CPA Exam Sections

The Uniform Certified Public Accountant (CPA) Exam comprises four sections, namely, Auditing and Attestation (AUD), Business Environment and Concepts (BEC), Financial Accounting and Reporting (FAR), and Regulation (REG). The unique content, structure, format, and scoring of the CPA exam earn it the title of one of the most challenging professional exams.

Passing the Uniform CPA exam is one of the requirements to attain CPA licensure. The CPA examCPA ExamThe CPA Exam assesses accounting professionals not just on their financial knowledge, but also on their ability to review and seek out key abilities.read more is conducted by the American Institute for Certified Public Accountants (AICPA) in coordination with the National Association of State Boards of Accountancy (NASBA).

The following table outlines the details related to the CPA exams.

Exam particularsDetails
Exam modeOnline
Number of sectionsFour (AUD, BEC, FAR, and REG)
Eligibility120-150 credit hours or bachelor’s degree
Accounting or business-related coursework
Education from an accredited and recognized institution
(requirements may vary as per the state board)
Duration of each exam sectionFour hours
Number of testlets (in each exam section)Five
Type of questionsMultiple Choice Questions (MCQs)
Task-based Simulations (TBSs)
Written Communication Tasks (WCTs)
Passing score (in each exam section)75 (on a scale of 0-99)
Exam fees (per section)Application Fees – $150
Examination Fees – $224
Re-examination Fees – $75
(may vary as per your jurisdiction)
Testing centerPrometric testing center
Testing scheduleThroughout the year (continuous testing model)
Time limit for clearing all sectionsWithin 18 months of passing the first section

Each time you apply to take one or more CPA Exam sections, submit the required documents and fees to your state board. After that, your state board or its designated agent will evaluate your application and contact you. 

You can take the exam in any order that suits your preference. AICPA also offers various sample tests to help you prepare for each exam section. 

This article briefly discusses each of the four sections’ content, format, and structure. This will help you prepare and schedule your CPA Exam better and maximize your odds of success.

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Exam Section 1: AUD

AUD CPA exam section tests your competence in performing auditing, attestation, and accounting consulting services. It also tests your understanding of ethics and professional responsibilities.

This section includes all topics relevant to a newly licensed CPA performing a typical engagement.  From the nature, type, scope, and procedure of an engagement to planning and reporting the same, the AUD section includes all aspects of accounting service. 

Content Allocation

The AUD section includes four content areas. The following table lists these areas along with the percentage of the content tested from each one of them. 

Content AreaTopicAllocation
Area 1Ethics, Professional Responsibilities, and General Principles (Including independence, professional conduct, professional skepticism, and professional judgement)15%-25%
Area 2Assessing Risk and Developing a Planned Response (Including planning, risk assessment, and understanding of business processes and internal controls)25%-35%
Area 3Performing Further Procedures and Obtaining Evidence (Including planned engagement procedures, procedures to obtain evidence, the effectiveness of internal controls)30%-40%
Area 4Forming Conclusions and Reporting (Including reporting requirements for service engagements)10%-20%

Required Skills

Every area of the AUD section requires you to master specific skills for better performance in the examination. 

SkillsWeight
Evaluation (mostly in Area 2 and 3)5%-15%
Analysis (mostly in Area 2 and 3)20%-30%
Application (All Areas)30%-40%
Remembering and Understanding (mostly in Area 1 and 4)25%-35%

Exam Format

The section includes five testlets, two MCQs and three TBSs.  The overall weightage of these two segments is equal.

AUD testlets Question types
MCQ             TBS
Testlet 1 36
Testlet 2 36
Testlet 3 2
Testlet 4 3
Testlet 5 3
`Total 72 8
Pretest 12 1
Operational 60 7
Scoring weightage 50% 50%

Pass Rate (2015-2020)

Since the last five years, there has been an impressive growth in the AUD pass rates. The cumulative pass rates in the AUD section have increased from 47% in 2015 to 53% in 2020. 

2020 Quarter 2 has witnessed the highest pass rate of 65% in the last five years. Besides, the rest of the quarters have also shown a positive trend.

CPA Exam Section 2: BEC

The BEC CPA Exam Section tests your competency in performing the following services:

This section assesses your understanding of the general business environment and your duties and responsibilities towards it. Also, it ensures you possess effective communication skills to discharge your duty as a CPA.

This is the only section with an extra segment of written communication tasks. Please note that the BEC exam result can be delayed by a week or so beyond the target release date. This is due to the extra analysis required in evaluating WCTs. 

Content Allocation

The BEC section includes five content areas. The following table lists these areas along with the percentage of the content tested from each one of them. 

