April 2002

Presiden't Commentary

The New and Improved CPA Exam?

By Nancy Newman-Limata, CPA

After the misdirected efforts leading to the failed global credential (XYZ) and CPA2Biz, is the American Institute of CPAs going to strike out on its third initiative – the computerized CPA examination?

As with many of the ideas incubated at the AICPA, the initial blueprint looked good, it’s the subsequent development and execution that seems questionable.

In 1995 a report on computerization of the examination concluded that a majority of the state boards of accountancy supported such an effort. As a result, in 1997 the National Association of State Boards of Accountancy (NASBA) and the AICPA appointed a joint Computerization Implementation Committee (CIC) to study the development and implementation of a computer-based examination. There is no doubt that the Uniform CPA examination must keep up with changing realities of the profession in order to protect the public interest. Arguably, a computer-based examination provides an easier platform for an ever-evolving examination. Additional benefits put forth seem logical: ability to offer at more frequent intervals, at more locations, with increased security, administrative efficiencies. So the CIC moved full steam ahead, ignoring two cardinal tests – cost/benefit and the “smell test.”

Let’s look first at cost/benefit – remember the rule that the cost can’t outweigh the benefit. We can’t price the examination so that no one will take it. Well, the New York State Board for Public Accountancy rejected in January of this year a proposal allowing NASBA to develop a computer based test (CBT) for CPAs based partially on concerns over the cost. Currently, the examination costs approximately $250. The projected costs related to a CBT examination as estimated by the state board raise the price to $600 for a single examination sitting for first-time applicants. Such an increase is significant. Candidates would have no choice but to pay it. I have trouble understanding how this benefits the candidates, the profession or the general public. My sense is that candidates would almost universally trade off the ability to take the examination more often or the convenience of a closer location for money in their pocket. The development costs of the CBT exam are estimated at between $14 million and $18 million, resulting in this increased cost. Developers must find a way around this or deal with unintended consequences including limiting access to the exam.

Now for the bigger reason the State Board rejected the proposal and that is the “smell test.” Chuck Schoff, Chairman of the New York State Board for Public Accountancy, and its members voiced strong opposition to the development of the CBT in conjunction with the AICPA and Prometric, a provider of computerized exam services for professional and academic markets, and a for-profit subsidiary of Thomson Corporation. Thomson is an investor in CPA2Biz. While I do not believe there is a conflict, appearance often supplants reality in life.

At a time when regulators and legislators are harping at us over the potential for conflicts and appearance of a lack of independence, how is it that our own national organization can ignore such an obvious appearance of conflict? I commend the other six states that voted against the advisory vote. For a change, New York was not standing alone. That is heartening. The four states that abstained from voting, like the Cowardly Lion, have their hearts in the right place. Why can’t the other states see how such an obvious conflict of interest subjects us to ridicule. What part of who we are and what we stand for don’t you get? We should never even be at the table negotiating with an entity with which the AICPA has an affiliation. While CPA2Biz may evaporate and the affiliation with Thomson may dissipate, my concern is over the views of a national organization that promotes, no less condones, such behavior. As a CPA I expect more. As CPAs we should all insist on more.


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