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CPA Business Environment and Concepts Corporate Governance

CPA Business Environment and Concepts Corporate Governance

CPA Business Environment and Concepts Corporate Governance :Overview 

You implicitly understand scarcity, whether you are aware of it or not. It is the most basic concept in economics, and is more of a solid fact than any abstraction. Simply put, the world has limited means to meet unlimited wants, so there is always a choice to be made. For example, there is only so much wheat grown every year

Supply and Demand
The market system is driven by supply and demand . Take beer again. Let’s say people want more beer, meaning the demand for beer is high.

Costs and Benefit
The concept of costs and benefits encompass a large area of economics that has to do with rational expectations and rational choices. In any situation, people are likely to make the choice that has the most benefit to them, with the least cost, or, put another way, the choice that provides more in benefits than it costs.

Everything Is in the Incentives
Incentives are part of costs and benefits and rational expectations, but they are so important that they are worth further examination. Incentives make the world go round, and sometimes go wrong.
Putting It All Together
Scarcity is the overarching theme of all economics. It sounds negative, and it is one of the reasons economics is referred

CPA Business Environment and Concepts Corporate Governance

The main content areas covered in each section are:

Auditing and Attestation (AUD)

  1. Ethics, Professional Responsibilities and General Principles
  2. Assessing Risk and Developing a Planned Response
  3. Performing Further Procedures and Obtaining Evidence
  4. Forming Conclusions and Reporting

Business Environment and Concepts (BEC)

  1. Corporate Governance
  2. Economic Concepts and Analysis
  3. Financial management
  4. Information technology
  5. Operations Management

Financial Accounting and Reporting (FAR) 

  1. Conceptual Framework, Standard-Setting and Financial Reporting
  2. Select Financial Statement Accounts
  3. Select Transactions
  4. State and Local Governments

Regulation (REG)

  1. Ethics, Professional Responsibilities and Federal Tax Procedures
  2. Business Law
  3. Federal Taxation of Property Transactions
  4. Federal Taxation of Individuals
  5. Federal Taxation of Entities

CPA Business Environment and Concepts Corporate Governance

Accounting and auditing pronouncements are eligible to be tested on the Examination in the later of: (1) the first testing window beginning after the pronouncement’s earliest mandatory effective date or (2) the first testing window beginning six (6) months after the pronouncement’s issuance date. In either case, there is a simultaneous introduction of content related to the new pronouncement and removal of content related to the previous pronouncement.

Changes in the federal taxation area, the Internal Revenue Code, and federal taxation regulations may be included in the testing window beginning six (6) months after the change’s effective date or enactment date, whichever is later.

For all other subjects covered in the Regulation (REG) and Business Environment and Concepts (BEC) sections, materials eligible to be tested include federal laws in the window beginning six (6) months after their effective date, and uniform acts in the window beginning one (1) year after their adoption by a simple majority of the jurisdictions.
The examination time allocated for each section is as follows:

  • 4 hours – Auditing and Attestation (AUD)
  • 4 hours – Business Environment and Concepts (BEC)
  • 4 hours – Financial Accounting and Reporting (FAR)
  • 4 hours – Regulation (REG)

NOTE:  At Prometric test centers, the time allowed for each session is 30 minutes longer than examination time so that candidates may complete the sign-in process and survey without using up any of the time allocated for the Examination. (This does NOT mean that Examination time is extended for those who finish the sign-in process quickly.  Examination time never changes.)

CPA Business Environment and Concepts Corporate Governance
 Candidates are offered a standardized, 15-minute break approximately midway through each section of the Examination. When offered this break, candidates may accept or decline and continue testing. If the candidate chooses to accept the break, he/she must click the “Take a Break” button. A confirmation screen will then note the break is underway. If a candidate takes a break without clicking the “Take a Break” button, the Examination Timer will continue to run.

Candidates are also permitted to take optional breaks between the other Examination section testlets, but the Examination timer will continue to run.

During any break, the candidate must adhere to the rules of the testing center.

The AICPA Board of Examiners (BOE) charges it’s Content Subcommittee with making a recommendation about the length of the Examination.  In order to elicit input on this subject from Boards of Accountancy, the academic community, and members of the accounting profession, an exposure draft was circulated in 2015 to all constituencies.

After review of all collected data and consultation with psychometricians, the Content Committee recommended a total of 16 hours of testing, a length considered optimal to provide ample content coverage, psychometric reliability and validity of scores, and sufficient opportunity for candidates to demonstrate the appropriate level of knowledge and skills.