Content AreaTopicAllocation
Area 1Enterprise Risk Management, Internal Controls, and Business Processes (Including provisions of the Sarbanes Oxley Act, 2002 financial reporting and risk identification in business processes)20%-30%
Area 2Economics
(Including business cyclesBusiness CyclesThe business cycle represents the expansion and contraction of the economy that occurs due to ups and downs in the gross domestic product (GDP) of a country. It is experienced over the long term and goes parallel with the natural growth rate.read more, economic IndicatorsEconomic IndicatorsSome economic indicators are GDP, Exchange Rate Stability, Risk Premiums, Crude Oil Prices etc. read more, and financial risksFinancial RisksFinancial risk refers to the risk of losing funds and assets with the possibility of not being able to pay off the debt taken from creditors, banks and financial institutions. A firm may face this due to incompetent business decisions and practices, eventually leading to bankruptcy.read more)
15%-25%
Area 3Financial Management
(Including capital structureCapital StructureCapital Structure is the composition of company’s sources of funds, which is a mix of owner’s capital (equity) and loan (debt) from outsiders and is used to finance its overall operations and investment activities.read more, metrics associated with it, and financial Financial Financial modeling refers to the use of excel-based models to reflect a company's projected financial performance. Such models represent the financial situation by taking into account risks and future assumptions, which are critical for making significant decisions in the future, such as raising capital or valuing a business, and interpreting their impact.read moremodeling/valuation)
10%-20%
Area 4Information Technology (Including cyber risks, access and authorization controls, and business resiliency plans)15%-25%
Area 5Operations Management
(Including business operationsBusiness OperationsBusiness operations refer to all those activities that the employees undertake within an organizational setup daily to produce goods and services for accomplishing the company's goals like profit generation.read more, cost accounting, and variance analysisVariance AnalysisVariance analysis is the process of identifying and analyzing the difference between the standard numbers that a company expects to accomplish and the actual numbers that they achieve, in order to help the firm analyze positive or negative consequences.read more techniques)
15%-25%

Required Skills

Similar to the AUD section, BEC also aims at testing higher-order skills. However, the latter does not test the content at the evaluation skill level. It is because you are not expected to display that skill concerning BEC content. 

Let’s see which skill(s) will be helpful to master the several BEC content areas. 

SkillsWeight
Analysis (All except Area 5)20%-30%
Application (All Areas)50%-60%
Remembering and Understanding (All Areas)15%-25%

Format

BEC section incorporates five testlets with 62 MCQs, 4 TBSs, and an additional element of 3 WCTs (Testlet 5). The following table outlines the breakup.

BEC testlets Question types
MCQ TBS WCT
Testlet 1 31
Testlet 2 31
Testlet 3 2
Testlet 4 2
Testlet 5 3
`Total 62 4 3
Pretest questions 12 1 1
Operational questions 50 3 2
Scoring weightage 50% 35% 15%

Pass Rate (2015-2020)

The section had reported a significant growth from 56% in 2015 to 66% in 2020. The performance of this section over the years has been incredible. This section is considered to be the easiest of the lot. This reflects in its pass rates.

Though it suffered a minor setback in 2017, BEC picked up in the next year and has been thriving since then. As a result, BEC is presently the exam section with the highest cumulative pass rate of 66% in 2020.

CPA Exam Section 3: FAR

FAR Section of the CPA Exam evaluates your competence in understanding and using various financial accountingFinancial AccountingFinancial accounting refers to bookkeeping, i.e., identifying, classifying, summarizing and recording all the financial transactions in the Income Statement, Balance Sheet and Cash Flow Statement. It even includes the analysis of these financial statements.read more and reporting regulations and standards. The following entities issue these rules and standards:

  • US Securities and Exchange Commission (US SEC)
  • Financial Accounting Standards Board (FASB)
  • Governmental Accounting Standards Board (GASB)
  • American Institute of Certified Public Accountants (AICPA)

Content Allocation

It includes four content areas. The following table lists these areas along with the percentage of the content tested from each one of them. 

Content AreaTopicAllocation
Area 1Financial Reporting, Conceptual Framework, and Standard-Setting (Including FASB Accounting Standard Codification, general-purpose financial statement reporting and special purpose framework)25%-35%
Area 2Selected Financial Statement Accounts
(Including financial accounting and reporting requirements as per FASB standards for specific financial statements)
30%-40%
Area 3Selected Transactions
(Including financial accounting and reporting requirements as per FASB standards for specific transactions)
20%-30%
Area 4Local and State Governments (Including GASB standards, comprehensive annual financial report, and Government-wide Financial Statements)5%-15%

Required Skills

Each content area in the section requires you to ace specific skills for better performance. Like BEC, FAR exam also does not test the content at the evaluation skill level. 

SkillsWeight
Analysis (Area 1, 2, and 3)25%-35%
Application (All Areas)50%-60%
Remembering and Understanding (All Areas)10%-20%

Format

There are five testlets in the REG section comprising 66 MCQs and 8 TBSs. Both of the item types have an equal scoring weightage. 

