The Business Environment and Concepts (BEC) test covers many topics that CPA candidates study in business school. BEC is also the only test on the CPA exam that includes written communication (essay) questions. Now, keep in mind that you need to mentally “shift gears” to do well on these questions. Use these tips to succeed on the BEC writing section and written communication questions.
Exam topics and structure
The BEC test is really a business management test. Fortunately, many of the topics on this exam are concepts that you’ve learned in your undergraduate business program.
There are three broad areas that are tested. You’ll be tested on corporate governance issues. CPAs are required to act in the best interest of the public. Specifically, the financial statements generated by CPAs must be materially correct. In addition, a CPA must be independent of the client. The corporate governance section gives you scenarios and asks you about the CPA’s responsibility to clients.
Your BEC test will also ask questions about economic concepts. You’ll see questions about the impact of currency exchange rates and the economic cycle of a product.
Finally, the BEC test covers financial decision-making. As a CPA, you’ll need to analyze alternatives and make business decisions. You’ll be asked questions about whether a company should make a component part or buy it from a vendor, for example. This section also asks questions about discontinuing a particular product line or department.
The importance of writing
I’ve noticed over the years that many CPAs who advance into senior management are those that communicate well. That includes effective written communication. Now, if you’re cringing, just bear with me.
CPAs write many different types of documents. You may write a memo to explain the accounting treatment of a particular transaction to senior management. Every company should maintain an updated procedure manual. To keep the manual updated, you need to write clear and concise procedures that your staff can understand. So, let’s agree that writing is something you need to do as a CPA.
The BEC test will ask you to write different types of essays. The test may ask you to explain a business process, for example. You also may be asked to research an accounting issue and write about it.
Your BEC test may ask you to perform financial analysis. That analysis may require you to identify trends in a set of financial statements. As an example, maybe you notice that accounts receivable are increasing at a much faster rate than sales. That may indicate that the business is selling to more customers with a higher risk of not paying their invoices.
How to start
When you read the question topic, create an outline. As I write this post, I’m looking at an outline I’ve written on a yellow legal pad. The outline helps you organize you thoughts into a logical flow.
Don’t skip this step! Some CPA candidates are tempted to just start writing. There’s a problem with that approach. You may get a few paragraphs into your essay and realize that you don’t have a logical flow going. Now you’ve wasted time and have to start over- by creating an outline(!)
Try to avoid jargon, if possible. If there’s a term you need to use, consider whether or not the typical reader will understand the meaning. Your production managers understand what revenue is, for example. That audience is probably not familiar with economic order quantity, so define that term if you use it.
When you reach the essay portion of the BEC test, take a deep breath. With some planning, you can succeed on this section of the CPA exam.