The CPA Journal

By Donna Whitten and Tantatape Brahmasrene

While passing rates for the Uniform CPA Examination vary from state to state, in general, passing rates remain relatively low. The National Association of State Boards of Accountancy (NASBA) released figures that indicated that while just over 20% of first-time candidates in 1990 passed all four sections of the Uniform CPA Examination, more than half of the first-time candidates failed to pass any sections. NASBA figures on the May 1998 exam administered in Indianapolis show that 24% of repeat candidates passed, and 12.9% of first-time candidates passed. Overall, 20% succeeded in passing all four parts.

New Survey of Relevant Factors

The authors surveyed all 1,072 May 1998 Indiana CPA candidates. The number of completed surveys returned totaled 238, for a response rate of 26%. Of those surveys completed and returned, seven had one or more item on the survey left blank.

Exhibit 1 presents the descriptive characteristics of the continuous variables of the survey response sample. For example, the average high school GPA of the survey respondents is higher than the average undergraduate GPA. Moreover, the average age of the survey respondents is slightly higher than the average graduation age for the traditional full-time student.

Exhibit 2 shows the descriptive characteristics of the categorical variables of the survey response sample.

Most respondents possessed a bachelor’s degree at the time of the exam. Another interesting item is that 51.7% of respondents ranked in the upper 10% of their high school class, indicating that those drawn to the Uniform CPA Exam tend to be some of the top high school academic performers.

In terms of preparation, most respondents used some form of preparation for the exam. Most chose either a live review course or self-study. Many worked in the accounting field in some capacity before sitting for the exam. Most worked in either private accounting or public accounting, with a small percentage in government and education. Most candidates had taken the exam at least once before.

Table 1 presents a cross-tabulation that investigates the relationship of selected variables. Data pertaining to the various factors is presented in actual raw numbers, not in percents. For example, the cross-tabulation of education and results produced a table that shows 88% of those who failed all four parts had a bachelor’s degree. In addition, although the percentages varied slightly among the remaining categories, 89.6% of those that achieved success in various stages held a bachelor’s degree. So, whether the candidate had a bachelor’s degree or higher does not appear to significantly influence the result.

Females comprise 60.1% of the respondents and 60.9% of those who passed all four parts on the first sitting. Of those passing after attaining a conditional status and those attaining a conditional status on this exam, females were represented in lower numbers than their population representation. For example, although females represented 60% of the population, they represented only 55% of those passing after attaining a conditional status, and only 54% of those attaining a conditional status on this exam. By and large, females perform as well as males in term of passing on the first sitting, but tend not to do as well in subsequent sittings.

Most candidates used some form of preparation for the exam: 58% chose the live review and 42% chose self-study. Yet, 70% of those passing on the first sitting had used a live review, while only 30% had used self-study. For some individuals, utilizing a live review for preparation for the exam may improve one’s chances of a successful outcome.

Do Credit Hours Matter?

Taking into account credit hours in relation to exam results, the numbers again present a varied picture. The data show that 87% of respondents had less than 150 credit hours at the time of this exam. This time period was intentionally chosen to reflect candidates sitting before the 150-rule came into effect in Indiana. The result categories of passed-after-conditional-status and attained-conditional-status show 77% and 100%, respectively. Those possessing 150 or more credit hours had performed better than expected in terms of attaining conditional status, but did not perform as well in terms of passing after attaining a conditional status.

Private vs. Public Accounting Experience

When investigating work experience in relation to exam results, the data show that 84.5% of respondents had some accounting-related experience at the time of the exam, in either private or public accounting. While having either of these types of experience seemed to be an advantage for those passing after attaining a conditional status, the picture is much different when examining the other results. For those passing all four parts on the first sitting, 43.5% had private experience, but only 17% had public. Except for the result of passing after attaining a conditional status, those with public experience did not perform as well. Although 75% of respondents had experience in either private or public accounting, only 60% of those who passed did. If experience seems to hinder performance, it could be because of the time constraints that employment puts on available study time. Or, it may be that the type of knowledge tested on the Uniform CPA Exam does not correlate well with the types of things individuals learn from their experience in the “real world.” This relationship, as it relates to gender, is explored further in Exhibit 3. The initial findings were not very revealing. Men and women were represented in each area in relative proportion to their population representation. With slight deviations, men and women with these types of work experiences passed after attaining a previous conditional status, attained conditional status, and failed in relative proportion to their population. In terms of passing all four parts on the first sitting, however, the results were very different. For private accounting, women seemed to have an advantage. A full 80% succeeded in passing all four parts on the first sitting, while for men only 20% did. The picture changed substantially when examining public accounting experience. Men and women represented equal proportions of those passing all four parts on the first sitting, even though they were represented differently in the sample. It seems women had an advantage in terms of passing all four parts on the first sitting if they had work experience in private accounting. However, they did not perform as well in that category if their experience was in public accounting. For men, the opposite is true, with public accounting an advantage; male candidates with private accounting experience did not perform as well.

Donna Whitten, CPA, is an assistant professor, and Tantatape Brahmasrene, PhD, is an associate professor, both in the Business Department at Purdue University North Central.