CPA FAR Exam: A Comprehensive Guide – CPA Evolution 2024

Introduction

The Financial Accounting and Reporting (FAR) section of the Uniform CPA Examination (the Exam) assesses the knowledge and skills that a newly licensed CPA must demonstrate in the financial accounting and reporting frameworks used by business entities (public and non-public), not-for-profit entities and state and local government entities. The financial accounting and reporting frameworks that are eligible for assessment within the FAR section of the Exam include the standards and regulations issued by the:

• Financial Accounting Standards Board (FASB)

• U.S. Securities and Exchange Commission (U.S. SEC) 

• American Institute of Certified Public Accountants (AICPA) 

• Governmental Accounting Standards Board (GASB) 

FAR CPA Exam Quick Facts

• FAR stands for Financial Accounting and Reporting.
• The FAR exam covers 3 main areas: Financial Reporting, Select Balance Sheet Accounts, Select Transactions.
• The FAR CPA exam is 4 hours long.
• There are 66 multiple-choice questions and 8 task-based simulations on the CPA FAR exam.
• The FAR CPA exam pass rate is around 45%.
• The FAR exam has the lowest pass rate of all 4 CPA exam parts.

Exam Structure 
The FAR section is designed to have the following exam time and question types on the US CPA Exam: 

The following table summarizes the content areas and the allocation of content tested in the FAR section of the Exam:

CPA FAR Testing Process

The AICPA sets two levels of difficulty for MCQ testlets: medium and difficult, which indicate the average difficulty of questions within the testlet. The difficulty of the second testlet is determined based on your performance on the first, as the exam adapts to your abilities.

However, there is no advantage or disadvantage in receiving harder or easier questions, as the exam takes question difficulty into account during grading. Candidates should answer each question to the best of their ability, regardless of perceived difficulty. 

If you perform well on the first testlet, you will receive a difficult testlet, and if you do not perform well, you will receive another medium testlet. 

It’s important to be prepared for questions that may give you pause, even in a medium-difficulty testlet, and to flag any confusing questions for review later.

Types of CPA FAR Questions 

In most FAR testlets, there are both operational and pre-test questions. Operational questions contribute to your total exam score, while pre-test questions do not. However, these two types of questions are indistinguishable from each other, so it’s not worth spending valuable testing time trying to determine which questions can be skipped. It’s best to approach each question with equal effort and answer to the best of your ability.

Pass Rates for the FAR Section of the CPA Exam 

In recent years, the FAR section of the CPA Exam has consistently had the lowest pass rates among all four sections. Although pass rates rose to nearly 50% in 2020, they leveled back out to 45% in 2021. The trend seems to continue with a 45% pass rate for FAR in 2022, and it is expected to remain in the mid-40s for the remainder of the year. 

However, it’s important to note that lower pass rates do not make the FAR section impossible to pass. The purpose of the CPA Exam is to ensure that candidates who pass, even with the lowest possible score, are capable of performing the duties of a CPA. Passing the exam reflects positively on the accounting profession, which is why CPAs tend to earn 10-15% higher salaries on average compared to their non-certified peers. 

Exam Structure Efficient Time Management for the FAR CPA Exam

The FAR section of the CPA Exam, like the other sections, has a total testing time of four hours. The five testlets in FAR are independent, and there are no time limits on each individual testlet. Therefore, it’s important for you to manage your time effectively during the exam to ensure that you can complete all five testlets before the exam time ends. 

It’s recommended to plan your time based on the total exam duration and the amount of time you think you will need to complete each testlet.

MCQs – 1.25 minutes each

TBSs – 18 minutes each

Top 5 tips for the FAR Exam
1. Spend more time practicing questions, than reading/ learning theory. The MCQs are generally more practical in nature than theory.

2. Most people find out why an answer is not right. However, always identify the cause of your correct answer, as well. Sometimes you may get the answer right by chance. Ensure the logic applied by you is sound. Reading the answer explanation is highly important.

3. Task-Based Simulations (TBSs) should be attempted after you have a stronghold in the MCQ section since simulations do not always conform to chapter boundaries and can test concepts from various disciplines. However, if you are good with the entire MCQs section, you will not find the TBSs as difficult, they will feel like long-form MCQs.

4.  Practice rewording information rather than simply reciting it.

5.  FAR is quite voluminous when compared to the other 3 CPA sections. Consistent revision and notes of the chapters are required so that they remain fresh on your mind as the exam day arrives.

Why choose Miles to earn your CPA?

Miles is the largest CPA training institutes in India. It offers the following:

• 200+ hours of CPA classes and classroom training over 28 Sundays. We provide Online Video lectures for those who need flexibility in their exam preparation or in locations where Miles classroom sessions are not conducted.
• Miles CPA Review has original McGraw Hill books authored by Varun Jain. They have exam-focused notes that include multiple aids for conceptual understanding and memory
• Miles Online Test Bank Access for online practice questions and mock exams (8000+ MCQs and 500+ Simulations including enhanced Simulations and DRS).
• Logistical support – Exam Eligibility, Foreign Credential Evaluation, NTS, UAE /US travel.
• CPA licensure assistance.

If you’re interested in pursuing CPA licensure with Miles Education, here are the steps to follow.

1. First, start your CPA course with Miles in April 2023.
2. Then, in June 2023, you can appear for the BEC exam. 
3. In October 2023, you can take the AUD exam.
4. Followed by the FAR exam in March 2024. 
5. Finally, in July 2024, you can appear for the REG exam.

    

Once you’ve completed all the necessary exams and met the licensure requirements, you can earn your CPA License and open doors to a world of opportunities in the field of accounting and finance.