Exposure Draft

Maintaining theRelevance of the Uniform
CPA Examination –®

Aligning the Exam with the
CPA Evolution Licensure Model

June 27, 2022

Contents
2

CPA Evolution — Transforming the CPA Licensure Model and Exam

4

Executive Summary
5

Description of Exposure Draft

52024 CPA Exam Transition Policy

5

Uniform CPA Examination Blueprints

7

Request for Comment

8

Background and Introduction
8

9

Recently Completed Practice Analyses
8

Practice Analysis Completed in 20168

Practice Analysis Completed in 2020

CPA Evolution Practice Analysis

10

Realignment of Existing Exam Content

11

New Exam Content Identified by the Practice Analysis
11 SOC Engagements
11 Personal Financial Planning and Tax Planning

12

Data and Technology Concepts

12

Research

12

Previous Research Affirmed

13

Emerging Content — Environmental, Social and Governance13

Exam Section Commentary17

Proposed Exam Design18

Board of Examiners

A1

Appendix
A1 Appendix A – Uniform CPA Examination Blueprints – Exposure Draft
B1 Appendix B – Practice Analysis Process

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CPA Evolution — Transforming the
CPA Licensure Model and Exam
The CPA Evolution initiative is transforming theCertified Public Accountant (CPA) licensuremodel to recognize the rapidly changing skills andcompetencies the practice of accounting requires
today and will require in the future. It is a joint effortof the National Association of State Boards of
Accountancy (NASBA) and the American Instituteof Certified Public Accountants (AICPA).
Exponential growth in new rules, concepts, andstandards, along with changes in the roles andresponsibilities of newly licensed CPAs (nlCPAs),
have caused the body of knowledge required ofnlCPAs to grow. The CPA Evolution model establishes
a foundation for the most important and relevant
topics that all nlCPAs need to know to protect the
public interest while providing an opportunity forcandidates to choose one of three Disciplines as
described below.
In 2020, the AICPA governing Council and the
NASBA Board of Directors both voted to advance
the CPA Evolution initiative. NASBA and the AICPA
are moving forward with implementing a new Coreand Discipline CPA licensure model, and plan tolaunch the CPA Evolution-aligned Uniform CPA
Examination® (the 2024 CPA Exam) in January 2024.

1

Under the CPA Evolution licensure model, allcandidates will be required to pass three Core
Exam sections covering: Auditing and Attestation(AUD); Financial Accounting and Reporting (FAR);
and Taxation and Regulation (REG).
Each candidate will also choose one Discipline¹(i.e., Business Analysis and Reporting (BAR),
Information Systems and Controls (ISC), or Tax
Compliance and Planning (TCP)) to demonstrate
knowledge and skills in that particular domain.
The Disciplines will focus on topics that apply to
nlCPAs engaged in those areas of practice and areless likely to be encountered by nlCPAs who are notfocused in those areas of practice. Regardless ofa candidate’s chosen Discipline, the CPA Evolution
model leads to CPA licensure, with rights, privileges,
and responsibilities consistent with the present
CPA license. CPA professional practice is not limitedby the Discipline passed; professional standards
provide guidance related to required competence
and due care when performing professional services.

Passing one Discipline Exam section is required for licensure. Once a candidate passes a Discipline Exam section, they cannot take another Discipline Exam section. If a candidate
takes a Discipline Exam section and does not pass, or loses credit for a passed Discipline Exam section, they can choose to take any of the Discipline Exam sections.

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New Licensure Model: Core and Disciplines

Strong Core with accounting, auditing
and taxation/regulation along with arecognition of the impact of technology
Knowledge & skills in (one of)three Disciplines
Reflects reality of practice
Adaptive and flexible
One CPA license
Enhances public projection

Data and technology concepts will be assessed in all
Core and Discipline Exam sections. This includes:• A focus on understanding how data is structured
and information flows through underlying
information technology (IT) systems andbusiness processes.
• Determining methods to transform data to
make it useful for decision-making.
• Verifying the completeness and accuracy ofsource data.

A candidate will not be required to generate reports orvisualizations, nor will a candidate be required to use
a data analytic software application. Task statements
will provide the necessary context of how technology isincorporated into the assessment.
Higher-order skills will be assessed in all Core andDiscipline Exam sections. The testing of higher-orderskills includes, but is not limited to, critical thinking,problem-solving, analytical ability, professional
skepticism, and research.

• Using the outputs of automated tools, visualizations,and data analytic techniques.

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Executive Summary
The Uniform CPA Examination® (the CPA Exam or theExam) provides reasonable assurance to Boards of
Accountancy that individuals who pass the CPA Exampossess the minimum level of knowledge and skills
necessary for initial licensure as a CPA. To remain
relevant to a dynamic profession and current with thereal-world demands on nlCPAs, the CPA Exam must
continually evolve.
The periodic execution of a Practice Analysis (PA) is
necessary to ensure that the CPA Exam:• S
 upports the profession’s commitment toprotecting the public interest;• R emains current, relevant, reliable, psychometricallyvalid, and legally defensible; and• F ulfills the needs of the Boards of Accountancy
in carrying out their licensing responsibilities.
In mid-2020, the AICPA’s Board of Examiners (BOE)
launched this PA, a research project designed to
update its understanding of the knowledge and skills
required of nlCPAs, particularly focused on aligning
the CPA Exam to the CPA Evolution licensure model.
The PA collected input about the work today’s nlCPAs
are required to perform from a variety of stakeholders
who share an interest in preserving the strengthand mission of the profession. Valuable information
was collected from CPA volunteers, with uniqueparticipants in each research phase, who directlysupervise nlCPAs. Please see the Practice Analysis
Process in Appendix B for more information.
The creation of three Core Exam sections and three
Discipline Exam sections required realignment of someexisting CPA Exam content and the identification of
new content to be assessed on the 2024 CPA Exam.
Substantially all of the content previously assessed in
the Business Environment and Concepts (BEC) section
has been reallocated to the AUD, FAR, BAR, and ISC
Exam sections.

The results of the PA research highlighted thefollowing points:

Focus on Data and Technology Concepts• D ata and technology concepts and higher orderskills will be tested in all Core and Discipline Examsections. See the Data and Technology section
and Uniform CPA Examination Blueprints inAppendix A for further information.

New content areas are primarily in the ISC
and TCP Discipline Exam sections as follows:• I T infrastructure, platforms, and services; security,
confidentiality, and privacy, and considerationsfor System and Organization Controls (SOC)
engagements will be assessed in the ISC Discipline
Exam section. See SOC Engagements section andUniform CPA Examination Blueprints in Appendix A
for further information.
• P ersonal financial planning and tax planning will
be assessed in the TCP Discipline Exam section.
See Personal Financial Planning and Tax Planning
section and Uniform CPA Examination Blueprints
in Appendix A for further information.

Environmental, Social, and Governance (ESG)• W
 hile the disclosure of ESG information is an areaof increasing focus for companies, investors, andregulators, the PA research indicated that nlCPAs
have minimal roles in ESG matters at this time. As
noted under Emerging Content — Environmental,
Social, and Governance, the BAR Discipline Examsection includes content on understanding how
the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) Enterprise Risk
Management (ERM) framework could be applied
to identify, respond to, and report ESG related risks.

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Description of Exposure Draft
This Exposure Draft (ED) presents an informed andthoughtful proposal for the 2024 CPA Exam basedon research and input from the profession and otherinterested stakeholders. Accordingly, this ED outlines
proposed 2024 CPA Exam changes using languagethat presumes those changes will be implemented
after review of feedback to the ED and, ultimately,
upon the BOE’s approval.
This ED, including the draft Uniform CPA Examination
Blueprints (the CPA Exam Blueprints) in Appendix
A, which are an integral part of this ED, presents thefindings and conclusions of a PA conducted by the
AICPA over the past two years under the oversightof the BOE and its Practice Analysis Sponsor Group.
This PA focused on aligning the CPA Exam to the CPA
Evolution licensure model. See further discussion
below under Practice Analysis Process in Appendix B.
Following consideration of comments received,
the final CPA Exam Blueprints are expected to beapproved in December 2022 and published in January2023 with a planned Exam launch in January 2024.
This will provide Exam candidates, colleges anduniversities, firms, review course providers, and otherstakeholders about a year to plan for the 2024 CPA
Exam as more fully described in the draft CPA Exam
Blueprints in Appendix A.

2024 CPA Exam Transition Policy
It is important to be aware that there will be a hardcutover from the current CPA Exam sections to
the 2024 CPA Exam sections on the January 2024
launch. None of the sections of the current CPA Examwill be available for testing after December 2023.
Accordingly, it is necessary to have a transition policy
for mapping credit for CPA Exam sections passed
under the current CPA Exam to credit under the 2024
CPA Exam. Transition policies like this have beennecessary at other times when significant changes
were made to the CPA Exam, such as when it wascomputerized in April 2004.

The CPA Exam transition policy was recommended
to the Boards of Accountancy by the NASBA CBTAdministration Committee after development andmuch deliberation by a task force with state board
representatives from the BOE, sitting state board
members, and executive directors from multiple
states. The Boards of Accountancy have agreed thistransition policy best serves the candidates, the stateboards, and the public interest.
The transition policy is quite simple. Candidates who
have credit for AUD, FAR, or REG on the current CPA
Exam will not need to take the corresponding newCore section of AUD, FAR, or REG on the 2024 CPA
Exam. Candidates who have credit for BEC on thecurrent CPA Exam will not need to take any of thethree Discipline sections.
If, however, a candidate loses credit for AUD, FAR,
or REG after Dec. 31, 2023, they then must takethe corresponding new Core section of AUD, FAR,
or REG. A candidate who loses credit for BEC
after Dec. 31, 2023 must select one of the three
Discipline sections to be tested. See Transition Policy
Announced for the 2024 CPA Exam Under the CPA
Evolution Initiative on NASBA’s website.

Uniform CPA Examination Blueprints
The CPA Exam Blueprints are the official document
approved by the BOE presenting the content
knowledge and skills required of nlCPAs for protectionof the public interest and eligible for assessment on
the CPA Exam.
The purpose of the CPA Exam Blueprints is to:• D ocument the minimum level of knowledge
and skills for initial licensure.
• A ssist candidates in preparing for the
CPA Exam by outlining the knowledge
and skills that may be tested.
• A pprise educators about the knowledge and skills
candidates will need to function as nlCPAs.
• Guide the development of CPA Exam questions.

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The CPA Exam Blueprints contain an introduction toeach CPA Exam section which provides (i) a summaryof what is eligible for assessment in the section, (ii)content allocations by area, (iii) skill2 allocations for thesection, and (iv) reference materials for the section.
The detailed blueprints are organized by content area,
content group, and content topic. Each group or topic
includes one or more representative tasks that an

2

nlCPA may be expected to complete in practice.
The representative task statements combine boththe applicable content knowledge and the skills
required in the context of the work that an nlCPA
would reasonably be expected to perform. Thus,
the assigned skill level is a direct result of the taskthat an nlCPA would reasonably be expected toperform in a given area.

The AICPA adopted a skill framework for the CPA Exam based on the revised Bloom’s Taxonomy of Educational Objectives. Bloom’s Taxonomy classifies a continuum of skills thatstudents can be expected to learn and demonstrate. For more information, see the Introduction portion of the CPA Exam Blueprints in Appendix A.

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Request for Comment
The AICPA values the views of all CPA Examstakeholders and is seeking comments on thequestions listed below. In your response, pleaseindicate whether the response represents the official
response of a State Board of Accountancy, state
CPA society, or regulator. Otherwise, please advise
whether the response is on behalf of a firm, business,college or university, government, other organization;or represents your individual views. The AICPA will
make all comments publicly available by posting the
responses to its website for one year.
The AICPA will consider all responses received onor before Sept. 30, 2022. Email your submission topracticeanalysis@aicpa.org.
The CPA Exam is designed to assess the knowledge
and skills of nlCPAs in their role to protect the public
interest. For the purpose of identifying the domain oftasks, knowledge and skills necessary to protect the
public interest, an nlCPA is defined as someone who
has fulfilled the applicable jurisdiction’s educationaland experience requirements, has the knowledge
and skills typically required by a person with one to
two years of experience, and has passed the Exam.
Core Exam sections assess the knowledge and skills
universal (common) to all nlCPAs. Discipline Examsections assess the knowledge and skills in therespective Discipline domain applicable to nlCPAs.
1. D
 o the Core Exam Blueprints include theknowledge and skills required of all nlCPAs
to protect the public interest? If not:a. Is there content missing from the Core
Exam Blueprints? If so, please explain
what content you believe should be added,
including examples of how this is affecting
nlCPA practice.

b. Is there content included in the Core Exam
Blueprints that is not relevant to nlCPA practicethat should be removed? If so, please provide
the details of what content you believe
should be removed and why it should not be
considered nlCPA practice.
2. Do each of the Discipline Exam Blueprints include
the knowledge and skills required of an nlCPA toprotect the public interest? If not:a. Is there content missing from the Discipline
Exam Blueprints? If so, please explain
what content you believe should be added,
including examples of how this is affecting
nlCPA practice.
b. Is there content included in the Discipline
Exam Blueprints that is not relevant to nlCPA
practice that should be removed? If so, pleaseprovide the details of what content you believe
should be removed and why it should not be
considered nlCPA practice.

Guide for Respondents
Comments are requested on the 2024 CPA Exam as
defined by the draft CPA Exam Blueprints included inAppendix A. Comments are most helpful when theyrefer to specific content in the CPA Exam Blueprints
to be added or deleted, including the rationale for the
response. When a respondent agrees with proposals
in the ED, it will be helpful for the AICPA to be madeaware of this view. Written comments on this ED will
become part of the public record of the AICPA andwill be posted on its website for one year. Responses
should be sent to practiceanalysis@aicpa.org andreceived no later than Sept. 30, 2022.

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Background and Introduction
Since 1917, the CPA Exam has a trusted history as
one component of the CPA licensing process. The
mission of the CPA Exam is to provide reasonableassurance to Boards of Accountancy that individuals
seeking licensure have demonstrated the minimum
knowledge and skills necessary for an nlCPA toprotect the public interest in today’s business andfinancial environment. The CPA Exam is the same
exam for every CPA candidate in all 55 United Stateslicensing jurisdictions.
The AICPA develops, maintains, and scores the CPA
Exam. The BOE, a senior volunteer committee of the
AICPA, is responsible for the establishment of policies
governing the development, maintenance, andscoring of the CPA Exam in accordance with legal andpsychometric standards as they apply to licensure
examinations. The BOE also has the responsibility forstrategic planning and risk assessment to ensure that
the CPA Exam continues to fulfill its mission.
To remain relevant to a dynamic profession andcurrent with the real-world demands on nlCPAs, the
CPA Exam must continually evolve. The periodic
execution of a PA is necessary to ensure that the
CPA Exam:• S upports the profession’s commitment
to protecting the public interest;• R emains current, relevant, reliable, psychometricallyvalid, and legally defensible; and• F ulfills the needs of the Boards of Accountancy incarrying out their licensing responsibilities.
The BOE policies require a PA to be conducted at any
time the changes in the profession are significant
enough to indicate the CPA Exam needs to be
updated (for a single CPA Exam section or the CPA
Exam as a whole). However, at a minimum, a PA
will be completed no less than every seven years.
As discussed below, PAs have been completed
more frequently. Between PAs, the BOE oversees
continuous maintenance of the CPA Exam. The CPA
Exam Blueprints are modified as necessary to remaincurrent with new standards and laws and revisions
are also made to improve the clarity, organization,and the content assessed.

Recently Completed Practice Analyses
The two previous PAs laid the foundation for the
CPA Exam Blueprints including the testing of
higher order skills, increased focus on understanding
the business, testing of data analytics and technology,
and increased focus on the reliance on SOC 1® Reporton Controls at a Service Organization Relevant toUser Entities’ Internal Control over Financial Reporting(ICFR) – Guide (SOC 1®).

Practice Analysis Completed in 2016
A PA was launched in 2014 and completed in2016. The findings were implemented in the CPA
Exam in 2017. The PA completed in 2016 resulted
in an increased focus on testing higher order skills
by increasing the number and scoring weight ofsimulations. The need to test higher order skills
was identified in the research as it was deemed
critically important that nlCPAs are competent inrecognizing issues, identifying errors, challenging
assumptions, and applying both professional
judgment and skepticism.
To assist CPA Exam candidates, educators, andother Exam stakeholders, the AICPA published thefirst CPA Exam Blueprints in 2016.

Practice Analysis Completed in 2020
The PA launched in 2019 and completed in 2020
focused on technology’s impact on nlCPA practice.
Several findings were identified in the technology
research including that nlCPAs need to haveincreased knowledge and skills related to:• U nderstanding the business – nlCPAs need tounderstand the business, including its operations,information systems, underlying businessprocesses, information and data flows, and risks
and related internal controls. Newly licensed CPAs
roles in understanding the business include:º U nderstanding the source of entity financial
and tax information,º U nderstanding procedures in manual andautomated systems by which transactions
are initiated, authorized, processed, andrecorded in general ledgers, andMaintaining the Relevance of the Uniform CPA Examination® – Aligning the Exam with the CPA Evolution Licensure Model | 8

º M
 apping internal controls in both manual andIT systems. In particular, nlCPAs need to beable to understand the flow of transactions
from start to finish, inclusive of both manualand automated systems, along with therelated control activities.
• D
 igital and data-driven mindset including data
analytics – A digital and data-driven mindset
includes understanding the potential sources ofdata as well as the completeness, accuracy, andrelevance of the data.
º This mindset is related to the initial finding
identified above, understanding the business.
Newly licensed CPAs should understandthe flow of transactions within businessprocesses and information systems; thiswill lead to understanding the availability
and reliability, i.e., completeness and accuracyof the data.
• R eliance on SOC 1® reports – significantly
increased reliance on SOC 1® reports given
how businesses are increasingly outsourcing
information systems and business processes
to third parties and storing data in the cloud.
º This finding is also an extension ofunderstanding the business. An auditor’sneed to understand a client’s businessprocesses and information systems extends
to outsourced processes or systems that
could impact the financial statements.
The PA completed in 2020 supported the need forstrong foundational knowledge and skills. Therewas universal support that technology advances
require nlCPAs to have a clear understanding ofbasic accounting, auditing, and taxation skills aswell as professional skepticism. The findings were
implemented in the CPA Exam in 2021.

CPA Evolution Practice Analysis
In mid-2020, the BOE launched this current PA toalign the CPA Exam with the CPA Evolution licensuremodel. Under the CPA Evolution licensure model,
all candidates will be required to pass three Core
Exam sections covering: AUD, FAR, and REG. Eachcandidate will also choose a Discipline (i.e., BAR, ISC,
and TCP) to demonstrate knowledge and skills inthat particular domain. The Disciplines will focus on
topics that apply to nlCPAs engaged in those areasof practice and are less likely to be encountered by
CPAs who are not focused in those areas of practice.
Regardless of a candidate’s chosen Discipline, the
CPA Evolution model leads to CPA licensure, withrights, privileges, and responsibilities consistent withthe present CPA license.
The PA research sought to understand the scopeof the initial NASBA and AICPA vision around theCore and Discipline model, which then provided
guiding principles for the research. The three Core
Exam sections will assess the knowledge and skills
required by all nlCPAs and the Disciplines Examsections will assess knowledge and skills requiredof nlCPAs in that particular domain.
The PA research was conducted in two phases:(i) the Exploration Phase and (ii) the Confirmation
Phase. The AICPA was assisted by a third-party
research firm in conducting focus groups andsurveys in both the Exploration and Confirmation
phases.
The Exploration Phase research captured valuable
information about the Core and Discipline Examsections utilizing surveys and focus groups,
respectively. Additional follow-up interviews withfocus group participants provided further information
about some of the new areas of content that would
be assessed in the Discipline Exam sections. The
Exploration Phase also included multiple meetings
with AICPA and NASBA leadership and frequentdiscussions with the BOE and its Content Committee
and Content Subcommittees.

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The Confirmation Phase research collected important
quantitative and qualitative feedback on the CPA
Exam Blueprints from licensed CPAs working in allareas of the profession. These CPAs participated insurveys where they provided ratings and comments
on groupings of task statements. These taskstatements were developed using the results of the
Exploration Phase research, and were reviewed,
modified, and approved by the BOE and its Content
Committee and Content Subcommittees. The
Confirmation Phase research provided the AICPA, theContent Committee, and the Content Subcommittees
additional information about content and skillsin the Core and Discipline Exam sections, which
was considered and incorporated into the draft
CPA Exam Blueprints in Appendix A that wereapproved by the BOE.
For further discussion of the breadth and depthof the Exploration and Confirmation Phase
research, see the Practice Analysis Process inAppendix B below.

Realignment of Existing Exam Content
The creation of three Core Exam sections and three
Discipline Exam sections, as outlined in the CPA
Evolution licensure model, required realignmentof some existing Exam content and identificationof new content to be assessed on the 2024 CPA
Exam. Substantially all of the content previously
assessed in the BEC section, with the exception of
the written communication item that will be removed
concurrent with the launch of the 2024 CPA Exam,3has been included in the AUD, FAR, BAR, and ISC
Exam sections. A de minimis amount of content wasremoved from the Exam as more fully described in
the Practice Analysis Process in Appendix B.

3

Additionally, certain content previously assessed in
the FAR and REG sections will now be assessed in the
BAR and TCP Discipline Exam sections, respectively.
Further, the PA identified new content requiring
assessment. For more information on the content
contained in each of the Core and Discipline Examsections, see Exam Section Commentary below.

For further information on the removal of the written communication item, see the Infrastructure-changes-to-the-cpa-exam-in-2024 document.

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New Exam Content Identified
by the Practice Analysis
New exam content was identified during the PA andis primarily in the ISC and TCP Discipline sections.

Personal Financial Planning
and Tax Planning

SOC Engagements

The PA research indicated that nlCPAs play animportant role in advising clients on the basics of
personal financial planning and tax planning. The PA
research indicated that nlCPAs are often involved in
tax compliance and they naturally progress into more
holistic work involving tax planning and personal
financial planning for clients.

The PA Research identified a significant increase in
SOC 2® Report on Controls at a Service Organization
Relevant to Security, Availability, Processing
Integrity, Confidentiality or Privacy — Guide (SOC 2®)
engagements. The PA research identified that nlCPAs
are performing procedures in recurring SOC 1® and
SOC 2® engagements. As more fully described below
under Exam Section Commentary, the ISC Discipline
Exam section will cover aspects of:• IT infrastructure, platforms, and services;• Security, confidentiality and privacy; and• Considerations for SOC engagements.
The ISC Discipline Exam section will assess theunique aspects of planning and reporting on both
SOC 1® and SOC 2® engagements, the systemdescription criteria used in SOC 1® and SOC 2®
engagements, and how the Trust Service Criteria areused in a SOC 2® engagement when evaluating thesuitability of the design and operating effectivenessof controls relevant to the security, availability, or
processing integrity of information and systems,
or the confidentiality or privacy of the information
processed by the systems at an entity.
All nlCPAs must understand internal controls overfinancial reporting and the implications of relying
on SOC 1® reports. This was identified in the PA
completed in 2020. Reliance on SOC 1® reports willcontinue to be covered in the AUD Core Exam section.

Newly licensed CPAs have been identified as
being involved with individual tax planningconsiderations for gross income, adjusted grossincome, taxable income, and estimated taxes; gifttaxation; and specific personal financial planning
concepts including:• U nderstanding qualified retirement plans, suchas traditional IRAs, Roth IRAs, 401(k)s, annuities,
and employer sponsored plans and preparingschedules used in the decision-making process
to select a retirement plan from among multiple
options and identifying the related advantages
and disadvantages.
• U nderstanding the risks associated with varying
investment options, including equity securities,
corporate bonds, and municipal bonds andcalculating the ROI for different investment
options, net of the tax impact.
• P lanning for funding post-secondary education
using qualified tuition programs, student loans
and grants, and scholarships.
• U nderstanding the use of insurance to mitigate
risk, including life insurance, long-term careinsurance, and umbrella policies.

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Data and Technology Concepts
Data and technology concepts will be assessed in all
Core and Discipline Exam sections. This includes:º Identify patterns, trends, and correlations to
explain an entity’s results.

• A focus on understanding how data is structured
and information flows through underlying IT
systems and business processes.

Task statements will provide the necessary context of
how technology is incorporated into the assessment.
For example, the BAR Discipline Exam section
includes the following task statement that outlines
how a candidate could be expected to use data tocomplete a task:• D etermining methods to transform data to makeit useful for decision-making.
• V erifying the completeness and accuracy ofsource data.
• U sing the outputs of automated tools,
visualizations, and data analytic techniques to:º Assist in risk assessment or to complete
planned procedures.
º P repare financial statements, account analysis,tax returns, supporting schedules.

• U se outputs (e.g., reports, visualizations)from data analytic techniques to identify
patterns, trends and correlations to explain
an entity’s results.
A candidate will not be required to generate reports
or visualizations, nor will a candidate be required touse a data analytic software application.

Research
Applied research is eligible to be tested in all Core andDiscipline Exam sections with a focus on reviewing
and using excerpts of source materials to complete a

range of tasks including identifying issues, analyzing
facts, and determining appropriate responses.

Previous Research Affirmed
In addition to the matters above, the PA researchaffirmed important findings from previous PAs.
That is, nlCPAs continue to need a strong foundationin the following areas for their role in protecting the
public interest:• A uditing and attestation; financial accounting
and reporting; taxation and regulation; ethics andprofessional standards; business law; economics;
and research.

• H igher-order skills – including, but are not limited
to, critical thinking, problem-solving, analyticalability, and professional skepticism.
• U nderstanding the business – nlCPAs need tounderstand the business including its operations,information systems, underlying businessprocesses, information and data flows, and risks
and related internal controls.

• Technology; digital and data-driven mindset
including data analytics, also known asdigital acumen.

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Emerging Content — Environmental,
Social, and Governance
ESG information is an area of increasing focus forcompanies, investors, and regulators. ESG covers
a wide range of potential considerations, including
among others, sustainability matters and an entity’s
impact on the environment, social matters and anentity’s values, and governance.
ESG is evolving rapidly. There has been initialrule-making and standard-setting activity around
ESG in the past year. The United States Securities
and Exchange Commission released proposed
rules on disclosure of climate related matters. The
International Sustainability Standards Board wasformed to develop a comprehensive global baselineof high-quality sustainability disclosure standards tomeet investors’ information needs.

PA research included direct inquiries of CPAs
to understand an nlCPA’s role in ESG matters.
Practitioners and supervisors of nlCPAs indicatedthe role was minimal at this time. Based on these
inquiries and consultation and deliberations with
the Content Committee and Content Subcommittee,
the BAR Discipline Exam section includes content onunderstanding how the COSO ERM framework could
be applied to identify, respond to, and report ESG
related risks.
The AICPA and the BOE will continue to monitor
ongoing developments in the ESG area.

