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Ultimate Guide to the BAR Section: CPA Exam Blueprint and Study Resources

Area I - Business Analysis (40-50%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Current period/historical analysis, including the use of data
1. Financial statement analysis Determine attribute structures, format and sources of data needed to prepare financial statement analysis.
Compare current period financial statement accounts to prior periods or budget and explain variances.
Interpret financial statement fluctuations and ratios (e.g., profitability, liquidity, solvency, performance).
Use outputs (e.g., reports, visualizations) from data analytic techniques to identify patterns, trends and correlations to explain an entity’s results.
Derive the impact of transactions on the financial statements and notes to the financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Non-financial and non-GAAP measures of performance Identify relevant non-financial and non-GAAP measures used to analyze an entity’s performance.
Identify and apply internal and external benchmarking (e.g., competitor analysis) techniques to measure an entity’s performance.
Use a balanced scorecard approach to measure an entity’s performance.
Interpret non-financial (e.g., customer retention rate, employee turnover, labor productivity rate, ticket response time) and non-GAAP (e.g., EBITDA, free cash flow, core earnings, adjusted net income for non-recurring expenses) measures and analyze specific aspects of an entity’s performance and risk profile.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Managerial and cost accounting Calculate fixed, variable and mixed costs.
Describe and use the different costing methods including absorption, variable, activity-based, process and job order costing.
Derive the appropriate variance analysis method to measure the key cost drivers by analyzing business scenarios.
Interpret sales results by performing price, volume and mix analysis.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Prospective analysis, including the use of data
1. Budgeting, forecasting and projection Determine methods to transform (e.g., preparing, cleaning, scrubbing) structured and unstructured data to make it useful for decision-making.
Prepare a budget using supportable assumptions.
Use forecasting and projection techniques to model financial results including revenue growth, cost and expense characteristics and profitability.
Prepare and interpret the results of planning techniques including cost benefit analysis, sensitivity analysis, what-if scenarios, breakeven analysis and predictive analytics.
Analyze results of forecasts and projections using ratio analysis and explanations of correlations to, or variations from, key financial indices.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Capital structure Calculate the cost of capital for a given financial scenario.
Determine the impact of changes in an entity’s capital structure on cost of capital, loan covenants, liquidity and leverage.
Compare the strategies for financing new business initiatives and operations within the context of an optimal capital structure.
Interpret the impact of various capital structures on financial statements and key performance measures.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Investment alternatives using financial valuation decision models Use assumptions (e.g., highest and best use, market participant assumptions, unit of account) and approaches (cost, income, market) to measure fair value.
Determine the impact of changes to assumptions used to value an asset.
Compare investment alternatives (e.g., system replacement, make, lease or buy decisions) using financial metrics and modeling (e.g., payback period, net-present value, economic value added, cash flow analysis, internal rate of return).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Risk management Recall the purpose and objectives of the COSO ERM framework.
Recall how the COSO ERM framework can be applied to identify, respond to, and report environmental, social and governance (ESG) related risks.
Apply the COSO ERM framework to identify risk/opportunity scenarios in an entity.
Use strategies to mitigate financial risks (e.g., market, interest rate, currency, liquidity).
Compare various strategies for managing the working capital of an entity.
Derive the impact of a proposed transaction on key performance measures of an entity.
Interpret an entity’s strengths, weaknesses, opportunities and threats (SWOT) analysis to assess the entity’s options to achieve its overall business strategy.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. Economic and market influences on business Determine the effect of supply and demand and elasticity measures on a product.
Calculate the effect of inflation on a product’s real price or an entity’s investments, debt and future expenses.
Calculate and use ratios and measures to quantify risks associated with risks of an entity (e.g., interest rates, currency exchange, prices).
Calculate the opportunity cost of a business decision.
Interpret the impact of market influences on an entity’s business strategy, operations and risk (e.g., sourcing production inputs, innovating to develop or diversify product offerings, seeking new markets, undertaking productivity or cost-cutting initiatives).
Compare acquisition and divestiture opportunities based on given market analysis and investment criteria.

Area II - Technical Accounting and Reporting (35-45%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Indefinite-lived intangible assets, including goodwill
Prepare a classified balance sheet from a trial balance and supporting documentation.
Adjust the balance sheet to correct identified errors.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Internally developed software
Recall the criteria necessary to capitalize software developed for internal use or software developed for sale in the financial statements.