CPA Business Environment and Concepts Corporate Governance
Each of the four sections of the Examination are composed of five testlets – groups of multiple-choice questions (MCQ) and task-based simulations (TBS or simulations). In the case of the BEC section, there are also written communication tasks.

CPA Business Environment and Concepts Corporate Governance

Auditing and Attestation (AUD):

  • Testlet 1: 36 MCQ
  • Testlet 2: 36 MCQ
  • Testlet 3: 2 TBS
  • Testlet 4; 3 TBS
  • Testlet 5: 3 TBS

Business Environment and Concepts (BEC)

  • Testlet 1: 31 MCQ
  • Testlet 2: 31 MCQ
  • Testlet 3: 2 TBS
  • Testlet 4; 2 TBS
  • Testlet 5: 3 Written Communication Tasks

Financial Accounting and Reporting (FAR)

  • Testlet 1: 33 MCQ
  • Testlet 2: 33 MCQ
  • Testlet 3: 2 TBS
  • Testlet 4; 3 TBS
  • Testlet 5: 3 TBS

Regulation (REG)

  • Testlet 1: 38 MCQ
  • Testlet 2: 38 MCQ
  • Testlet 3: 2 TBS
  • Testlet 4; 3 TBS
  • Testlet 5: 3 TBS

No.  While each Examination section covers materials from the Examination Blueprints, the questions in each testlet are delivered randomly and do not follow the blueprint order.

CPA Business Environment and Concepts Corporate Governance
Task-based simulations (TBS or simulations) are condensed case studies. In a TBS, use of knowledge is tested through a variety of tasks, some of which require searching databases, completing written communication tasks, or working with spreadsheets and forms. The skills that TBSs are intended to measure are: application, analysis and evaluation of the body of knowledge, and written communication.

CPA Business Environment and Concepts Corporate Governance
For the research portions of simulations, candidates have access to some sections of the AICPA Professional Standards (in the Auditing and Attestation section), FASB Codification (in the Financial Accounting and Reporting section), and Tax Code (in the Regulation section).

CPA Business Environment and Concepts Corporate Governance
The reference materials consisting of AICPA Professional Standards, FASB Codification, and the Tax Code are referred to collectively as “authoritative literature”.
In written communication tasks, candidates are presented with a situation and instructed to write a letter or memorandum on a specific topic.

Written communication tasks are scored on the basis of three criteria:
(1) organization (structure, ordering of ideas, linking of ideas one to another); (2) development (presentation of supporting evidence); and (3) expression (use of standard business English).  Responses that do not address the assigned topic are not scored. Click here for more information about written communication tasks.

CPA Business Environment and Concepts Corporate Governance
In Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), and Regulation (REG), multiple-choice questions account for 50% and task-based simulations 50% of the score. In Business Environment and Concepts (BEC), multiple-choice questions account for 50%, task-based simulations 35% of the score and written communication tasks account for 15% of the score.

CPA Business Environment and Concepts Corporate Governance
A multistage adaptive test delivery model is used for all multiple-choice testlets. This means that the first testlet presented to the candidate is at a level of moderate difficulty.  The subsequent testlet – at the same or slightly more difficult level – is then chosen automatically based on the examinee’s performance on the first testlet. The task-based simulations presented in AUD, BEC, FAR and REG, and the written communication tasks in BEC, do not follow the adaptive model. They are not selected on the basis of prior performance.

CPA Business Environment and Concepts Corporate Governance
Within each testlet or task-based simulation, questions may be answered in any order. However, the sequence in which testlets are presented does not change.

Candidates may review and revise their responses only as long as the testlet remains open.  Once they complete the testlet and move on to the next, it is not possible to return.

Candidates take different, equivalent Examinations.  The questions presented to candidates are drawn from a pool of test questions according to defined specifications.  Although candidates take different tests, the specifications ensure that the results are comparable.

The test assembly method and expert reviews ensure that all tests meet content specifications.  All test questions are classified according to their content and statistical properties before they are administered on an operational test.  The moderate and more difficult testlets meet equivalent content specifications.  Test administration software at the test center selects the difficulty level of multiple-choice testlets based on the candidate’s performance.

The AICPA keeps Examination content current and aligned with professional practice.  Additional changes in test length, structure, and content may be made, subject to the same process as was used to propose and approve the current test format.  Changes based on regular practice analyses are part of a critical ongoing program of continuous improvement.

CPA Business Environment and Concepts Corporate Governance

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