Changes to the 2017 CPA Exam: An Opportunity to Further Students’ Professional Success

By Mitchell Franklin, CPA, Ph.D., and Michaele Morrow, CPA, Ph.D.

Editor: Annette Nellen, CPA, CGMA, Esq.

Significant changes are coming to the CPA Exam in April. The current CPA Exam was designed to focus on basic remembering and understanding, the lowest levels of learning in Bloom's Taxonomy, and application. But, according to the AICPA's Practice Analysis Final Report: Maintaining the Relevance of the Uniform CPA Examination (April 4, 2016), the new exam will increase emphasis on the higher levels of Bloom's Taxonomy, such as analysis and application, and reduce emphasis on remembering and understanding. Evaluate and create, the highest levels of the taxonomy, will not be tested on the Regulation (REG) section of the Uniform CPA Examination. Exhibit 1 shows the application of Bloom's Taxonomy to the skill framework adopted by the AICPA for the exam.

The ability to apply and analyze is more consistent with skills that an employer would expect from a newly licensed CPA, but that ability is not always well-developed with current accounting classroom methods. Preparing students for changes to the exam should be a catalyst for reducing the expectations gap that currently exists between academia and the profession when it comes to the skills important to the success of new accounting graduates (Yu, Churyk, and Chang, "Are Students Ready for Their Future Accounting ­Careers? Insights From Observed Perception Gaps Among Employers, Interns, and Alumni," 10 Global Perspectives on Accounting Education 1 (2013)).

Exhibit 1: Skill levels

Testing the principles of application and analysis on the new exam will help examiners determine whether a CPA candidate can associate learned elements from various areas in accounting to integrate, make judgments, and draw conclusions to address situations that would be encountered in practice. Successful adaptation to the new exam format will require a significant adjustment of attitudes and techniques currently employed by students learning accounting, as well as attitudes and techniques of instructors teaching accounting.

This column highlights how the topics and testing will change for the REG section of the 2017 CPA Exam. The authors then provide suggestions for what taxation faculty can focus on in the classroom to ensure students understand tax topics and develop necessary skills to be successful on campus, on the CPA Exam, and in an accounting career. Additionally, this column provides recommendations for how faculty and professionals can work together to ensure that students graduate with the necessary skills to improve their chances of success on the CPA Exam and increase their marketability and on-the-job performance.

Tax Coverage on the 2017 CPA Exam

As with the current exam, the revised exam will test taxation topics within the REG section of the CPA Exam. Skills related to those topics—as defined in Bloom's Taxonomy—will be assessed as shown in Exhibit 2.

Exhibit 2: Skill set as tested on REG section of 2017 CPA Exam

The old exam focused heavily on remembering and understanding; this will be limited to only 25%-35% of questions on the new exam. Instead, between 25% and 35% of content within the REG section will focus on analysis of material, where students will be expected to differentiate, organize, relate, compare, contrast, and question information provided. Another 35%-45% of the REG questions will require students to engage in application of material to a new situation. Both of these skills, application and analysis, require a high level of critical thinking. The higher skill of evaluation will be tested only on the Auditing and Attestation (AUD) section of the new CPA Exam.

The REG section of the CPA Exam comprises five sections—four focus on taxation and one on business law (AICPA, Practice Analysis Final Report) (see Exhibit 3 below).

Exhibit 3: Taxation topics on REG section of 2017 CPA Exam

On the new exam, REG will be allotted four hours rather than three and will contain 76 multiple-choice questions and eight or nine task-based simulations. Written communication will not be tested on this section. More importantly, the lower stages of Bloom's Taxonomy, remembering and understanding, will be tested primarily on the questions in the sections for ethics, professional responsibility, and federal tax procedures and business law. The other REG sections will be weighted more heavily toward questions evaluating the higher levels of learning—application and analysis.