Exam Section CommentaryThis portion of the ED provides summary information
and PA considerations for each of the 2024 CPA
Exam’s six sections. The content to be assessed in
the Core and Discipline Exam sections reflect theknowledge and skills identified and validated in the
PA research. The representative task statements
combine the applicable content knowledge and theskills required in the context of the work that an nlCPA
would reasonably be expected to perform and provide
clarity over what will be assessed in the respective
Core and Discipline Exam sections.

Core Exam Sections
The Core sections: AUD, FAR, and REG will test theknowledge and skills that all nlCPAs need in their role
to protect the public interest. All candidates will be
required to pass the three Core Exam sections.

Auditing and Attestation (AUD)
The AUD Core Exam section remains largely
unchanged, aside from the addition of BEC content
described below. No existing AUD content was
moved to other 2024 CPA Exam sections.
The AUD Core Exam section tests the knowledge
and skills that all nlCPAs must demonstrate when
performing audit, attestation, and accounting andreview service engagements. The assessment will
focus on an nlCPA’s role in planning, risk assessment,
performing procedures, obtaining evidence, andreporting for these engagement types. The
assessment will incorporate professional skepticism
and professional judgment with a focus on thecritical assessment of evidence and the need
to apply knowledge and experience to makeinformed decisions.

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In 2021, as a result of the 2020 PA, the AUD section
was expanded to emphasize: (i) technology as anexternal factor in the understanding of the business,(ii) understanding significant business processes
and related IT systems, and (iii) identifying anddocumenting the significant components of anentity’s control environment, including entity level
and IT general controls.
Certain economics content from BEC has been added
to the AUD Core Exam section. This content covers
internal and external factors related to understanding
an entity and its environment including basic
economic concepts such as supply and demand andbusiness cycles. Additionally, some business process
and internal control content from BEC has been
added to the AUD Core Exam section.

Under the Core and Discipline Model, some existing
FAR content will be allocated between the FARCore Exam section and the BAR Discipline Examsection, for example, revenue recognition andlease accounting. Revenue recognition in the FARCore Exam section will assess recalling basic
concepts of accounting for revenue and applying
the five-step model to determine the amount andtiming of revenue recognition. Lease accounting in
the FAR Core Exam section will assess lessee
accounting including determining the carrying
amounts of lease-related assets and liabilities. Other
than identified above, state and local government
accounting is in the BAR Discipline Exam section.
The Core FAR Exam section includes content from
BEC related to understanding and applying financial
statement ratios and performance metrics.

For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation, andreferences, see the AUD Core Exam section Blueprintin Appendix A.

For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation, andreferences, see the FAR Core Exam section Blueprintin Appendix A.

Financial Accounting and Reporting (FAR)

Taxation and Regulation (REG)

The FAR Core Exam section tests the knowledge
and skills that all nlCPAs must demonstrate withrespect to financial accounting and reporting
frameworks used by for-profit (public and nonpublic)
and not-for-profit entities. The frameworks eligible forassessment include the standards and/or regulations
issued by the:• Financial Accounting Standards Board (FASB)• U
 .S. Securities and Exchange Commission(U.S. SEC)• A
 merican Institute of Certified Public
Accountants (AICPA)
Additionally, the Core FAR Exam section will test
the foundational concepts related to state andlocal governments as issued by the Governmental
Accounting Standards Board (GASB), including
measurement focus, basis of accounting, anddetermining the appropriate funds in which torecord activities.

The REG Core Exam section tests the knowledge andskills that all nlCPAs must demonstrate with respect
to U.S. ethics and professional responsibilities related
to tax practice, U.S. business law, and U.S. federal tax
compliance for individuals and entities with a focus
on recurring and routine transactions.
Under the CPA Evolution Core and Discipline model,
existing REG content will be allocated between the
REG Core Exam section and the TCP Discipline Examsection. The REG Core Exam section will focus onroutine and recurring tasks and the TCP Discipline
Exam section will focus on nonroutine and higher
complexity tasks. For example, the REG Core Examsection will test individual gross income concepts likewages, interest and dividends, guaranteed payments
received from a partnership, and income from aqualified retirement plan, while the TCP Discipline
Exam section will test gross income concepts
like the exercise of incentive stock options (ISO),
imputed interest on a below-market-rate loan, andcompensation earned while employed outside the U.S.

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For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation, andreferences, see the REG Core Exam section Blueprintin Appendix A.

Discipline Exam sections
The Discipline Exam sections: BAR, ISC, and TCP
will test the knowledge and skills in the respective
Discipline domain applicable to nlCPAs. Eachcandidate must pass one Discipline Exam section.

Business Analysis and Reporting (BAR)
The BAR Discipline Exam section tests the knowledge
and skills an nlCPA must demonstrate with respect to:• A nalyzing financial statements and financial
information with a focus on an nlCPA’s role incomparing historical results to budgets andforecasts; deriving the impact of transactions,
events (actual and proposed), and market
conditions on performance measures; andcomparing investment alternatives.
• S elect technical accounting and reporting
requirements under the FASB and SEC thatare applicable to for-profit business entities(e.g., stock compensation, business combinations,derivatives) and higher order skills related torevenue recognition and lease accounting.
• F inancial accounting and reporting requirements
under GASB that are applicable to state and local
government entities.
The BAR Discipline Exam section will test more
complex technical accounting topics such as
stock compensation, business combinations, andderivatives and hedge accounting. Certain topics will
be tested in both the FAR Core Exam section and
the BAR Discipline Exam section, such as revenue
recognition and lease accounting. For example, theBAR Discipline Exam section will test:• The analysis and interpretation ofagreements, contracts, and other supporting
documentation to determine whether
revenue was appropriately recognized.
• R ecalling and applying lessor accounting
requirements and analyzing the provisions of alease agreement to determine whether a lessee
appropriately accounted for the lease.

The BAR Discipline Exam section includes content
from BEC on non-financial measures of performance;
managerial and cost accounting concepts and theuse of variance analysis techniques; budgeting,forecasting, and projection techniques; factorsthat influence an entity’s capital structure, suchas leverage, cost of capital, liquidity, and loan
covenants; financial valuation decision models
used to compare investment alternatives; risk
management topics including the COSO Enterprise
Risk Management framework; and the effectof changes in economic conditions and market
influences on an entity’s business.
For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation,and references, see the BAR Discipline Examsection Blueprint in Appendix A.

Information Systems and Controls (ISC)
The ISC Discipline Exam section tests the knowledge
and skills an nlCPA must demonstrate with respect
to information technology (IT) audit and advisory
services, including SOC engagements. The ISC
Discipline Exam section also tests the knowledge andskills that nlCPAs must demonstrate with respect todata management, including data collection, storage,
and usage throughout the data life cycle.
With respect to SOC engagements, the ISC Discipline
Exam section primarily focuses on:• The use of the Description Criteria for a
Description of a Service Organization’s
System and Trust Services Criteria for Security,
Availability, Processing Integrity, Confidentiality,
and Privacy in planning, performing, and reportingin a SOC 2® engagement.
• P lanning, certain procedures (excluding thetesting of internal controls over financial
reporting) and reporting on a SOC 1® engagement.
The ISC Discipline Exam section includes content
from BEC on certain aspects of business processes
and internal control, risks associated with IT andcontrols that respond to those risks, and data
management and relationships.

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For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation, andreferences, see the ISC Discipline Exam section
Blueprint in Appendix A.

alternatives, or business structures. The assessmentof personal financial planning will focus on planning
strategies and opportunities that an nlCPA typically
identifies in connection with the preparation andreview of individual tax returns.

Tax Compliance and Planning (TCP)As explained above in the REG Core Exam section,
existing REG content will be allocated between the
REG Core Exam section and the TCP Discipline Examsection. The TCP Discipline Exam section will focus
on nonroutine and higher complexity tasks, including,for example, consolidated C-Corporation tax returns
and international tax issues.

The TCP Discipline Exam section tests the knowledge
and skills an nlCPA must demonstrate with respect to
U.S. federal tax compliance for individuals and entities
with a focus on nonroutine and higher complexitytransactions, U.S. federal tax planning for individuals
and entities, and personal financial planning.
The assessment of federal tax compliance will focus
on an nlCPA’s role in both the preparation and review
of tax returns. The assessment of federal tax planningwill focus on an nlCPA’s role in determining the tax
implications of proposed transactions, available tax

For further information on the content organizationand tasks, content allocation, overview of content
areas, section assumptions, skill allocation, andreferences, see the TCP Discipline Exam section
Blueprint in Appendix A.

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Proposed Exam Design
The table below presents the design of the 2024 CPA Exam by Core and Discipline section, section time andquestion type.
SectionSection TimeMultiple-Choice
Questions (MCQs)

Tasked-Based
Simulations (TBSs)4

AUD – Core

4 hours78

7

FAR – Core

4 hours

50

7

REG – Core

4 hours72

8

BAR – Discipline

4 hours

50

7

ISC – Discipline

4 hours

82

6

TCP – Discipline

4 hours

68

7

The table below presents the scoring weight of MCQs and TBSs for each Core and Discipline Exam section.
Score Weighting5
SectionMultiple-Choice Questions (MCQs)

Tasked-Based Simulations (TBSs)

AUD – Core

50%

50%

FAR – Core

50%

50%

REG – Core

50%

50%

BAR – Discipline

50%

50%

ISC – Discipline

60%

40%

TCP – Discipline

50%

50%

All feedback to this ED will be thoughtfully considered and help finalize the development of the 2024 CPA Examcontent, structure and design. Changes for the 2024 CPA Exam will be announced early in 2023 and implemented
in 2024.

4

Number of MCQs and TBSs are preliminary and approximate. The actual number of MCQs and TBSs will be included in the Final Report expected to be issued in January 2023.

5

Score weighting is preliminary and approximate. Actual score weighting will be included in the Final Report expected to be issued in January 2023.

Maintaining the Relevance of the Uniform CPA Examination® – Aligning the Exam with the CPA Evolution Licensure Model | 17

Board of Examiners
Barry Berkowitz (chair)

Audrey Katcher (incoming chair)

Noel S. Abdur-Rahim

Nicola Neilon

Doug Behn

Erica K. Nelson

Allan Cohen

Joshua W. Partlow

Jimmy Corley

Randy Penfield

Hannah Crabtree

Nadia A. Rogers (incoming Board member)

Audra Dixon

Katrina L. Salazar (incoming Board member)

Wendy Garvin (incoming Board member)Michelle Schumacher (incoming Board member)James D. Gottfried

Kathleen Smith

Steve GriceDavid Vaudt

Joyce Joseph

Denny Way

Maintaining the Relevance of the Uniform CPA Examination® – Aligning the Exam with the CPA Evolution Licensure Model | 18

Appendix A

Uniform CPA Examination®

Blueprints
Exposure Draft
American Institute of CPAs

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Uniform CPA Examination Blueprints

Table of Contents
2

Introduction: Uniform CPA Examination Blueprints

AUD1

Core Examination Section – Auditing and Attestation (AUD)
AUD2Section Introduction

AUD6
AUD7

Summary Blueprint
Area I – Ethics, Professional Responsibilities
and General Principles

AUD11

Area II – Assessing Risk and Developing a Planned
Response

AUD17

Area III – Performing Further Procedures andObtaining Evidence

AUD22
FAR1

REG1

BAR1

Discipline Examination Section – Business Analysis
and Reporting (BAR)
BAR2Section Introduction
BAR5
Summary Blueprint
BAR6
Area I – Business Analysis
BAR10 Area II – Technical Accounting and Reporting
BAR14 Area III – State and Local Governments

ISC1

Discipline Examination Section – Information Systems
and Controls (ISC)

Area IV – Forming Conclusions and ReportingCore Examination Section – Financial Accounting
and Reporting (FAR)
FAR2Section Introduction

FAR5

Summary Blueprint

FAR6

Area I – Financial Reporting

FAR11

Area II – Select Balance Sheet Accounts

FAR15

Area III – Select Transactions

Core Examination Section – Taxation and Regulation (REG)
REG2Section Introduction
REG5
Summary Blueprint
REG6
Area I – Ethics, Professional Responsibilities
and Federal Tax Procedures
REG8
Area II – Business Law
REG11 Area III – Federal Taxation of Property Transactions
REG12 Area IV – Federal Taxation of Individuals
REG15 Area V – Federal Taxation of Entities(including tax preparation)

Uniform CPA Examination Blueprints

TCP1

ISC2

Section Introduction

ISC6

Summary Blueprint

ISC7

Area I – Information Systems and Data Management

ISC10

Area II – Security, Conﬁdentiality and Privacy

ISC14

Area III – Considerations for System and Organization
Controls (SOC) Engagements

Discipline Examination Section – Tax Complianceand Planning (TCP)
TCP2
Section Introduction
TCP5
Summary Blueprint
TCP6
Area I – Tax Compliance and Planning for Individuals
and Personal Financial Planning
TCP9
Area II – Entity Tax Compliance
TCP14 Area III – Entity Tax Planning
TCP16 Area IV – Property Transactions (disposition of assets)

1

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Introduction

Uniform CPA Examination Blueprints
The CPA licensure model requires all candidates to pass three Core exam
sections and one Discipline exam section of a candidate’s choosing. The Uniform
CPA Examination (the Exam) has been designed accordingly as reﬂected in the
Exam Blueprints. The Core exam sections assess the knowledge and skills that
all newly licensed CPAs (nlCPAs) need in their role to protect the public interest.
The Discipline exam sections assess the knowledge and skills in the respective
Discipline domain applicable to nlCPAs in their role to protect the public interest.
The three Core exam sections, each four hours long, are: Auditing and Attestation(AUD), Financial Accounting and Reporting (FAR) and Taxation and Regulation(REG). The three Discipline exam sections, each four hours long, are: Business
Analysis and Reporting (BAR), Information Systems and Controls (ISC) and Tax
Compliance and Planning (TCP).
The table below presents the design of the Exam by Core and Discipline section,section time and question type.
Section TimeMultiple-Choice
Questions (MCQs)1

Tasked-Based
Simulations (TBSs)1

AUD – Core

4 hours78

7

FAR – Core

4 hours

50

7

REG – Core

4 hours72

8

BAR – Discipline

4 hours

50

7

ISC – Discipline

4 hours

82

6

TCP – Discipline

4 hours

68

7

Section1

The table below presents the scoring weight of MCQs and TBSs for each Coreand Discipline Exam section.
Score Weighting2
Multiple-Choice
Questions (MCQs)

Tasked-Based
Simulations (TBSs)1

AUD – Core

50%

50%

FAR – Core

50%

50%

REG – Core

50%

50%

BAR – Discipline

50%

50%

ISC – Discipline

60%

40%

TCP – Discipline

50%

50%

SectionThe AICPA adopted a skill framework for the Exam based on the revised Bloom’s
Taxonomy of Educational Objectives³. Bloom’s Taxonomy classiﬁes a continuumof skills that students can be expected to learn and demonstrate.

Number of MCQs and TBSs are preliminary and approximate. The actual number of MCQs and TBSs will be included in the Final Report expected to be issued in January 2023.

2

Score weighting is preliminary and approximate. Actual score weighting will be included in the Final Report expected to be issued in January 2023.

3

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives(Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York:David McKay.

Uniform CPA Examination Blueprints

2

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Introduction

Uniform CPA Examination Blueprints (continued)
Representative tasks that are critical to an nlCPA’s role in protecting the public
interest have been identiﬁed. The representative tasks combine both theapplicable content knowledge and skills required in the context of the work ofan nlCPA. Based on the nature of a task, one of four skill levels, derived from therevised Bloom’s Taxonomy, is assigned to each of the tasks, as follows:
Skill Levels
Evaluation

The examination or assessment of problems,and use of judgment to draw conclusions.

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

The skill levels to be assessed on each Core and Discipline section of the Exam
are included in the table below.

• The section introduction outlines the scope of the section, the content
organization and tasks, the content allocation, the overview of content
areas, section assumptions, the skill allocation and a listing of the section’s
applicable reference literature.
• The section blueprint outlines the content to be tested, the associated skill
level to be tested and representative tasks an nlCPA would likely encounter. The
blueprints are organized by content AREA, content GROUP and content TOPIC.
Each topic includes one or more representative TASKS that an nlCPA may be
expected to complete.
The purpose of the blueprint is to:• Document the minimum level of knowledge and skills necessary for
initial licensure.
• Assist candidates in preparing for the Exam by outlining the knowledge
and skills that may be tested.
• Apprise educators about the knowledge and skills candidates will needto function as nlCPAs.

Remembering andUnderstanding4

Application4

Analysis4

Evaluation4• Guide the development of Exam questions.

AUD – Core

30–40%

30–40%

15–25%

5–15%

FAR – Core

5–15%

45–55%

35–45%–

REG – Core

25–35%

35–45%

25–35%–BAR – Discipline

10–20%

45–55%

30–40%–The tasks in the blueprints are representative and are not intended to be(nor should they be viewed as) an all-inclusive list of tasks that may be testedon the Exam. The number of tasks associated with a particular content group or
topic is not indicative of the extent such content group, topic or related skill level
will be assessed on the Exam.

ISC – Discipline

55–65%

20–30%

10–20%–

TCP – Discipline

5–15%

50–60%

30–40%–

Section4

Each section of the Exam has a section introduction and a corresponding
section blueprint.

Skill weightings are preliminary and approximate. Actual skill ratings will be included in the Final Report expected to be issued in January 2023.

Uniform CPA Examination Blueprints

3

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Uniform CPA Examination
Auditing and Attestation (AUD)

Blueprint

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Section Introduction

Auditing and Attestation
The Auditing and Attestation (AUD) section of the Uniform CPA Examination(the Exam) tests the knowledge and skills that nlCPAs must demonstrate when
performing the following engagements:

A list of reference materials relevant to the AUD section of the Exam is included
under References at the conclusion of this introduction.

• Audit engagements include ﬁnancial statement audits, compliance audits,
audits of internal control integrated with an audit of ﬁnancial statements andaudits of entities receiving federal awards or grants. Audits include issuer
entities subject to the requirements set forth by the Public Company Accounting
Oversight Board (PCAOB), nonissuer entities subject to the requirements set
forth by the American Institute of CPA’s (AICPA) Auditing Standards Boardor governmental entities subject to the requirements of the U.S. Government
Accountability Oﬃce (GAO) or the Oﬃce of Management and Budget (OMB).

The AUD section blueprint is organized by content AREA, content GROUP
and content TOPIC. Each topic includes one or more representative TASKS
that an nlCPA may be expected to complete when performing various typesof engagements.

• Attestation engagements include assertion-based examinations, direct
examinations and review or agreed-upon procedures engagements that are
subject to the requirements set forth by the AICPA’s Auditing Standards Board.
• Accounting and review service engagements include preparation, compilation
and review engagements that are subject to the requirements set forth by the
AICPA’s Accounting and Review Services Committee.
The assessment will focus on an nlCPA’s role in planning, risk assessment,
performing procedures, obtaining evidence and reporting for these engagement
types. The assessment will incorporate:• Data and technology concepts with a focus on understanding how data is
structured and ﬂows through underlying systems, verifying the completenessand accuracy of source data and using the outputs of data analytic techniques
to assist in risk assessment or to complete planned procedures.
• Professional skepticism and professional judgment with a focus on the criticalassessment of evidence and the need to apply knowledge and experience tomake informed decisions.
• Applied research with a focus on reviewing and using excerpts of source
materials (e.g., auditing standards, attestation standards, accounting andreview services standards) to complete a range of tasks including identifying
issues, analyzing facts and determining appropriate responses.

Content organization and tasks

The tasks in the blueprint are representative. They are not intended to be(nor should they be viewed as) an all-inclusive list of tasks that may be tested
in the AUD section of the Exam. Lists or examples included within the text ofa representative task beginning with the word “including” are not intended to
be exhaustive. Within some representative tasks are parenthetical lists. If aparenthetical list begins with “e.g.”, this is not intended to be an exhaustive list but
rather examples of the types of content that could be assessed. Parenthetical lists
that do not include “e.g.” are intended to be an exhaustive list of the content to beassessed with respect to that representative task. Additionally, the number of tasks
associated with a particular content group or topic is not indicative of the extent
such content group, topic or related skill level will be assessed on the Exam.

Content allocation
The following table summarizes the content areas and the allocation of content
tested in the AUD section of the Exam:Content area

Allocation

Area I

Ethics, Professional Responsibilities and General Principles

15–25%

Area II

Assessing Risk and Developing a Planned Response

25–35%

Area III

Performing Further Procedures and Obtaining Evidence

30–40%

Area IV

Forming Conclusions and Reporting

10–20%

Uniform CPA Examination Blueprints: Core Examination Section – Auditing and Attestation (AUD)

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Section Introduction

Auditing and Attestation (continued)
Overview of content areas
Area I of the AUD section blueprint covers ethics, professional responsibilities andgeneral principles, including the following:• Ethics and independence including understanding and applying the AICPA
Code of Conduct and the ethical and independence requirements of the
U.S. Securities and Exchange Commission (SEC), PCAOB, GAO and Departmentof Labor (DOL).
• Professional skepticism including the critical assessment of evidence and theneed to apply knowledge and experience to make informed decisions.
• Nature, scope and terms of engagements including engagement preconditions.
• Requirements for engagement documentation and communication withmanagement or those charged with governance.
• Understanding of quality control on an engagement and responsibilities
within a ﬁrm.
Area II of the AUD section blueprint covers planning and risk assessment anddesign of procedures responsive to identiﬁed risks. The Area includes the following:• Engagement strategy and engagement planning.
• Internal and external factors related to understanding an entity and its
environment including basic economic concepts such as supply anddemand and business cycles.
• Understanding an entity’s control environment and business processes
including an understanding of the COSO Internal Control – Integrated
Framework, entity-level controls and the design of internal controls,
IT systems and related IT general controls. SOC 1® reports as they affectthe audit of user-entity ﬁnancial statements are also included.

• Planning for and using the work of others including management’s specialists
and auditor’s specialists.
• Speciﬁc areas of engagement risk including compliance with laws andregulations, accounting estimates, related parties and requirements for
single audits in accordance with the Uniform Guidance for Single Audits.
Area III of the AUD section blueprint covers performing procedures and obtaining
evidence. The Area includes the following:• Use of data and information including requesting, preparing and transforming
data, reliability of data and information and data analytics.
• Suﬃcient appropriate evidence including sources of evidence and concludingon whether evidence obtained achieves the engagement’s planned objectives.
• Sampling techniques including appropriate populations, sample size,
stratiﬁcation and extrapolation of results.
• Performing procedures to obtain evidence including tests of controls, tests ofdetails, analytical procedures and external conﬁrmations.
• Speciﬁc matters that require special audit consideration such as accounting
estimates, investments in securities, inventory, litigation, claims andassessments, going-concern and testing transactions related to federal awards
during a single audit.
• Misstatements and internal control deﬁciencies including preparing a summaryof misstatements and determining their effect on the ﬁnancial statements andthe nature, timing and extent of procedures.
• Written representations requested from management.
• Subsequent events including identiﬁcation of subsequent events and the impact
to an entity’s ﬁnancial statements and disclosures.

• Materiality including performance materiality or tolerable misstatement.
• Assessing and responding to risks of material misstatement, whether
due to fraud or error.

Uniform CPA Examination Blueprints: Core Examination Section – Auditing and Attestation (AUD)

AUD3

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Section Introduction

Auditing and Attestation (continued)
Area IV of the AUD section blueprint covers engagement reporting. The Area
includes the following:• Reporting on auditing and attestation engagements including factors toconsider when forming an opinion, types of opinions and the appropriate
form and content of a report.
• Considerations for performing preparation engagements.
• Considerations for reporting on compilation and review engagements, including
the appropriate form and content of a report.
• Considerations for reporting on compliance aspects as part of an audit
engagement or an attestation engagement related to compliance with a
speciﬁc requirement or rule.
• Other reporting considerations when performing engagements, including
consistency, other information, review of interim ﬁnancial information,
supplementary information, special-purpose frameworks and additional
reporting requirements under GAO Government Auditing Standards.

Section assumptions
The AUD section of the Exam includes multiple-choice questions andtask-based simulations. When completing multiple-choice questions andtask-based simulations in the AUD section of the Exam, candidates should
be aware of the entity type and engagement type presented in the question.
To the extent that there are different requirements for an entity under audit
or review, the question will include an explicit reference to the entity type(issuer or nonissuer).
Questions may refer to an audit engagement by including phrases such as“an audit of a nonissuer” or “an audit of an issuer”. Questions will refer to othertypes of engagements by including phrases such as “examination of pro forma
ﬁnancial information”, “review engagement”, “interim review”, “compilation
5

engagement”, etc. The use of the terms “auditor”, “accountant” or “practitioner”
will also be used to further identify engagement types and applicable professional
standards. Candidates should be mindful of the engagement type whenanswering a question.

Skill allocation
The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives5. Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:
Skill Levels
Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

The AUD section of the Exam assesses content at all of the skill levels of Bloom’s
Taxonomy as described below:• Remembering and Understanding is mainly concentrated in Area I and Area IV.
Area I contains much of the general audit knowledge that is required for nlCPAs.
In Area IV, many of the tasks relate to reporting and are driven by templates andillustrative examples.

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives(Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York:David McKay.

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Section Introduction

Auditing and Attestation (continued)• Application is tested in all four areas of the AUD section. Application tasks focus
on general topics such as professional responsibilities and documentation, andthe day-to-day tasks that nlCPAs perform, using standardized application tools
such as audit programs and sampling techniques.
• Analysis and Evaluation skills, tested in Area II and Area III, involve tasks that
require a higher level of analysis and interpretation. These tasks, such asconcluding on suﬃciency and appropriateness of evidence, require nlCPAs toapply professional skepticism and judgment.
The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

References – Auditing and Attestation• AICPA Statements on Auditing Standards and Related Auditing Interpretations• PCAOB Auditing Standards (SEC approved), Auditing Interpretations and Ethics
and Independence Rules• U.S. GAO Government Auditing Standards• AICPA Statements on Standards for Accounting and Review Services
and Related Accounting and Review Services Interpretations• AICPA Statements on Standards for Attestation Engagements
and Interpretations• AICPA Audit and Accounting Guides• AICPA Code of Professional Conduct• Sarbanes-Oxley Act of 2002
• U.S. DOL Interpretive bulletins relating to guidelines on independence ofaccountant retained by Employee Beneﬁt Plan (29 CFR 2509.75-9)• U.S. SEC Independence Rules• The Committee of Sponsoring Organizations of the Treadway Commission(COSO): Internal Control — Integrated Framework• Current textbooks on auditing, attestation services, economics and ethics
and independence• Single Audit Act, as amended• OMB Audit Requirements for Federal Awards (2 CFR 200)
• AICPA Statements on Quality Control Standards

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Summary Blueprint
Content area allocation

WeightI. Ethics, Professional Responsibilities and General Principles

15–25%

II. Assessing Risk and Developing a Planned Response

25–35%

III. Performing Further Procedures and Obtaining Evidence

30–40%

IV. Forming Conclusions and Reporting

10–20%

Skill allocation

WeightEvaluation

5–15%

Analysis

15–25%

Application

30–40%

Remembering and Understanding

30–40%

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Area I – Ethics, Professional Responsibilities and General Principles (15–25%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Ethics, independence and professional responsibilities
1. AICPA Code ofProfessional Conduct

Understand the principles, rules and interpretations included in the AICPA Codeof Professional Conduct.
Apply the principles, rules and interpretations included in the AICPA Code ofProfessional Conduct to situations.
Apply the Conceptual Framework for Members in Public Practice and Members
in Business included in the AICPA Code of Professional Conduct to situations
that could present threats to compliance with the rules included in the Code.
Apply the Conceptual Framework for Independence included in the AICPA Codeof Professional Conduct to situations that could present threats to compliancewith the rules included in the Code.

