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CPA certification is one of the top professional credentials that is pursued by students and working professionals. Administered by the AICPA (American Institute of CPAs), the comprehensive US CPA exam have four parts, namely FAR (Financial Accounting & Reporting), BEC (Business Environment & Concepts), AUD (Auditing & Attestation), and REG (Regulations). In this blog post, we will discuss all the details regarding the CPA FAR Exam.
The most comprehensive and frequently regarded as the most challenging part of the CPA Exam is the Financial Accounting and Reporting (FAR) section. Candidates should be able to demonstrate on the FAR CPA Exam that they can recall and apply financial reporting concepts and that they possess the knowledge needed by CPAs.
FAR focuses on determining whether a candidate is qualified to carry out this mandate competently. You’ll learn about the conceptual framework, financial reporting and standard setting, financial statement preparation, financial transactions following US GAAP and IFRS rules, and compliance with state and local governments.
You must possess in-depth knowledge of the accounting standards applied by various entities to pass this subject. You must remember crucial formulas and complete accounting calculations within a set amount of time, in addition to understanding the accounting standards.
Before you take the exam, make an effort to thoroughly understand the material and practice sample quizzes. The exam’s difficulty is evident by the fact that FAR has the lowest pass rate. However, if you prepare well, you can undoubtedly get through it.
The section of the CPA FAR Exam has historically had the lowest pass rates of the four. Pass rates significantly increased in 2020 to almost 50%, stabilizing at 45% in 2021. The pass rate for the FAR exam in 2022 starts at 45%, continuing the current trend. For the remainder of 2022, the FAR pass rate will stay in the mid-40s.
The CPA FAR Exam section is possible because the pass rates are lower than those for other sections. The CPA Exam’s objective is to confirm that candidates who clear with the lowest possible score are qualified to carry out CPA-related responsibilities. Everyone who succeeds should have positive thoughts about the industry. CPAs typically make 10–15% more money than their non-certified counterparts.
The following table lists the CPA FAR Exam pass rates over the previous five years.
| Year | First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Cumulative |
| 2021 | 46.64% | 42.63% | – | – | 44.70% |
| 2020 | 46.37% | 62.86% | 55.67% | 43.53% | 49.98% |
| 2019 | 44.43% | 49.37% | 50.29% | 40.57% | 46.31% |
| 2018 | 41.59% | 49.17% | 48.85% | 44.57% | 46.22% |
| 2017 | 43.14% | 43.76% | 47.58% | 42.50% | 44.42% |
The CPA FAR Exam consists of five testlets that must be completed in four hours, plus a 15-minute break. The first two testlets consist of multiple-choice questions (MCQ), and the final three are simulations based on tasks (TBS). The five testlets of FAR contain two different kinds of questions.
The AICPA specifies the medium and difficulty for the levels of difficulty for MCQ testlets. These represent the Testlet’s average question difficulty. The second MCQ testlet, like the other CPA Exam sections, adjusts based on how well you did on the first. Receiving harder or easier questions has neither an advantage nor a disadvantage, according to the AICPA, because the exam checking takes the question difficulty into account when awarding grades. In other words, more complex questions earn more points.
Your initial MCQ testlet has a medium level of difficulty. The difficulty of the next one will vary depending on how well you did on the first testlet. Both the testlet they receive and the level of difficulty assigned to each question will be concealed from the candidates. Regardless of how difficult a question may seem to them, candidates should attempt to provide the best response.
A challenging testlet will be given to you if you do good on the first testlet. You will be given another medium testlet if your performance on the first testlet is terrible.
Even in a medium-difficulty testlet, expect a few questions to stump you because the difficulty rating given to each testlet is based on the average difficulty of the MCQs. Be prepared to mark any difficult questions for you and return to them after finishing the rest of the testlet.
The CPA FAR exam has two forms of questions in the CPA FRA Exam:
The first section given is based on an average of medium difficulty. To begin with, the MCQ testlets have variable difficulty. Therefore, the overall difficulty balances out to medium, despite the possibility of some questions being more challenging or accessible than others. If you perform well on the first segment, you will receive a more challenging MCQ set for the following section.
These are more difficult than before, but they are worth more points. You will, however, be given a second medium-difficulty MCQ testlet if your performance could be more robust. Remember that you can pass the FAR exam with two medium-difficulty test sections, mainly if you perform well on the second one. However, if your early sections go well, don’t be shocked if the exam starts to get harder to make up for it.
