified during the period under audit, the auditor must add a paragraph that:
- Identifies the CAM
- State why the auditor thinks this matter is critical in nature
- Discuss how the CAM was addressed in the audit
- Refer to relevant accounts or disclosures that are related to the CAM
Business Environment and Concepts (BEC) Changes in Q3 2019
The BEC section had two areas that got some love: IT restructure + data analytics (data visualization).
While the scope of the exam isn't changing (read: it’s not “harder” or testing more topics), the study guide flows better.
It starts with IT fundamentals (software, hardware, use in business), moves on to risks of IT, and then to controls to address the risks.
If you compare the IT blueprint versions from Q1 2019 and Q3 2019, it is really a big bath of changes and the AICPA did a lot of nit-picky updating to representative tasks. However, there are several items of particular significance for CPA candidates:
1. Brand new representative task for IT:
NEW: Define the basics of hardware, software, databases, networks, mobile technology, etc. used by an entity internally, externally and through outsourcing arrangements (e.g., application service providers and cloud computing).
While this is “new” it has always been tested and was previously implied. If you’re a Yaeger CPA Review student, don’t worry. We’ve been teaching it all along!
2. The AICPA now sells out which types of "business processes" IT may address (which it didn't do before):
OLD: Identify the role of information systems in key business processes within an entity.
NEW: Identify the role of information systems [(e.g., enterprise and application systems)] in key business processes [(e.g., sales, cash collections, purchasing, disbursements, human resources, payroll, production, treasury, fixed assets, general ledger and reporting).]
3. Data analytics (which includes visualizations) are now spelled out and clearly eligible for testing. The ones that you’ll see on the BEC section will look like a manager’s dashboard and be geared toward internal decision making.
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