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Rationalizing the Coverage of IFRS on the CPA Exam

This past winter break, I found myself perusing several CPA exam candidates personal blogs as well as a number of  community forums for CPA exam candidates and I could sense there was quite a bit of apprehension among future examinees vis a vis the incorporation of International Financial Reporting Standard (IFRS) in the candidate’s body of knowledge for the CPA exam (As of January 1st, 2011). Prior to these recent changes, the national average CPA exam pass rate was more or less 48%, it is therefore understandable that many current CPA exam candidates have grown even more anxious because of the additional and considerable amount of study time that is going to be required of them to successfully pass the two sections of the CPA exam that include IFRS related test questions: Financial Accounting Reporting (FAR) and Audit (AUD). I have been studying in preparation to take the CPA exam and  I have to admit that there is nothing fun about having to learn completely new materials such as IFRS.

Beyond the inconvenience of having to expand more cerebral energy as part of studying for the CPA exam, the addition of IFRS to the candidate’s body of knowledge provides an opportunity to CPA exam candidates of the years 2011 and beyond to differentiate themselves from individuals who already successfully passed FAR and AUD in prior years. The reason why the American Institute of Certified Public Accounatnts (AICPA) moved ahead with testing IFRS on the CPA exam is because the  Financial Accounting Standards Baord (FASB) and the International Accounting Standards Board (IASB) are working very closely to converge U.S. Generally Accepted Accounting Principles (GAAP) with IFRS. As such, all the entities that are going to be affected by the switch from U.S. GAAP to IFRS will undoubtedly need to secure the expertise of accounting professionals who, at the very least, can substantiate a basic understanding of IFRS. Could anybody think of a better way to demonstrate to a potential employer one’s knowledge of the fundamental aspects of IFRS other than  to point to the fact that passing scores have been obtained on the two sections of the CPA exam that test IFRS knowledge?

While studying IFRS in preparation for the CPA exam is sure not to elevate an individual to the level of an expert in IFRS matters, it however provides a strong foundation upon which IFRS expertise can certainly be erected. Simply put, I happen to believe the benefits of being tested on IFRS far outweigh the drawbacks. Just as the Sabarnes-Oxley Act of 2002 spurred a demand for accounting professionals, it can be expected that the transition from U.S. GAAP to IFRS is bound to have the same impact on the accounting profession as a whole. It is very likely that the “adoption” of IFRS by the U.S. will create more international work assignment opportunities since there will only be minimal differences between U.S. accounting standards and those of the other industrialized nations. It goes without saying that the globalization of financial reporting standards will have a catalystic effect on the internationalization of the accounting profession and I don’t think that any 21st century aspiring and foresighted accounting professional would like to be caught flat footed when this massive transformation of the accounting profession fully becomes reality.


  1. Comment by Julie:

    Hey there, You have done a great job. I’ll definitely digg it and personally recommend to my friends.
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  2. Comment by Richard Honsa, CPA:

    The fact is, the waters in audit are deep and wide, and the CPA exam should be considered the water’s edge. As an experienced CPA, I can tell you that the question of whether you were tested on IFRS material on the CPA exam will most likely never come up in an interview. In fact, interviews typically center around discovering a candidates ability to communicate well, among other certain qualities.

    In today’s accounting scene, there are many who were laid off who have many years experience in audit work, but who have never ventured into IFRS territory. These candidates would easily adjust to the new standards, as they are not much different as a whole. These candidates will be competing with you and other CPA candidates for jobs in a down market, and many of them are already CPAs. In fact, many of them passed the exam when all four parts were taken in two days, a fact that should not escape the attention of up and coming candidates, who enjoy taking the exam one part at a time.

    (Please note that many old school folks are somewhat peeved at the notion that accountants may now take an “easier” version of the test. To them, a greenhorn’s distinction between CPA exams with or without IFRS concepts means little. Sorry to rain on your parade, I am just attempting to inject a little real world analysis into your assertion. Nevertheless, experience matters much, and you must be prepared to sell yourself.)

    In closing, I will add that you should continue to focus on your communication skills. It is quite refreshing to see that rising CPA stars are getting out in the blogosphere and writing about issues within the community. Your ability to raise this discussion in a cogent manner carries more water at the end of the day than your ability to tell an interviewer how IFRS appeared on a CPA exam. Keep on writing, as it will carry you farther than you yet realize.

    Richard L. Honsa, CPA, MTX

    • Comment by Narcisse:


      Thank you for providing your feedback to this post. I will have to differ with you on some of the things you said. First, the differences between U.S. GAAP and IFRS are not as superficial as your purport them to be. There are some significant differences in the areas of revenue recognition, the accounting for leases, and the valuation of Property Plant and Equipment just to name a few. Second, the fact that "laid off CPAs can very easily adjust to the new standards" is really irrelevant to the point I was trying to make. A job interview is a two way process. It is incumbent upon the interviewee to highlight any aspect of his/her background that could potentially benefit the prospective employer even if the latter doesn't bring it up during the interview. Passing the CPA exam in its new form provides reasonable assurance to a future employer that one has a basic commend of IFRS.That might be insignificant to your eyes, however in this highly competitive job market one needs every edge that he/she can get. What other "old school CPAs" think about the level of difficulty of today's CPA exam is really none of my concerns, I still have yet to run into any new CPA license holder who claims that he did not have to seriously prepare for the exam.

  3. Comment by Rose:

    Well, I have friends who are still freaked out about the change.. I follow CPA EXCEL for FAR and I already completed AUD..So for me its more like what ever the change we should get through this..so I don't keep that in my mind..And while stepping into the future of accounting we should always embrace the change..

    • Comment by Narcisse:

      Hello Rose:

      Thank you for dropping by. In my opinion, you are showing the right attitude. The ability to welcome then adapt to changes in any field of work is a strong attribute of successful professionals.

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