2. Requirements of the Securities
and Exchange Commission and
the Public Company Accounting
Oversight Board

Understand the ethical and independence requirements of the Securities andExchange Commission and the Public Company Accounting Oversight Board.

3. Requirements of the Government
Accountability Oﬃce and theDepartment of Labor

Understand the ethical and independence requirements of the Government
Accountability Oﬃce Government Auditing Standards.

Apply the ethical requirements and independence rules of the Securities andExchange Commission and the Public Company Accounting Oversight Board tosituations that could compromise compliance or impair independence during
an audit of an issuer.

Understand the independence requirements of the Department of Labor.

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Area I – Ethics, Professional Responsibilities and General Principles (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Ethics, independence and professional responsibilities (continued)
3. Requirements of the Government
Accountability Oﬃce and theDepartment of Labor (continued)

Apply the ethical requirements and independence rules of the Government
Accountability Oﬃce Government Auditing Standards to situations that could
present threats to compliance during an audit of, or attestation engagement
for, a government entity or an entity receiving federal awards.
Apply the independence rules of the Department of Labor to situations when an
accountant would not be considered independent during an audit of employee
beneﬁt plans.

B. Professional skepticism and professional judgment
Understand the concepts of professional skepticism and professional judgment.
Understand unconscious auditor biases and other impediments to acting withprofessional skepticism, including threats, incentives and judgment-making
shortcuts.
C. Nature and scope
1. Audit engagements

Identify the nature, scope and objectives of the different types of audit
engagements for issuers and nonissuers (e.g., ﬁnancial statement, ERISA
plan ﬁnancial statement).

2. Engagements conducted under
Government Accountability Oﬃce
Government Auditing Standards

Identify the nature, scope and objectives of engagements performed inaccordance with Government Accountability Oﬃce Government AuditingStandards, including single audits.

3. Other engagements

Identify the nature, scope and objectives of attestation engagements andaccounting and review service engagements.

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Area I – Ethics, Professional Responsibilities and General Principles (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Terms of engagement
1. Preconditions for an engagement

Identify the preconditions needed for accepting or continuing an engagement.

2. Terms of engagement and theengagement letter

Identify the factors affecting the acceptance or continuance of an engagement.
Recall when it is acceptable to agree to management’s request for a change
in the type of engagement (e.g., from an audit to a review).
Perform procedures to conﬁrm that a common understanding of the termsof an engagement exist with management and those charged with governance.
Document the terms of an engagement in a written engagement letter orother suitable form of written agreement.

E. Requirements for engagement documentation
Identify the elements that comprise suﬃcient appropriate documentation inphysical or electronic form for an engagement.
Identify the requirements for the assembly and retention of documentation inphysical or electronic form for an engagement.
Prepare documentation that is suﬃcient to enable an experienced auditor or
practitioner having no previous connection with an engagement to understand thenature, timing, extent and results of procedures performed, the signiﬁcant ﬁndings
and conclusions reached and the signiﬁcant professional judgments made.

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Area I – Ethics, Professional Responsibilities and General Principles (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

F. Communication with management and those charged with governance
1. Planned scope and timingof an engagement

Identify the matters related to the planned scope and timing of an engagementthat should be communicated to management and those charged withgovernance.
Prepare presentation materials and supporting schedules for use in communicating
the planned scope and timing of an engagement to management and those charged
with governance.

2. Internal control related matters

Identify the matters related to deﬁciencies and material weaknesses in internal
control that should be communicated to those charged with governance andmanagement for an engagement and the timing of such communications.
Prepare written communication materials for use in communicating identiﬁed
internal control deﬁciencies and material weaknesses for an engagement tothose charged with governance and management.

G. Quality control
Identify a CPA ﬁrm’s responsibilities for its accounting and auditing practice’s
system of quality control.
Explain procedures and responsibilities for quality control on an engagement.

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Area II – Assessing Risk and Developing a Planned Response (25–35%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Planning an engagement
1. Overall engagement strategy

Explain the purpose and signiﬁcance of the overall engagement strategy
for an engagement.

2. Engagement plan

Prepare a draft engagement plan for speciﬁc processes, accounts or classesof transactions considering the prior period and changes in the current period.
Prepare supporting planning-related materials (e.g., client assistance request
listings, time budgets) for a detailed engagement plan starting with the prior-year
engagement plan or with a template.

B. Understanding an entity and its environment
1. External factors

Understand supply and demand, elasticity measures and proﬁt maximization(e.g. marginal cost, marginal revenue).
Understand the business cycles (trough, expansion, peak, recession) and leading,coincident and lagging indicators of economic activity (e.g., consumer price index,
producer price index, federal funds rate, bond yields, unemployment).
Identify relevant factors (e.g., industry, regulatory, economic, government policy,
ﬁnancial reporting framework, technology, supply chain) that could impact anentity, its operations, and/or the inherent risk of material misstatement.

2. Internal factors

Understand the entity’s responsibilities with respect to the corporate governanceprovisions of the Sarbanes-Oxley Act of 2002.
Identify the relevant factors that deﬁne the nature of an entity, including theimpact on the risk of material misstatement (e.g., its operations, ownership andgovernance structure, investment and ﬁnancing plans, selection of accounting
policies and objectives and strategies).

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Area II – Assessing Risk and Developing a Planned Response (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Understanding an entity’s control environment and business processes, including information technology (IT) systems
1. COSO Internal Control –Integrated Framework

Deﬁne internal control within the context of the COSO internal control framework,
including the purpose, objectives and limitations of the framework.
Identify and deﬁne the components, principles and underlying structure of the
COSO internal control framework.

2. Control environment, IT generalcontrols, and entity-level controls

Understand the elements of an entity’s control environment, including the design
and implementation of IT general controls and entity-level controls.
Perform procedures to obtain an understanding of how an entity has responded
to risks arising from IT, including identifying and testing the design andimplementation of relevant IT general controls.

3. Business processes and thedesign of internal controls,
including IT systems

Identify and document the signiﬁcant business processes and data ﬂows that
directly or indirectly impact an entity’s ﬁnancial statements.
Perform a walkthrough of a signiﬁcant business process and document(e.g., ﬂow charts, process diagrams, narratives) the ﬂow of relevant transactions
and data from initiation through ﬁnancial statement reporting and disclosure.
Obtain an understanding of an entity’s IT systems infrastructure (e.g., ERP, cloudcomputing or hosting arrangements, custom or packaged applications) anddocument the procedures performed to obtain that understanding.
Obtain an understanding of IT systems that are, directly or indirectly, the sourceof ﬁnancial transactions or the data used to record ﬁnancial transactions(e.g., how the entity uses IT systems to capture, store, and process information).
Perform tests of the design and implementation of relevant automated andmanual transaction-level internal controls (e.g. authorizations and approvals,
reconciliations, veriﬁcations, physical or logical controls, segregation of duties).

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Area II – Assessing Risk and Developing a Planned Response (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Understanding an entity’s control environment and business processes, including information technology (IT) systems (continued)
3. Business processes and thedesign of internal controls,
including IT systems (continued)

Identify and document the relevant automated and manual controls within the ﬂow
of an entity’s transactions for a signiﬁcant business process and consider the effectof these controls on the completeness, accuracy and reliability of an entity’s data.
Conclude whether relevant automated and manual transaction-level internal
controls are effectively designed and placed in operation.

4. Implications of an entity
using a service organization

Understand the differences between SOC 1® and SOC 2® engagements.
Identify and document the purpose and signiﬁcance of an entity’s use of a service
organization, including the impact of using a SOC 1® Type 2 report in an audit ofan entity’s ﬁnancial statements.
Use a SOC 1® Type 2 report to determine the nature and extent of testing procedures
to be performed in an audit of an entity’s ﬁnancial statements.

5. Limitations of controls andrisk of management override

Understand the limitations of internal controls and the potential impact on the riskof material misstatement of an entity’s ﬁnancial statements.
Identify and document the risks associated with management override of internal
controls and the potential impact on the risk of material misstatement of anentity’s ﬁnancial statements.

D. Materiality
1. For the ﬁnancial statements
as a whole

Understand materiality as it relates to the ﬁnancial statements as a whole.
Calculate materiality for an entity’s ﬁnancial statements as a whole.
Calculate the materiality level (or levels) to be applied to classes of transactions,account balances and disclosures in an audit of an issuer or nonissuer.

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Area II – Assessing Risk and Developing a Planned Response (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Materiality (continued)
2. Tolerable misstatement
and performance materiality

Understand the use of tolerable misstatement or performance materiality in anaudit.
Determine tolerable misstatement or performance materiality for the purposes ofassessing the risk of material misstatement and determining the nature, timing
and extent of further audit procedures in an audit of an issuer or nonissuer.

E. Assessing and responding to risks of material misstatement, whether due to fraud or error
Determine the pressures, incentives and opportunities for fraud (e.g., fraudulent
ﬁnancial reporting, misappropriation of assets) that could lead to the risk ofmaterial misstatement.
Determine risk of material misstatement, whether due to fraud or error, at theﬁnancial statement level and relevant assertion level for each material class oftransactions, account balance and disclosure.
Determine a response to risks of material misstatement at the ﬁnancial statementlevel (e.g. maintaining professional skepticism, engagement team supervision,
incorporating elements of unpredictability), considering the auditor’s understandingof the control environment.
Determine appropriate procedures to assess the operating effectivenessof relevant controls.
Determine appropriate substantive procedures to test relevant assertions for eachmaterial class of transactions, account balance and disclosure.
Determine procedures to satisfy the requirements and objectives of an attestation
engagement.
Determine procedures to satisfy the requirements and objectives of an accounting
and review services engagement.

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Area II – Assessing Risk and Developing a Planned Response (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Assessing and responding to risks of material misstatement, whether due to fraud or error (continued)
Assess risks of material misstatement, whether due to fraud or error, at theﬁnancial statement level and develop a response by leveraging the combined
knowledge and understanding of the engagement team.
Assess the potential impact of identiﬁed risks at the relevant assertion level foreach material class of transactions, account balance and disclosure, considering
the controls the auditor intends to test.
Analyze the risk of material misstatement, including the potential impact ofindividual and cumulative misstatements, to provide a basis for developing
planned audit procedures.
Use outputs from audit data analytic procedures (e.g. reports and visualizations)to identify transactions that may have a higher risk of material misstatement andinterpret the results to develop planned audit procedures.
F. Planning for and using the work of others
Identify the factors to consider in determining the extent to which an engagement
team can use the work of the internal audit function, IT auditor, auditor’s specialist,
management’s specialist or a component auditor.
Determine the nature and scope of the work of the internal audit function, IT
auditor, auditor’s specialist, management’s specialist or component auditor.
Perform and document procedures to determine the extent to which an
engagement team can use the work of the internal audit function, IT auditor,
auditor’s specialist, management’s specialist or a component auditor.

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Area II – Assessing Risk and Developing a Planned Response (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

G. Speciﬁc areas of engagement risk
1. An entity’s compliancewith laws and regulations

Understand the accountant’s responsibilities with respect to laws and regulations
that have a direct effect on the determination of material amounts or disclosuresin an entity’s ﬁnancial statements for an engagement.
Understand the accountant’s responsibilities with respect to laws and regulations
that are fundamental to an entity’s business but do not have a direct effect on theentity’s ﬁnancial statements in an engagement.
Perform tests of compliance with laws and regulations that have a direct
effect on material amounts or disclosures in an entity’s ﬁnancial statements
in an engagement.
Perform tests of compliance with laws and regulations that are fundamental toan entity’s business, but do not have a direct effect on the entity’s ﬁnancial
statements for an engagement.

2. Accounting estimates

Recognize the potential impact of lower complexity and higher complexity
signiﬁcant accounting estimates on the risk of material misstatement, including theindicators of management bias.

3. Related parties and related
party transactions

Perform procedures to identify related party relationships and transactions,
including consideration of signiﬁcant unusual transactions and transactions
with executive oﬃcers.

4. Uniform Guidance
for single audits

Understand when an entity is required to have a single audit in accordance withthe audit requirements of the Uniform Guidance, including the identiﬁcation offederal awards and major programs.

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Area III – Performing Further Procedures and Obtaining Evidence (30–40%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Use of data and information
1. Requesting, preparing
and transforming data

Explain the components of a relational database (e.g., tables, records, ﬁelds/
attributes, primary and foreign keys, normalization).
Explain the characteristics and uses of different measurement scales (e.g.,
nominal, ordinal, interval, ratio, continuous, discrete).
Determine attribute structures, format, and sources of data needed when making
a data extraction request to complete planned procedures.
Determine methods to transform (e.g., preparing, cleaning, scrubbing) data tocomplete planned procedures.

2. Reliability of dataand information

Perform procedures (e.g., agreeing information to original sources such as generalledger, subledger or external information sources, validating search or query
criteria used to obtain data) to validate the reliability (completeness, accuracy,
authenticity and susceptibility to management bias) of data and information
obtained.

3. Data analytics

Describe how to apply automated tools and techniques to process, organize,
structure or present data in a given context to generate useful information thatcan be used as evidence.
Perform procedures using outputs (e.g., reports, visualizations) from audit
data analytic techniques and types (e.g., descriptive, diagnostic) to determine
relationships and trends among variables and interpret results.

B. Suﬃcient appropriate evidence
Determine the sources of suﬃcient appropriate evidence (e.g., obtained frommanagement specialists, obtained from external sources, developed by the audit
team from internal or external sources).

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Area III – Performing Further Procedures and Obtaining Evidence (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Suﬃcient appropriate evidence (continued)
Exercise professional skepticism and professional judgment while analyzing
information to be used as audit evidence taking into account its relevance andreliability, authenticity and whether such information corroborates or contradicts
the assertions in the ﬁnancial statements.
Conclude whether suﬃcient appropriate evidence has been obtained to achieve
the objectives of the planned procedures.
C. Sampling techniques
Understand the purpose and application of sampling techniques including the useof automated tools and audit data analytic techniques to identify signiﬁcant eventsor transactions that may impact the ﬁnancial statements.
Determine the appropriate population of items to sample to meet the objectivesof the planned procedures.
Use sampling techniques to extrapolate the characteristics of a populationfrom a sample of items.
D. Procedures to obtain suﬃcient appropriate evidence
1. Test of controls
and test of details

Use observation and inspection to obtain evidence.
Use recalculation (manually or using automated tools and techniques) to test
the mathematical accuracy of information to obtain evidence.
Use reperformance to independently execute procedures or controls to
obtain evidence.
Inquire of management and others to gather evidence and document the results.

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Area III – Performing Further Procedures and Obtaining Evidence (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Procedures to obtain suﬃcient appropriate evidence (continued)
1. Test of controls andtest of details (continued)

Analyze responses obtained during structured interviews or informal
conversations with management and others, including those in non-ﬁnancial
roles, and ask relevant and effective follow-up questions to understand theirperspectives and motivations.
Perform tests of operating effectiveness of internal controls, including the analysisof exceptions to identify deﬁciencies in an audit of ﬁnancial statements or an audit
of internal control.

2. Analytical procedures

Determine the suitability of substantive analytical procedures to provide evidence
to support an identiﬁed assertion.
Perform substantive analytical procedures, including developing an expectation,
on an account balance to provide evidence to support an identiﬁed assertion.
Perform analytical procedures near the end of an audit engagement that assist
the auditor when forming an overall conclusion about whether the ﬁnancial
statements are consistent with the auditor’s understanding of the entity.
Evaluate and investigate differences resulting from analytical procedures(e.g., ﬂuctuations or relationships that are inconsistent with other information
or expected values).

3. External conﬁrmations

Conﬁrm signiﬁcant account balances and transactions using appropriate tools
and techniques (e.g., conﬁrmation services, electronic conﬁrmations, manual
conﬁrmations) to obtain relevant and reliable evidence.
Analyze external conﬁrmation responses to determine the need for follow-up
or further investigation.

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Area III – Performing Further Procedures and Obtaining Evidence (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Speciﬁc matters that require special consideration
1. Accounting estimates

Recalculate and reperform procedures to validate the inputs and assumptionsof an entity’s signiﬁcant accounting estimates with a higher risk of material
misstatement or complexity, such as fair value estimates.
Perform procedures (e.g. reviewing the work of a specialist and procedures
performed by the engagement team) to validate an entity’s calculations anddetailed support for signiﬁcant accounting estimates, including consideration of
information that contradicts assumptions made by management.
Conclude on the reasonableness of signiﬁcant accounting estimates with a lower
risk of material misstatement or complexity in an audit.

2. Investments in securities

Identify the considerations relating to the measurement and disclosure of the fairvalue of investments in securities in an audit.
Test management’s assumptions, conclusions and adjustments related to thevaluation of investments in securities in an audit.

3. Inventory and inventory
held by others

Test the ending inventory quantities in an audit by obtaining evidence regarding
the existence and condition of inventory and inventory held by others (e.g.,inventory counting procedures, conﬁrmation) and conclude whether inventory
records accurately reﬂect count results.

4. Litigation, claims and assessments

Perform appropriate audit procedures, including inquiring of management andothers, reviewing minutes and sending external conﬁrmations, to detect theexistence of litigation, claims and assessments.

5. An entity’s ability to continue
as a going concern

Identify factors that should be considered while performing planned proceduresthat may indicate substantial doubt about an entity’s ability to continue as a going
concern for a reasonable period of time.

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Area III – Performing Further Procedures and Obtaining Evidence (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Speciﬁc matters that require special consideration (continued)
6. Uniform Guidance for single audits

Test transactions related to federal awards for compliance with statutes,
regulations, and the terms and conditions of the federal awards.

F. Misstatements and internal control deﬁciencies
Prepare a summary of corrected and uncorrected misstatements.
Determine the effect of uncorrected misstatements on an entity’s ﬁnancial
statements in an engagement.
Determine the effect of identiﬁed misstatements on the assessment of internal
control over ﬁnancial reporting, individually and in the aggregate.
Evaluate internal control deﬁciencies to determine potential impact on the nature,timing, and extent of audit procedures.
G. Written representations
Identify the written representations that should be obtained from management or
those charged with governance in an engagement.
H. Subsequent events and subsequently discovered facts
Recall the impact of subsequently discovered facts on the auditor’s report.
Perform procedures to identify subsequent events that should be reﬂectedin an entity’s current period ﬁnancial statements and disclosures.
Determine whether identiﬁed subsequent events are appropriately reﬂectedin an entity’s ﬁnancial statements and disclosures.

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Area IV – Forming Conclusions and Reporting (10–20%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Reporting on audit engagements
Identify the factors that an auditor should consider when forming an opinion on an
entity’s ﬁnancial statements.
Identify the factors that an auditor should consider when forming an opinion on
the effectiveness of internal control in an audit of internal control over ﬁnancial
reporting that is integrated with an audit of ﬁnancial statements.
Identify the type of opinion (unqualiﬁed or unmodiﬁed, qualiﬁed, adverse, ordisclaimer of opinion) that an auditor should render on the audit of an issuer
or nonissuer’s ﬁnancial statements.
Identify the appropriate use of emphasis-of-matter and other-matter(explanatory) paragraphs.
Determine the appropriate form and content of an auditor’s report for an
engagement, including the appropriate use of emphasis-of-matter andother-matter (explanatory) paragraphs.
Determine the appropriate form and content of a report on the audit of internal
control over ﬁnancial reporting, including report modiﬁcations and the use of
separate or combined reports for the audit of an entity’s ﬁnancial statements andthe audit of internal control.
B. Reporting on attestation engagements
1. Examination or review
engagements

Identify the factors that a practitioner should consider when issuing anassertion-based examination, direct examination or review report.
Determine the appropriate form and content of an accountant’s report foran assertion-based examination, direct examination, or review for an
attestation engagement.

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Auditing and Attestation (AUD)

Area IV – Forming Conclusions and Reporting (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Reporting on attestation engagements (continued)
2. Agreed-upon procedures
engagements

Identify the factors that a practitioner should consider when issuing anagreed-upon procedures report for an attestation engagement.
Determine the appropriate form and content of an agreed-upon procedures
report for an attestation engagement.

C. Accounting and review service engagements
1. Preparation engagements

Identify the factors that an accountant should consider when performing apreparation engagement.

2. Compilation engagements

Identify the factors that an accountant should consider when reporting on an
engagement to compile an entity’s ﬁnancial statements.
Determine the appropriate form and content of an accountant’s report for acompilation engagement.

3. Review engagements

Identify the factors that an accountant should consider when reporting on an
engagement to review an entity’s ﬁnancial statements.
Determine the appropriate form and content of an accountant’s report for areview engagement.

D. Reporting on compliance
Identify the factors that an auditor should consider when reporting on compliancewith aspects of contractual agreements or regulatory requirements in connection
with an audit of an entity’s ﬁnancial statements.
Identify the factors that a practitioner should consider when reporting on an
attestation engagement related to an entity’s compliance with the requirementsof speciﬁed laws, regulations, rules, contracts or grants, and reports on theeffectiveness of internal controls over compliance with the requirements.

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Auditing and Attestation (AUD)

Area IV – Forming Conclusions and Reporting (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Other reporting considerations
1. Comparative statements andconsistency between periods

Identify the factors (change in accounting principle, the correction of a material
misstatement, or a material change in classiﬁcation) that would affect thecomparability or consistency of ﬁnancial statements.

2. Other information in documentswith audited statements

Understand the auditor’s responsibilities related to other information included in
documents with audited ﬁnancial statements.

3. Review of interim ﬁnancial
information

Identify the factors an auditor should consider when reporting on an engagement
to review interim ﬁnancial information.

4. Supplementary information

Identify the factors an auditor should consider when reporting on supplementary
information included in or accompanying an entity’s ﬁnancial statements.

5. Additional reporting requirements
under Government AccountabilityOﬃce Government AuditingStandards

Identify requirements under Government Accountability Oﬃce Government
Auditing Standards related to reporting on internal control over ﬁnancial
reporting and compliance with provisions of the law, regulations, contracts,
grant agreements and federal awards that have a material effect on theﬁnancial statements.
Understand the requirements when preparing the auditor’s report on complianceand internal control over compliance – major programs and the auditor’s scheduleof ﬁndings and questioned costs for a single audit.

6. Special-purpose frameworks

Identify the factors an auditor should consider when reporting on the audit ofﬁnancial statements prepared in accordance with the cash basis, tax basis,
regulatory basis, contractual basis or other basis of accounting.

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Uniform CPA Examination Financial
Accounting and Reporting (FAR)

Blueprint

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Section Introduction

Financial Accounting and Reporting
The Financial Accounting and Reporting (FAR) section of the Uniform CPA
Examination (the Exam) assesses the knowledge and skills that nlCPAs must
demonstrate in the ﬁnancial accounting and reporting frameworks used byfor-proﬁt (public and nonpublic) and not-for-proﬁt entities.

Content organization and tasks

The frameworks eligible for assessment include the standards and/or regulations
issued by the:Tasks in the FAR section blueprint are representative. They are not intended
to be (nor should they be viewed as) an all-inclusive list of tasks that may betested in the FAR section of the Exam. Lists or examples included within the textof a representative task beginning with the word “including” are not intended
to be exhaustive. Within some representative tasks are parenthetical lists. If aparenthetical list begins with “e.g.,” this is not intended to be an exhaustive list but
rather examples of the types of content that could be assessed. Parenthetical lists
that do not include “e.g.” are intended to be an exhaustive list of the content to beassessed with respect to that representative task. Additionally, the number of tasks
associated with a particular content group or topic is not indicative of the extent
such content group, topic or related skill level will be assessed on the Exam.

• Financial Accounting Standards Board (FASB)• U.S. Securities and Exchange Commission (U.S. SEC)
• American Institute of Certiﬁed Public Accountants (AICPA)
The assessment of ﬁnancial accounting and reporting concepts will focus onan nlCPA’s role in the preparation and review of ﬁnancial statements, accountbalances and transactions to ensure compliance with the applicable frameworks
described above. The assessment will incorporate:• Data and technology concepts, including the veriﬁcation of the completenessand accuracy of source data used in the preparation of ﬁnancial statements
and the use of various sources of data and information to prepare supporting
schedules for account balances.
• Applied research with a focus on reviewing and using excerpts of source
materials (e.g., FASB Accounting Standards Codiﬁcation) to complete a rangeof tasks including identifying issues, analyzing facts and determining
appropriate responses.
The FAR section of the Exam will also assess foundational concepts related tothe accounting requirements for state and local governments as issued by theGovernmental Accounting Standards Board (GASB).

The FAR section blueprint is organized by content AREA, content GROUP andcontent TOPIC. Each group or topic includes one or more representative TASKS
that an nlCPA may be expected to complete in practice.

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

Allocation

Area I

Financial Reporting

30–40%

Area II

Select Balance Sheet Accounts

30–40%

Area III

Select Transactions

25–35%

A list of reference materials relevant to the FAR section of the Exam is included
under References at the conclusion of this introduction.

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Section Introduction

Financial Accounting and Reporting (continued)
Overview of content areas
Area I of the FAR section blueprint covers the preparation, review and analysis
of ﬁnancial statements (for proﬁt and not-for-proﬁt entities) and foundational
concepts related to the accounting requirements for state and local governments.
The Area includes the following:• Long-term debt, including notes and bonds payable and debt covenantcalculations.
• Equity transactions, speciﬁcally focusing on equity issuance, stock dividends,
stock splits and treasury stock.

• General-purpose ﬁnancial reporting and ratios and performance metrics
applicable to for-proﬁt entities and not-for-proﬁt entities prepared under the
FASB Accounting Standards Codiﬁcation.

If signiﬁcant accounting or reporting differences exist between for-proﬁt andnot-for-proﬁt entities for a given group or topic, such differences are in
representative not-for-proﬁt tasks in the FAR section blueprint.

