In January 2024, the most recent update to the CPA Exam will go into effect. Known as the CPA Evolution licensure model, this new format brings additional and increasingly significant financial subjects into the examination with the aim of better preparing CPAs for their role. 

If you’re considering taking the CPA Exam in the near future, you’re likely wondering what your options are. Should you attempt to take all sections of the current CPA Exam before the new one goes into effect? Is it better to wait and just take the CPA Evolution version in 2024? Could a combination approach be the most effective?  

In this blog post, we’ll give a quick overview of the CPA Evolution and how it differs from the current CPA Exam. Then we’ll lay out strategies for taking the CPA Exam before and after the CPA Evolution changes go into effect. 

What you need to know about CPA Exam changes 

If you’re in accounting classes or have started studying for the CPA Exam, you probably know that the current version contains four parts: 

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

Each section takes four hours, for a total of 16 hours to complete the requirements for the CPA Exam.  

Format changes 

The CPA Evolution will still include four sections of four hours each, but the format will change. Candidates will be responsible for passing three core sections and one new discipline section. Everyone who sits the CPA Exam will still need to pass the AUD, FAR and REG sections; however, they have three options when it comes to the discipline section: 

  • Business Analysis and Reporting (BAR) 
  • Information Systems and Controls (ISC) 
  • Tax Compliance and Planning (TCP) 

While the three core sections reflect general knowledge all CPAs should have, the discipline exams focus on specialties. Below is a quick breakdown of the main topics that will appear in the three new discipline sections. 

Business Analysis and Reporting (BAR) 

  • Capital structure and operations  
  • Consolidation and business combinations  
  • Derivatives and hedge accounting returns  
  • Leases 
  • Managerial accounting 
  • Non-financial performance  
  • State and local government and NFP accounting  
  • Revenue recognition application and analysis   

Information Systems and Controls (ISC) 

  • Change management 
  • Considerations for System and Organization Controls (SOC) engagements 
  • COSO frameworks applied to cloud computing, blockchain and cybersecurity 
  • Information systems and data management 
  • Regulations, standards and frameworks 
  • Security, confidentiality and privacy 
  • Security risks and controls 

Tax Compliance and Planning (TCP) 

  • Computation of income and deductions for a trust 
  • Formation and liquidation of entities 
  • Entity tax compliance 
  • Entity tax planning 
  • Personal finance planning 
  • Property transactions 
  • Tax compliance  
  • Tax implications of foreign income 
  • Use of losses by taxpayers to minimize tax liability 

Content changes 

In addition to the overall format change, some exam content will move to other sections. For example, content from the BEC section, which is being discontinued in 2024, will be broken up and added to four of the six sections. For example, “Understanding and applying financial statement ratios and performance metrics” will move to the FAR section, and “Basic economic concepts – supply and demand, business cycles” and “Business process and internal controls” will now fall under the AUD section.  

Also, certain topics within each section will move from the core exam into one of the new discipline exams. After the CPA Evolution goes into effect, some FAR content will be split between the FAR core exam section and the BAR discipline section. These include the following: 

  • Analysis skill level representative tasks for revenue recognition 
  • Business combinations 
  • Consolidated financial statements 
  • Derivatives and hedge accounting 
  • Financial statements of employee benefit plans 
  • Government accounting 
  • Indefinite lived intangible assets 
  • Internally developed software 
  • Leases 
  • Public company reporting 
  • R&D costs 
  • Stock compensation 

Some REG topics, specifically gross income concepts (ISO, imputed interested, compensation earned outside the U.S.), will also move to the TCP discipline exam. 

Key dates related to CPA Evolution 

If you’re thinking of getting started on your CPA Exam journey before Jan. 1, 2024, know that any sections that you pass before that date will still count toward licensure. You won’t need to retest in 2024. AUD, FAR and REG exams will count as core credit, and BEC will replace a discipline section requirement.  

The 18-month passing window will stay in effect; however, if you pass any section in 2023, that clock will reset on Jan. 1, 2024, so you’ll get extra time to finish all exams. In fact, if you passed any section after July 1, 2022, you’ll have until June 20, 2025, to pass your remaining sections.  

When scheduling your exams, keep in mind that NASBA will stop processing Authorizations to Test and Notices to Schedule (NTS) for the BEC exam on Nov. 15, 2023. That means your application and NTS must be approved before then if you want to take that section. Also, no tests will be scheduled between Dec. 16, 2023, and Jan. 9, 2024. This blackout period is to allow for conversion of IT systems to the 2024 CPA Exam sections. 

The AICPA has released a tentative schedule of testing and score reporting dates for 2024 to help you plan your exam strategy. 

CPA Exam testing strategy 

In this section, we’ll break down Surgent’s recommended testing strategies for two scenarios: taking all sections before January 2024 or splitting them between 2023 and 2024.  

If you can take all sections before January 2024: 

We recommend the following testing order: BEC, AUD, REG and FAR.  

Why? Historically, BEC has been the easiest section to pass, and while it’s being eliminated in 2024, its content will still be covered and distributed among four of the sections in the new exam format. Plus, if you pass BEC before CPA Evolution, it will count as a replacement for your discipline exam requirement.  

Prometric slots are filling up fast in anticipation of CPA Evolution. Be sure to book your seat for BEC as soon as possible so you’ll have time to retest if you fail. FAR is expected to get easier in 2024, so save this section for last.  

If you can’t take all sections before January 2024: 

Take the BEC and AUD sections in 2023.  

BEC is being eliminated under the CPA Evolution model but will still count toward your discipline exam requirement if passed in 2023. Also, the AUD section is expected to be more difficult in 2024 and cover economic concepts and some controls from the old BEC exam. Additional material on SOC reporting, technology and cloud computing also will appear in the 2024 AUD core section.  

Take the REG and FAR sections in 2024. 

The REG and FAR sections are expected to be easier after CPA Evolution goes into effect. Some of the trickier FAR topics will be moved into the BAR discipline section, which means candidates waiting until 2024 to sit for FAR will have an exam that goes deeper into certain topics but will cover less advanced subject matter.  

We also recommend taking your discipline exam right after the core section associated with it. That means taking BAR immediately following FAR, ISC after AUD, and TCP after REG. Remember: the discipline exam that you take does not need to be your current field of study. Take the exam that you’re most confident you will pass on the first attempt.  

Conquer the CPA Evolution with Surgent 

This year, Surgent will begin rolling out an updated exam prep course. Course material will dynamically change based on your testing date. For instance, if you are taking FAR in 2023, you’ll see different course content than people taking it in 2024.  

Surgent will make it as easy as possible for you to study the correct material. If you want to stay on top of the latest updates and changes to the CPA Exam, Surgent has created a CPA Evolution resource center that will help support and guide you through the changes.