Calculate capitalized software developed for internal use or software developed for sale to be reported in the financial statements and the related amortization expense.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Revenue recognition
Interpret agreements, contracts and/or other supporting documentation to determine the amount and timing of revenue to be recognized in the financial statements using the five-step model.
Interpret source data and outputs from data analytic techniques (e.g., reports, visualizations) to detect, investigate and resolve potential discrepancies (e.g., errors, outliers, unexpected contract elements) in the recognition of revenue in the financial statements using the five-step model.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
D. Stock compensation (share-based payments)
Recall concepts associated with share-based payment arrangements (e.g., grant date, vesting conditions, inputs to valuation techniques, valuation models).
Use a given fair value measurement of a share-based payment arrangement classified as equity to prepare journal entries to recognize compensation cost.
Use given fair value measurements of a share-based payment arrangement classified as a liability to prepare journal entries to recognize compensation cost.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
E. Research and development costs
Identify research and development costs and classify the costs as an expense in the financial statements.
Calculate the research and development costs to be reported as an expense in the financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
F. Business combinations
Recall concepts associated with the accounting for business combinations (e.g., business vs. asset acquisition, contingent consideration, measurement period adjustments).
Prepare journal entries to record the identifiable net assets acquired in a business combination that results in the recognition of goodwill or a bargain purchase gain.
Prepare journal entries to record the identifiable net assets acquired in a business combination that includes a noncontrolling interest.
Calculate the consideration transferred in a business combination.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
G. Consolidated financial statements
Recall basic consolidation concepts and terms (e.g., controlling interest, noncontrolling interest, primary beneficiary, variable interest entity).
Recall the basic functional currency concepts including the indicators to be considered when determining a subsidiary’s functional currency.
Calculate foreign currency translation adjustments (local currency to functional currency and/or functional currency to reporting currency) to prepare consolidated financial statements.
Determine the appropriate presentation of foreign currency translation adjustments in the consolidated statement of comprehensive income.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
H. Derivatives and hedge accounting
Identify the characteristics of a freestanding and/or embedded derivative financial instrument to be recognized in the financial statements.
Identify the criteria necessary to qualify for hedge accounting.
Recall the appropriate presentation of gains and losses on derivative financial instruments (swaps, options and forwards) in the financial statements.
Use given inputs (interest rates, notional amounts, fair value measurements) to prepare the journal entries to record the net settlements and changes in fair value for an interest rate swap that qualifies for hedge accounting (fair value hedge, cash flow hedge).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
I. Leases
Identify the criteria for classifying a lease arrangement for a lessor.
Calculate the carrying amount of lease-related assets and liabilities and prepare journal entries that a lessor should record.
Calculate the amount of lease income that a lessor should recognize in the income statement.
Prepare journal entries that the seller/lessee should record for a sale and leaseback transaction.
Interpret agreements, contracts and/or other supporting documentation to determine the appropriate accounting treatment of a leasing arrangement and prepare the journal entries that the lessee should record.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
J. Public company reporting topics
Recall public company reporting requirements of Regulation S-X and Regulation S-K.
Recall the purpose, objective and key characteristics of XBRL business reporting.
Recall the criteria used to identify reportable segments.
Recall the financial statement note disclosure requirements for reportable segments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
K. Financial statements of employee benefit plans
Identify the required financial statements for a defined benefit pension plan and a defined contribution pension plan.
Recall the disclosure requirements for the notes to the financial statements of a defined benefit pension plan and a defined contribution pension plan.
Prepare a statement of changes in net assets available for benefits for a defined benefit pension plan and a defined contribution pension plan.
Prepare a statement of net assets available for benefits for a defined benefit pension plan and a defined contribution pension plan.

Area III - State and Local Governments (10-20%)

Skill
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
A. Format and content of the financial section of the annual comprehensive financial report
1. Government-wide financial statements Identify and recall basic concepts and principles associated with government-wide financial statements (e.g., required activities, financial statements, financial statement components).
Prepare the government-wide statement of net position for a state or local government from trial balances and supporting documentation.
Prepare the government-wide statement of activities for a state or local government from trial balances and supporting documentation.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Governmental funds financial statements Identify and recall basic concepts and principles associated with governmental fund financial statements (e.g., required funds, financial statements, financial statement components).