• Disclosures speciﬁc to public companies including earnings per share prepared
under the FASB Accounting Standards Codiﬁcation and the interim, annual andperiodic ﬁling requirements for U.S. registrants in accordance with the rules of
the U.S. SEC.

Area III of the FAR section blueprint covers the ﬁnancial accounting and reporting
requirements in the FASB Accounting Standards Codiﬁcation that are applicable toselect transactions for both for-proﬁt and not-for-proﬁt entities. The Area includes
the following:• Financial statements prepared under special purpose frameworks as describedin AU-C Section 800 of the Codiﬁcation of Statements on Auditing Standards.

• Accounting changes and error corrections.

• State and local government concepts including measurement focus, basisof accounting and determining the appropriate funds to record activities inaccordance with the GASB Codiﬁcation of Governmental Accounting and
Financial Reporting Standards.
Area II of the FAR section blueprint covers the ﬁnancial accounting and reporting
requirements in the FASB Accounting Standards Codiﬁcation that are applicable
to select balance sheet accounts for both for-proﬁt and not-for-proﬁt entities. The
Area includes the following:• Contingencies and commitments.
• Revenue recognition, speciﬁcally focusing on recalling and applying the ﬁve-stepmodel and accounting for contributions received by not-for-proﬁt entities.
• Accounting for income taxes.
• Fair value measurement concepts and classiﬁcation within the fairvalue hierarchy.
• Leases, speciﬁcally focusing on recalling and applying lessee
accounting requirements.

• Cash and cash equivalents.

• Subsequent events.

• Trade receivables.

If signiﬁcant accounting or reporting differences exist between for-proﬁt andnot-for-proﬁt entities, such differences are in representative not-for-proﬁt tasks
in the FAR section blueprint.

• Inventory.
• Property, plant and equipment.
• Investments, including ﬁnancial assets at fair value, ﬁnancial assets at
amortized cost and equity method investments.
• Intangible assets, with a focus on ﬁnite-lived intangible assets.
• Payables and accrued liabilities.

Section assumptions
The FAR section of the Exam includes multiple-choice questions and task-based
simulations. Candidates should assume that all of the information provided ineach question is material and should apply all stated assumptions. In addition,
candidates should assume that each question applies to a for-proﬁt business

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Section Introduction

Financial Accounting and Reporting (continued)
entity reporting under U.S. GAAP unless otherwise stated in the fact pattern for aquestion. For example, questions that apply to not-for-proﬁt entities specify thenature of these entities as “not-for-proﬁt” or “non-governmental, not-for-proﬁt.”
Questions that apply to state and local governments include phrases such as“local government,” “state,” “municipality” or “city.”

use accounting concepts and standards to measure and recognize ﬁnancial
statement amounts.

Skill allocation• Analysis skills are tested in all three areas of the FAR blueprint. Tasks, such asreconciling account balances and detecting ﬁnancial reporting discrepancies,
require nlCPAs to demonstrate a higher level of interpretation. Area II has thehighest concentration of analysis tasks.

The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives6. Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:

The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

References — Financial Accounting and Reporting

Skill Levels
Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

• FASB Accounting Standards Codiﬁcation

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

• U.S. SEC References:

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

• FASB Concepts Statements– Securities Exchange Act of 1934
– Regulation S-X of the Code of Federal Regulations (17 CFR Part 210)
– Regulation S-K of the Code of Federal Regulations (17 CFR Part 229)
• Codiﬁcation of Statements on Auditing Standards: AU-C Section 800, Special
Considerations – Audits of Financial Statements Prepared in Accordancewith Special Purpose Frameworks

The FAR section of the Exam assesses content at the ﬁrst three skill levels of
Bloom’s taxonomy as described below:• AICPA Practice Aid — Accounting and Financial Reporting Guidelines
for Cash — and Tax — Basis Financial Statements• Remembering and Understanding is tested in all three areas of the FAR
blueprint. Tasks, such as identifying transactions and ﬁnancial reporting
requirements, require nlCPAs to demonstrate their comprehension of
accounting concepts and standards.

• State and Local Government References:• Application skills are tested in all three areas of the FAR blueprint. Tasks,
such as preparing journal entries and ﬁnancial statements, require nlCPAs to
6– GASB Codiﬁcation of Governmental Accounting and Financial
Reporting Standards– GASB Statements• Current textbooks on accounting for business entities, not-for-proﬁt entities,
and state and local government entities

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives (Complete
Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York: David McKay.

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Financial Accounting and Reporting (FAR)

Summary Blueprint
Content area allocation

WeightI. Financial Reporting

30–40%

II. Select Balance Sheet Accounts

30–40%

III. Select Transactions

25–35%

Skill allocation

WeightEvaluation–

Analysis

35–45%

Application

45–55%

Remembering and Understanding

5–15%

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Financial Accounting and Reporting (FAR)

Area I – Financial Reporting (30–40%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. General-Purpose Financial Reporting: For-Proﬁt Business Entities
1. Balance sheet/Statementof ﬁnancial position

Prepare a classiﬁed balance sheet from a trial balance andsupporting documentation.
Adjust the balance sheet to correct identiﬁed errors.
Detect, investigate and correct discrepancies while agreeing the balance
sheet amounts to supporting documentation, including the source data.

2. Income statement/Statementof proﬁt or loss

Prepare a single-step or multi-step income statement (e.g., operating,nonoperating, discontinued operations) from a trial balance and supporting
documentation.
Adjust the income statement to correct identiﬁed errors.
Calculate transaction gains or losses recognized from monetary transactions
denominated in a foreign currency.
Detect, investigate and correct discrepancies while agreeing the income statement
amounts to supporting documentation, including the source data.

3. Statement of comprehensive
incomeRecall the purpose, objectives and structure of the statement ofcomprehensive income.
Identify items classiﬁed as other comprehensive income.

4. Statement of changes in equity

Prepare a statement of changes in equity from a trial balance andsupporting documentation.
Adjust the statement of changes in equity to correct identiﬁed errors.
Detect, investigate and correct discrepancies while agreeing the statementof changes in equity amounts to supporting documentation, including thesource data.

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Financial Accounting and Reporting (FAR)

Area I – Financial Reporting (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. General-Purpose Financial Reporting: For-Proﬁt Business Entities (continued)
5. Statement of cash ﬂows

Prepare a statement of cash ﬂows using the direct method or indirect method
and required disclosures from supporting documentation.
Adjust a statement of cash ﬂows to correct identiﬁed errors.
Detect, investigate and correct discrepancies while agreeing the statement ofcash ﬂows amounts to supporting documentation, including the source data.
Derive the impact of transactions on the statement of cash ﬂows.

6. Consolidated ﬁnancial statements(including wholly-owned subsidiaries
and noncontrolling interests)

Prepare consolidated ﬁnancial statements (adjustments, and/or eliminations)from supporting documentation.
Adjust consolidated ﬁnancial statements to correct identiﬁed errors.
Detect, investigate and correct discrepancies identiﬁed while agreeing theconsolidated ﬁnancial statement amounts to supporting documentation,
including the source data.

7. Notes to ﬁnancial statements

Adjust the notes to the ﬁnancial statements to correct identiﬁed errors
and omissions.
Compare the notes to the ﬁnancial statements to the ﬁnancial statements andsupporting documentation, including the source data, to identify inconsistencies
and investigate those inconsistencies.

B. General-Purpose Financial Reporting: Nongovernmental Not-for-Proﬁt Entities
1. Statement of ﬁnancial position

Recall the purpose and objectives of the statement of ﬁnancial position
for a nongovernmental, not-for-proﬁt entity.

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Financial Accounting and Reporting (FAR)

Area I – Financial Reporting (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. General-Purpose Financial Reporting: Nongovernmental Not-for-Proﬁt Entities (continued)
1. Statement of ﬁnancial position(continued)

Prepare a statement of ﬁnancial position for a nongovernmental, not-for-proﬁt
entity from a trial balance and supporting documentation.
Adjust the statement of ﬁnancial position for a nongovernmental, not-for-proﬁt
entity to correct identiﬁed errors.

2. Statement of activities

Recall the purpose and objectives of the statement of activities for anongovernmental, not-for-proﬁt entity.
Prepare a statement of activities for a nongovernmental, not-for-proﬁt entity
from a trial balance and supporting documentation.
Adjust the statement of activities for a nongovernmental, not-for-proﬁt entity
to correct identiﬁed errors.

3. Statement of cash ﬂows

Recall the purpose and objectives of the statement of cash ﬂows for anongovernmental, not-for-proﬁt entity.
Prepare a statement of cash ﬂows and required disclosures using the direct
method or indirect method for a nongovernmental, not-for-proﬁt entity.
Adjust the statement of cash ﬂows for a nongovernmental, not-for-proﬁt entity
to correct identiﬁed errors.

4. Notes to the ﬁnancial statements

Adjust the notes to the ﬁnancial statements to correct identiﬁed errors
and omissions.

C. State and Local Government Concepts
1. Measurement focus andbasis of accounting

Recall the measurement focus and basis of accounting used by state and local
governments for fund and government-wide ﬁnancial reporting.

2. Purpose of funds

Determine the appropriate fund(s) that a state or local government should use
to record its activities.

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Financial Accounting and Reporting (FAR)

Area I – Financial Reporting (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Public Company Reporting Topics
Recall the purpose of forms 10-Q, 10-K and 8-K that a U.S. registrant is required
to ﬁle with the U.S. Securities and Exchange Commission under the Securities
Exchange Act of 1934.
Identify the items of Form 10-Q (Part I Items 1 through 3) and Form 10-K
(Part II Items 7, 7A and 8) ﬁled with the U.S. Securities and Exchange Commission.
Calculate basic earnings per share and diluted earnings per share considering
the impact of stock options, preferred stock, convertible preferred stock and/or
convertible debt.
E. Special Purpose Frameworks
Recall appropriate ﬁnancial statement titles to be used for the ﬁnancial statements
prepared under a special purpose framework.
Perform calculations to convert cash basis or modiﬁed cash basis ﬁnancial
statements to accrual basis ﬁnancial statements.
Prepare ﬁnancial statements using the cash basis or modiﬁed cash basisof accounting.
Prepare ﬁnancial statements using the income tax basis of accounting.
F. Financial Statement Ratios and Performance Metrics
Identify the appropriate ﬁnancial statement ratio or performance metric to performa speciﬁed type of analysis.
Calculate proﬁtability ratios (e.g., gross proﬁt margin, return on sales, returnon assets, return on equity).
Calculate liquidity ratios (e.g., current, quick, accounts receivable turnover,inventory turnover, accounts payable turnover).

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Financial Accounting and Reporting (FAR)

Area I – Financial Reporting (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

F. Financial Statement Ratios and Performance Metrics (continued)
Calculate solvency ratios (e.g., debt-to-equity, total debt, times interest earned).
Calculate performance metrics (e.g., EBITDA, price-to-earnings, dividend payout,
asset turnover).
Calculate variances between budget and actual results.

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Financial Accounting and Reporting (FAR)

Area II – Select Balance Sheet Accounts (30–40%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Cash and cash equivalents
Calculate cash and cash equivalents balances to be reported in the ﬁnancial
statements.
Reconcile the cash balance per the bank statement to the general ledger.
Investigate unreconciled cash balances to determine whether an adjustment
to the general ledger is necessary.
B. Trade receivables
Calculate trade receivables and allowances and prepare journal entries.
Prepare any required journal entries to record the transfer of trade receivables(secured borrowings, factoring, assignment, pledging).
Prepare a rollforward of the trade receivables account balance using various
sources of data and information.
Reconcile and investigate differences between the subledger and general ledger
for trade receivables to determine whether an adjustment is necessary.
C. Inventory
Calculate the carrying amount of inventory and prepare journal entries using
various costing methods.
Use the lower of cost and net realizable value or the lower of cost or market
approach to calculate the carrying amount of inventory.
Prepare a rollforward of the inventory account balance using various sourcesof data and information.
Reconcile and investigate differences between the subledger and general ledger
for inventory to determine whether an adjustment is necessary.

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Financial Accounting and Reporting (FAR)

Area II – Select Balance Sheet Accounts (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Property, plant and equipment
Calculate the gross and net property, plant and equipment balances and prepare
journal entries.
Calculate gains or losses on the disposal of long-lived assets to be recognizedin the ﬁnancial statements.
Calculate impairment losses on long-lived assets to be recognized in theﬁnancial statements.
Determine whether an asset qualiﬁes to be reported as held for sale in theﬁnancial statements.
Adjust the carrying amount of assets held for sale and calculate the loss to berecognized in the ﬁnancial statements.
Prepare a rollforward of the property, plant and equipment account balanceusing various sources of data and information.
Reconcile and investigate differences between the subledger and generalledger for property, plant and equipment to determine whether an adjustment
is necessary.
E. Investments
1. Financial assets at fair value

Identify investments that are eligible or required to be reported at fair value inthe ﬁnancial statements.
Calculate the carrying amount of investments measured at fair value(excluding impairment).
Calculate investment income to be recognized in net income for investments
measured at fair value and prepare journal entries.
Calculate impairment losses to be recognized on applicable investments reported
at fair value in the ﬁnancial statements.

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Financial Accounting and Reporting (FAR)

Area II – Select Balance Sheet Accounts (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Investments (continued)
2. Financial assets at amortized cost

Identify investments that are eligible to be reported at amortized cost in theﬁnancial statements.
Calculate the carrying amount of investments measured at amortized costand prepare journal entries (excluding impairment).
Calculate impairment losses to be recognized on investments reported atamortized cost in the ﬁnancial statements.

3. Equity method investments

Identify when the equity method of accounting can be applied to an investment.
Calculate the carrying amount of equity method investments and prepare journal
entries (excluding impairment).

F. Intangible assets
Identify the criteria for recognizing intangible assets in the statement of ﬁnancial
position and classify intangible assets as either ﬁnite-lived or indeﬁnite-lived.
Calculate the carrying amount of ﬁnite-lived intangible assets reported in theﬁnancial statements (initial measurement, amortization and impairment) andprepare journal entries.
Calculate the carrying amount of purchased software and cloud computing
arrangements reported in the ﬁnancial statements (initial measurement,
amortization and impairment) and prepare journal entries.
G. Payables and accrued liabilities
Calculate the carrying amount of payables (e.g., accounts payable, dividends
payable) and accrued liabilities (e.g., accrued wages, accrued vacation, accrued
bonuses) and prepare journal entries.

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Financial Accounting and Reporting (FAR)

Area II – Select Balance Sheet Accounts (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

G. Payables and accrued liabilities (continued)
Identify and calculate liabilities arising from exit or disposal activities(e.g., one-time termination beneﬁts, severance arrangements) and determine
the timing of recognition in the ﬁnancial statements.
Calculate the liabilities and assets resulting from asset retirement obligations
and prepare journal entries.
Reconcile and investigate differences between the subledger and general ledger
for accounts payable and accrued liabilities to determine whether an adjustment
is necessary.
H. Long-term debt (ﬁnancial liabilities)
1. Notes and bonds payable

Recall the criteria to classify a change to a debt instrument as either a
modiﬁcation of terms or an extinguishment of debt.
Understand when a change to the terms of a debt instrument qualiﬁes as atroubled debt restructuring.
Calculate the interest expense attributable to notes and bonds payable reported
in the ﬁnancial statements (e.g., discounts, premiums, debt issuance costs).
Calculate the carrying amount of notes and bonds payable and prepare
journal entries.

2. Debt covenant compliance

Perform debt covenant calculations as stipulated in a debt agreement toascertain compliance.

I. Equity
Prepare journal entries to recognize equity transactions in the ﬁnancial statements(e.g., equity issuance, stock dividends, stock splits, treasury stock).

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Financial Accounting and Reporting (FAR)

Area III – Select Transactions (25–35%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Accounting changes and error corrections
Calculate a required adjustment to the ﬁnancial statements due to an accountingchange (change in accounting principle or change in accounting estimate)or error correction and determine whether it requires prospective or
retrospective application.
Derive the impact to the ﬁnancial statements and related note disclosuresof an identiﬁed accounting change or an error correction.
B. Contingencies and commitments
Recall the recognition and disclosure criteria used to identify commitments
and contingencies.
Calculate amounts of contingencies and prepare journal entries.
Review supporting documentation to determine whether a commitment orcontingency requires recognition and/or disclosure in the ﬁnancial statements.
C. Revenue recognition
Recall concepts of accounting for revenue using the ﬁve-step model.
Recall the recognition requirements associated with conditional and unconditional
promises to give (pledges) for a nongovernmental, not-for-proﬁt entity.
Identify transfers to a nongovernmental, not-for-proﬁt entity acting as an agent orintermediary that are not recognized as contributions.
Determine the amount and timing of revenue to be recognized using the ﬁve-stepmodel and prepare journal entries.
Determine the recognition and subsequent measurement requirements forcontract costs and prepare journal entries.

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Financial Accounting and Reporting (FAR)

Area III – Select Transactions (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Revenue recognition (continued)
Determine the amount and timing of revenue to be recognized by anongovernmental, not-for-proﬁt entity for contributed services received
and prepare journal entries.
Calculate the amount to be recognized for contributions (ﬁnancial assets andnonﬁnancial assets) to a nongovernmental, not-for-proﬁt entity.
D. Accounting for income taxes
Recall the accounting treatment for uncertainty in income taxes.
Recall the criteria for recognizing or adjusting a valuation allowance fora deferred tax asset.
Calculate the income tax expense, current taxes payable/receivable anddeferred tax liabilities/assets.
Prepare journal entries to record the tax provision.
E. Fair value measurements
Identify the valuation techniques used to measure fair value.
Recall assumptions (e.g., highest and best use, market participant assumptions,
unit of account) and approaches (cost, income, market) used to measure fair value.
Use the fair value hierarchy to determine the classiﬁcation of a fair value
measurement.

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Financial Accounting and Reporting (FAR)

Area III – Select Transactions (25–35%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

F. Lessee accounting
Recall the appropriate accounting treatment for residual value guarantees,
purchase options and variable lease payments included in leasing arrangements
for a lessee.
Identify the criteria for classifying a lease arrangement for a lessee.
Calculate the carrying amount of lease-related assets and liabilities and prepare
journal entries that a lessee should record.
Calculate the lease costs that a lessee should recognize in the income statement.
G. Subsequent events
Identify a subsequent event and recall its appropriate accounting treatment.
Calculate required adjustments to ﬁnancial statements and/or note disclosures
based on identiﬁed subsequent events.
Derive the impact to the ﬁnancial statements and required note disclosures due
to identiﬁed subsequent events.

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Uniform CPA Examination
Taxation and Regulation (REG)

Blueprint

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Section Introduction

Taxation and Regulation
The Taxation and Regulation (REG) section of the Uniform CPA Examination(the Exam) tests the knowledge and skills that nlCPAs must demonstratewith respect to:• U.S. ethics and professional responsibilities related to tax practice• U.S. business law• U.S. federal tax compliance for individuals and entities with a focus onrecurring and routine transactions
The assessment of federal tax compliance will focus on an nlCPA’s role in both the
preparation and review of tax returns. The assessment will incorporate:

rather examples of the types of content that could be assessed. Parenthetical lists
that do not include “e.g.” are intended to be an exhaustive list of the content to beassessed with respect to that representative task. Additionally, the number of tasks
associated with a particular content group or topic is not indicative of the extent
such content group, topic or related skill level will be assessed on the Exam.

Content allocation
The following table summarizes the content areas and the allocation of content
tested in the REG section of the Exam:Content area

Allocation• Data and technology concepts including the veriﬁcation of the completenessand accuracy of source data used to prepare returns and supporting schedules
and the consideration of the outputs of automated validation checks anddiagnostic tools that highlight potential errors or anomalies.

Area I

Ethics, Professional Responsibilities and Federal
Tax Procedures

10–20%

Area IIBusiness Law

15–25%• Applied research with a focus on reviewing and using excerpts of source
materials (e.g., Internal Revenue Code, Treasury Regulations) to complete a
range of tasks including identifying issues, analyzing facts and determining
appropriate responses.

Area III

Federal Taxation of Property Transactions

5–15%

Area IV

Federal Taxation of Individuals

22–32%

Area V

Federal Taxation of Entities (including tax preparation)

23–33%

A list of reference materials relevant to the REG section of the Exam is included
under References at the conclusion of this introduction.

Content organization and tasks
The REG section blueprint is organized by content AREA, content GROUP andcontent TOPIC. Each topic includes one or more representative TASKS that an
nlCPA may be expected to complete when performing tax preparation services
or other responsibilities of a CPA.
The tasks in the blueprint are representative. They are not intended to be(nor should they be viewed as) an all-inclusive list of tasks that may be tested
in the REG section of the Exam. Lists or examples included within the text ofa representative task beginning with the word “including” are not intended to
be exhaustive. Within some representative tasks are parenthetical lists. If aparenthetical list begins with “e.g.”, this is not intended to be an exhaustive list but

Overview of content areas
Area I of the REG section blueprint covers the following:• Ethics and Responsibilities in Tax Practice — Requirements based on Treasury
Department Circular 230 and the rules and regulations for tax return preparers.
• Licensing and Disciplinary Systems — Requirements of state boards ofaccountancy to obtain and maintain the CPA license.
• Federal Tax Procedures – Understanding federal tax processes and procedures,
including audits and appeals, appropriate disclosures, substantiation, penalties
and authoritative hierarchy.
• Legal Duties and Responsibilities – Understanding legal issues that affect the
CPA and their practice.

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Section Introduction

Taxation and Regulation (continued)
Area II of the REG section blueprint covers several business law concepts focusedon the legal implications of business transactions and issues as they relate toaccounting, auditing and ﬁnancial reporting. The Area includes the following:• Government regulation of business, speciﬁcally employment taxes, worker
classiﬁcation laws, the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005, the Foreign Corrupt Practices Act of 1977 and the Patient
Protection and Affordable Care Act.
• Areas of agency, contracts, debtor-creditor relationships and business structure.
– The Uniform Commercial Code under the topics of contracts
and debtor-creditor relationships.
– Legal aspects of business entity selection, formation, operationand termination.
Area III of the REG section blueprint covers federal tax compliance related toroutine and recurring property transactions for individuals and entities. The Area
includes the following:• Basis of an asset purchased for use in a trade or business, and the related
depreciation of the asset.
• Basis of an asset converted from personal to business use, and the related
depreciation of the asset.
• Basis of assets held by individuals.
• Basis of intangible assets.
• Cost recovery (depreciation and amortization) of assets held for use in a
trade or business.
Area IV of the REG section blueprint covers federal tax compliance related toroutine and recurring transactions and issues for individuals. The Area includes
the following:• Reporting of income from pass-through entities, including the proper handlingof items on an individual’s tax return.
• Loss limitations, ﬁling statuses available to a taxpayer, the role of tax credits
and safe harbor requirements for estimated taxes.
Area V of the REG section blueprint covers federal tax compliance related toroutine and recurring transactions and issues for entities. The Area includes
the following:• Required adjustments to book income to determine taxable income.
• Computation of taxable income for C corporations, including state and local
tax issues, and allowable tax credits.
• Determination of ordinary business income (loss) and separately stated items
for S corporations and partnerships, and the impact of current year transactions
on the owner’s basis in the entity.
• Classiﬁcation options for limited liability companies, eligibility and election of
S corporation status and types of tax-exempt organizations.

Section assumptions
The REG section of the Exam includes multiple-choice questions and task-based
simulations. Candidates should assume that the information provided in eachquestion is material and should apply all stated assumptions. Candidates will
not be tested on their knowledge of speciﬁc tax rate percentages, amounts
or limitations that are indexed to inﬂation. Absent any stated assumptions,candidates should assume that transactions or events referenced in the question
occurred in the current year and should apply the most recent provisions of
the tax law in accordance with the timing speciﬁed in the CPA Exam Policy on
New Pronouncements.

• Inclusion and exclusion of amounts for purposes of calculating gross income,adjusted gross income and taxable income.

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Section Introduction

Taxation and Regulation (continued)
Skill allocation
The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives7. Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:
Skill Levels

The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

References — Regulation• Revised Model Business Corporation Act

Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

• Revised Uniform Limited Partnership Act

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

• Uniform Accountancy Act

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

• Revised Uniform Partnership Act• Uniform Commercial Code• Internal Revenue Code of 1986, as amended• Treasury Department Circular No. 230, Regulations Governing Practice
before the Internal Revenue Service• Treasury Regulations

The REG section of the Exam assesses content at the ﬁrst three skill levels of
Bloom’s Taxonomy as described below:• Remembering and Understanding is mainly concentrated in Area I and Area II.
These two areas contain the general ethics, professional responsibilities andbusiness law knowledge that is required for nlCPAs and they are tested at thelower end of the skill level continuum.
• Application and Analysis skills are primarily tested in Areas III, IV and V. These
three areas contain more of the day-to-day tasks that nlCPAs are expected toperform related to the preparation and review of tax returns and therefore aretested at the higher end of the skill level continuum.

7• Other administrative pronouncements regarding federal taxation• Case law on federal taxation• Public Law 86-272• Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
• Patient Protection and Affordable Care Act• The Foreign Corrupt Practices Act of 1977
• Uniform Division of Income for Tax Purposes Act (UDITPA)• Current textbooks on business law, federal taxation, accounting and ethics

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives(Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York:David McKay.

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Regulation and Taxation (REG)

Summary Blueprint
Content area allocation

WeightI. Ethics, Professional Responsibilities and Federal
Tax Procedures

10–20%

II. Business Law

15–25%

III. Federal Taxation of Property Transactions

5–15%

IV. Federal Taxation of Individuals

22–32%

V. Federal Taxation of Entities (including tax preparation)

23–33%

Skill allocation

WeightEvaluation–

Analysis

25–35%

Application

35–45%

Remembering and Understanding

25–35%

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Regulation and Taxation (REG)

Area I – Ethics, Professional Responsibilities
and Federal Tax Procedures (10–20%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Ethics and responsibilities in tax practice
1. Regulations governing practice
before the Internal Revenue Service

Recall the regulations governing practice before the Internal Revenue Service.
Apply the regulations governing practice before the Internal Revenue Service
given a speciﬁc scenario.

2. Internal Revenue Code andRegulations related to tax
return preparers

Recall who is a tax return preparer.
Recall situations that would result in tax return preparer penalties.
Apply potential tax return preparer penalties given a speciﬁc scenario.

B. Licensing and disciplinary systems
Understand and explain the role and authority of state boards of accountancy.
C. Federal tax procedures
1. Audits, appeals and the
judicial process

Explain the audit and appeals process as it relates to tax matters.
Explain the different levels of the judicial process as they relate to tax matters.

2. Substantiation and disclosureof tax positions

Summarize the requirements for the appropriate disclosure of atax return position.
Identify situations in which disclosure of tax return positions is required.
Identify whether substantiation is suﬃcient given a speciﬁc scenario.

