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NextGen Magazine


A Conversation with the ‘CPA Ninja’

Chris Gaetano
Published Date:
Apr 25, 2017


Jeff Elliott, CPA, is the founder of Another71.com, a CPA exam-focused site that attracts more than 100,000 unique visitors a month to its blog, resource-heavy forum, and NINJA CPA Review study courses. There are 35 threads on the front page of the exam forum, and each of them is active on a daily basis; the site averages about 200 posts per day. Elliott lives with his wife and what he describes as his “eight dependency exemptions” in Topeka, Kan. He took the time to respond to questions from NextGen about his company.

What inspired you to enter the accounting field, in general, and to get your CPA, in particular?

When I was in college [Kansas State University], I chose accounting by default because my grandfather earned his accounting degree during the Depression, went on to be CFO of an aircraft manufacturer, and had a successful career. I didn’t really know what I wanted to do, so I chose accounting to follow in his footsteps.

I decided to pursue the CPA designation because, after I had been in the working world for a few years and had a few tax seasons under my belt, I realized that I was at a huge disadvantage careerwise without it. I started taking night classes while working full time in order to get my 150 hours.

The CPA exam test prep market already has a number of very big players. What inspired you to start your own test prep company? What was missing that you felt you could provide?

I didn’t find the market, but rather, the market found me.

I didn’t actually intend to start a business when I launched Another71 back in 2008. If I had envisioned it becoming a business someday, I would have named it “passthecpaexamtips.com” or something, instead of after a failing score, which carries some nice irony to it.

You are correct that the marketplaces already had some behemoths in it, so I had to carve out my own niche. Another71 has become the “Facebook of the CPA Exam,” so to speak. It’s a gathering place for CPA candidates from a variety of different backgrounds, experiences and review courses. In that regard, I was able to offer something unique to the marketplace.

To this day, Another71 is still the most-visited CPA exam-related site on the Internet, with around 100,000 unique visitors and 1 million page views per month—stats which still surprise me and I’m thankful for. It’s the great forum members that make the site what it is.

The popularity of the NINJA materials enabled us to purchase the Bisk CPA Review assets from Thomson Reuters in August 2016, [and] we plan on doing bigger things with [them] in the future.

What was the process of starting this company like? What were the main challenges you needed to overcome?

As I said before, I never intended for it to be a company—it just grew into one by listening to the marketplace and seeing what opportunities exist.

Another71 started as a very basic blog. Pretty soon, blog posts had 3,000-plus comments. We said, “OK, we need to add a forum.”

There also wasn’t a good audio program out there that would enable people to study during their commute, at the gym, etc., so we made one.

There was a huge need for an affordable second test bank for people to study with, so we became an AICPA licensee and launched NINJA MCQ [multiple–choice questions], leveraging some technology that was already in place.

It’s never a good idea to enter a marketplace and offer up a product just because you’ve decided that you deserve to exist. You need to listen and fill the gaps. When there are 10 hot dog vendors along a crowded sidewalk, the last thing people need is yet another hot dog stand.

Instead, maybe you set up a stand with amazing ketchup and mustard to go with those hot dogs, which is what we’ve tried to do. I’ll let other guys roll up with their new hot dog stand and tout the spring water that their hot dogs are boiled in (causing everyone else to start using the same spring water), and stick with serving killer ketchup and mustard and, hopefully, getting along with all of the other hot dog vendors in the process.

In what ways did your training as a CPA prepare you for heading this company? In what ways did it not?

Being a CPA definitely helps from the analytical side and for things like cash flow and tax planning. One skill set that I’ve had to learn—and I think it’s one that you can only learn on the job and “in the trenches”—is how to actually run a company, manage vendor relationships, adapt to market changes and deal with increasing competition. For this reason, I don’t think people should get an MBA until they are more seasoned in their careers or have some experience running a company. The education will mean more.

The new version of the CPA exam recently rolled out. What did you need to change in order to adjust and stay relevant?

The 2017 CPA exam changes aren’t going to be as scary as people think. If you stop and think about it, the same concepts are being tested—and some content is actually being removed—just in a different way. Candidates will see fewer multiple-choice questions and more simulations on exam day. The multiple choice/simulation ratio will be 50-50 instead of 60-40-ish, as it is now.

BEC [Business Environment and Concepts] is also getting some simulations, but candidates already need to know cost accounting for the MCQ, so a simulation on cost accounting shouldn’t be too bad. It’s still the CPA exam—just a tweak here and there. Pass rates will likely drop as they do whenever there’s a change …  but then, things normalize.

