Which CPA Exam Section Should You Take First?

The Certified Public Accountant (CPA) license represents a significant achievement for accounting professionals, signaling a high level of expertise and ethical commitment. This credential is earned by passing a rigorous multi-part examination. Aspiring CPAs frequently contemplate the most effective order in which to approach these distinct sections, a highly individualized decision influenced by various personal and academic considerations.

Understanding the CPA Exam Sections

The CPA exam is structured into four distinct sections, each covering a broad area of accounting knowledge. Candidates must demonstrate proficiency across these subjects to earn the CPA designation. Each section is designed to test a candidate’s understanding of specific principles, standards, and regulations relevant to the accounting profession.

Auditing and Attestation (AUD)

This section focuses on the principles and procedures involved in auditing financial statements and performing other attestation services. Topics include generally accepted auditing standards (GAAS), which are established by the American Institute of Certified Public Accountants (AICPA) for audits of private companies. For public companies, the Public Company Accounting Oversight Board (PCAOB) sets the auditing standards, which are generally aligned with GAAS but include additional requirements. Candidates are tested on audit planning, risk assessment, internal controls, evidence gathering, and the various types of audit reports.

Business Environment and Concepts (BEC)

BEC covers a wide range of business-related topics that are relevant to the accounting profession. This includes corporate governance, economic concepts, financial management, information technology, and operations management. A significant portion of this section addresses the COSO Internal Control – Integrated Framework, which outlines five components of internal control: control environment, risk assessment, control activities, information and communication, and monitoring activities. Candidates are expected to understand how these components contribute to an effective system of internal control.

Financial Accounting and Reporting (FAR)

FAR is often considered the most extensive section, covering U.S. Generally Accepted Accounting Principles (GAAP) as applied to various entities, including business enterprises, not-for-profit organizations, and governmental entities. Specific areas include revenue recognition under Accounting Standards Codification (ASC) 606 and lease accounting under ASC 842. The section also delves into topics like consolidations, business combinations, and financial statement presentation.

Regulation (REG)

REG focuses on U.S. federal taxation, business law, and professional ethics. This includes individual income tax, corporate taxation, and partnership taxation, along with related deductions, credits, and filing requirements. Candidates are also tested on the AICPA Code of Professional Conduct, which outlines ethical guidelines and principles for CPAs, emphasizing integrity, objectivity, and due care. Business law topics such as contracts, agency, and debtor-creditor relationships are also included.

Key Considerations for Ordering Your Exams

When deciding on the sequence for taking the CPA exam sections, several factors can influence a candidate’s strategy. Thoughtful consideration of these elements can help create a more effective study and testing plan. Each candidate’s background and learning style will shape which factors hold the most weight.

Content overlap between sections can be a strategic advantage. For instance, understanding internal controls, which is a major part of the BEC section, directly supports the Auditing and Attestation (AUD) section, as auditors evaluate internal controls during their engagements. Similarly, ethical principles covered in the Regulation (REG) section, particularly the AICPA Code of Professional Conduct, also appear in the AUD section. Recognizing these interconnected topics can allow for more efficient study time.

A candidate’s personal strengths and weaknesses, often stemming from academic coursework or professional experience, should guide their initial choices. If a candidate excelled in tax courses, starting with REG might build confidence and provide an early win. Conversely, tackling a perceived weaker area first, such as the extensive financial accounting topics in FAR, allows for dedicated study time without the pressure of an expiring credit for another section.

The structure and format of each exam section, including the types of questions, can also play a role in sequencing decisions. All sections feature multiple-choice questions and task-based simulations. Understanding these format variations can help candidates prepare for specific challenges.

Score release windows are another practical consideration, especially given the various deadlines involved. The window to pass all four sections has been extended to 30 months for candidates passing their first section after January 1, 2024. Knowing when scores will be available allows candidates to plan potential retakes and maintain momentum within their credit window.

Common Approaches to Exam Sequencing

Candidates often adopt specific strategies for sequencing their CPA exam sections, each with its own logical basis. These approaches aim to optimize study efficiency, manage the cumulative knowledge burden, or build confidence. There is no single “correct” order, as individual circumstances vary.

Many candidates choose to start with Financial Accounting and Reporting (FAR) because it is widely regarded as the most comprehensive and challenging section. The rationale is to tackle the largest hurdle first, allowing for focused effort on its extensive content, including complex topics like consolidations and governmental accounting. Passing FAR early can also provide a significant confidence boost, setting a positive tone for the remaining sections.

Another common approach involves taking Auditing and Attestation (AUD) immediately after FAR. This sequence is often chosen due to conceptual overlap, as auditing financial statements (AUD) requires a strong understanding of how those statements are prepared under GAAP (FAR). Knowledge of financial reporting standards directly informs an auditor’s ability to assess financial statement assertions and identify potential misstatements.

Some candidates opt to take Regulation (REG) after FAR. While the content of REG, primarily U.S. federal taxation and business law, is distinct from FAR, this order can be appealing for those who prefer to separate the heavily financial accounting topics from the tax-focused material.

The Business Environment and Concepts (BEC) section is sometimes saved for last by candidates. This strategy might be based on the perception that BEC covers a broader, more conceptual range of topics, including economics, IT, and corporate governance, which may feel less “technical” than the other sections. Finishing with BEC can allow candidates to integrate knowledge from previous sections, particularly regarding internal controls that are relevant to both BEC and AUD.

Combining sections with perceived synergies is another popular strategy. For instance, taking AUD and REG in succession might be chosen by candidates who recognize the shared emphasis on ethics and professional responsibilities found in both sections. Similarly, some might group FAR and BEC together due to overlaps in financial management concepts or the application of internal controls to financial processes.