User:Deanhulbert23/Certified Public Accountant

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The CPA designation, which stands for Certified Public Accountant, derives from a person who takes and passes the standardized CPA exam which is administered by the American Institute of Certified Public Accountants. Further, a person must meet educational and experience requirements to obtain the CPA license.

The CPA exam has a long and robust history full of changes to become what it is today. Since the first uniform exam in 1917, the CPA exam has increased its emphasis on information technology and became fully online in 2004. In addition, the technology in accounting curricula in schools is being changed to make accounting graduates and future CPAs ready for the working world. Furthermore, the demographics of CPAs—  majority male throughout the 20th century— have shifted significantly. Women have made significant gains within the profession over the years and the amount of CPAs are roughly equal between men and women.

History of CPA Exam
The first law establishing CPA designation was passed in New York on April 17, 1896. Before 1896, the first accounting organization in the USA, The Institute of Accounts, issued certificates to members that passed an examination. However, organizations could not bar nonmembers from practicing, so legislation was needed to control the growth of practitioners.

Before 1917, individual states had their own licensing examinations where accountants could earn the CPA credential, but this differed significantly from state to state. The exams were administered to further the cause of professional cohesion among the accounting profession, verified membership to practice accounting, and for individuals to earn membership in the Institute of Public Accountants (IPA). In response to these factors, the first uniform exam was held on June 14-15, 1917. It established four sections: Auditing, Commercial Law, Accounting Theory and Practice Part 1, and Accounting Theory and Practice Part 2. The Commercial Law and Accounting Theory and Practices sections were precursors to the REG (Business Law and Tax) and FAR (Financial Accounting) sections. The Auditing, Business Law, and Accounting Theory exam segments were each 3.5 hours in length and totaled 10.5 hours. The Accounting Practice Parts I and II were both 4.5 hours in length, totaling to 9 hours. All states would start using the standard CPA exam administered by the organization which would eventually become the AICPA by 1952. The use of calculators was forbidden on the exam until 1994.

Prior to 2004, individuals had to take all four sections of the CPA exam in the span of two days. In 2004, upon recommendation by the AICPA, there was a shift to take the four sections at different dates. Also in 2004, the CPA exam moved from paper and pencil to an online format. The shift to online allowed the exam to test application and technological skills through task-based simulations. It also led to an increased emphasis on information technology with regards to risk assessment for internal controls.

While not as significant as the changes to come in 2024, the CPA exam saw some changes in 2017. The biggest change in 2017 was the amount of knowledge required to answer each of the questions. Before 2017, questions on the CPA exam tested the applicants’ remembering and understanding of the concept. Remembering and understanding corresponds to the lowest levels of Bloom’s Taxonomy. Starting in 2017, examiners wanted to include questions that tested higher levels of Bloom’s Taxonomy. As such, the amount of questions testing remembering and understanding was reduced and questions that tested an applicant’s analysis and application of a skill were added to the CPA exam. Examiners saw that employers of new CPAs would require the use of analysis and application of skills instead of basic remembering and understanding.

Specifically, the Regulation (REG) section of the CPA exam saw changes in 2017. While the REG section of the CPA exam does not test the highest levels of Bloom’s taxonomy, 60-80 percent of the questions on the exam test analysis and application skills. Only 25-35 percent of questions test remembering and understanding following the changes to the exam. Prior to the changes, a majority of questions were remembering and understanding. The Auditing and Attestation (AUD) section will test the highest levels of Bloom’s Taxonomy in the form of evaluation questions. In addition, the REG exam which had been three hours right before the change in 2017 became four hours and has 76 multiple choice questions and either eight or nine task-based simulations.

In 2019, the AICPA conducted a study that showed that CPAs needed an increased skill set in data analytics, excel, and overall, more technological skills. While the CPA exam tested knowledge on information technology, employers believed that not enough was being tested. This led to the evolution of the 2024 exam, known as the Core+Discipline Model. Starting in 2024, all CPA candidates will take the same three core sections of Accounting, Auditing, and Taxation. Then each candidate will have a choice between Taxation Compliance and Planning, Business Reporting and Analysis, and Information Systems Control. The new model will allow candidates to show a deeper knowledge of the content while still testing the foundation of accounting principles. It will also allow candidates to demonstrate a knowledge of technology, critical thinking skills, advanced problem-solving skills, and sound professional judgment which is an important skill used in the workplace and profession.

Impact of Technology
Many tasks that a CPA used to do while working have now been automated. Therefore current and future CPAs are required to do more complex tasks with technology as the simpler tasks have become automated. An example of a more complex task would include analyzing and interpreting data using a visualization software. Technology is used regularly in the job to the point where technological proficiency is needed when starting as a CPA.

Since technological proficiency is more important than in prior years, accounting organizations have begun starting to teach technology within the accounting curricula in colleges and universities. One big change was in 2013, when the Association to Advance Collegiate Schools of Business (AACSB) mandated that information technology be included in all accredited accounting programs. The transition to add information technology has not been one without challenges. One specific challenge with regards to adding information technology into accounting curricula is the balance of preparing students for the CPA exam and preparing to work as a CPA following graduation. Preparing for the CPA exam and preparing to work as a CPA after graduation can be different, making this difficult for professors and schools to figure out what to include in their curricula. Instructors generally agree that including data analytics should be included when teaching about accounting information systems as a whole but few instructors think that data analytics should be in the entire accounting curricula at schools.

Demographics of CPAs
A disparity exists among the demographics of AICPA members, specifically as it relates to class and gender. Between 1976 and 2005, 77% of CPAs were either middle or upper class and nearly half of all CPA candidates belonged to an upper middle class socioeconomic background. Although AICPA membership is predominated by individuals from wealthier socioeconomic backgrounds, 20% of AICPA members were lower class between 1976 and 2005. This indicates that the CPA profession is not exclusionary, but rather that it provides upward social and economic mobility. While women only accounted for 2.4% of all CPAs between 1934-1975, 50-60% of all hiring's by CPA firms were women between 2001 and 2010. Considering the unique barriers female CPAs may experience within the accounting profession, it is theorized that female CPAs come from higher socioeconomic backgrounds to overcome any gender bias they may experience. This would elucidate the higher prevalence of wealthy AICPA members who are women. These findings indicate that the demographic discrepancies among AICPA members have narrowed significantly in recent years.

History of Profession
Many accounting professionals believed the 150 credit requirement— implemented in several states first in 1988 and then expanded to nearly all states in 2001— would lead to more knowledgeable, experienced CPAs. The National Association of State Board of Accountancy (NASBA) collected and analyzed data from 1996 to 1998 to verify the effectiveness of the measure. Researchers studied more than 116,000 candidates who took the exam between 1996 and 1998. 33% of respondents had more than 150 college credit hours, while 67% had less than 150 credit hours. The research reveals that for candidates with less than 150 credits, only 13% passed the CPA exam on their first try. Conversely, for candidates with 150 or more credits, 21% passed the CPA exam on their first try. Some suggest extraneous variables— including the additional study time those possessing 150 credits likely have while still enrolled in university— could distort the verifiability of the study.