The Financial Accounting and Reporting (FAR) exam is one of the four accounting tests included in the Certified Public Accountant (CPA) exam. To obtain your CPA certification, you must take and pass this section as well as the Audit and Attestation (AUD) exam, the Regulation (REG) exam, and the Business Environment and Concepts (BEC) exam within a rolling eighteen-month period. While eighteen months may seem like plenty of time to pass a four-part exam, the CPA exam is considered one of the most difficult exams to pass, so it's imperative that you have a test-taking strategy in place before you begin the exam.
When you prepare to take the CPA exam, you determine which of the four accounting tests you want to take first. Your eighteen-month time frame begins as soon as you pass the first section. If you don't pass all four sections of the exam within your eighteen-month window, you can lose credit for sections of the test you've already passed. Because of the eighteen-month rule, most instructors and accounting industry leaders advise that you start by taking the most difficult portions of the test first.
According to the American Institute of Certified Public Accountants (AICPA), exam results for the first two quarters of 2013 indicate that the FAR exam and the AUD exam are the two most difficult tests. However, the majority of students and instructors consider the FAR exam the most difficult section, which makes it a good place to start. But, before you schedule your FAR exam, you need to understand what topics the exam covers, why it's considered so difficult, and why you should consider taking the FAR exam first.
The FAR exam is four hours long. It covers typical financial statements and unique details in governmental and not-for-profit reporting. The broad range of topics covered and the volume of material that you need to remember in order to pass the exam make the test extremely difficult. Some students have noted that the simulation-format questions on the test are challenging and the multiple choice questions often require extensive calculations. When you're preparing for the test, some of the topics you need to study include:
- Conceptual framework, standards, standard setting, and presentation of financial statements
- Financial statement accounts: recognition, measurement, valuation, calculation, presentation, and disclosures
- Governmental accounting and reporting
- Not-for-profit accounting and reporting
- Specific transactions, events, and disclosures
Choosing the FAR exam as your first exam section has multiple benefits. Not only does it alleviate some of the pressure to pass the remaining exams, it helps you build up your confidence so that you can prepare for the remaining portions of the test. Because there is some overlap in the tests, mastering the concepts and topics covered on the FAR exam may help you pass the AUD exam.
Regardless of whether you choose to take the FAR exam first, it's important that you spend plenty of time studying and preparing for each test. The more prepared you are, the better your chances of obtaining your CPA certificate.
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