As the CPA Evolution 2024 is the following big news in the F&A world, it attempts to change the CPA licensure model by gearing CPA professionals with new-age accounting skills to meet the future demands of the F&A industry. Let’s dive into knowing the significance of FAR (Financial Accounting and Reporting) amidst this transitioning phase.
FAR as a Subject
Of the four core sections under the CPA course, FAR is a voluminous, complex, and detailed section. The FAR exam covers extensive topics ranging from the conceptual framework, standard-setting, and selecting financial statements & transactions to preparing financial reports and consolidation of local and state governments. This also means it needs die-hard preparation as it involves more math content.
Approach to the FAR Exam
FAR Section Overview:
– Recognized as more comprehensive and intimidating compared to other sections.
– Demands a dedicated exam preparation strategy of 80-100 hours.
Study Approach with VARK:
– Utilize a schematic study plan.
– Incorporate VARK approach (video, audio, reading, and kinesthetic) to align with diverse learning styles.
Effective Preparation Techniques:
– Engage in quizzes, mock tests, and practice regulations, information, and security.
– Acknowledge the pass rate fluctuation (44-50%) and tailor preparation accordingly.
Focus on FAR Exam Structure:
– Comprises 50% Multiple Choice Questions (MCQs) and 50% Task-Based Simulations (TBS).
– Emphasizes the importance of sound knowledge in US GAAP before attempting the four-hour exam.
Strategic Question Attempt:
– Recognizes the grading system’s dependence on question complexity.
– Advises attempting tougher questions to enhance performance and increase chances of scoring higher.
Priority in Exam Sequence:
– Stresses the need for immense focus due to potential syllabus changes.
– Recommends attempting FAR first, given its critical role and potential variations in government accounting coverage.
Understanding IFRS and US GAAP:
– Highlights the significance of comprehending distinctions between IFRS and US GAAP.
– Acknowledges the challenging reconciliation process between the two accounting standards.
Simplified FAR for Real-World Application
The FAR section, historically challenging, has been streamlined to focus on core principles and essential skills. This shift aligns the exam with the evolving needs of the accounting profession, providing candidates with a more accessible and relevant examination experience.
The 2024 CPA exam reflects a commitment to relevance and practicality, ensuring candidates are well-prepared for the dynamic world of finance. The simplified FAR and the introduction of the BAR option mark significant steps toward a more streamlined and effective examination experience, setting the stage for success in the evolving landscape of finance and accounting.
Skills tested under FAR
Retention and comprehension, application, analysis, and evaluation skills form the bottom line to cracking the FAR exam. To master these traits, you need to –
- Thoroughly read every concept in the FAR CPA study material.
- Watch live online webinars, lectures, guest talks, cracking mock tests, and concept-based flashcards to supplement your reading of theories.
- Time management is critical in cracking the FAR exam as you need to take up mock tests and quizzes regularly to overcome exam pressure.
- Read the explanations after answering the questions as it deepens your understanding and makes you exam-ready.
CPA Evolution 2024:
The Certified Public Accountant (CPA) exam underwent a notable transformation, simplifying the Financial Analysis and Reporting (FAR) section and introducing three optional papers in the Business Environment and Concepts (BEC) section. Notably, the Business Analysis and Reporting (BAR) option has emerged as a premier choice for aspiring CPAs.
Here are the specific changes to the FAR syllabus as per the CPA Evolution 2024:
1. New Topics:
Data Analytics and Data-Driven Decision-Making
This section will cover topics such as:
– Data collection and preparation
– Data analysis and interpretation
– Data visualization and communication
– Use of data analytics in accounting and auditing
Risk Management and Internal Control
This section will focus on:
– Identification and assessment of risks
– Design and implementation of internal controls
– Monitoring and evaluation of internal controls
Financial Reporting Framework:
This section will provide an overview of:
– The U.S. Generally Accepted Accounting Principles (GAAP)
– International Financial Reporting Standards (IFRS)
– Other relevant financial reporting frameworks
2. Emphasis on Critical Thinking and Problem-Solving Skills:
The FAR exam will place a greater emphasis on critical thinking and problem-solving skills, requiring candidates to:
– Apply their knowledge and understanding to real-world scenarios
– Analyze and interpret complex financial information
– Make informed decisions and recommendations
3. Integration of Technology:
The exam will incorporate technology-related topics, such as:
– Use of accounting software
– Data analytics tools
– Cloud-based systems
– Emerging technologies in accounting
4. Changes in the Exam Format:
The FAR section will be divided into two parts: FAR 1 and FAR 2.
Each part will have a time limit of four hours.
The total testing time for FAR will be eight hours.
5. Transition Period:
Candidates who are in the process of completing the CPA exam under the current syllabus will have a transition period to complete the remaining sections under the new syllabus.
Note: It’s important to note that these changes are subject to approval by the AICPA and NASBA and may be further refined before the implementation in 2024. Candidates are advised to stay informed about the latest updates and requirements through official sources.