Over the past several years, the authors have had conversations with faculty at many institutions and seen varying levels (from none to significant) of coursework and curriculum designed to focus solely on passing the CPA Exam. Some courses "teach to the exam" with an intent to maximize CPA Exam pass rates, which means they also focus on the lower levels of Bloom's Taxonomy—remembering and ­understanding—­tested by the exam, rather than the higher level of learning desired by employers and necessary for students to succeed in the accounting profession. Many of these universities report CPA Exam pass rates significantly above average, adding pressure for faculty to take this approach within their courses, whether or not it is the intent of the respective program. While this strategy improves pass rates, it significantly reduces quality of graduate preparation and increases the disconnect that exists between academic institutions and the profession, and should be addressed within many programs by department chairs, program directors, and deans.

This disconnect between the classroom and the profession has been highlighted in research for the past two decades. Bonk and Smith ("Alternative Instructional Strategies for Creative and Critical Thinking in the Accounting Curriculum," 16(2) Journal of Accounting Education 261 (August 1998)) found that memorization of accounting concepts does not lead to successful performance as an accounting professional, while Bolt-Lee and Foster ("The Core Competency Framework: A New Element in the Continuing Call for Accounting Education Change in the United States," 12(1) Accounting Education 33 (2003)) point out that even though graduates were rarely prepared for successful entry into the accounting profession at the time when the CPA Exam was computerized, calls for a change in both accounting education and testing on the CPA Exam were ignored.

Later, Jackling and De Lange ("Do Accounting Graduates' Skills Meet the Expectations of Employers? A Matter of Convergence or Divergence," 18 (4-5) Accounting Education: An International Journal 369 (September 2009)) reported that employers believed that accounting curricula did not adequately prepare accounting students for success in an accounting career. The expectations gap between academia, examiners, and the profession still exists (Yu, Churyk, and Chang, "Are Students Ready for Their Future Accounting Careers? Insights From Observed Perception Gaps Among Employers, Interns, and Alumni"), but the higher-level thinking focus on the revised CPA Exam should help bridge this gap.

Prepare Students for Success in the Classroom, on the Exam, and in the Profession

The world accounting students encounter upon graduation requires them to operate at the highest levels of Bloom's Taxonomy—engaging in application, analysis, evaluation, and creation. But in a traditional classroom, lectures often focus on the lowest levels of Bloom's Taxonomy, with students demonstrating the ability to remember and understand topics discussed. Outside of class, students might be required to independently complete homework problems or projects involving application, analysis, or evaluation.

Understanding that this does not fully develop the skills students need in the profession, many accounting educators have recently begun implementing a "flipped" classroom—moving the lower levels of Bloom's Taxonomy to outside the classroom to free up class time for focusing on higher levels of learning. For example, students enrolled in a flipped accounting class would be required to watch video lectures or other forms of media, engage in short interactive online exercises, or complete assignments to independently remember and understand material before the scheduled class.

During class, students work under the direct observation of the instructor on individual and group work assignments related to the material already introduced outside of class. These assignments and cases stimulate the highest levels of learning and require students to analyze, evaluate, and create—but under the supervision of the instructor, who provides feedback to individuals and the group as a coach rather than a lecturer. An in-class tax planning exercise in a flipped format might be a short project (completed in one class period) that requires students to analyze options for a client and prepare a recommendation of the best option for the client, with time at the end for reflection and analysis of all alternatives.

An example tax planning project might involve a client who recently purchased a new fixed asset. Alternative options for depreciation would include Sec. 179 expensing, bonus depreciation, and selection of an appropriate depreciation method such as modified accelerated cost recovery system (MACRS) or straight-line. Before class, students would be expected to read or watch assigned material and complete short problems to develop an understanding of applicable depreciation rules. In class, a small group of students could work together to analyze alternative depreciation options based on information provided about the client.

This case would require students to choose the best option using a net present value (NPV) calculation analysis created in a spreadsheet including (1) depreciation over the life of the asset using MACRS, straight-line, Sec. 179 expensing, and bonus depreciation, and (2) calculation of the overall impact on taxable income, as well as the tax liability using each alternative. Future tax rates can be given for the calculations, or students could be required to estimate those rates based on projected increases in taxable income or perhaps anticipated changes in tax policy, if that is a discussion topic in class.

Based on these calculations, students would evaluate all options and determine which method of depreciation is best for the client over the short run and long run of the asset life. During this time, the instructor would walk around and monitor the progress of each team, answering questions and guiding students down the proper path to complete the assignment. At the end of class, each student group would present a formal recommendation for the client that included the most tax-efficient method and whether or not Sec. 179 immediate expensing or bonus depreciation should be elected. A tax memo for the file and a formal client letter would be written in class if time permits, or assigned to be finished out of class for the next class period.