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Regulation and Taxation (REG)

Area I – Ethics, Professional Responsibilities
and Federal Tax Procedures (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Federal tax procedures (continued)
3. Taxpayer penalties

Recall situations that would result in taxpayer penalties relating to tax returns.
Identify taxpayer penalties given a speciﬁc scenario.

4. Authoritative hierarchy

Recall the appropriate hierarchy of authority for tax purposes.

D. Legal duties and responsibilities
1. Common law duties and liabilities
to clients and third parties

Summarize the tax return preparer’s common law duties and liabilities to clientsand third parties.
Identify situations which result in violations of the tax return preparer’s common
law duties and liabilities to clients and third parties.

2. Privileged communications,conﬁdentiality and privacy acts

Summarize the rules regarding privileged communications as they relate
to tax practice.
Identify situations in which communications regarding tax practice areconsidered privileged.

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Regulation and Taxation (REG)

Area II – Business Law (15–25%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Agency
1. Authority of agents and principals

Recall the types of agent authority.
Identify whether an agency relationship exists given a speciﬁc scenario.

2. Duties and liabilities of
agents and principals

Explain the various duties and liabilities of agents and principals.
Identify the duty or liability of an agent or principal given a speciﬁc scenario.

B. Contracts
1. Formation

Summarize the elements of contract formation between parties.
Identify whether a valid contract was formed given a speciﬁc scenario.
Identify different types of contracts (e.g., written, verbal, unilateral, express,
implied) given a speciﬁc scenario.

2. Performance and discharge

Explain the rules related to the fulﬁllment of performance obligations
necessary for an executed contract.
Explain the different ways in which a contract can be discharged(e.g. performance, agreement, and operation of the law).
Identify whether a contract has been discharged given a speciﬁc scenario.
Identify whether both parties to a contract have fulﬁlled their performanceobligation given a speciﬁc scenario.

3. Breach and remedies

Summarize the different remedies available to a party for breach of contract.
Identify situations involving breach of contract given a speciﬁc scenario.
Identify the remedy available to a party for breach of contract given a
speciﬁc scenario.

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Regulation and Taxation (REG)

Area II – Business Law (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Debtor-creditor relationships
Explain the rights, duties and liabilities of debtors, creditors and guarantors.
Explain the rights of debtors and creditors and how property is distributedin bankruptcy proceedings.
Explain the difference between a secured and unsecured creditor and therequirements needed to perfect a security interest.
Identify rights, duties or liabilities of debtors, creditors or guarantors givena speciﬁc scenario.
D. Federal laws and regulations (employment tax, qualiﬁed health plans, bankruptcy, worker classiﬁcations and anti-bribery)
Summarize the federal laws and regulations for qualiﬁed health care plans,
including required business mandates and premium tax credits.
Explain the federal laws and regulations related to employment taxes fromboth an employer and employee perspective.
Recall the factors used to determine classiﬁcation of an employee versus
an independent contractor.
Recall the types of bankruptcy and the requirements for dischargeof indebtedness.
Summarize the federal laws and regulations prohibiting bribery of foreign
government oﬃcials, including payments made to generate preferential treatment
from a foreign government.
Identify compliance issues with various federal laws and regulations (employment
tax, qualiﬁed health plans, bankruptcy, worker classiﬁcations and anti-bribery)
given a speciﬁc scenario.

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Regulation and Taxation (REG)

Area II – Business Law (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

E. Business structure
1. Selection and formation ofbusiness entity and related
operation and termination

Summarize the processes for formation and termination of various
business entities.

2. Rights, duties, legal obligations
and authority of owners andmanagement

Summarize the rights, duties, legal obligations and authority of owners
and management.

Summarize the legal characteristics of various business entities.

Identify the rights, duties, legal obligations and authority of owners andmanagement given a speciﬁc scenario.

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Regulation and Taxation (REG)

Area III – Federal Taxation of Property Transactions (5–15%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Basis of assets
Calculate the tax basis of an asset purchased for use in a trade or business.
Calculate the tax basis of an asset converted from personal to business use.
Calculate the tax basis of property received as a gift or as an inheritancefrom a decedent.
Calculate the tax basis of stock acquired through a wash sale.
Calculate the basis of intangible assets, including organization costs,
start-up costs and loan costs.
B. Cost recovery (depreciation and amortization)
Calculate tax depreciation for tangible business property using MACRS,
including identiﬁcation of the applicable recovery period and convention.
Determine property eligible for a Section 179 deduction.
Calculate tax amortization for intangible assets.
Review a tax depreciation and amortization schedule for the current year
and supporting documentation, including any source data used to create
the schedule, to determine the completeness and accuracy of the expense
amounts deducted for tax purposes.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the depreciation
and amortization expense reported on a tax return based on the source data used
to prepare the return.

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Regulation and Taxation (REG)

Area IV – Federal Taxation of Individuals (22–32%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Gross income (inclusions and exclusions)
Calculate the amounts that should be included in an individual’s gross income
as reported on Form 1040 – U.S. Individual Income Tax Return, including
wages, interest and dividends, guaranteed payments received from a partnership,income from a qualiﬁed retirement plan and punitive damages.
Calculate the capital gain that should be included in an individual’s gross income
as reported on Form 1040 – U.S. Individual Income Tax Return from transactions,
including gains from the sale of investments or virtual currencies, assets received
as gifts and assets received from a decedent and classify them as
long-term or short-term.
Calculate the amounts that should be excluded from an individual’s grossincome as reported on Form 1040 – U.S. Individual Income Tax Return, including
tax-exempt interest, gifts received and life insurance proceeds.
Calculate the income reported in the year of death for a decedent on Form 1040 –U.S. Individual Income Tax Return.
Review Form 1040 – U.S. Individual Income Tax Return and supporting
documentation, including any source data used to create the return, to determine
the completeness and accuracy of the gross income reported.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the gross income
reported on Form 1040 – U.S. Individual Income Tax Return based on the source
data used to prepare the form.
B. Reporting of items from pass-through entities
Use information provided from disregarded and pass-through entities in which anindividual has an ownership interest to report ordinary business income (loss) andseparately stated items on an individual’s tax return.

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Regulation and Taxation (REG)

Area IV – Federal Taxation of Individuals (22–32%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Adjustments and deductions to arrive at adjusted gross income and taxable income
Identify adjustments allowed in the calculation of adjusted gross income givena speciﬁc scenario, including a contribution to a qualiﬁed retirement plan,
contribution to a health savings plan and self-employment expenses.
Identify itemized deductions allowed in the calculation of taxable income givena speciﬁc scenario, including medical expenses, qualiﬁed residence interest
expense, taxes and charitable contributions.
Calculate the qualifying business income (QBI) deduction for federal income
tax purposes.
Review Form 1040 – U.S. Individual Income Tax Return and supporting
documentation, including any source data used to create the return, to determine
the accuracy of the adjusted gross income and taxable income reported.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the adjusted grossincome and taxable income reported on Form 1040 – U.S. Individual Income Tax
Return based on the source data used to prepare the form.
D. Loss limitations
Calculate the net tax loss allowed on the sale of capital property, including nettingof capital gains and losses and capital loss carryforwards.
Calculate the amount of ordinary business loss allowed for an individual materiallyparticipating in the operations of a pass-through entity with suﬃcient basis in
the entity.
Calculate losses disallowed for tax purposes, such as from a hobby, wash saleor sale of a personal-use asset.

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Regulation and Taxation (REG)

Area IV – Federal Taxation of Individuals (22–32%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Loss limitations (continued)
Review Form 1040 – U.S. Individual Income Tax Return and supporting
documentation, including any source data used to create the return, todetermine the accuracy of the losses reported.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the loss limitations
reported on Form 1040 – U.S. Individual Income Tax Return based on the source
data used to prepare the form.
E. Filing status
Recall taxpayer ﬁling status for tax purposes.
Recall relationships meeting the deﬁnition of dependent for purposes ofdetermining taxpayer ﬁling status.
Identify taxpayer ﬁling status for tax purposes given a speciﬁc scenario.
F. Computation of tax and credits
Recall and deﬁne the difference between a refundable and nonrefundable
tax credit.
Recall and deﬁne the safe harbor requirements for individual estimated tax
payments to avoid penalties.
Calculate the tax liability based on an individual’s taxable income given a speciﬁc
scenario, including consideration of the net investment income tax.

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Regulation and Taxation (REG)

Area V – Federal Taxation of Entities (including tax preparation) (23–33%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Differences between book and tax income (loss)
Identify permanent vs. temporary differences to be reported on Schedule M-3
in a given scenario.
Calculate the book/tax differences to be reported on a Schedule M-1 or M-3.
Review an entity’s adjusted book trial balance and supporting documentation
to identify and calculate possible book/tax differences.
Review a C corporation’s adjusted book trial balance and supporting
documentation, including relevant source data used to create the trial
balance, to determine the completeness and accuracy of the book/tax
differences reported on Form 1120 – U.S. Corporation Income Tax Return.
B. C corporations
1. Computations of taxable income,tax liability and allowable credits

Calculate taxable income for a C corporation.
Calculate the current-year net operating or capital loss of a C corporation,and the limitations on use in the current year.
Calculate the credits allowable as a reduction to tax for a C corporation.

2. State and local tax issues

Deﬁne the general concept and rationale of nexus with respect to stateand local taxation.
Deﬁne the general concept and rationale of apportionment and allocation
with respect to state and local taxation.
Calculate state taxable income using the applicable apportionment factors
given a speciﬁc scenario.

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Regulation and Taxation (REG)

Area V – Federal Taxation of Entities (including tax preparation) (23–33%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. S corporations
1. Eligibility and election

Recall eligible shareholders for an S corporation for tax purposes.
Recall S corporation eligibility requirements for tax purposes.
Identify situations in which S corporation status would be revoked or
terminated for tax purposes.

2. Determination of ordinary businessincome (loss) and separately
stated items

Calculate ordinary business income (loss) and separately stated items for an
S corporation for tax purposes.
Calculate the impact of current year operations on an S corporation’s accumulated
adjustments account.
Review federal Form 1120S – U.S. Income Tax Return for an S Corporation andsupporting documentation, including any source data used to create the return,to determine the completeness and accuracy of the classiﬁcation of items as
ordinary business income (loss), separately stated or nondeductible.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the ordinary
business income (loss) and separately stated items reported on Form 1120S –U.S. Income Tax Return for an S Corporation based on the source data used toprepare the form.

3. Basis of shareholder’s interest

Calculate a shareholder’s stock basis in an S corporation for tax purposes
resulting from business operations, cash contributions by the shareholder andcash distributions to the shareholder.
Calculate changes in a shareholder’s debt basis in an S corporation resulting fromcurrent year repayment of debt.

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Regulation and Taxation (REG)

Area V – Federal Taxation of Entities (including tax preparation) (23–33%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Partnerships
1. Determination of ordinary businessincome (loss) and separately
stated items

Calculate ordinary business income (loss) and separately stated items fora partnership for tax purposes, including consideration of guaranteed
payments disbursed.
Review federal Form 1065 – U.S. Return of Partnership Income and supporting
documentation, including any source data used to create the return, to determine
the completeness and accuracy of the classiﬁcation of items as ordinary businessincome (loss), separately stated or nondeductible.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of ordinary businessincome (loss) and separately stated items reported on Form 1065 – U.S. Return ofPartnership Income based on the source data used to prepare the form.

2. Basis of partner’s interest

Calculate the partner’s basis in a partnership for tax purposes resulting frombusiness operations, cash contributions by a partner, cash distributions to apartner and changes in existing partnership liabilities.

E. Limited liability companies
Recall the tax classiﬁcation options for a limited liability company fortax purposes.
F. Tax-exempt organizations
Recall the different types of tax-exempt organizations for tax purposes.

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Uniform CPA Examination
Business Analysis andReporting (BAR)

Blueprint

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Section Introduction

Business Analysis and Reporting
The Business Analysis and Reporting (BAR) section of the Uniform CPA
Examination (the Exam) assesses the knowledge and skills nlCPAs must
demonstrate with respect to:• Financial statement and ﬁnancial information analysis with a focus on an
nlCPA’s role in comparing historical results to budgets and forecasts, deriving
the impact of transactions, events (actual and proposed) and market conditions
on ﬁnancial and nonﬁnancial performance measures and comparing
investment alternatives.
• Select technical accounting and reporting requirements under the Financial
Accounting Standards Board (FASB) Accounting Standards Codiﬁcation andthe U.S. Securities and Exchange Commission (SEC) that are applicable tofor-proﬁt business entities and employee beneﬁt plans.
• Financial accounting and reporting requirements under the Governmental
Accounting Standards Board (GASB) that are applicable to state and local
government entities.
The assessment will also incorporate:• Data and technology concepts including the:– Determination of methods to transform data to make it useful for
decision-making.
– Determination of attribute structures, formats and sources of data needed
to prepare ﬁnancial statement analysis.
– Use of outputs from data analytic techniques to identify patterns, trends
and correlations to explain an entity’s results.
• Applied research with a focus on reviewing and using excerpts of source
materials (e.g. FASB Accounting Standards Codiﬁcation, GASB Statements ofGovernmental Accounting Standards) to complete a range of tasks including
identifying issues, analyzing facts and determining appropriate responses.
A list of reference materials relevant to the BAR section of the Exam is included
under References at the conclusion of this introduction.

Content organization and tasks
The BAR section blueprint is organized by content AREA, content GROUP andcontent TOPIC. Each group or topic includes one or more representative TASKS
that an nlCPA may be expected to complete in practice.
Tasks in the BAR section blueprint are representative. They are not intended
to be (nor should they be viewed as) an all-inclusive list of tasks that may betested in the BAR section of the Exam. Lists or examples included within the
text of a representative task beginning with the word “including” are not intended
to be exhaustive. Within some representative tasks are parenthetical lists. If aparenthetical list begins with “e.g.”, this is not intended to be an exhaustive list but
rather examples of the types of content that could be assessed. Parenthetical lists
that do not include “e.g.” are intended to be an exhaustive list of the content to beassessed with respect to that representative task. Additionally, the number of tasks
associated with a particular content group or topic is not indicative of the extent
such content group, topic or related skill level will be assessed on the Exam.

Content allocation
The following table summarizes the content areas and the allocation of content
tested in the BAR section of the Exam:Content area

Allocation

Area I

Business Analysis

40–50%

Area II

Technical Accounting and Reporting

35–45%

Area III

State and Local Governments

10–20%

Overview of content areas
Area I of the BAR section blueprint covers historical, current and prospective
analysis of the ﬁnancial statements. The Area includes the following:• Financial statement analysis, including comparison of current period ﬁnancial
statements to prior period or budget and interpretation of ﬁnancial statement
ﬂuctuations and ratios.

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Section Introduction

Business Analysis and Reporting (continued)• Non-ﬁnancial and non-GAAP measures of performance, including use of
the balanced scorecard approach and interpretation of non-ﬁnancial andnon-GAAP measures to assess an entity’s performance and risk proﬁle.
• Managerial and cost accounting concepts and the use of varianceanalysis techniques.
• Budgeting, forecasting and projection techniques.
• Factors that inﬂuence an entity’s capital structure, such as leverage,
cost of capital, liquidity and loan covenants.
• Financial valuation decision models used to compare investment alternatives.
• The Committee of Sponsoring Organizations of the Treadway Commission(COSO) Enterprise Risk Management framework, including how it applies toenvironmental, social and governance (ESG) related risks.
• The effect of changes in economic conditions and market inﬂuences on an
entity’s business.
Area II of the BAR section blueprint covers ﬁnancial accounting and reporting
requirements in the FASB Accounting Standards Codiﬁcation that are applicable
to technical accounting and reporting topics. The Area includes the following:• Indeﬁnite-lived intangible assets, including goodwill.
• Internally developed software.
• Revenue recognition, speciﬁcally focusing on the analysis and interpretationof agreements, contracts and other supporting documentation to determine
whether revenue was appropriately recognized.
• Stock compensation.
• Research and development costs.
• Business combinations.
• Consolidated ﬁnancial statements, speciﬁcally focusing on topics including
variable interest entities, noncontrolling interests, functional currency andforeign currency translation adjustments.

• Derivatives and hedge accounting.
• Leases, speciﬁcally focusing on recalling and applying lessor accounting
requirements and analyzing the provisions of a lease agreement to determine
whether a lessee appropriately accounted for the lease.
• Public company reporting topics, speciﬁcally focusing on Regulation S-X,
Regulation S-K and segment reporting.
• Financial statements of employee beneﬁt plans.
To the extent there are accounting or reporting differences between publicbusiness entities and nonpublic business entities, such differences may be tested
for the ﬁnancial accounting and reporting topics in the BAR section blueprint.
Area III of the BAR section blueprint covers GASB’s ﬁnancial accounting andreporting requirements for state and local governments under the GASB
standards and interpretations. The Area includes the following:• Basic concepts and principles of the government-wide, governmental funds,
proprietary funds and ﬁduciary funds ﬁnancial statements.
• Preparing government-wide, governmental funds, proprietary funds andﬁduciary funds ﬁnancial statements and other components of the ﬁnancial
section of the annual comprehensive ﬁnancial report.
• Deriving the government-wide ﬁnancial statements and reconciliation
requirements.
• Accounting for speciﬁc types of transactions such as net position, fundbalances, capital assets, long-term liabilities, interfund activity, nonexchange
revenue, expenditures and expenses and budgetary accounting within thegovernmental entity ﬁnancial statements.

Section assumptions
The BAR section of the Exam includes multiple-choice questions and task-based
simulations. Candidates should assume that all of the information provided ineach question is material and should apply all stated assumptions. In addition,
candidates should assume that each question applies to a for-proﬁt business

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Section Introduction

Business Analysis and Reporting (continued)
entity reporting under U.S. GAAP unless otherwise stated in the fact pattern for aquestion. For example, questions that apply to the state and local governments
include phrases such as “local government,” “state,” “municipality” or “city.”

Skill allocation
The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives8. Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:• Analysis skills are tested in Areas I and II of the BAR blueprint. Tasks, suchas interpreting results, comparing alternatives, reconciling account balances
and interpreting agreements, require nlCPAs to demonstrate a higher level ofinterpretation. Area I has the highest concentration of analysis tasks.
The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

References — Business Analysis and Reporting

Skill Levels
Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

The BAR section of the Exam assesses content at the ﬁrst three skill levels of
Bloom’s taxonomy as described below:• Remembering and Understanding is tested in all three areas of the BAR
blueprint. Tasks, such as identifying criteria and recalling concepts, require
nlCPAs to demonstrate their comprehension of accounting concepts,
frameworks and standards. Areas II and III have the highest concentrationof remembering and understanding tasks.
• Application skills are tested in all three areas of the BAR blueprint. Tasks, suchas calculating and determining the impact of a transaction on the business,preparing journal entries and preparing ﬁnancial statements, require nlCPAs touse accounting and business concepts to measure an entity’s performance andto measure and recognize ﬁnancial statement amounts.

• FASB Accounting Standards Codiﬁcation• U.S. SEC References:– Securities Exchange Act of 1934
– Regulation S-X of the Code of Federal Regulations (17 CFR Part 210)
– Regulation S-K of the Code of Federal Regulations (17 CFR Part 229)
• State and Local Government References:– GASB Codiﬁcation of Governmental Accounting and Financial
Reporting Standards– GASB Statements, Interpretations, Technical Bulletins andConcepts Statements– National Council on Governmental Accounting (NCGA) Statements
and Interpretations• The Committee of Sponsoring Organizations of the Treadway Commission(COSO):– Enterprise Risk Management – Integrating with Strategy and Performance– Enterprise Risk Management – Applying Enterprise Risk Management toEnvironmental, Social and Governance-related risks• Current textbooks on accounting for business entities, state and local
government entities, data analytics, economics, ﬁnance, managerial andcost accounting

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Business Analysis and Reporting (BAR)

Summary Blueprint
Content area allocation

WeightI. Business Analysis

40–50%

II. Technical Accounting and Reporting

35–45%

III. State and Local Governments

10–20%

Skill allocation

WeightEvaluation–

Analysis

30–40%

Application

45–55%

Remembering and Understanding

10–20%

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Business Analysis and Reporting (BAR)

Area I – Business Analysis (40–50%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Current period/historical analysis, including the use of data
1. Financial statement analysis

Determine attribute structures, format and sources of data needed to prepareﬁnancial statement analysis.
Compare current period ﬁnancial statement accounts to prior periods or budget
and explain variances.
Interpret ﬁnancial statement ﬂuctuations and ratios.
Use outputs (e.g., reports, visualizations) from data analytic techniques to identify
patterns, trends and correlations to explain an entity’s results.
Derive the impact of transactions on the ﬁnancial statements and notes to theﬁnancial statements.

2. Non-ﬁnancial and non-GAAP
measures of performance

Identify relevant non-ﬁnancial and non-GAAP measures used to analyze an entity’s
performance.
Identify and apply internal and external benchmarking (e.g., competitor analysis)
techniques to measure an entity’s performance.
Use a balanced scorecard approach to measure an entity’s performance.
Interpret non-ﬁnancial (e.g., customer retention rate, employee turnover, laborproductivity rate, ticket response time) and non-GAAP (e.g., EBITDA, free cash
ﬂow, core earnings, adjusted net income for non-recurring expenses) measuresand analyze speciﬁc aspects of an entity’s performance and risk proﬁle.

3. Managerial and cost accounting

Calculate ﬁxed, variable and mixed costs.
Describe and use the different costing methods including absorption, variable,
activity-based, process and job order costing.

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Business Analysis and Reporting (BAR)

Area I – Business Analysis (40–50%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Current period/historical analysis, including the use of data (continued)
3. Managerial and cost accounting(continued)

Derive the appropriate variance analysis method to measure the key cost drivers
by analyzing business scenarios.
Interpret sales results by performing price, volume and mix analysis.

B. Prospective analysis, including the use of data
1. Budgeting, forecastingand projection

Determine methods to transform (e.g., preparing, cleaning, scrubbing) structured
and unstructured data to make it useful for decision-making.
Prepare a budget using supportable assumptions.
Use forecasting and projection techniques to model ﬁnancial results including
revenue growth, cost and expense characteristics and proﬁtability.
Prepare and interpret the results of planning techniques including cost beneﬁt
analysis, sensitivity analysis, what-if scenarios, breakeven analysis andpredictive analytics.
Analyze results of forecasts and projections using ratio analysis and explanationsof correlations to, or variations from, key ﬁnancial indices.

2. Capital structure

Calculate the cost of capital for a given ﬁnancial scenario.
Determine the impact of changes in an entity’s capital structure on cost of capital,
loan covenants, liquidity and leverage.
Compare the strategies for ﬁnancing new business initiatives and operations
within the context of an optimal capital structure.
Interpret the impact of various capital structures on ﬁnancial statements and key
performance measures.

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Business Analysis and Reporting (BAR)

Area I – Business Analysis (40–50%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Prospective analysis, including the use of data (continued)
3. Investment alternatives
using ﬁnancial valuation
decision models

Use assumptions (e.g., highest and best use, market participant assumptions, unitof account) and approaches (cost, income, market) to measure fair value.
Determine the impact of changes to assumptions used to value an asset.
Compare investment alternatives (e.g., system replacement, make, lease or buy
decisions) using ﬁnancial metrics and modeling (e.g., payback period, net-present
value, economic value added, cash ﬂow analysis, internal rate of return).

4. Risk management

Recall the purpose and objectives of the COSO ERM framework.
Recall how the COSO ERM framework can be applied to identify, respond to,
and report environmental, social and governance (ESG) related risks.
Apply the COSO ERM framework to identify risk/opportunity scenarios in an entity.
Use strategies to mitigate ﬁnancial risks (e.g., market, interest rate,currency, liquidity).
Compare various strategies for managing the working capital of an entity.
Derive the impact of a proposed transaction on key performance measuresof an entity.
Interpret an entity’s strengths, weaknesses, opportunities and threats (SWOT)
analysis to assess the entity’s options to achieve its overall business strategy.

5. Economic and market
inﬂuences on business

Determine the effect of supply and demand and elasticity measures on a product.
Calculate the effect of inﬂation on a product’s real price or an entity’s investments,
debt and future expenses.

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Business Analysis and Reporting (BAR)

Area I – Business Analysis (40–50%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Prospective analysis, including the use of data (continued)
5. Economic and market inﬂuenceson business (continued)

Calculate and use ratios and measures to quantify risks associated with risksof an entity (e.g., interest rates, currency exchange, prices).
Calculate the opportunity cost of a business decision.
Interpret the impact of market inﬂuences on an entity’s business strategy,
operations and risk (e.g., sourcing production inputs, innovating to develop
or diversify product offerings, seeking new markets, undertaking productivity
or cost-cutting initiatives).
Compare acquisition and divestiture opportunities based on given market analysis
and investment criteria.

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Business Analysis and Reporting (BAR)

Area II – Technical Accounting and Reporting (35–45%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Indeﬁnite-lived intangible assets, including goodwill
Recall impairment indicators for goodwill and other indeﬁnite-lived
intangible assets.
Calculate the carrying amount of goodwill and other indeﬁnite-lived intangible
assets reported in the ﬁnancial statements (initial measurement and impairment)
and prepare journal entries.
B. Internally developed software
Recall the criteria necessary to capitalize software developed for internal use
or software developed for sale in the ﬁnancial statements.
Calculate capitalized software developed for internal use or softwaredeveloped for sale to be reported in the ﬁnancial statements and the related
amortization expense.
C. Revenue recognition
Interpret agreements, contracts and/or other supporting documentation todetermine the amount and timing of revenue to be recognized in the ﬁnancial
statements using the ﬁve-step model.
Reconcile and investigate differences between the sales subledger and the generalledger to determine whether an adjustment is necessary.
D. Stock compensation (share-based payments)
Recall concepts associated with share-based payment arrangements (e.g., grantdate, vesting conditions, inputs to valuation techniques, valuation models).
Use a given fair value measurement of a share-based payment arrangementclassiﬁed as equity to prepare journal entries to recognize compensation cost.

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Business Analysis and Reporting (BAR)

Area II – Technical Accounting and Reporting (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Stock compensation (share-based payments) (continued)
Use given fair value measurements of a share-based payment arrangementclassiﬁed as a liability to prepare journal entries to recognize compensation cost.
E. Research and development costs
Identify research and development costs and classify the costs as an expensein the ﬁnancial statements.
Calculate the research and development costs to be reported as an expensein the ﬁnancial statements.
F. Business combinations
Recall concepts associated with the accounting for business combinations(e.g., business vs. asset acquisition, contingent consideration, measurement
period adjustments).
Prepare journal entries to record the identiﬁable net assets acquired in a businesscombination that results in the recognition of goodwill or a bargain purchase gain.
Prepare journal entries to record the identiﬁable net assets acquired in a businesscombination that includes a noncontrolling interest.
Calculate the consideration transferred in a business combination.
G. Consolidated ﬁnancial statements
Recall basic consolidation concepts and terms (e.g., controlling interest,
noncontrolling interest, primary beneﬁciary, variable interest entity).