FAR testlets Question types
MCQ TBS
Testlet 1 33
Testlet 2 33
Testlet 3 2
Testlet 4 3
Testlet 5 3
`Total 66 8
Pretest 12 1
Operational 54 7
Scoring Weightage 50% 50%

Pass Rate (2015-2020)

The FAR Pass Rate has gone through a roller-coaster ride during 2015-2020.  FAR is considered to be the toughest exam section with the lowest pass rates. However, Q2 2020 witnessed the highest passing rate (63%) across the entire five-year period.

While Q1 and Q3 have been a bit topsy-turvy for FAR, Q2 and Q4 have proved to be a period of growth. Moreover, the overall pass rate for the section has seen only a 3% growth from 2015 to 2020. 

CPA Exam Section 4: REG

REG CPA Exam Section analyses your competence in understanding and applying the concepts of federal taxation, business law, and ethics. This section tests your abilities and ethics while performing taxation and advisory services.

Content Allocation

The section includes five content areas. The following table lists these areas along with the percentage of the content tested from each one of them.  

Content AreaTopicAllocation
Area 1Federal Tax Procedures, Professional Responsibilities, and Ethics (Including Internal Revenue Code, taxpayer penalties, and audits, appeals, and judicial process)10%-20%
Area 2Business Law (Including contracts, agents and principle, and debtor-creditor relationships)10%-20%
Area 3Federal Taxation (Property Transactions) (Including Taxable and non-taxable dispositions, gift taxation, and related party transactionsRelated Party TransactionsRelated party transaction is an arrangement between two related parties for the transfer of resources, services or obligations, irrespective of whether a price is charged or can affect the statement of profit or loss and the financial position of an entity.read more)12%-22%
Area 4Federal Taxation (Individuals) (Including gross incomeGross IncomeThe difference between revenue and cost of goods sold is gross income, which is a profit margin made by a corporation from its operating activities. It is the amount of money an entity makes before paying non-operating expenses like interest, rent, and electricity.read more, pass-through entitiesPass-through EntitiesThe pass-through entity can be defined as a process by which any organization is relieved from double taxation burden. In order to avoid the double taxation, business income is considered to be the personal income.read more, and passive activity losses)15%-25%
Area 5Federal Taxation (Entities) (Including C CorporationsC CorporationsAccording to US tax laws, any corporation that is not a S corporation is considered a C corporation, which has a different legal status and is taxed accordingly. It has its own articles of incorporation that defines its activities and is held by the shareholders, while its liability is limited.read more, S Corporations, and Partnerships)28%-38%

Required Skills

Here lies the breakdown of specific skills tested in the REG section. 

SkillsWeight
Analysis25%-35%
Application35%-45%
Remembering and Understanding (mostly in Area 1 and 2)25%-35%

Format

There are five testlets in the REG exam section comprising 76 MCQs and 8 TBSs. Both of the item types have an equal scoring weightage.

REG testlets Question types
MCQ             TBS
Testlet 1 38
Testlet 2 38
Testlet 3 2
Testlet 4 3
Testlet 5 3
`Total 76 8
Pretest 12 1
Operational 64 7
Scoring Weightage 50% 50%

Pass Rate (2015-2020)

REG pass rate has been the highest in the Q2 2020 with an impressive 76%. Though it suffered a tiny setback in 2017, there has been a significant improvement in the succeeding years. 

The overall pass rate of REG surged 13%, from 49% in 2015 to 62% in 2020. Even the onset of Q1 2021 was promising for the REG section. It witnessed a 59% pass rate. 

Ranking of Exam Sections (Toughest to Easiest)

In August 2020, NASBA conducted a survey on the difficulty of CPA exam sections. Here is the ranking of each section based on its level of difficulty:

  1. FAR – 43%
  2. REG – 27%
  3. BEC – 17%
  4. AUD – 13%

As evident, there was a general consensus that FAR is the most challenging exam section. Please note that these statistics are only to give you an idea of how and in which order to take the exam sections for better results. As long as you are well-prepared for the examination, you can take up any section with sheer ease. 

The Right Order

Going by the CPA exam section difficulty order mentioned above, here are two suggested exam orders: 

  • AUD-REG-BEC-FAR, or
  • FAR-BEC-REG-AUD

Start with a difficult section like FAR or REG and let the burden off of your shoulders in the very beginning itself. 

A pro tip here is that never take up two difficult sections in a row. This will cause mental fatigue and affect your performance. Instead, always go with an “easy-difficult-easy” or “difficult-easy-difficult” flow. 

Know that there is no proper or perfect order to sit for the CPA exam sections. Go by your preference and comfort to pass all four sections with flying scores. 

This has been a guide to the CPA Exam Sections. Here we discuss the content, format, and structure of all the CPA Exam sections. You may also have a look at the below articles to compare CPA with other examinations –

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