This particular assignment requires students to engage in creation, application, and analysis for the NPV calculations in the spreadsheet, as well as written evaluation of options through a memo and client letter. Both tasks are consistent with the higher levels of learning expected on the new CPA Exam—but not delivered in exactly the same format to avoid "teaching to the exam"—and develop skills needed to succeed as a new staff accountant.

Encouragingly, research shows that use of short cases and exercises in class—as opposed to traditional methods of instruction—do enhance learning and retention of new material (Ashbaugh and Johnstone, "Developing Students' Technical Knowledge and Professional Skills: A Sequence of Short Cases in Intermediate Financial Accounting," 15(1) Issues in Accounting Education 67 (February 2000)). For tax courses, a flipped classroom frees class time for students to work on preparing tax returns, researching answers to tax questions (using tools such as RIA Checkpoint or CCH IntelliConnect), and communicating solutions through a written tax memo or client letter.

This scenario is ideal for all parties involved: Students come prepared for class and can work on engaging, interesting, and relevant-to-an-accounting-career issues, while instructors can move out from behind the lectern or PowerPoint presentation, get to know students, and fully engage them in the learning process. Students will be ready for success on the CPA Exam and in a career in accounting, something that professionals have been asking for from academia for two decades.

Most faculty members are used to providing support to students outside of the classroom, and assisting in exam preparation has long been a part of that assistance for many faculty. One strategy that works well is to partner with student organizations, such as Beta Alpha Psi, to offer CPA preparation workshops. Faculty, alumni, and other members of the professional community can be recruited to lead workshops that focus on subject matter students find particularly difficult.

The key is to focus on specific topics rather than a specific review course, so all students can benefit regardless of which CPA review program they are using to prepare. The transition to the new exam likely means that qualified faculty members will lead workshops for a few years until recent graduates with exam success can take the lead under the guidance of a faculty member.

An alternative to workshops could be "CPA Exam" office hours for students preparing for the exam who need personalized assistance understanding a specific topic in the study materials. This could be one on one with the faculty or in small groups. Alumni working in the profession could serve the same function, through either a formal or an informal mentoring system. The role of the professional could range from a subject-matter expert to serving as a coach who keeps the student accountable to study goals.

Finally, many CPA Exam review courses offer free content access to faculty to use in the classroom. The authors caution faculty not to rely entirely on this material and fall into the trap of teaching to the exam, but use of these tools in the classroom can be a useful preview for students preparing to take the exam.

What Can Tax Professionals Offer to Educators?

Current tax professionals should not be content to have a passive role in the education of future tax professionals. Tax professionals can and should partner with tax faculty to ensure that classroom content and delivery don't just focus on the short-term goal of passing a class, but also prepare students for success on the new CPA Exam, which will also develop skills students need to become effective tax professionals. There are four major ways that a tax professional can engage with academia.

Get on (the Advisory) Board

Membership on an accounting department or program advisory board is key for tax professionals to communicate the current state of the profession to educators. It does not have to be an alma mater—perhaps a local university from which a firm hires a large number of graduates. The department benefits from a professional's insight into current trends in the firms, such as hiring, current needs, and monetary support for graduate education.

Professionals should also communicate to the department chair when graduates from their program are performing well or perhaps not performing as well as graduates from other schools. For instance, graduates from the program might be struggling to pass the CPA Exam at the same rate as graduates from another school. Communicating this to the department chair or program coordinator provides an opportunity for an adjustment to curriculum or teaching methods to ensure the accounting program is producing competitive graduates.

Go to the Head of the Class

Guest speaking is a common technique to connect tax professionals with students. Professionals should be willing to speak not only about what is happening outside the classroom, but also about the importance of what is being taught in the classroom and how. Consider the previous example of a flipped classroom. Research has shown that students performed better in a flipped classroom and mastered higher levels of learning but only when they understood why they should learn the material this way (Lage, Platt, and Treglia, "Inverting the Classroom: A Gateway to Creating an Inclusive Learning Environment," 31(1) The Journal of Economic Education 30 (Winter 2000)). Of course, the instructor should explain the benefits of a flipped classroom to students, but the seal of approval from an accounting professional might carry more weight and provide students with motivation to put forth effort in out-of-class assignments.