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Business Analysis and Reporting (BAR)

Area II – Technical Accounting and Reporting (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

G. Consolidated ﬁnancial statements (continued)
Recall the basic functional currency concepts including the indicators to beconsidered when determining a subsidiary’s functional currency.
Calculate foreign currency translation adjustments (local currency to functional
currency and/or functional currency to reporting currency) to prepare consolidated
ﬁnancial statements.
Determine the appropriate presentation of foreign currency translation
adjustments in the consolidated statement of comprehensive income.
H. Derivatives and hedge accounting
Identify the characteristics of a freestanding and/or embedded derivative ﬁnancial
instrument to be recognized in the ﬁnancial statements.
Identify the criteria necessary to qualify for hedge accounting.
Recall the appropriate presentation of gains and losses on derivative ﬁnancial
instruments (swaps, options and forwards) in the ﬁnancial statements.
Use given inputs (interest rates, notional amounts, fair value measurements) toprepare the journal entries to record the net settlements and changes in fair value
for an interest rate swap that qualiﬁes for hedge accounting (fair value hedge,
cash ﬂow hedge).
I. Leases
Identify the criteria for classifying a lease arrangement for a lessor.
Calculate the carrying amount of lease-related assets and liabilities and prepare
journal entries that a lessor should record.
Calculate the amount of lease income that a lessor should recognize in theincome statement.

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Business Analysis and Reporting (BAR)

Area II – Technical Accounting and Reporting (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

I. Leases (continued)
Prepare journal entries that the seller/lessee should record for a sale andleaseback transaction.
Interpret agreements, contracts and/or other supporting documentation todetermine the appropriate accounting treatment of a leasing arrangement
and prepare the journal entries that the lessee should record.
J. Public company reporting topics
Recall public company reporting requirements of Regulation S-X andRegulation S-K.
Recall the purpose, objective and key characteristics of XBRL business reporting.
Recall the ﬁnancial statement note disclosure requirements forreportable segments.
K. Financial statements of employee beneﬁt plans
Identify the required ﬁnancial statements for a deﬁned beneﬁt pension plan
and a deﬁned contribution pension plan.
Recall the disclosure requirements for the notes to the ﬁnancial statementsof a deﬁned beneﬁt pension plan and a deﬁned contribution pension plan.
Prepare a statement of changes in net assets available for beneﬁts for adeﬁned beneﬁt pension plan and a deﬁned contribution pension plan.
Prepare a statement of net assets available for beneﬁts for a deﬁned beneﬁt
pension plan and a deﬁned contribution pension plan.

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Business Analysis and Reporting (BAR)

Area III – State and Local Governments (10–20%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Format and content of the ﬁnancial section of the annual comprehensive ﬁnancial report
1. Government-wide ﬁnancial
statements

Identify and recall basic concepts and principles associated withgovernment-wide ﬁnancial statements (e.g., required activities, ﬁnancial
statements, ﬁnancial statement components).
Prepare the government-wide statement of net position for a state or local
government from trial balances and supporting documentation.
Prepare the government-wide statement of activities for a state or local
government from trial balances and supporting documentation.

2. Governmental funds
ﬁnancial statements

Identify and recall basic concepts and principles associated with governmental
fund ﬁnancial statements (e.g., required funds, ﬁnancial statements, ﬁnancial
statement components).
Prepare the statement of revenues, expenditures and changes in fund balances
for the governmental funds of a state or local government from trial balances andsupporting documentation.
Prepare the balance sheet for the governmental funds of a state or local
government from trial balances and supporting documentation.

3. Proprietary funds
ﬁnancial statements

Identify and recall basic concepts and principles associated with proprietary fundﬁnancial statements (e.g., required funds, ﬁnancial statements, ﬁnancial statement
components).
Prepare the statement of revenues, expenses and changes in fund net position
for the proprietary funds of a state or local government from trial balances andsupporting documentation.
Prepare the statement of net position for the proprietary funds of a stateor local government from trial balances and supporting documentation.
Prepare the statement of cash ﬂows for the proprietary funds of a stateor local government.

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Business Analysis and Reporting (BAR)

Area III – State and Local Governments (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Format and content of the ﬁnancial section of the annual comprehensive ﬁnancial report (continued)
4. Fiduciary funds
ﬁnancial statements

Identify and recall basic concepts and principles associated with ﬁduciary fundﬁnancial statements (e.g., required funds, ﬁnancial statements, ﬁnancial statement
components).
Prepare the statement of changes in ﬁduciary net position for the ﬁduciary fundsof a state or local government from trial balances and supporting documentation.
Prepare the statement of net position for the ﬁduciary funds of a state or local
government from trial balances and supporting documentation.

5. Notes to ﬁnancial statements

Recall the disclosure requirements for the notes to the basic ﬁnancial statementsof state and local governments.

6. Management’s discussion
and analysis

Recall the objectives and components of management’s discussion and analysis
in the annual comprehensive ﬁnancial report for state and local governments.

7. Budgetary comparison reporting

Recall the objectives and components of budgetary comparison reporting in theannual comprehensive ﬁnancial report for state and local governments.

8. Required supplementary
information (RSI) other thanmanagement’s discussion
and analysis

Recall the objectives and components of required supplementary information
other than management’s discussion and analysis in the annual comprehensive
ﬁnancial report for state and local governments.

9. Financial reporting entity,
including blended and discrete
component units

Recall the criteria for classifying an entity as a component unit of a stateor local government and the ﬁnancial statement presentation requirements(discrete or blended).

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Business Analysis and Reporting (BAR)

Area III – State and Local Governments (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Deriving government-wide ﬁnancial statements and reconciliation requirements
Prepare worksheets to convert the governmental fund ﬁnancial statements to thegovernmental activities reported in the government-wide ﬁnancial statements.
Prepare the schedule to reconcile the total fund balances and the net change
in fund balances reported in the governmental fund ﬁnancial statements tothe net position and change in net position reported in the government-wide
ﬁnancial statements.
C. Typical items and speciﬁc types of transactions and events: measurement, valuation, calculation and presentation in governmental entity ﬁnancial statements
1. Net position andcomponents thereof

Calculate the net position balances (unrestricted, restricted and net investment
in capital assets) for state and local governments and prepare journal entries.

2. Fund balances andcomponents thereof

Calculate the fund balances (assigned, unassigned, nonspendable, committed andrestricted) for state and local governments and prepare journal entries.

3. Capital assets andinfrastructure assets

Identify capital assets reported in the government-wide ﬁnancial statementsof state and local governments.
Calculate the net general capital assets balance for state and local governments
and prepare journal entries (initial measurement and subsequent depreciation andamortization).

4. General and proprietarylong-term liabilities

Identify general and proprietary long-term liabilities reported in thegovernment-wide ﬁnancial statements of state and local governments.
Calculate the total indebtedness to be reported in the government-wide
ﬁnancial statements of a state or local government.
Calculate the net general long-term debt balance for state and local governments
and prepare journal entries (e.g., debt issuance, interest payments, issuepremiums, issue discounts).

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Business Analysis and Reporting (BAR)

Area III – State and Local Governments (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Typical items and speciﬁc types of transactions and events: measurement, valuation, calculation and presentation in governmental entity ﬁnancial statements (continued)
5. Interfund activity,
including transfers

Prepare eliminations of interfund activity in the government-wide ﬁnancial
statements of state and local governments.
Prepare journal entries to recognize interfund activity within state andlocal governments.

6. Nonexchange revenue
transactions

Calculate the amount of nonexchange revenue to be recognized by stateand local governments using the modiﬁed accrual basis of accounting andprepare journal entries.
Calculate the amount of nonexchange revenue to be recognized by stateand local governments using the accrual basis of accounting and prepare
journal entries.

7. Expenditures and expenses

Calculate expenditures to be recognized under the modiﬁed accrual basis ofaccounting (paid from available fund ﬁnancial resources) for state and local
governments and prepare journal entries.
Calculate expenses to be recognized under the accrual basis of accounting
for state and local governments and prepare journal entries.

8. Budgetary accounting
and encumbrances

Recall and explain the types of budgets used by state and local governments.
Prepare journal entries to record budgets (original and ﬁnal) of state andlocal governments.
Prepare journal entries to record encumbrances of state and local governments.

Uniform CPA Examination Blueprints: Discipline Examination Section – Business Analysis and Reporting (BAR)

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Uniform CPA Examination
Information Systems
and Controls (ISC)

Blueprint

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Section Introduction

Information Systems and Controls
The Information System and Controls (ISC) section of the Uniform CPA Examination(the Exam) tests the knowledge and skills that nlCPAs must demonstrate withrespect to information systems, including processing integrity, availability, security,
conﬁdentiality and privacy. Inherent in the analysis of controls in each of thesesubjects is awareness of the risks that the entity is intending to mitigate through theuse of those controls.

Content organization and tasks

The ISC section also tests the knowledge and skills that nlCPAs must demonstratewith respect to data management, including data collection, storage and usage
throughout the data life cycle.

The tasks in the blueprint are representative. They are not intended to be (norshould they be viewed as) an all-inclusive list of tasks that may be tested in the ISC
section of the Exam. Lists or examples included within the text of a representative
task beginning with the word “including” are not intended to be exhaustive. Withinsome representative tasks are parenthetical lists. If a parenthetical list begins with“e.g.”, this is not intended to be an exhaustive list but rather examples of the typesof content that could be assessed. Parenthetical lists that do not include “e.g.” areintended to be an exhaustive list of the content to be assessed with respect to that
representative task. Additionally, the number of tasks associated with a particular
content group or topic is not indicative of the extent such content group, topic or
related skill level will be assessed on the Exam.

The ISC section of the exam focuses on information technology (IT) audit andadvisory, including System and Organization Controls (SOC) engagements. With
respect to SOC engagements, the ISC section primarily focuses on:• The use of the Description Criteria for a Description of a Service Organization’s
System and Trust Services Criteria for Security, Availability, Processing Integrity,
Conﬁdentiality, and Privacy in planning, performing and reporting in a SOC 2®
engagement.
• Planning, certain procedures (excluding the testing of internal controls overﬁnancial reporting) and reporting on a SOC 1® engagement.
The assessment will also incorporate applied research with a focus on reviewing
and using excerpts of source materials (e.g., standards, regulations, frameworks)
to complete a range of tasks including identifying issues, analyzing facts anddetermining appropriate responses.
A list of reference materials relevant to the ISC section of the Exam is included
under References at the conclusion of this introduction.

The ISC section blueprint is organized by content AREA, content GROUP andcontent TOPIC. Each topic includes one or more representative TASKS that an
nlCPA may be expected to complete when performing assurance or advisory
services relative to an entity’s business processes, information systems, data
management and security.

Content allocation
The following table summarizes the content areas and the allocation of content
tested in the ISC section of the Exam:Content area

Allocation

Area I

Information Systems and Data Management

35–45%

Area II

Security, Conﬁdentiality and Privacy

35–45%

Area IIIConsiderations for System and Organization
Controls (SOC) Engagements

15–25%

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Section Introduction

Information Systems and Controls (continued)
Overview of content areas
Area I of the ISC section blueprint is focused on information systems and data
management in a modern context, recognizing that much of it is cloud-based andundergoing rapid innovation. The Area includes the following:• Testing an entity’s controls over security, conﬁdentiality and privacy.
• An entity’s incident response plan.

• IT architecture components and the use of cloud-based models for IT
infrastructure, platforms and services.

While certain representative tasks in Area II relate to testing controls in a SOC 2®
engagement context, they are representative of similar procedures that may be
performed in other IT audit and advisory contexts.

• Enterprise and accounting information systems, the business processes they
enable and controls over processing integrity.

Area III of the ISC section blueprint covers considerations for SOC engagements.
The Area includes the following:• System availability and IT change management.

• Form, content and management assertions in SOC 1®, SOC 2® and SOC 3®
reports and the intended users of those reports.

• Data collection, storage, structured query language (SQL) queries andintegration of data from different data sources.
• Business process models.
While certain representative tasks in Area I relate to testing controls in a SOC 2®
engagement context, they are representative of similar procedures that may be
performed in other IT audit and advisory contexts.
Area II of the ISC section blueprint covers security, conﬁdentiality and privacy. The
Area includes the following:• Select portions of speciﬁed regulations, standards and frameworks related
to information security and privacy that are considered by management indesigning and implementing information systems and related controls.
• Types of threats and attacks (including cyber) to which an entity may
be subject.

• Aspects of engagement planning and reporting for SOC 1® and SOC 2®
engagements.
• Procedures related to complementary user entity controls and complementary
subservice organization controls.
• Procedures related to the system description criteria for SOC 1® and SOC 2®
engagements.
• Trust services criteria for SOC 2® engagements.

Section assumptions
The ISC section of the Exam includes multiple-choice questions and task-based
simulations. Candidates should assume that the information provided in eachquestion is material and should apply all stated assumptions.

• Controls the entity uses to prevent, detect and respond to those threats
and attacks.
• Controls the entity uses to maintain the conﬁdentiality and privacy of
information.

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Section Introduction

Information Systems and Controls (continued)
Skill allocation
The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives9. Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:
Skill Levels

References — Information Systems and Controls
The subject matter covered in the ISC section is rapidly changing. Newly licensed
CPAs need to stay current through resources such as those detailed below. To
the extent the References refer to speciﬁc sections of a publication, the scopeof the assessment of the content in that publication will be limited to thosespeciﬁc sections.

Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

Application

The use or demonstration of knowledge, concepts
or techniques.

– 2017 Trust Services Criteria for Security, Availability, Processing
Integrity, Conﬁdentiality, and Privacy (Includes March 2020 updates)(Trust Services Criteria)

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

– 2018 Description Criteria for a Description of a Service Organization’s
System in a SOC 2® Report

The ISC section of the Exam assesses content at the ﬁrst three skill levels of
Bloom’s Taxonomy as described below:• Remembering and Understanding skills are tested across all areas. These areas
contain foundational knowledge that nlCPAs are expected to possess related tostandards, regulations, frameworks and procedures.
• Application skills are tested across all areas. These areas contain tasks that
nlCPAs are expected to perform related to examining information systems,
data management and SOC engagements.
• Analysis skills are tested in Area I and Area II. These areas contain tasks
that nlCPAs are expected to perform related to detecting deﬁciencies in thesuitability or design and deviations in the operation of controls related to
information systems.
9

The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

• AICPA– Description Criteria for Management’s Description of the Entity’s
Cybersecurity Risk Management Program– Frequently asked questions – SOC 2® and SOC 3® examinations– Materiality considerations for attestation engagements involving aspectsof subject matters that cannot be quantitatively measured– Reporting on an Examination of Controls at a Service Organization Relevant
to User Entities’ Internal Control Over Financial Reporting (SOC 1®) – Guide– SOC 2® Reporting on an Examination of Controls at a Service
Organization Relevant to Security, Availability, Processing Integrity,
Conﬁdentiality, or Privacy– Statements on Standards for Attestation Engagements and Interpretations

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives(Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York:David McKay.

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Section Introduction

Information Systems and Controls (continued)• Center for Internet Security (CIS), CIS Controls; Version 8– “Overview” and “Why is this Control critical?” sections of each control(Control 01 to Control 18)• The Committee of Sponsoring Organizations of the Treadway
Commission (COSO)– Blockchain and Internal Control: The COSO Perspective– Enterprise Risk Management for Cloud Computing– Managing Cyber Risk in a Digital Age• Cybersecurity & Infrastructure Security Agency (CISA)– Security Tips published by the National Cyber Awareness System (NCAS),
released or revised subsequent to November 1, 2019 that are relevant to theGroups and Topics in Area I and Area II, limited to the information in the tip
itself, and not extending to the underlying referenced material• Health Insurance Portability and Accountability Act of 1996 (HIPAA) 45 CFRPart 164 Security and Privacy– Section 164.103 through Section 164.530 excluding Implementation
Speciﬁcations and Compliance Dates– NIST Privacy Framework: A Tool For Improving Privacy through Enterprise
Risk Management; Version 1.0, Sections 1 and 2, including the glossary
deﬁnitions of terms used in those sections– Security and Privacy Controls for Information Systems and Organizations,
Special Publication 800-53 (SP 800-53) Revision 5, Chapters 1 and 2,
including the glossary deﬁnitions of terms used in those sections• PCI Security Standards Council Payment Card Industry Data Security Standard(PCI DSS)– PCI DSS Quick Reference Guide; Version 3.2.1 Introduction: Protecting
Cardholder Data with PCI Security Standards, Overview of PCI Requirements
and Security Controls and Processes for PCI DSS Requirements• Regulation (EU) 2016/679 General Data Protection Regulation (GDPR)– Articles 4 through 34• Textbooks– Accounting Information Systems– Data Conﬁdentiality and Privacy– Data Literacy– Data Management• ISACA– COBIT 2019 Framework: Introduction and Methodology, Chapters 1 through 5– Incident Response and Disaster Recovery– White papers available to the public free of charge that address subject
matters covered in the groups and topics of ISC Area I and Area II– Information Security / Cyber Security• National Institute of Standards and Technology (NIST)– Framework for Improving Critical Infrastructure Cybersecurity (CSF) Version
1.1, Sections 1 and 2, including the glossary deﬁnitions of terms used inthose sections– Information Systems– Information Technology (IT)– IT Audit and Assurance

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Information Systems and Controls (ISC)

Summary Blueprint
Content area allocation

WeightI. Information Systems and Data Management

35–45%

II. Security, Conﬁdentiality and Privacy

35–45%

III. Considerations for System and Organization
Controls (SOC) Engagements

15–25%

Skill allocation

WeightEvaluation–

Analysis

10–20%

Application

20–30%

Remembering and Understanding

55–65%

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Information Systems and Controls (ISC)

Area I – Information Systems and Data Management (35–45%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Information systems
1. IT infrastructure

Explain the purpose and recognize examples of key components of IT architecture(e.g., operating systems, servers, network infrastructure, and end-user devices).
Explain cloud computing, including cloud computing models (infrastructure as aservice (IaaS), platform as a service (PaaS), and software as a service (SaaS))and deployment models (e.g., public, private, hybrid).
Summarize the role and responsibilities of cloud service providers.
Explain how the COSO framework addresses cloud computing governance.

2. Enterprise and accounting
information systems

Summarize enterprise resource planning (ERP) and accounting information
systems, what they encompass and how they interact.
Explain how the COSO internal control framework can be used to evaluate risks
related to the use of blockchain in the context of ﬁnancial reporting and to design
and implement controls to address such risks.
Determine potential changes to business processes to improve the performanceof an accounting information system (e.g., automation, outsourcing).
Reconcile the actual sequence of steps and the information, documents, tools andtechnology used in a key business process of an accounting information system(e.g., sales, cash collections, purchasing, disbursements, human resources, payroll,
production, treasury, ﬁxed assets, general ledger, reporting) to the documented
process (e.g., ﬂowchart, business process diagram, narrative).
Detect deﬁciencies in the suitability or design and deviations in the operationof controls related to an information system’s processing integrity in a
SOC 2® engagement using the Trust Services Criteria.

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Information Systems and Controls (ISC)

Area I – Information Systems and Data Management (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Information systems (continued)
3. Availability

Recall the scope, purpose and key considerations for business resiliency, disasterrecovery and business continuity plans.
Explain the objectives of mirroring, replication and back-up.
Summarize steps in a business impact analysis.
Recall measures of system availability (e.g., agreed service time, downtime).
Determine the appropriateness of the organization’s data backup types(e.g., full, incremental, differential) including recovery considerations.
Detect deﬁciencies in the suitability or design and deviations in the operation ofcontrols related to a service organization’s availability service commitments andsystem requirements in a SOC 2® engagement using the Trust Services Criteria.

4. Change management

Summarize aspects of change management including authorization, the useof different environments, segregation of duties, testing, conversion, anddocumentation.
Explain key concepts of release management and patch management procedures.
Test the design and implementation of change control policies for IT resources(hardware and software).

B. Data management
Identify data collection methods and techniques.
Deﬁne the various types of data storage (e.g., data warehouse, data lake, data mart)and database schemas (e.g., star, snowﬂake).

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Information Systems and Controls (ISC)

Area I – Information Systems and Data Management (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Data management (continued)
Summarize the data life cycle (i.e., the span of the use of information, fromcreation, through active use, storage and ﬁnal disposition).
Examine a relational database’s structure to determine whether it applies data
integrity rules, uses a data dictionary, and normalizes the data.
Examine a SQL query (common commands, clauses, operators, aggregate
functions and string functions) to determine whether the retrieved data set isrelevant and complete.
Integrate the data available from different data sources to provide informationnecessary for ﬁnancial and operational analysis and decisions.
Investigate a business process model (e.g., ﬂowchart, data ﬂow diagram, businessprocess model and notation (BPMN) diagram) to identify potential improvements.

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Information Systems and Controls (ISC)

Area ll – Security, Confidentiality and Privacy (35–45%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Regulations, standards and frameworks
Recall the covered entities and permitted uses and disclosures of the HIPAA
Security and Privacy Rules.
Recall the scope of the GDPR and the six principles and key concepts for
personal data.
Recall the requirements of the PCI DSS.
Recall the three parts of the NIST CSF (Framework Core, Framework
Implementation Tiers, Framework Proﬁles).
Recall the three parts of the NIST Privacy Framework (Framework Core,
Framework Proﬁles, Framework Implementation Tiers).
Recall the purpose, applicability, target audience and organizational responsibilities
of NIST SP 800-53.
Recall the overview of each CIS Control.
Recall the governance system principles, governance framework principles andthe components of a governance system according to COBIT 2019.
B. Security
1. Threats and attacks

Classify the different types of threat agents (e.g., internal or external, nation or
non-nation state-sponsored, adversary, threat actors, attacker or hacker).
Identify types of attacks (e.g., physical, distributed denial of service, malware,social engineering, web application attacks, mobile device attacks).
Identify techniques used in a cyber-attack (e.g., buffer overﬂow, mobile code,
cross-site scripting, SQL injections, race conditions, covert channel, replay andreturn-oriented attack).

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Information Systems and Controls (ISC)

Area ll – Security, Confidentiality and Privacy (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Security (continued)
1. Threats and attacks(continued)

Explain the stages in a cyber-attack (e.g., reconnaissance, scanning, enumeration,
gaining access, escalation of privileges, maintaining access, network exploitation,
covering tracks).
Identify the cybersecurity risks related to using cloud environments, platforms
and services.
Identify the cybersecurity risks related to the Internet of Things (IoT).
Identify the cybersecurity risks related to mobile technologies.
Explain threat modeling and threat landscape.
Determine the speciﬁc cybersecurity threats in an organization’s connections
with customers, vendors and partner organizations.

2. Mitigation

Identify ways to protect networks and devices used to access the network
remotely (e.g., isolation and segmentation, virtual private network (VPN),
wireless network security, endpoint security, system hardening, intrusion
prevention and detection systems).
Recall the deﬁnition and purpose of vulnerability management.
Explain the concepts of layered security and defense-in-depth.
Deﬁne the concepts of least-privilege, zero-trust, whitelisting and theneed-to-know principle.
Explain the differences between policy-based, role-based, rule-based,risk-adaptive and discretionary access controls.
Recall the purpose and content of a technology acceptable use policy including
considerations speciﬁc to mobile technologies and bring-your-own-device (BYOD).

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Information Systems and Controls (ISC)

Area ll – Security, Confidentiality and Privacy (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Security (continued)
2. Mitigation (continued)

Explain how the COSO frameworks can be used to assess cyber risks
and controls.
Determine the common preventive, detective or corrective controls(e.g., authorization, intrusion prevention systems, device and software
hardening, log analysis, intrusion detection systems, virus quarantining,
patches) to mitigate risk of cyber-attacks for an organization.
Determine the appropriate identiﬁcation and authentication techniques
and technologies (e.g., password management, single sign-on, multi-factor
authentication, personal identiﬁcation number (PIN) management, digital
signatures, smart cards, biometrics) in a speciﬁc scenario.
Perform procedures to obtain an understanding how the entity communicates
information to improve security knowledge and awareness and to model
appropriate security behaviors to personnel through a security awarenesstraining program.

3. Testing

Provide input into a security assessment report by documenting the issues,ﬁndings and recommendations identiﬁed while performing tests of controls.
Perform a walkthrough of an organization’s procedures relevant to IT security(e.g., IT risk management, human resources, training and education) and compare
the observed procedure with the documented policy requirement.
Detect deﬁciencies in the suitability or design and deviations in the operation ofcontrols related to a service organization’s security service commitments andsystem requirements in a SOC 2® engagement using the Trust Services Criteria.
C. Conﬁdentiality and privacy
Explain encryption fundamentals, techniques and applications.
Recall the differences between conﬁdentiality and privacy.

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Information Systems and Controls (ISC)

Area ll – Security, Confidentiality and Privacy (35–45%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Conﬁdentiality and privacy (continued)
Identify methods for the protection of conﬁdential data during the design,development, testing and implementation of applications that use conﬁdential
data (e.g., data obfuscation, tokenization).
Explain Data Loss Prevention (DLP).
Identify ﬁnancial and operational implications of a data breach.
Determine controls and data management practices to securely collect, process,store, transmit and delete conﬁdential data or data subject to privacy regulations.
Detect deﬁciencies in the suitability or design and deviations in the operation ofcontrols related to a service organization’s conﬁdentiality and privacy service
commitments and system requirements in a SOC 2® engagement using theTrust Services Criteria.
Perform a walkthrough of an organization’s procedures relevant to conﬁdentiality
and privacy (e.g., IT risk management, human resources, training and education)and compare the observed procedure with the documented policy requirement.
D. Incident response
Recall the differences between security/cybersecurity events and incidents.
Explain the use of insurance as a mitigation strategy for a security incident
or data breach.
Summarize contents commonly included in incident response plans(e.g., roles, responsibilities, methods, steps, timelines).
Perform procedures to test whether the entity responded to cybersecurity
incidents in accordance with the incident response plan.

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Information Systems and Controls (ISC)

Area III – Considerations for System and Organization Controls (SOC)
Engagements (15–25%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Considerations speciﬁc to planning and performing a SOC engagement
Explain the purpose of the Trust Services Criteria and its organization(e.g., alignment with the COSO Internal Control – Integrated Framework,
supplemental criteria, common criteria and additional speciﬁc criteria).
Recall the types of subject matters a practitioner may be engaged to reporton using the Trust Services Criteria.
Identify management assertions speciﬁc to the different categories and types(Type 1 and Type 2) of SOC engagements (SOC 1®, SOC 2®, SOC 3®).
Recall the intended users of SOC 1®, SOC 2® and SOC 3® reports.
Summarize the independence considerations between the service auditor,
service organization and subservice organizations.
Explain how materiality is determined and used in performing a SOC engagement(SOC 1®, SOC 2®).
Identify the risk assessment requirements for a service organization and theservice auditor.
Summarize the criteria for a vendor to be considered a subservice organization.
Explain the considerations for deciding between, and use of, the inclusive andcarve-out method for subservice organizations and complementary subservice
organization controls (CSOCs).
Deﬁne service commitments and system requirements in a SOC 2® engagement
and how they correspond to an entity’s objectives referred to in the Trust
Services Criteria.