Prepare the statement of revenues, expenditures and changes in fund balances for the governmental funds of a state or local government from trial balances and supporting documentation.
Prepare the balance sheet for the governmental funds of a state or local government from trial balances and supporting documentation.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Proprietary funds financial statements Identify and recall basic concepts and principles associated with proprietary fund financial statements (e.g., required funds, financial statements, financial statement components).
Prepare the statement of revenues, expenses and changes in fund net position for the proprietary funds of a state or local government from trial balances and supporting documentation.
Prepare the statement of net position for the proprietary funds of a state or local government from trial balances and supporting documentation.
Prepare the statement of cash flows for the proprietary funds of a state or local government.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. Fiduciary funds financial statements Identify and recall basic concepts and principles associated with fiduciary fund financial statements (e.g., required funds, financial statements, financial statement components).
Prepare the statement of changes in fiduciary net position for the fiduciary funds of a state or local government from trial balances and supporting documentation.
Prepare the statement of net position for the fiduciary funds of a state or local government from trial balances and supporting documentation.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. Notes to financial statements Recall the disclosure requirements for significant accounting policies, infrastructure and capital assets and long-term liabilities in the notes to the basic financial statements of state and local governments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
6. Management’s discussion and analysis Recall the objectives and components of management’s discussion and analysis in the annual comprehensive financial report for state and local governments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
7. Budgetary comparison reporting Recall the objectives and components of budgetary comparison reporting in the annual comprehensive financial report for state and local governments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
8. Required supplementary information (RSI) other than management’s discussion and analysis Recall the objectives and components of required supplementary information other than management’s discussion and analysis in the annual comprehensive financial report for state and local governments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
9. Financial reporting entity, including blended and discrete component units Recall the criteria for classifying an entity as a component unit of a state or local government and the financial statement presentation requirements (discrete or blended).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
B. Deriving government-wide financial statements and reconciliation requirements
Prepare worksheets to convert the governmental fund financial statements to the governmental activities reported in the government-wide financial statements.
Prepare the schedule to reconcile the total fund balances and the net change in fund balances reported in the governmental fund financial statements to the net position and change in net position reported in the government-wide financial statements.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
C. Typical items and specific types of transactions and events: measurement, valuation, calculation and presentation in governmental entity financial statements
1. Net position and components thereof Calculate the net position balances (unrestricted, restricted and net investment in capital assets) for state and local governments and prepare journal entries.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
2. Fund balances and components thereof Calculate the fund balances (assigned, unassigned, nonspendable, committed and restricted) for state and local governments and prepare journal entries.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
3. Capital assets and infrastructure assets Identify capital assets reported in the government-wide financial statements of state and local governments.
Calculate the net general capital assets balance for state and local governments and prepare journal entries (initial measurement and subsequent depreciation and amortization).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
4. General and proprietary long-term liabilities Identify general and proprietary long-term liabilities reported in the government-wide financial statements of state and local governments.
Recall the recognition and measurement requirements for a net pension liability for a defined benefit pension plan for state and local governments.
Recall the recognition and measurement requirements for a net other post employment benefit (OPEB) liability for an OPEB plan for state and local governments.
Calculate the total indebtedness to be reported in the government-wide financial statements of a state or local government.
Calculate the net general long-term debt balance for state and local governments and prepare journal entries (e.g., debt issuance, interest payments, issue premiums, issue discounts).
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
5. Interfund activity, including transfers Prepare eliminations of interfund activity in the government-wide financial statements of state and local governments.
Prepare journal entries to recognize interfund activity within state and local governments.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
6. Nonexchange revenue transactions Calculate the amount of nonexchange revenue to be recognized by state and local governments using the modified accrual basis of accounting and prepare journal entries.
Calculate the amount of nonexchange revenue to be recognized by state and local governments using the accrual basis of accounting and prepare journal entries.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
7. Expenditures and expenses Calculate expenditures to be recognized under the modified accrual basis of accounting (paid from available fund financial resources) for state and local governments and prepare journal entries.
Calculate expenses to be recognized under the accrual basis of accounting for state and local governments and prepare journal entries.
Content group/topic Remembering & Understanding Application Analysis Evaluation Representative Task
8. Budgetary accounting and encumbrances Recall and explain the types of budgets used by state and local governments.
Prepare journal entries to record budgets (original and final) of state and local governments.
Prepare journal entries to record encumbrances of state and local governments.