Contract Signed for Computer-Based CPA Test: May 2004 Launch

By Dennis O'Leary, Director of Governmental Relations

NEW YORK-The American Institute of Certified Public Accountants (AICPA), the National Association of State Boards of Accountancy (NASBA) and computer-based testing provider Prometric signed a contract last May to develop and deliver a computer-based test (CBT) for CPAs.

The final paper-and-pencil test will be administered in November 2003, and the CBT should be launched after November 2003 but no later than May 2004, according to NASBA.

But it is unclear if New York state will implement the CBT on the same time schedule. The New York State Board for Public Accountancy consistently raised concerns over possible conflicts of interest stemming from the AICPA's business relationship with Thomson Corporation, Prometric's parent company and a partner in the AICPA's web portal, CPA2Biz. During a January 2002 NASBA meeting, delegates from New York and five other state accountancy boards voted against the contract. Most of the state delegates voted in favor of the contract, giving NASBA the green light to come to terms with Prometric and the AICPA, despite lingering reservations.

By May, NASBA seemed to have reached a comfort-level with contract terms and potential conflict of interest disclosures among the three parties.

"I have every confidence that the computer-based examination will be one the state boards will be proud to use," said NASBA Chairman Barton Baldwin in a June report. "Besides producing a top-quality testing process, the tri-party agreement will provide the boards with legal safeguards that they had not previously enjoyed."

Will New York participate in the CBT, beginning in 2004?

"I cannot foresee New York being a route stepper and not going along with the other jurisdictions in preserving the uniform exam," said George T. Foundotos, a Professor of Accounting at Dowling College, using the military term for a soldier who doesn't march in line.

The uniform exam is important for keeping practice privileges and substantial equivalency, but Foundotos said New York may face difficulties because both the state comptroller and state legislature must approve any exam contract with the state.

"It may be difficult to get through the state legislature and comptroller," Foundotos said.

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At the NASBA eastern regional meeting in Cleveland from June 9 to June 11, a briefing on the CBT revealed that the AICPA's Board of Examiners has determined that the CBT will consist of four sections, with a total length of 14 hours. The test is divided into four-and-a-half hours for auditing and attestation, four hours for financial accounting and reporting, three hours for regulation and two-and-a-half hours for business and environmental concepts.

NASBA is advising all state boards to have uniform rules for the CBT. For example, the exam should be given during four quarters or "windows" with each section taken individually and in any order. A failed section cannot be taken again within the same three-month window, and credit for each passed section will be valid for 18 months from the date of the first passage of a section.

The three parties to the CBT contract have distinctive roles. NASBA will develop and administer both the confidential candidate database and candidate eligibility; the AICPA handles test creation and scoring, and Prometric will operate test sites for the CBT, including test delivery and scheduling. Some state boards will need to pass new legislation to convert to the CBT. New York should not need such a legislative change.

It is anticipated that the CBT will consist of multiple-choice questions and essays; however, 25 percent of the CBT will be based on simulations. Also, each part of the CBT will include simulations that are likely to test a candidate's research and computer skills, such as searching for data, spreadsheet usage and word processing.

The AICPA has established a website devoted to the CBT, which will provide familiarization materials. This site will be the "go-to" site for the CBT, and is located at www.cpa-exam.org.

The AICPA has formed a Score Scale Task Force, and a final decision on score scales for the CBT is expected by this fall. Beta pretesting of the CBT took place from November 2001 to February 2002 at five universities across the country, with 278 testing appointments. Ten thousand new CBT "test items" are expected to be developed by the end of this year.