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Information Systems and Controls (ISC)

Area III – Considerations for System and Organization Controls (SOC)
Engagements (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Considerations speciﬁc to planning and performing a SOC engagement (continued)
Recall the impact of subsequently discovered facts on the SOC engagement(SOC 1®, SOC 2®).
Explain the purpose and common sections of a system description subject to
SOC 1® or SOC 2® engagements.
Recall the Description Criteria for Management’s Description of an Entity’s
Cybersecurity Risk Management Program.
Explain the purpose of complementary user entity controls (CUECs) identiﬁedby service organization management in their system description.
Recall requirements about obtaining management’s written representations
in a SOC engagement (SOC 1®, SOC 2®).
Obtain an understanding of the system addressed by a SOC 2® engagement,
including the clear identiﬁcation of the boundaries of the system as deﬁned by
the service organization.
Perform procedures to obtain an understanding of how a service organization
provides its personnel and external users information on how to report failures,
incidents, concerns and other complaints related to a system subject to a
SOC 2® engagement.
Prepare a comparison of management’s system description to suitable criteria
in a SOC 1® engagement or to the description criteria in a SOC 2® engagement.
Perform procedures to identify subsequent events that could require disclosure(SOC 1®, SOC 2®).

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Information Systems and Controls (ISC)

Area III – Considerations for System and Organization Controls (SOC)
Engagements (15–25%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Considerations speciﬁc to reporting on a SOC engagement
Explain the effect of CUECs on the SOC report (SOC 1®, SOC 2®).
Summarize the carve-out vs. the inclusive method of reporting on CSOCs.
Explain the types of opinions and report modiﬁcations when deﬁciencies havebeen identiﬁed.
Prepare results of testing of controls to be included in the SOC 2® report of thetest of a control, including when there was an exception identiﬁed by the test.
Determine the appropriate form and content of a report on the examinationof controls at a service organization (SOC 1®, SOC 2®).

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Uniform CPA Examination
Tax Compliance andPlanning (TCP)

Blueprint

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Section Introduction

Tax Compliance and Planning
The Tax Compliance and Planning (TCP) section of the Uniform CPA Examination(the Exam) tests the knowledge and skills that nlCPAs must demonstrate withrespect to:• U.S. federal tax compliance for individuals and entities with a focus on
nonroutine and higher complexity transactions

Content organization and tasks
The TCP section blueprint is organized by content AREA, content GROUP andcontent TOPIC. Each topic includes one or more representative TASKS that an
nlCPA may be expected to complete when performing tax preparation services,tax planning services or personal ﬁnancial planning services.

The assessment of federal tax compliance will focus on an nlCPA’s role in boththe preparation and review of tax returns. The assessment of federal tax planningwill focus on an nlCPA’s role in determining the tax implications of proposedtransactions, available tax alternatives or business structures. The assessmentof personal ﬁnancial planning will focus on planning strategies and opportunities
that an nlCPA typically identiﬁes in connection with the preparation and review ofindividual tax returns.

The tasks in the blueprint are representative. They are not intended to be(nor should they be viewed as) an all-inclusive list of tasks that may be tested
in the TCP section of the Exam. Lists or examples included within the text ofa representative task beginning with the word “including” are not intended to
be exhaustive. Within some representative tasks are parenthetical lists. If aparenthetical list begins with “e.g.”, this is not intended to be an exhaustive list
but rather examples of the types of content that could be assessed. Parentheticallists that do not include “e.g.” are intended to be an exhaustive list of the content
to be assessed with respect to that representative task. Additionally, the numberof tasks associated with a particular content group or topic is not indicative of theextent such content group, topic or related skill level will be assessed on the Exam.

The assessments described above will also incorporate:

Content allocation• Data and technology concepts including the veriﬁcation of the completenessand accuracy of source data used to prepare returns and supporting schedules.

The following table summarizes the content areas and the allocation of content
tested in the TCP section of the Exam:• U.S. federal tax planning for individuals and entities• Personal ﬁnancial planning• Applied research with a focus on reviewing and using excerpts of source
materials (e.g., Internal Revenue Code, Treasury Regulations) to complete a
range of tasks including identifying issues, analyzing facts and determining
appropriate responses.
A list of reference materials relevant to the TCP section of the Exam is included
under References at the conclusion of this introduction.

Content area

Allocation

Area I

Tax Compliance and Planning for Individuals and Personal
Financial Planning

30–40%

Area II

Entity Tax Compliance30–40%

Area III

Entity Tax Planning

10–20%

Area IV

Property Transactions (disposition of assets)

10–20%

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Section Introduction

Tax Compliance and Planning (continued)
Overview of content areas
Area I of the TCP section blueprint is focused on individuals and covers federal
tax compliance for nonroutine transactions and issues, tax planning and personalﬁnancial planning. The Area includes the following:• Tax compliance issues related to incentive compensation, at-risk and passive
loss limitations and gifting assets.
• Tax planning issues related to accelerating or deferring income and deductions
to minimize tax liability, estimated tax payments, gifting assets, changing tax
rates and legislation.
• Personal ﬁnancial planning for individuals, including the assessment of qualiﬁed
retirement plans, investing, education funding and risk mitigation through theuse of insurance.
Area II of the TCP section blueprint covers federal tax compliance related tononroutine entity tax transactions and issues. The Area includes the following:• Utilization of net operating losses, consolidated tax returns and internationaltax issues for C corporations.
• Transactions between an entity and owner, speciﬁcally recognized income andlosses from the contribution of noncash property, liquidating and nonliquidating
distributions of noncash property and services performed by an owner.
• Impact on an owner’s basis resulting from contributions and distributions of
noncash property to an entity.
• Partnership elections and the impact of ownership changes to a partnership.
• Identifying characteristics of different types of trusts, calculating income andallocating items between income and corpus.
• Obtaining and maintaining tax-exempt status as well as recalling the types of
unrelated business income for a tax-exempt organization.

Area III of the TCP section blueprint covers federal tax planning for entities. The
Area includes the following:• Formation and liquidation of various entities, including comparisons of different
entity types.
• Tax planning for C corporations, S corporations and partnerships, including thetax implications of a proposed transaction to both the entity and owner.
Area IV of the TCP section blueprint covers federal tax compliance issues related
to asset dispositions. The Area includes the following:• Nontaxable dispositions of property, and the realized, recognized and deferred
tax gains resulting from the transaction.
• Character of recognized gains and losses on the disposition of property used ina trade or business, including installment sale transactions.
• Sale of property to a related party, including nonrecognition of gain or loss.

Section assumptions
The TCP section of the Exam includes multiple-choice questions and task-based
simulations. Candidates should assume that the information provided in eachquestion is material and should apply all stated assumptions. Candidates will
not be tested on their knowledge of speciﬁc tax rate percentages, amounts orlimitations that are indexed to inﬂation. To the extent a question addresses a
topic that could have different tax treatments based on timing (e.g., net operating
losses), it will include a clear indication of the timing (e.g., use of real dates)
so that the candidates can determine the appropriate portions of the Internal
Revenue Code or Treasury Regulations to apply to the question. Absent such anindication of timing or other stated assumptions, candidates should assume thattransactions or events referenced in the question occurred in the current year andshould apply the most recent provisions of the tax law in accordance with thetiming speciﬁed in the CPA Exam Policy on New Pronouncements.

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Section Introduction

Tax Compliance and Planning (continued)
Skill allocation
The Exam applies a skill framework based on the revised Bloom’s Taxonomyof Educational Objectives.10 Bloom’s Taxonomy classiﬁes a continuum of skills
depicted in the table below:
Skill Levels

The representative tasks combine both the applicable content knowledge andthe skills required in the context of the work that an nlCPA would reasonably be
expected to perform.

References — Tax Compliance and Planning• Revised Model Business Corporation Act

Evaluation

The examination or assessment of problems, and useof judgment to draw conclusions.

• Revised Uniform Limited Partnership Act

Analysis

The examination and study of the interrelationshipsof separate areas in order to identify causes and ﬁnd
evidence to support inferences.

• Internal Revenue Code of 1986, as amended

Application

The use or demonstration of knowledge, concepts
or techniques.

Rememberingand Understanding

The perception and comprehension of the signiﬁcanceof an area utilizing knowledge gained.

• Revised Uniform Partnership Act• Treasury Regulations• Other administrative pronouncements regarding federal taxation• Case law on federal taxation• Current textbooks on federal taxation, personal ﬁnancial planning andtax planning

The TCP section of the Exam assesses content at the ﬁrst three skill levels of
Bloom’s Taxonomy as described below:• Remembering and Understanding is mainly concentrated in Area I and Area II.
These two areas contain nonroutine compliance issues encountered by nlCPAs
and they are tested at the lower end of the skill level continuum.
• Application and Analysis skills are tested across all areas. These areas
contain day-to-day planning tasks that nlCPAs are expected to perform related
to tax and personal ﬁnancial planning and the preparation and review of tax
returns and therefore are tested at the higher end of the skill level continuum.

10

Revised taxonomy see Anderson, L.W. (Ed.), Krathwohl, D.R. (Ed.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., & Wittrock, M.C. (2001). A taxonomy for learning, teaching, and assessing: A revision of Bloom’s Taxonomy of Educational Objectives(Complete Edition). New York: Longman. For original taxonomy see Bloom, B.S. (Ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., & Krathwohl, D.R. (1956). Taxonomy of educational objectives: The classiﬁcation of educational goals. Handbook 1: Cognitive domain. New York:David McKay.

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Tax Compliance and Planning (TCP)

Summary Blueprint
Content area allocation

WeightI. Tax Compliance and Planning for Individuals
and Personal Financial Planning

30–40%

II. Entity Tax Compliance30–40%

III. Entity Tax Planning

10–20%

IV. Property Transactions (disposition of assets)

10–20%

Skill allocation

WeightEvaluation–

Analysis

30–40%

Application

50–60%

Remembering and Understanding

5–15%

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Tax Compliance and Planning (TCP)Area I – Tax Compliance and Planning for Individuals and Personal Financial
Planning (30–40%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Individual compliance and tax planning considerations for gross income, adjusted gross income, taxable income and estimated taxes
Consider the impact to an individual’s taxable income for certain items of grossincome, including the exercise of incentive stock options (ISO), imputed interest
on a below-market-rate loan, and compensation earned while employed outside
the U.S.
Consider the effect of changing tax rates and legislation on the timing of income
and expense items for planning purposes given a speciﬁc scenario.
Identify projected tax savings through utilization of ﬂexible spending accounts(FSAs) and qualiﬁed health savings accounts (HSAs) for planning purposes givena speciﬁc scenario.
Consider the impact of using either itemized deductions or the standard deduction
for planning purposes given a speciﬁc scenario.
Calculate estimated tax payments required for an individual to avoid
underpayment penalties given a speciﬁc planning scenario.
Review an individual’s projected income and expenses prior to year-end to
determine the tax implications, and provide options to minimize tax liability
given a speciﬁc planning scenario.
B. Compliance for passive activity and at-risk loss limitations (excluding tax credit implications)
Calculate the at-risk loss limitation for an activity in which an individual materiallyparticipates, including losses from pass-through entities and losses from realestate rental activities with active participation.
Calculate the passive activity loss limitations given a speciﬁc scenario, including
the netting of passive activity gains and losses.

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Tax Compliance and Planning (TCP)Area I – Tax Compliance and Planning for Individuals and Personal Financial
Planning (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. Compliance for passive activity and at-risk loss limitations (excluding tax credit implications) (continued)
Calculate utilization of suspended losses on the disposition of a passive activity
for tax purposes.
Review an individual’s basis schedules and supporting documentation for apass-through entity, including any source data used to create the schedules,
to conﬁrm the correct allocation of a loss between the amounts suspended
for at-risk limitations, suspended for passive activity rules, and allowed fortax purposes.
C. Gift taxation compliance and planning
Recall allowable gift tax deductions and exclusions for federal gift tax purposes.
Explain the uniﬁed transfer tax system and how the annual exclusion, marital
deduction and the uniﬁed credit impact the planning for gifts and gift taxation.
Calculate the amount of taxable gifts for federal gift tax purposes.
Calculate the potential tax savings when donating noncash property to acharitable organization given a speciﬁc planning scenario, including identiﬁcationof the property to be donated to minimize the individual’s current-year tax liability.
Identify the potential tax savings from gifting ownership of noncash property to
an individual given a speciﬁc planning scenario, including identiﬁcation of theproperty to be gifted to minimize the donor’s future estate.

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Tax Compliance and Planning (TCP)Area I – Tax Compliance and Planning for Individuals and Personal Financial
Planning (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Personal ﬁnancial planning for individuals
Demonstrate an understanding of the advantages and disadvantages of different
qualiﬁed retirement plans, including traditional IRAs, Roth IRAs, 401(k)s, annuities,
and employer-sponsored plans.
Demonstrate an understanding of the risks associated with different investment
options, including equity securities, corporate bonds and municipal bonds.
Demonstrate an understanding of planning for funding post-secondary education,
including qualiﬁed tuition programs, student loans, grants and scholarships.
Explain how insurance is used in planning to mitigate risk, including life insurance,long-term care insurance and umbrella policies.
Prepare a schedule to be used in the decision-making process to select aretirement plan from different options given a speciﬁc planning scenario,
identifying the related advantages and disadvantages.
Calculate the return on investment (ROI) for different investment options,net of the tax impact, given a speciﬁc planning scenario.

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Tax Compliance and Planning (TCP)Area II – Entity Tax Compliance (30–40%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. C corporations
1. Net operating and capital
loss utilization

Recall the limitations on the use of net operating losses when there is anownership change.
Calculate the amount of a C corporation’s net operating loss for a given year
and the related carryforward or carryback.
Calculate the amount of a C corporation’s capital loss utilized in the current year
and the related carryforward or carryback.

2. Transactions between ashareholder and a C corporation(contributions to and distributions
from a corporation and loans)Calculate a shareholder’s tax realized and recognized gain (loss) on thecontribution of noncash property to a C corporation, and the C corporation’sbasis in the property contributed.
Calculate the tax realized and recognized gain (loss) for both a C corporationand shareholders on a nonliquidating distribution of noncash property, and theshareholders’ basis in the property received.
Calculate the tax realized and recognized gain (loss) for both a C corporationand shareholders on a liquidating distribution, and the shareholders’ basis in theproperty received.
Calculate the amount and treatment of the cash distributions to shareholders inexcess of a C corporation’s current and accumulated earnings and proﬁts (E & P).
Review loan documents and supporting documentation to determine the tax
implications of a loan between a shareholder and C corporation, including
imputed interest.

3. Consolidated tax returns

Recall the requirements for ﬁling a consolidated federal Form 1120 – U.S.
Corporation Income Tax Return.
Calculate taxable income for a consolidated federal Form 1120 – U.S. Corporation
Income Tax Return, including elimination of intercompany transactions.

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Tax Compliance and Planning (TCP)Area II – Entity Tax Compliance (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. C corporations (continued)
4. International tax issues

Explain the sourcing of income for a U.S. corporation with foreign operations.
Explain the sourcing of income for a foreign corporation with U.S. operations,
including consideration of federal tax withholding requirements.
Explain the concept of a controlled foreign corporation (CFC) and the impact
on a U.S. corporation’s taxable income.
Explain the concept of permanent establishment for a corporation and theactivities that would create it.
Explain the difference between a foreign branch and foreign subsidiary withrespect to federal income taxation to a U.S. corporation.
Explain the requirements related to Interest Charge Domestic International
Sales Corporation (IC-DISC), foreign derived intangible income (FDII), base erosion
and anti-abuse (BEAT) and global intangible low-taxed income (GILTI).
Calculate U.S. and foreign source income given a speciﬁc scenario.

B. S corporations
1. Basis of shareholder’s interest

Calculate the impact on a shareholder’s stock basis in an S corporation fortax purposes resulting from contributions of noncash property, including an
S corporation’s assumption of debt on the contributed property.
Calculate the impact on a shareholder’s stock basis in an S corporation fortax purposes resulting from nonliquidating distributions of noncash property.
Calculate the impact on a shareholder’s debt basis in an S corporation for tax
purposes resulting from loans made by a shareholder to an S corporation.
Review a shareholder’s stock and debt basis schedules in an S corporation for tax
purposes and supporting documentation, including any source data used to create
the schedule, to determine the accuracy of transactions reﬂected.

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Tax Compliance and Planning (TCP)Area II – Entity Tax Compliance (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

B. S corporations (continued)
2. Transactions between ashareholder and an S corporation(contributions to and distributions
from a corporation)

Calculate a shareholder’s tax realized and recognized gain (loss) on thecontribution of noncash property to an S corporation, and the S corporation’s basis
in the property contributed.
Calculate the tax realized and recognized gain (loss) for both an S corporationand shareholders on a nonliquidating distribution of noncash property, and theshareholders’ basis in the property received.
Calculate the tax realized and recognized gain (loss) for both an S corporation andshareholders on a liquidating distribution, and the shareholders’ basis in
the property received.
Calculate the allocation of S corporation income (loss) after the sale of ashareholder’s ownership interest in the S corporation for tax purposes.

C. Partnerships
1. Basis of partner’s interest

Calculate the impact on a partner’s basis in a partnership for tax purposes
resulting from contributions of noncash property, including a partnership’s
assumption of debt on the contributed property.
Calculate the impact on a partner’s basis in a partnership for tax purposes
resulting from nonliquidating distributions of noncash property.
Calculate the impact on a partner’s basis in a partnership for tax purposes
resulting from recourse and nonrecourse partnership debt incurred during
the current year, including loans made by a partner to a partnership.
Review a partner’s basis schedule in a partnership for tax purposes andsupporting documentation, including any source data used to create the schedule,
to determine the accuracy of transactions reﬂected.

2. Partnership and partner elections

Recall partner elections applicable to a partnership for tax purposes.

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Tax Compliance and Planning (TCP)Area II – Entity Tax Compliance (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Partnerships (continued)
3. Transactions between a partner
and a partnership (services
performed by a partner andcontributions to and distributions
from a partnership)

Calculate the tax implications of certain transactions between a partnerand partnership (e.g., services performed by a partner) for tax purposes.
Calculate a partner’s tax realized and recognized gain (loss) on the contribution of
noncash property to a partnership, and the partnership’s basis in theproperty contributed.
Calculate the tax realized and recognized gain (loss) for both a partnership andpartners on a nonliquidating distribution of noncash property, and the partner’sbasis in the property received.
Calculate the tax realized and recognized gain (loss) for both a partnershipand partners on a liquidating distribution, and the partner’s basis in theproperty received.

4. Ownership changes

Calculate the allocation of partnership income (loss) after the sale of apartner’s share in a partnership for tax purposes.
Calculate the revised basis of partnership assets due to a transfer of a partnershipinterest for tax purposes.

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Tax Compliance and Planning (TCP)Area II – Entity Tax Compliance (30–40%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

D. Trusts
1. Types of trusts

Recall and explain the characteristics of various types of trusts, including
simple trusts, complex trusts and grantor trusts.
Recall and explain a trust as a pass-through entity and the roles of grantor,
trustee, and beneﬁciaries and the concept of corpus.

2. Income and deductions

Identify the allocation of items between income and corpus in a given scenario.
Calculate a trust’s accounting income, distributable net income and taxable
income, including the income distribution deduction.

E. Tax-exempt organizations
1. Obtaining and maintaining
tax-exempt status

Recall the requirements to qualify as an IRC Section 501(c)(3)tax-exempt organization.
Recall the events that would cause an entity to lose its tax-exempt status.

2. Unrelated business income

Recall the different types of unrelated business income for tax-exempt
organizations for tax purposes.

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Tax Compliance and Planning (TCP)Area III – Entity Tax Planning (10–20%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Formation and liquidation of business entities
Prepare a schedule that is used as an input to an entity selection decision that
calculates the tax implications of noncash property transactions for multiple
entity types.
Identify the type of business entity that is best described by a given set of
legal characteristics.
Derive the tax implications of entity selection and formation decisions acrossmultiple entity types and compare the results.
Derive the tax implications of entity liquidation decisions across multiple entity
types and compare the results.
B. Tax planning for C corporations
Calculate the potential tax savings from utilization of net operating and capital
loss carryovers.
Identify opportunities to optimize state and local income tax rules in tax planningfor business expansion given a speciﬁc scenario, including apportionment ofincome and location of business.
Calculate the effect of changing tax rates and legislation on the timing ofincome and expense items for tax planning purposes given a speciﬁc scenario.
Calculate estimated tax payments for a C corporation in order to avoid
underpayment penalties given a speciﬁc planning scenario.
Derive the tax implications to a shareholder and C corporation for a proposedtransaction after formation of the corporation, including noncash property
contributions and noncash property distributions.

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Tax Compliance and Planning (TCP)Area III – Entity Tax Planning (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Tax planning for S corporations
Calculate the projected amount subject to built-in gains for a proposed dispositionof an asset in order to minimize the built-in gains tax due.
Identify the implications of terminating an S corporation election given a speciﬁcplanning scenario.
Derive the tax implications to a shareholder and S corporation for a proposedtransaction after formation of the corporation, including noncash property
contributions and loans from a shareholder and noncash property distributions
to a shareholder.
Derive the tax implications of a contemplated election to treat distributions toshareholders as being made from an S corporation’s accumulated earning andproﬁts (AEP) and not from the accumulated adjustments account (AAA).
D. Tax planning for partnerships
Calculate the tax implications to a partner for the contribution to a partnershipof noncash property that has appreciated or depreciated in value.
Calculate the tax implications of various types of payments to a partner, including
guaranteed payments and a nonliquidating distribution.
Derive the tax implications to a partner and partnership for a proposed transaction,
including a contribution of noncash property, a nonliquidating distribution of
noncash property or the sale of a partnership interest.

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Tax Compliance and Planning (TCP)Area IV – Property Transactions (disposition of assets) (10–20%)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

A. Nontaxable disposition of assets
Calculate the realized gain, recognized gain and deferred gain on like-kind property
exchange transactions for tax purposes and the basis of the asset received as aresult of the exchange transaction.
Review asset sale and exchange transactions, and relevant supporting
documentation, to determine whether they are taxable or nontaxable.
B. Amount and character of gains and losses on asset disposition, and netting process, including installment sales
Identify the character of the gain and loss recognized by a taxpayer on thedisposal of an asset given a speciﬁc scenario.
Calculate the Section 1231 capital gain and Section 1231 ordinary loss recognized
for tax purposes on the disposition of an asset used in a trade or business.
Calculate the Section 1245 and Section 1250 depreciation recapture recognized
for tax purposes on the disposition of an asset used in a trade or business.
Calculate the unrecaptured Section 1250 gain recognized for tax purposes on
disposition of an asset used in a trade or business.
Calculate the loss allowed on the disposition of Section 1244 small business stock
for tax purposes.
Review a schedule of asset dispositions for the current year and supporting
documentation, including any source data used, to determine the completenessand accuracy of the amount and the character of the gain or loss recognized fortax purposes.
Review and resolve discrepancies identiﬁed by automated diagnostic andvalidation checks to ensure the completeness and accuracy of the amountand character of a gain or loss reported on a tax return based on the source
data used to prepare the return.

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Tax Compliance and Planning (TCP)Area IV – Property Transactions (disposition of assets) (10–20%) (continued)
Skill
Content group/topic

Remembering& Understanding

Application

Analysis

Evaluation

Representative Task

C. Related party transactions, including imputed interest
Recall related parties for tax purposes.
Calculate the direct and indirect ownership percentages of corporation
stock or partnership interests to determine whether there are related parties
for tax purposes.
Calculate a taxpayer’s gain or loss on a subsequent disposition of an asset toan unrelated third party that was previously purchased from a related party.
Calculate the amount and treatment of imputed interest on related party
transactions for tax purposes.

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Examinations Team
American Institute of CPAs
100 Princeton South, Suite 200
Ewing, NJ 08628
888.777.7077 | aicpa.org© 2022 American Institute of Certified Public Accountants. All rights reserved. AICPA and American Institute of CPAs are trademarks of the American Institute of Certified
Public Accountants and are registered in the United States, the European Union and other countries. The Globe Design is a trademark owned by the Association ofInternational Certified Professional Accountants and licensed to the AICPA. The Uniform CPA Examination is a registered trademark of the American Institute of Certified
Public Accountants and is registered in the United States. 2112-61075

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Appendix B
Practice Analysis Process
Goal of Licensure
The goal of licensure is protection of the public
interest, or more specifically, providing the publicwith assurance that those individuals who arelicensed possess a minimum level of knowledge
and skills necessary for safe and effective practice.
The qualifications for licensure generally include
educational requirements, and the passing of an
exam assessing the knowledge and/or skills requiredfor competent performance.6 Some form of PA
is typically used as the basis for identifying andsupporting the knowledge and skills necessary forcompetent performance.7

Practice Analysis Process

various subject matter experts (SME)9 and that the
information collected be representative of the diversity
within the occupation.10 Diversity refers to regional orjob context factors and to SME factors such as raceor ethnicity, experience, and gender. The practiceanalysis conducted to define the performance domain
for nlCPA was designed to be consistent with theStandards for Educational and Psychological Testing(AERA, APA, & NCME, 2014); General Requirements
for Bodies Operating Certification of Persons(Organization for Standardization, 2003); Standards
for the Accreditation of Certification Programs(NCCA, 2014) and current professional practice.

Project Organization
Proposal of New Model for CPA Licensure andInitial NASBA and AICPA Research 2018 – 2021

Practice or job analysis refers to a variety ofsystematic procedures designed to obtain descriptive
information about the tasks performed on a job
and/or the knowledge, skills, and abilities thought
necessary to perform those tasks.8 A practiceanalysis is the primary mechanism for establishing
the job-relatedness of decisions concerning licensure.
That is, if licensure decisions can be linked directly tothe outcomes of a practice analysis, they may be said
to be job-related. Similarly, if the content of a licensure
exam/test can be linked directly to the outcomesof a practice analysis, the test may be said to be
job-related, and inferences from test scores may besupported by arguments of content validity as related
to the practice analysis.

The CPA Evolution initiative aims to transform the
CPA licensure model to recognize the rapidlychanging skills and competencies the practice ofaccounting requires today and will require in the
future. It is a joint effort of NASBA and AICPA.

The rationale that supports the content of a licensure
exam is the demonstrable linkage that exists between
the exam content and the performance domain of theassociated occupation or profession. Professional
standards and legal precedents recommend thata practice analysis include the participation of• The new CPA licensure model should position
CPAs for the future.