For example, the exercise in the flipped classroom focused on an NPV analysis in a spreadsheet that was then written up in a tax memo for the file and communicated to a client in a letter. Students might believe that their job duties as a staff accountant might involve rote or basic tasks, when in fact much of that work is often outsourced or automated. A visiting tax professional could stress that much of a staff accountant's job would involve analysis using spreadsheets, so proficiency in Excel is important. Many staff accountants would also be assigned to research tax issues at both the federal and state level, and then write a clear and concise tax memo for a manager or partner to review.

A tax professional could also discuss other everyday job duties and stress how the tax world now requires collaboration and communication. Preparing tax returns at the federal level might require research, client communication via phone or email, and awareness of specific client facts, both past and present, to make useful recommendations to a client. A staff accountant assigned to a client who does business in multiple jurisdictions might end up working with a team of colleagues spread across the country or the world, requiring time management and organizational skills in addition to the analysis and evaluation skills for researching rules in different jurisdictions. The visiting tax professional should stress the importance of practicing these activities in the classroom to sharpen application, analysis, and evaluation skills to prepare for the CPA Exam and for a career in tax.

Make a Case

Tax professionals should collaborate with tax faculty to develop teaching material for the classroom. Professionals have hundreds of client cases that can be shared with tax faculty to develop a case that can realistically be used as a classroom exercise or a larger group project. To have a bigger impact on tax education, tax professionals and tax faculty should consider preparing a teaching note or case for submission to an accounting education journal. Once published, these cases are accessible to tax faculty who might not have the resources to generate their own cases; published cases in journals team-prepared by tax faculty and professionals are an invaluable resource that can vastly improve tax education. As a bonus, increased publication and exchange of tax cases with faculty members at a variety of institutions might inspire an increase in educational research and innovation, where new idea generation is currently stagnant(Rebele and St. Pierre, "Stagnation in Accounting Education Research," 33(2) Journal of Accounting Education 128 (June 2015)).

Teach the Teacher

Tax professionals should support tax faculty in their efforts to prepare students for the new CPA Exam and a career in tax by providing education opportunities for the tax faculty. The inclusion of faculty members in firm-sponsored professional development activities could ensure that the professor has the proper technical knowledge to convey to students. Especially in taxation, constant changes in technical content can leave even the savviest and most attentive faculty member with gaps in technical knowledge.


Change is coming to the CPA Exam, and sometimes people see change as a negative thing—but this change presents many positive opportunities for accounting students, faculty, and professionals. For students, the 2017 CPA Exam will be more relevant to what exam candidates will need to know for successful entry into the accounting profession. To take full advantage of this opportunity, students will need to adopt a different mindset when it comes to learning, and accept the changes that accounting educators make in the classroom to help them with that adoption.

Tax faculty have the opportunity to reexamine curriculum and think about the content and teaching techniques that really contribute to students' future success. They might consider flipping some or all of the classroom, freeing up time for in-class activities that mimic real-world tax duties. One-on-one interaction with students is guaranteed in this format, which is much more fun than lecturing to a class of sleepy undergraduates!

Tax professionals have always provided feedback to faculty about what skills they look for in graduates. The changes to the 2017 CPA Exam create an opportunity for professionals to speak up at a time when faculty might be willing to listen and implement changes to techniques and curriculum. Professionals can also take a more active role in the curriculum through developing cases with faculty and providing opportunities for professional development of tax faculty.

If students, faculty, and professionals work to take advantage of these opportunities, the results should be higher CPA Exam pass rates and more successful graduates, which is something that will benefit all invested in the future of the profession.   



Annette Nellen is a professor in the Department of Accounting and Finance at San José State University in San José, Calif. Mitchell Franklin is an assistant professor of accounting and director of the Department of Accounting at Madden School of Business at Le Moyne College in Syracuse, N.Y. Michaele Morrow is an assistant professor of accounting at Sawyer Business School at Suffolk University in Boston. For more information about this column, contact

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