TSBs are not graded on a binary scale of correct or incorrect, unlike the multiple-choice sections. It is so that even if some of the simulation’s components are incorrect, you can still receive partial credit. As a result, you should attempt to answer each of these questions as entirely as possible; even if your answer is only partially accurate, it will still count toward your overall score on the FAR section.
The CPA FAR Exam has a rich and distinctive subject matter. The content areas will put your skill levels to the test. 50-60% of the weight is given to the application, 25-35% to analysis, and 10-20% to remembering and understanding.
| Content Area | Content Area |
| Select Financial Statement Accounts | 30 to 40% |
| State & Local Governmental Accounting | 5 to 15% |
| Conceptual Framework & Financial Reporting | 25 to 35% |
| Transactions | 20 to 30% |
Your final score on the FAR exam will be made up of 50% of the marks from the MCQs and 50% of the marks from the TBSs. So, to pass, you must receive an overall score of 75 points on a scale of 0-99. No points will be deducted for incorrect responses, and you will receive points for each right response. As a result, answer all questions.
The first testlet you receive has a medium level of difficulty, and if you pass it, the second testlet has a higher level of difficulty. The second testlet will be of medium difficulty if you perform poorly. When compared to medium questions, difficult questions give you a chance to earn more points.
However, because the correct answers on the challenging testlet are worth more, you won’t be penalized if you perform well on the first testlet but poorly on the subsequent testlet with challenging questions. Furthermore, two medium testlets are sufficient for passing the exam.
The FAR portion of the CPA Exam is regarded as the most difficult due to its consistently low pass rate (just under 45% in 2021). BEC has typically been regarded as the simplest, while AUD and REG fall somewhere in the middle.
However, no CPA Exam section is simple. You will be tested on four different skill levels, according to the AICPA, so memorizing questions and solutions won’t cut it; you’ll also need to invest the necessary time in understanding the concepts. Each level of proficiency builds on the one before it. FAR puts a lot of emphasis on application. Bring some numbers to the FAR section more than any other section.
Although the CPA FAR exam is challenging, you can pass on your first attempt with the right study plan and a CPA review provider who can help you master the material.
FAR is typically chosen first by recent college graduates. This is because FAR contains content from college accounting courses. It is widely believed by candidates that taking FAR first is simpler. The additional study time for FAR will not be counted toward the 18-month window because it requires more time to complete. Keep in mind that you must pass each of the four sections of the CPA certification exam within 18 months of passing the first one.
You will feel less pressure about the remaining three sections if you pass FAR first because it has the lowest pass rate of the four. You will have a head start on other sections if you start studying for the CPA FAR Exam first because the material also overlaps with those sections. Avoid making rash decisions whenever possible. After thorough study and sufficient practice, take the exam feeling confident about the material.
FAR takes four hours to complete. You have this amount of time to complete all five testlets. Individual testlets, however, are not subject to a time restriction. To ensure that you finish all of the testlets before the exam ends, you must effectively manage your time.
Between the third and fourth testlets, there will be a standard 15-minute break. After the first, second, and fourth testlets, you can take three additional optional breaks. You should be aware that the exam timer is paused for the mandatory breaks but not for the optional ones.
You may spend up to 18 minutes on each TBS and up to 75 seconds on each MCQ, depending on the difficulty of the questions. You can more effectively manage your exam time by taking a few practice tests. While you are completing the practice exams, make mental notes.
The CPA FAR Exam section’s pass rates have been around 45% for the past few years, the lowest of any CPA Exam section during that time. Make a CPA FAR Exam study schedule and devote the time necessary to thoroughly comprehend the topics tested. Candidates report devoting more time to studying for FAR than to the other sections.
FAR covers the broadest range of accounting knowledge of any exam section. Plan your time accordingly. Gaining a thorough understanding of FAR topics may take up to 10–11 weeks (a minimum of 6). In your CPA review course, don’t skip any of the content to get to the end faster, especially concepts you find challenging. It takes time to develop genuine confidence, which is a requirement for passing FAR.
The FAR section of the US CPA exam is regarded as one of the most challenging. Even though passing the test on your first try may be challenging, it is not impossible. Here are a few pointers to help you learn more effectively as you prepare for the CPA FAR Exam section:
The CPA FAR Exam is covered in detail here, including exam format, pass rates, content, testing procedures, question types, how the exam is graded, how difficult it is to pass, when you should take it, and the most effective methods of preparation.
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