Beginning in 2018, and over three years, NASBA
and the AICPA talked to more than 4,000 stakeholders
from across the profession to gather input on
how to transform CPA licensure. The feedback
received included:• The profession agrees with the need to change
the CPA licensure model.
• N ewly licensed CPAs should all demonstratestrong common Core competencies.

• The new CPA licensure model should continue
to protect the public interest.

American Educational Research Association [AERA], American Psychological Association [APA], and the National Council for Measurement in Education [NCME], 2014
AERA, APA, & NCME, 2014 National Commission for Certifying Agencies [NCCA], 2002; Raymond & Neustel, 2006.
8(Arvey & Faley, 1988; Gael, 1983; Raymond & Neustel, 2006).
9(Mehrens, 1987; NCCA, 2002; Raymond & Neustel, 2006).
10(Kuehn, Stallings, & Holland, 1990).
6
7

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In Fall 2019, NASBA and the AICPA carefully reviewed
all of the feedback received, studied other professions’licensure models, and considered multiple options for
updates to the CPA licensure model before developing
the Core and Discipline licensure model.

Overview of the Practice
Analysis Methodology

This approach is responsive to stakeholder input,
while still propelling the profession into the future.
The model starts with a strong Core in accounting,auditing, and tax, with a recognition of the impact
technology has on each. All candidates will be
required to complete the Core sections. Then,each candidate will choose a Discipline in which todemonstrate knowledge and skills in that particulardomain. Regardless of chosen Discipline, this modelleads to full CPA licensure, with rights and privilegesconsistent with any other CPA. The Discipline selected
for testing does not mean the CPA is limited to thatpractice area. Benefits of the Core and Discipline
model include:

Initial Draft of CPA Evolution-Aligned CPA
Exam Blueprints• E nhances public protection by producing
candidates who have the knowledge necessary
to perform high-quality work, meeting the needsof organizations, firms, and the public.
• Is responsive to feedback, as it builds accounting,auditing, tax, and technology knowledge
requirements into a robust common Core.
• R
 eflects the realities of practice, requiringknowledge in one of three Disciplines that arepillars of the profession.
• Is adaptive and flexible.
• Results in one CPA license.
After the AICPA governing Council and the
NASBA Board of Directors both voted to support
advancing the CPA Evolution initiative, the AICPA
began a new practice analysis to develop a
CPA Evolution-aligned CPA Exam.

Phase 1 — Exploration

The first step of aligning the CPA Exam to the Coreand Discipline model for CPA Evolution was to
examine the content assessed by the CPA Examand allocate content to the Core and Discipline
Exam sections. Guiding principles were established
for the allocation of current content to the Core andDiscipline model for CPA Evolution. First, the content
allocated to the Core Exam sections should represent
the knowledge and skills that all nlCPAs need toprotect the public interest. Second, the Discipline
Exam sections should assess knowledge and skillsin the candidate’s area of focus necessary to protect
the public interest.
The AICPA worked with the joint AICPA and NASBACPA Evolution Task Force, which led the initial vision,scoping, and research for the CPA Evolution initiative
starting in 2018, to create an initial draft of the CPA
Evolution-aligned content at a topic level. Content wasallocated to the Core and Discipline sections using
the guiding principles described above. The resulting
initial draft of the content was then reviewed andtested using surveys and focus groups.
The AICPA contracted with American Institutes for
Research (AIR) to develop the protocols for the Core
Exams Survey and Discipline Exams Focus Groups.
AIR collected, analyzed, and reported the resultsof the Core Exams Survey; and led the questions,discussions, and reporting for three virtual Discipline
Exams Focus Groups.

Core Exams Survey
A group of 34 CPAs from across the profession who
were familiar with the CPA Evolution project wereasked to provide agreement ratings on the proposedgroups and topics for all proposed Core Examsections covering accounting, auditing and attestation,and taxation and regulation. The participants had
the opportunity to participate in a virtual introductory
training session. Prior to the virtual training session,
participants were sent documents explaining thesurvey and research process.

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During the training, AICPA reviewed the CPA Evolution
model, the guiding principles, mapping examples,and draft Discipline Exam section content. After an
overview of the effort, AICPA walked participants
through the Core Exams Survey to ensure their
comfort level with completing the survey. Participants
had approximately four weeks to complete the Core
Exams Survey and provided ratings on 161 groups
and topics.
The Core Exams Survey asked the participants towhat extent they agree that certain groups or topics
should be part of the Core Exam sections. To provide
their agreement ratings, participants were asked
to select a response from a Likert-scale ranging
from 1 (Strongly Disagree) to 4 (Strongly Agree). If
participants did not agree that certain groups or
topics should be included in the Core Exam sections,then they were asked if the content should be
included in a Discipline Exam section or removed
from the 2024 CPA Exam.
The results of the Core Exam Survey showed strong
support for the groups and topics proposed to be
included in the Core Exam sections. Of the 161
groups and topics, only 11 groups and topics received
less than an average agreement rating (less than
3.0). Overall, participants who disagreed with theaforementioned content did not think the content
should be removed from the 2024 CPA Exam,rather it should be considered for the Discipline
Exam sections.
Additionally, the participants were asked to provide
agreement ratings on eight content topics that were
proposed for removal from the 2024 CPA Exam.
Participants agreed (provided an average agreement
rating greater than 3.0) that five of the content topics
could be considered for removal including:• B EC – Operations Management –Approaches, techniques, measures, benefits
to process-management driven businesses• B EC – Operations Management –Management philosophies and techniques
for performance improvement• F AR – State and Local Governments –State and local government concepts –Conceptual framework• F AR – State and Local Governments – Typicalitems and specific types of transactions andevents: measurement, valuation, calculationand presentation in governmental entity financial
statements – Special items• F
 AR – State and Local Governments – Typicalitems and specific types of transactions andevents: measurement, valuation, calculation andpresentation in governmental entity financial
statements – Other financing sources and uses
Participants did not agree (provided an average
agreement rating below 3.0) that three of the content
topics should be removed including:• F AR – Conceptual Framework, StandardSetting and Financial Reporting – Conceptual
framework and standard-setting for business andnonbusiness entities – Conceptual framework• F AR – Conceptual Framework, StandardSetting and Financial Reporting – Conceptual
framework and standard-setting for business andnonbusiness entities – Standard-setting process• R EG – Federal Taxation of Entities(including tax preparation and planning
strategies): S corporations: Built-in gains tax
Using the results of the survey, the Content
Committee and Content Subcommittees proposed toremove the five content topics discussed above fromthe 2024 CPA Exam, but also decided it was proper
to remove conceptual framework and standardsetting process from FAR. The Content Committee
and Content Subcommittees agreed that the content
topics were not knowledge and skills required for
nlCPA practice. Additionally, the Content Committee
and Content Subcommittees, moved the assessmentof built-in gains tax to the TCP Discipline Examsection.

Discipline Exam Focus Groups
Using the same CPAs from the Core Exams Survey,
who were already familiar with CPA Evolution and
the PA research, AICPA and AIR conducted three
three-hour virtual panels, one for each Discipline
Exam section. Based on the participants’ backgroundand area of practice, they were asked to participate in
one focus group (either BAR, ISC, or TCP).

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For each focus group, the participants were reviewing,
reacting, and brainstorming using the high-leveldescription for that particular Discipline Examsection. During each focus group, the participants
brainstormed and generated content for each area
under the specific Discipline Exam section. Whengenerating new content for one area, the AIR
facilitator gave the participants time to review thehigh-level proposed content for that area and thenbrainstorm additional ideas for topics. The virtual
focus groups used Google Jamboard™ to conduct
the virtual brainstorming using virtual sticky notesthat could be created and edited by the participants.
Numerous content topics were generated from eachfocus group including:• F or the BAR Discipline Exam section, important
context and background were given for the
potential assessments of financial statement
analysis, technical accounting and reporting;financial and operations management; andaccounting for state and local governments.
• F or the ISC Discipline Exam section, important
context and background were given for the
potential assessments of IT governance andrisk assessment; performing procedures; tests
of internal control; SOC engagements; use andmanagement of data; and information security
and protection of information assets.
• F or the TCP Discipline Exam section, important
context and background were given for individual
tax and financial planning; entity tax compliance;
entity tax planning; and property transactions.
The results of the focus group’s brainstorming
were largely confirmatory in nature to the potential
content that could be assessed in the Discipline
Exam sections, and provided important context andbackground for the knowledge and skills required ofnlCPAs in those areas of practice.

Exploration Phase Follow-up Interviews
Based on the results of the Discipline Exam Focus
Groups, it was clear that more information wasneeded on nlCPA’s role particularly related to SOC
engagements and personal financial planning andtax planning. To gather more information about
the knowledge and skills needed by nlCPAs, theAICPA planned and conducted a series of directinterviews with over 20 CPAs from across theprofession working directly on SOC engagements
and tax planning and personal financial planning who
supervised nlCPAs.
AIR advised on the process, protocol, and interview
questions. The following questions were asked withregard to nlCPAs working on SOC engagements andtax planning and personal financial planning.

SOC Engagements Interviews
The SOC interview protocol included thefollowing questions regarding an nlCPA’s rolein SOC engagements:• To what extent are nlCPAs involved in
SOC engagements at your firm?
º SOC 1® (Type 1 or Type 2 engagements)?
º SOC 2® (Type 1 or Type 2 engagements)?
º S
 OC 3® Trust Services Criteria for General
Use Report (SOC 3®) (Type 1 or Type 2
engagements)?
º SOC® – Supply Chain?
º SOC® – Cybersecurity?
• D oes your firm need to provide additional training
in order for nlCPAs to be able to perform therequired tasks? If training is required, what is thenature of the required training and delivery mode?
º D
 o the nlCPAs involved in SOC engagements
have a specialized degree or background in
addition to auditing / accounting? If so, which
degree or credential?
º W hat is the approximate breakout of nlCPAs
that work on SOC engagements versus staff
with other credentials?

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 hat responsibilities or tasks, if any, does the
nlCPA have in planning the SOC 1®/SOC 2®
engagements?
º W hat does the nlCPA primarily focus on in theplanning of SOC 1®/SOC 2® engagements?
º W hat knowledge or skills are nlCPA required tohave regarding Trust Services Criteria?
º O btaining an understanding of the service
organization’s system and risk assessment;
and what is the extent of the nlCPA’s role?
• W hat responsibilities or tasks does the nlCPA
have in performing the SOC engagement?
º W hat responsibilities or tasks do the nlCPAs
have in obtaining evidence regarding the designof controls?
º W hat responsibilities or tasks do nlCPAs havein obtaining evidence regarding the operating
effectiveness of controls?
º W hat responsibilities or tasks do nlCPAs havein evaluating the reliability of information
produced by the service organization?
• W hat responsibilities or tasks, if any, does the
nlCPA have in the preparation of the Service
Auditor’s Report?
º W hat responsibilities or tasks, if any, does
the nlCPA have in describing tests of controls
and results?
• W hat tools, techniques, or technology do
nlCPAs use (or are emerging) to gather data or
information in any of the aforementioned areasof a SOC engagement?
The themes emerging from the virtual interviews
regarding an nlCPA’s role in SOC engagements
highlighted that nlCPAs are increasingly involved
on SOC engagements and need to understand thebasics of planning, performing, and reporting on
SOC engagements (SOC 1® and SOC 2®) and theTrust Services Criteria. This includes understanding
the basics of security, confidentiality, and privacy;
incident response; IT infrastructure; change
management; and data management.

The research showed that nlCPAs are rarely involved
in SOC 3®, SOC® for Supply Chain, and SOC® for
Cybersecurity engagements. The AICPA analyzed
the focus group themes and identified the findingsthat are summarized in the New Content Identified
by Practice Analysis section. These findings
are fundamental to the proposed content andreorganization throughout the AUD Core Examsection and the ISC Discipline Exam section of the2024 CPA Exam.

Personal Financial Planning (PFP) and Tax
Planning Interviews
The PFP and tax planning interview protocol included
the following questions regarding an nlCPA’s role in
PFP and tax planning:• To what extent are nlCPAs involved in personal
financial planning at your firm?
º D
 o nlCPAs provide both PFP and tax
preparation services to clients; are theyrequired to specialize?
º D
 o you require members of PFP practiceto have their CPA license?
 Is the amount of members of the PFP
practice with their CPA license comparable
to the amount of CPAs in your tax practice?
• D oes your firm need to provide additional training
in order for nlCPAs to be able to perform therequired tasks? If training is required, what is thenature of the required training and delivery mode?
º D
 o nlCPAs involved in personal financial
planning have a specialized degree orbackground in addition to taxation/accounting?
If so, which degree or credential?
• To what extent are nlCPAs required to understandthe regulatory landscape, including financial
services regulations and fiduciary practices?
º Are other licenses and/or certifications
required? If so, at what point in these
individuals’ careers?
º Are nlCPAs required to know the
PFP standards?

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• W
 hat responsibilities or tasks, if any, does the
nlCPA have in fundamental financial planningfor clients?
• W hat responsibilities or tasks, if any, does
the nlCPA have in estate, gift, and wealthtransfer planning?
• W hat responsibilities or tasks, if any, does
the nlCPA have in charitable planning?
• W hat responsibilities or tasks, if any, does
the nlCPA have in risk management andinsurance planning?
• W hat responsibilities or tasks, if any,
does the nlCPA have in employee andbusiness-owner planning?
• W hat responsibilities or tasks, if any, does
the nlCPA have in investment planning?
º What types of investments are discussed?
• W hat responsibilities or tasks, if any, does the
nlCPA have in retirement planning?
• W hat responsibilities or tasks, if any, does the
nlCPA have in elder, special needs, and chronic
illness planning?
• W hat responsibilities or tasks, if any, does the
nlCPA have in education planning?
• W hat tools, techniques, or technology do
nlCPAs use (or are emerging) to gather data or
information for personal financial planning work?
• A re there other areas of financial planning or tax
planning not discussed that involve nlCPA? If so,which areas?
The themes emerging from the virtual interviews
regarding an nlCPA’s role in personal financial
planning and tax planning highlighted that nlCPAs are
involved in advising clients on the basics of personal
financial planning (including retirement and education
planning; implications of how insurance mitigates risk;
and risks of different types of investments).

Focus Groups on Data and Technology
Concepts in Taxation
Based on the results of the Discipline Exam Focus
Groups, it was clear that more information wasneeded regarding the use of data and technology
by nlCPAs in taxation.

A group of diverse tax practitioners from different
locations and firm sizes were brought together forfocus group sessions to consider how technology,
including automation of aspects of tax returnpreparation and outsourcing, continues to impact
the work of nlCPAs.
Through four focus group sessions, there wasdiscussion on how the tax preparation process has
evolved. This included the use of software and othertechnology used to communicate with clients andgather, analyze, and prepare data and documentation.
The group discussed detailed examples of the mostimportant tasks where the nlCPA are involved.
The focus groups identified that nlCPAs review tax
returns and client information earlier in their careers,sometimes without the experience of having prepared
the returns from original documentation. At multiple
points in their work, nlCPAs need to possess ananalytical mindset to understand what information
they have, what information they do not have, and why
it may or may not make sense given the context.
The results of the focus groups provided valuable
information and context that were used to draft
the task statements in the REG Core Exam and the
TCP Discipline Exam sections. This will change how
certain tasks will be assessed, including the need tounderstand the sources and flow of data and potential
issues with the data and consider automateddiagnostic and validation checks.

Analysis of the Core Exams Surveys,
Focus Groups and Interviews
The results of the Core Exams Survey showedstrong initial support for the content allocated to theCore Exam sections. The Discipline Exams Focus
Groups generated numerous ideas to consider andprovided confirmatory data that major areas of nlCPA
practice were included in the proposed Discipline
Exam sections. The Discipline Exams Focus Groups
highlighted that more research was needed in a
few key areas: an nlCPA’s role in SOC engagements
and an nlCPA’s role in personal financial planningand tax planning.

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The follow-up interviews focused on an nlCPA’s rolein SOC engagements and personal financial planningand tax planning. The research showed that nlCPAs
need increased knowledge and skills related to SOC
engagements, IT, and related controls. This included
the basics of planning, performing, and reporting on
SOC engagements and additional focus on security,
confidentiality, and privacy; incident response;
IT infrastructure; change management; and data
management. The research also showed that nlCPAs
need increased knowledge and skills related topersonal financial planning and tax planningincluding the basics of personal financial planningand the basics of tax planning for C Corporations,
S Corporations, and partnerships, including the useof data and technology.
The BOE’s Content Committee and its Subcommittees
reviewed the results of the survey, focus groups,
and interviews and incorporated the results into thenext draft of the Core and Discipline Exam section
Blueprints, which focused on adding task statements
to the areas, groups, and topics. The resultant
Blueprints were used as the basis for the next stepof research – the Socialization Survey.

Socialization Survey
The Socialization Survey was the profession’s firstchance to review and provide feedback on thepotential content for the 2024 CPA Exam. The survey
outlined the Core and Discipline Exam sections, which
included the areas and groups/topics for each of the
proposed sections. The online survey was posted on
the AICPA’s website for two months and included a
Background Document, which provided information
on CPA Evolution, CPA Evolution research conductedto date, and an outline of the proposed 2024 CPA
Exam content to review prior to taking the survey.
AIR advised on the process, Background Document,
and survey. The survey asked participants to indicate
their level of agreement with the proposed content
for each area of a Core and Discipline Exam section.
The rating provided should have considered all of the
proposed content for that area as it related to thepractice of nlCPAs. If a participant did not agree withthe content proposed for a certain area, they wereasked to explain which specific groups/topics in thearea they disagreed with and their reasoning.
A participant was able to provide ratings and feedback
on all Core and Discipline Exam sections or provide
ratings and feedback on select Core and Discipline
Exam sections. Additionally, each area of the Coreand Discipline Exam sections could be skipped if
the participant did not feel comfortable rating aparticular area.
At the conclusion of the Socialization Survey, aparticipant was asked two additional questions:(i) was there any additional content that you
believed was not yet identified and should beconsidered for inclusion in a Core or Discipline Examsection; and (ii) did you have any other comments
related to the content allocations in the Core or
Discipline Exam sections.
Over 400 participants from across the profession
participated in the Socialization Survey. The
results indicated strong support for the area andgroups/topics for each Core and Discipline Examsection with an average rating of over three and ahalf on a four-point scale. To provide their agreement
ratings, participants were asked to select a response
from a Likert-scale ranging from 1 (Strongly
Disagree) to 4 (Strongly Agree). No area of any Coreor Discipline Exam section received less than an
average agreement rating (3.0). Participants thatprovided ratings were from across the profession
with most participants from public accounting (37%);
academia (17%); working in business and industry(14%); working for not-for-profits or governmentorganizations (8%); and other (24%).
The qualitative results provided at the end of thesurvey indicated that there were questions orconcerns related to the visibility of technology,
analytics, and data in the Core and Discipline Examsections; the placement of cost accounting in the
BAR Discipline Exam section; the split of testing
lessee accounting in the FAR Core Exam section andlessor accounting in the BAR Discipline Exam section;and the prominence of Environment, Social, andGovernance (ESG) topics in the Core and Discipline
Exam sections.

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The BOE’s Content Committee and its Subcommittees
reviewed the results of the Socialization Survey andincorporated the results into the next draft of theCore and Discipline Exam section Blueprints, which
focused on refining task statements to the areas,groups, and topics. The resultant Blueprints wereused as the basis for the next step of research —the Confirmation Phase.

The AICPA recruited survey participants and vetted
them based on their background and experience. In
addition, AICPA gathered information about theirprimary area of employment to try to ensure thatparticipants were assigned to the appropriate Coreand Discipline pairing and balanced across thesecategories. Across all three Core and Discipline
pairings, the AICPA recruited over 400 participants.

Phase 2 – Confirmation

The AICPA conducted four Confirmation Phase
Training Sessions11 for all selected participants.
Additionally, selected participants were emailed
background information on CPA Evolution and thesurvey process, which they were requested to readprior to the training session. These sessions wereapproximately 30 minutes in length and provided theparticipants with an overview of the CPA Evolution
initiative, the new licensure model, and the 2024
CPA Exam PA research, along with an overview ofwhat would be expected of them for the upcoming
survey. The last portion of the session was devoted
to answering participants’ questions. A representativefrom AIR attended each session and answered anyquestions related to the confirmation survey.

The AICPA contracted with AIR to develop a survey
methodology to collect quantitative and qualitative
feedback on the CPA Exam Blueprints from licensed
CPAs from all areas of the profession. These
CPAs participated in a survey where they would
provide ratings and comments on groupings oftask statements reviewed by the BOE’s Content
Committee and its Subcommittees using the
research from Phase 1 of the PA.
Based on the length of the content, which included all
the areas, groups/topics, and task statements in eachCore and Discipline Exam section, AIR recommended
breaking the content into three surveys, each
including a Core and Discipline pairing. This would
result in surveys of a reasonable length. The Core
Discipline pairings were the following:• C ore Financial Accounting and Reporting/Discipline Business Analysis and Reporting• C ore Taxation and Regulation/Discipline
Tax Compliance and Planning• C ore Auditing and Attestation/Discipline
Information Systems and Controls
AIR recommended that data be collected fromapproximately 100 participants for each pairing
who met particular criteria that were designed toensure participants were very familiar with the workof nlCPAs and their role in protecting the public
interest. The criteria for survey participants included
the following: (i) active CPA licensure status and (ii)experience directly supervising nlCPAs in the last two
years. The intent was to have participants with varied
backgrounds including diversity in area of practice,
ethnicity, gender, location, and age.

11

Each survey included a Core and Discipline pairing
and was administered using Verint EFM (previously
known as Vovici 7). Participants were presented
with the Core Exam section first, followed by the
Discipline Exam section. The survey also included
a demographic questionnaire asking participants to
identify their experience, job title, licensure status,
education, race/ethnicity, gender, and age. Note thatthe participants could choose not to disclose theirrace/ethnicity, gender, age, and education.
Participants were asked to indicate (i) their level ofagreement that each grouping of task statements
includes the knowledge and skills required of an
nlCPA, and (ii) provide a rating representing how
confident they were in their ratings given to allgroupings within an Area. When assigning ratings
to the groupings, participants were instructedto consider the presented content with respect
to nlCPAs to make a holistic rating across theinformation presented for each grouping.

These sessions were recorded and made available to those who could not attend, and to the additional participants who were recruited later.

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To provide their agreement ratings, participants wereasked to select a response from a Likert-scale ranging
from 1 (Strongly Disagree) to 4 (Strongly Agree).
At the end of each Area, they were asked to rate
their confidence in their ratings on the same 4-point
rating scale.
Numeric ratings do not capture why participants rated
a grouping below threshold. Therefore, a commentbox for Strongly Disagree or Disagree ratings was
included. Participants who disagreed with thegrouping content were given the option of providing
feedback to explain their rationale for low ratings.
Moreover, at the end of the entire survey, participants
were asked to provide additional feedback on the
proposed content and suggest additional content
that they believed had not been identified and shouldhave been considered for inclusion in either the Coreor Discipline Exam Sections. The section below
discusses key points from the quantitative andqualitative results of the Confirmation Phase Survey.

Key Points• The results of this Confirmation Survey are basedon a total of 300 participants out of 414 (72.5%)
recruited CPAs. The range of final sample sizes
across the three Core and Discipline pairings was
79 to 118.
• A
 ll survey participants were active CPAs who
supervised nlCPAs in the last two years, mostly
working in public practice.
• W hile all participants across the three surveys
held at least a bachelor’s degree, a substantial
portion of them also had a master’s degree.
• A cross the three surveys, participants
represented all ages (above 25) and traditional
genders (male/female). In terms of race, mostof the participants (i.e., over 80%) reported being
in a White racial group.
• D istribution of primary area of employment
among participants.
º F AR/BAR had 74% of participants frompublic accounting; 15% from government or
not-for-profit; and 11% from business andindustry. Conversely, AUD/ISC and REG/TCP
had 97% and 98% of participants from public
accounting, respectively, with the balance inbusiness and industry.

º Across the three surveys, participants fromall size firms in public accounting were invited
to participate with 37% from small firms, 37%
from large firms, and 26% from Big 4 firms.
• A
 ll Area-level average confidence ratings wereabove 3.00, indicating participants’ high level ofconfidence in their ratings.
• N one of the Group averages within the FAR
and REG Core Exam sections and the TCP
Discipline Exam section fell below the thresholdof 3.00 (Agree).
• A UD, BAR, and ISC included a total of four Groups
with a Mean rating below the threshold of 3.0.
º AUD – Economic Conceptsº B AR – Prospective Analysis, including the useof dataº BAR – Derivatives and Hedge Accountingº ISC – Regulations, Standards and Frameworks
AIR analyzed comments from participants who
disagreed with the content on below-thresholdgroupings, as well as comments from all participants
provided at the end of the surveys. A summary of
the below-threshold comments revealed opinionsfrom those who disagreed with the content, suchas the following:• A UD – Economic Concepts, most content could
be removed.
• B
 AR – Prospective Analysis and Derivatives andHedge Accounting could be too advanced for
nlCPAs, and therefore, could be removed.
• B
 AR – Prospective Analysis and AUD – Economic
Concepts may be better placed elsewhere in
the Exam and, in some cases, replaced withsuggested alternatives accordingly.
• ISC – Regulations, Standards and Frameworks
could be too specific, too advanced for nlCPAs,
or both; therefore, they may need to be removed.
• B
 AR – Prospective Analysis, AUD – Economic
Concepts, and ISC – Regulations, Standards andFrameworks, there is a possible gap between theacademic training and applied practice that could
have implications for exam content.

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From the end of survey comments:• O verall, participants who provided additional
feedback at the end of the survey mostly
showed a neutral, or positive, attitude
towards the proposed content of the CPA
Evolution-aligned Exam.
• S
 pecifically, the REG/TCP pairing garnered thehighest positive feedback among all three Coreand Discipline pairings.
AIR’s synthesis of survey responses revealed that theoverall proposed content for the CPA Exam Blueprints
appropriately captures capabilities necessary for
initial licensure even though some content revisions
to the below-threshold Groups were suggested.

Overall, participants provided over 1,000 comments
during the survey process. AICPA reviewed allcomments, including comments made for groupingsof task statements receiving above agreement ratingsin order to identify any emerging themes.
The BOE’s Content Committee and its Subcommittees
reviewed, considered, and deliberated the quantitativeand qualitative results of the Confirmation Phase
survey and incorporated the results into the next
draft of the Core and Discipline Exam section
Blueprints. The Subcommittee deliberations resulted
in the reorganization of certain content, revision ofmultiple task statements, and adjustment to specificcontent and skill weightings. The resultant CPA Exam
Blueprints, which were reviewed and approved by theContent Committee and the BOE, are included forcomment in Appendix A of this ED.

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