Executive Summary for Practice Analysis of Certified Public Accountants Report

Overview
The Board of Examiners of the American Institute of Certified Public Accountants (AICPA) is responsible for preparing the Uniform CPA Examination, the licensing exam used by all 50 states, the District of Columbia, Puerto Rico, U.S. Virgin Islands, and Guam. This practice analysis provided a comprehensive understanding of the current requirements for public accounting and represents the first step in building a technically and legally sound licensure examination. The American Institutes for Research (AIR) conducted this practice analysis, along with staff from the AICPA Examinations Team and a task force of the Board of Examiners known as the Content Oversight Task Force (COTF).

Objectives and Procedures
The practice analysis had two primary objectives. First, it comprehensively described the tasks performed by entry-level CPAs, and the knowledge and skills needed to practice accounting successfully at entry-level. Second, it provided the data to help update content specifications for future versions of the Uniform CPA Examination.

Three phases of research activities were used to achieve these objectives. Throughout all the phases, particular attention was devoted to ensuring wide-scale participation of CPAs, adhering to professional standards for conducting practice analyses, and capturing recent and ongoing changes in accounting practice.

Phase 1—Planning primarily involved reviews of background materials and over 20 structured interviews with accounting professionals. These activities resulted in three major outcomes. First, they provided a comprehensive understanding of the accounting profession. Second, they helped generate important task, knowledge, and skill information—the requirements of accounting practice. Third, they provided information to develop sampling plans for focus groups and the practice analysis survey.

Phase 2—Analysis primarily involved conducting focus groups to specify further the requirements of accounting practice and administering a survey of these requirements to entry-level CPAs. Phase 2 activities began with five focus groups, each comprised of 8 to 12 CPAs, to identify and refine the tasks performed by entry-level CPAs, and the knowledge and skills needed for successful job performance. Participants were organized according to their primary practice area (e.g., accounting and auditing, taxation, or business and industry). During the 1 � to 2-day focus group sessions, participants reviewed and modified the lists of tasks, knowledge, and skills developed during Phase I.

The task, knowledge, and skill lists formed the basis for two versions of a practice analysis survey. One survey contained task information and one survey contained knowledge and skill information. Both surveys were designed to elicit various ratings such as importance and frequency. Surveys were administered to 5,000 entry-level CPAs (2,500 per version) that were randomly selected to be representative with respect to jurisdiction, gender, race/ethnicity, and firm size. Approximately 15 percent of the sample were comprised of CPAs in private industry.

Phase 3—Specifications provided a framework for using Phase 2 results. Specifically, we developed guidelines for using the survey results and a literature review of measurement methods (conducted as part of Phase III) to construct a framework for developing the Uniform CPA Examination. These guidelines included recommendations for developing an initial framework for test development in terms of proportions of items needed to cover particular knowledge and skill domains. We also considered a number of other issues such as reliability of measurement, and practical features of the test administration and setting.

Major Findings
A total of 1,349 completed surveys were returned for an overall response rate of 27.5 percent¹. The response rate for the task survey was 29.1 percent (714 out of 2,457). The response rate for the knowledge and skill survey was 25.9 percent (635 out of 2,453). Analyses to assess the quality of the data showed that the respondents did not make a lot of rating errors and were representative with respect to jurisdiction and other background variables (e.g., race/ethnicity, gender). Furthermore, the ratings were reliable, interpretable, and similar to ratings from a related practice analysis study.

A portion of each survey asked respondents about the percentage of time spent in various practice areas. Across all respondents, the most time spent in a given area was 29.9 percent for audit and 13.8 percent for both corporate income taxation and individual income taxation. The least reported time spent in a given practice area was 0.6 percent for both business valuation and profitability analysis, and 0.5 percent for both organization structuring and inventory management.

The task, knowledge, and skill ratings were the primary output from the survey. Most of the analyses of these ratings involved the computation of descriptive statistics, such as means and standard deviations. We then compared these results across practice groups defined as CPAs specializing in accounting and auditing, taxation, or business and industry.

The greatest level of similarity in ratings across practice groups was found among the skill requirements. For example, active listening, computational skills, reasoning skills, and interpersonal skills were highly important for CPAs in all practice groups. A moderate level of similarity occurred for the ratings of knowledge. For example, most practice groups regarded areas such as basic mathematics, writing mechanics, and standards for presentation and disclosure in financial statements as very important. However, each practice group also had its own specific areas of knowledge that were important for successful performance. The greatest differences between practice groups occurred in task ratings. Thus, even though the tasks performed by CPAs vary as a function of practice group, the knowledge requirements to a moderate extent and the skill requirements to an even greater extent overlap across practice groups.

To further evaluate task, knowledge, and skill ratings, we compared them for CPAs in public accounting and CPAs in private industry. Again, the same pattern emerged. These two groups of CPAs did not vary in their ratings of important skills, but did vary greatly in their importance ratings of tasks. In terms of knowledge requirements, there were moderate differences overall. The greatest differences in importance ratings occurred for taxation-related knowledge items. Conversely, CPAs in public practice did not differ from CPAs in private industry on their importance ratings for many of the knowledge items dealing with general business knowledge, law, and ethics.

Implications for the Uniform CPA Examination
The primary objective was to identify the tasks and activities performed by entry-level CPAs, and the knowledge and skills needed in order to perform them. This information, in turn, will be used in the development of content specifications for the Uniform CPA Examination. The content specifications represent a primary input into a testing plan for developing both paper-and-pencil and computer-based testing versions of the Uniform CPA Examination. In Section X of this report, we present some suggested guidelines for using the practice analysis results to develop such a testing plan.

Despite the wealth of information gathered during this project, it only presents a snapshot of the CPA profession. The practice analysis has comprehensively described the requirements of professional accounting as practiced today. Because ongoing changes in the profession were identified and accounted for, it is likely that the practice analysis will provide valuable information for several years to come. To ensure it does, we also developed an updating plan for keeping the practice analysis information up-to-date.

This final report provides complete documentation of the procedures and results of this practice analysis of CPAs. It is difficult to overstate the importance of comprehensive, up-to-date practice information. Such information forms the foundation for developing the Uniform CPA Examination and helps to ensure that this examination will effectively screen CPAs who possess the knowledge and skills needed to protect the public.

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