How much of an effort was it to adapt your materials to the new test? What were the big challenges?

You’re seeing the big CPA review companies invest a lot of capital into new study software. It’s become an arms race, almost, as they try to out-feature the competition. We are smaller and are adapting accordingly. We’ll be ready.

The new exam is meant to better reflect the sorts of tasks a newly minted CPA is expected to perform in the workplace. Using your own experience as a CPA as a guide, how effective do you think the new exam is in doing this?

It’s difficult for a standardized test to measure something like critical thinking, but the examiners are doing a good job of heading the CPA exam in the right direction. A standardized test adds pressure to the candidate on exam day that isn’t necessarily there in real life, so it’s hard to say if it will effectively gauge a candidate’s competence in these areas. Some really smart people freak out on exam day and wilt under the pressure and do poorly.

From a knowledge-base perspective, studying for the CPA exam is still the most important aspect of the whole experience. In what other setting are you going to force yourself to sit down and learn corporate taxation, unless you actually work in tax?  Even then, you learn just enough to do your job, most likely. Exam results aside, it’s the hours and hours of studying that gain you the perspective to be a better CPA.

The new exam comes amid a period of rapid change for the CPA profession as a whole: Many routine tasks are being automated, while new developments like blockchain and cognitive computing have made skills like data analytics and database management more relevant for candidates than they were before. To what extent do you think technological skills like these will be reflected in future versions of the CPA exam? And in general, where do you see the exam going in the future? 

While it’s important to understand the basic ideas behind things like these, I don’t think the CPA exam should deep dive into these concepts at all. In business, you have to specialize and stick to what you do best and outsource the rest.

As CPAs, it’s important that we remain experts at what we do better than anyone else: tax, audit and financial statements. We need to understand how the rest of the world works and be able to have intelligent conversations with peers in other industries, but let’s stick to what we do and do it well.

To use the data analytics example: Yes, CPAs need to understand what’s going on with that and know the basics, but it’s not as if we are now going to get into the data analytics business, in addition to estate tax planning, not-for-profit audits and whatever else our firm offers. There are people out there who do data analytics for a living and eat, sleep, breathe that stuff. Let’s outsource these tasks and stay focused on what we do better than everyone else.

This is a long-winded way of saying that the CPA exam should stick to the basics of accounting and not chase rabbit trails. I think IFRS [International Financial Reporting Standards] was added to the CPA exam
prematurely—and now, it’s being backed down a notch in the new exam, so that goes to show you that even topically relevant rabbit trails can make their way onto the CPA exam.


The CPA Exam According to Exam Ninja Jeff Elliot

Say you were given free rein to design the next version of the CPA exam. What would it look like when you’re done?

Jeff: This is a fun question. Here is what I would do:

BEC [Business Environment & Concepts] - Get rid of the IT section and replace it with Excel skill testing.

A shocking number of accountants out there don’t know how to do basic Excel functions like SUMIF [a function for adding  cells in a worksheet] , VLOOKUP and PivotTables. I would also dump corporate governance and replace it with  business valuation. How many newly minted CPAs actually know how to value a business or even what basic valuation  metrics are? It sounds absurd, but the answer is “not many,” I’m guessing.

FAR [Financial Accounting and Reporting] - IFRS is already being slowly backed down in terms of testing.

I would dump it altogether. GAAP [generally accepted accounting principles] has been adjusted to where the differences  between GAAP and IFRS are becoming fewer and fewer. I would drop not-for-profit accounting from FAR. I believe CPA  candidates study this just enough to pass and don’t actually retain this information. It’s only relevant to people who work in  firms that have not-for-profit clients, and they can learn this on the job. I feel the same way about governmental accounting, but dumping not-for-profit accounting from the CPA exam would be a good start.

Another area would be financial statement preparation. How many newly minted CPAs can put together a set of books?  Sure, they know the concepts, and how to handle a translation gain or loss, but do they know how to create a balance sheet, income statement and statement of cash flows? Again, this sounds absurd, but I don’t think I’m that far off.

More testing on the interstatement flow of information [among] these three financial statements would be good. I would clear out accounting and replace it with more basic financial statement preparation.

REG [Regulation] - I would get rid of a lot of the business law topics in exchange for more tax.

The exceptions would be agency law and contract law. A deeper dive into the minutiae of tax law and actually preparing a Form 1040, 1120, 1065, etc., instead of the business law stuff that people are likely to forget anyway. Under my reign, the REG portion of the CPA exam would look more like the IRS enrolled agent exam.

I probably wouldn’t be very popular with CPA candidates either.