What You Need to Know for the FAR ExamAugust 3, 2016

Introductions

• Denise ProbertCPA, CGMAWiley Director of Curriculum,Accounting Test Prep

• Julie SnowWiley CPAexcel Product Support

Webinar Agenda

• Current format of the FAR exam• Current content tested on the FAR exam• Format and content changes expected to the FAR exam on

and after April 1, 2017• Tips and techniques for passing FAR• Raffle!• Ask the Expert

Current Format of the FAR Exam

Testlet  130  

MCQs

Testlet  230  

MCQs

Testlet  330  

MCQs7  TBSs

%  of  Exam

Contents

17 -­‐ 23% Conceptual  framework,  standards,  standard  setting,  and  presentation  of  financial  statements

27  – 33% Financial  statement  accounts27  – 33% Specific  transactions,  events,  and  disclosures8  – 12% Governmental  accounting  and  reporting8  – 12% Not-­‐for-­‐profit  accounting  and  reporting

Current Content Tested on the FAR Exam

Net Income $34,000

Owner contribution 9,000

Deferred gain on an effective cash-flow hedge 8,000

Foreign currency translation gain 2,000

Prior service cost not recognized in net periodic pension cost 5,000

AICPA Disclosure Question

A company reported the following information for year 1:

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question (cont.)

What is the amount of other comprehensive income for year 1?A. $5,000B. $14,000C. $15,000D. $43,000

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question

At December 31, year 1, Gasp Co.'s allowance for uncollectible accounts had a credit balance of $30,000. During year 2, Gasp wrote off uncollectible accounts of $45,000. At December 31, year 2, an aging of the accounts receivable indicated that $50,000 of the December 31, year 2, receivables may be uncollectible.

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question (cont.)

What amount of allowance for uncollectible accounts should Gasp report in its December 31, year 2, balance sheet?A. $20,000B. $25,000C. $35,000D. $50,000

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question

Green Co. was preparing its year-end financial statements. Green had a pending lawsuit against a competitor for $5,000,000 in damages. Green's attorneys indicate that obtaining a favorable judgment was probable and the amount of damages is reasonably estimated. Green incurred $100,000 in legal fees. The income tax rate was 30%. What amount, if any, should Green recognize as a contingency gain in its financial statements?A. $0B. $3,430,000C. $3,500,000D. $4,900,000Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question

The measurement focus of governmental fund accounting is on which of the following?A. Current financial resources. B. Economic resources. C. Cash. D. Working capital.

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosure Question

What is the primary purpose of the statement of activities of a nongovernmental not-for-profit organization?A. To report the change in net assets for the period. B. To report the liquidity of the entity as of a specific date. C. To report assets, liabilities, and net assets as of a specific date. D. To report the cash flow position of the entity for the period.

Copyright  ©  2014   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosed Task-Based Simulation

Copyright  ©  2014  -­‐ 2016  by  the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

AICPA Disclosed Task-Based Simulation (cont.)

Copyright  ©  2014  -­‐ 2016  by  the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

Copyright  ©  2013   -­‐ 2016  by   the  American  Institute  of  Certified  Public  Accountants,  Inc.,  is  reprinted  and/or  adapted  with  permission.

FAR Exam – April 1, 2017

• Major Exam changes:– Focus on and enhance the testing of higher-order

cognitive skills– Reallocate skills and content– Increase number of task-based simulations, (to focus on

higher-order skills)– Replace content specifications outlines (CSOs) with

blueprints (enhanced depth and breadth of exam content coverage)

– Change structure of Exam

Higher-Order Cognitive SkillsFinancial Accounting and Reporting

Evaluation

Analysis

Application

Remembering  and  Understanding

Current  Exam  Focus

Next  Exam  Focus

Higher-Order Cognitive SkillsFinancial Accounting and Reporting

Evaluation

Analysis

Application

Remembering  and  Understanding

Current  Exam  Focus

Next  Exam  Focus

Higher-Order Cognitive Skills

SKILL  LEVELS

Evaluation The  examination  or assessment  of  problems,  and  use  of  judgment  to  draw  conclusions.

Analysis The  examinationand  study  of  the  interrelationships  of  separate  areas  in  order  to  identify  causes  and  find  evidence  to  support  inferences.  

Application The  use  or  demonstration  of  knowledge,  concepts  or  techniques.

Remembering  and  understanding

The  perception  and  comprehension  of  the  significance  of  an  area  utilizing  knowledge  gained.

Higher-Order Cognitive SkillsFinancial Accounting and Reporting

SKILL  LEVELS

Evaluation The  examination  or assessment  of  problems,  and  use  of  judgment  to  draw  conclusions.

Analysis The  examinationand  study  of  the  interrelationships  of  separate  areas  in  order  to  identify  causes  and  find  evidence  to  support  inferences.  

Application The  use  or  demonstration  of  knowledge,  concepts  or  techniques.

Remembering  and  understanding

The  perception  and  comprehension  of  the  significance  of  an  area  utilizing  knowledge  gained.

Reallocation of Higher-Order Cognitive SkillsFinancial Accounting and Reporting

Section Remembering  and  Understanding

Application Analysis Evaluation

Current  ExamALL 50% 50% N/A N/A

Next  ExamFAR 10%-­‐20% 50%-­‐60% 25%-­‐35% N/A

Reallocation of FAR Content

Source:  AICPA  Exposure  Draft:  Maintaining  the  Relevance  of  the  Uniform  CPA  Exam  (September  1,  2015)

FAR Exam Score Weighting

60%

40%

MCQsTBSs

Current  Exam

50%50%

MCQsTBSs

Next  Exam

Next FAR Exam Structure

Source:  AICPA  Next  Exam  Structure  – White  Paper

Tips and Techniques for Passing FAR!

• FAR First!!• Study and practice• Time management• One question at a time• Do not leave a question blank• Be confident in yourself

Photo  Credit:  Probert,  2016

Raffle Time!

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• 4,500+ CPA Exam Questions with Detailed Answers

• 160+ Task-based Simulations, Including 10+ New Document Review Simulations (DRS)

• Replicates the Prometric Interface

Ask the Expert