Analytics-Potential-of-Students-to-Pass-US-CPA-Exam

Analytics: Potential of Students to Pass US CPA Exam

Shortage of CPAs has been continuing for decades, and the survey of AICPA’s 2019 PCPS CPA firm says the primary issue for most public accounting firms is staff recruitment. The U.S. Bureau of Labour Statistics has reported that unemployment for auditors and accountants is under 2 percent. In recent years, record numbers are majoring in accounting, but the people sitting for the CPA exam are static, which results in “CPA gap.”

An individual must pass all the four sections of the CPA exam. New hired individuals face challenges in work for weeks and then spend some time studying for the exam. A recent graduate commented: “Before starting as a fulltime, if you haven’t passed at least two sections of the exam, you’re probably going to face troubles.”

CPA Success Index:

With an attempt to get a better outcome, ‘Accounting today’ created the CPA Success Index, a metric that estimates a student’s progress while completing all the four sections of the CPA Exam which are taken within 18 months.

These analytics are based on the number of sections that the candidate has passed on his/her first attempt in the preceding 12 months, grossing that value up to 18 months using the school’s average first-time pass rate, and then further dividing that value by the total number of sections (four).

These are the 10 schools that have the highest success indices amongst extensive collegiate accounting programs; University of Missouri-Columbia (95.3 percent), Texas A&M University (90 percent), University of Northern Iowa (89 percent), Wake Forest University (82.6 percent), James Madison University (81.8 percent), Southern Methodist University (80 percent), University of Texas (79.8 percent), Boston College (77.4 percent), University of Kansas (76.7 percent) and the University of Wisconsin (78.2 percent).

According to the University of Missouri, an index of 95.3 percent means that an average of 3.81 sections were cleared per candidate during the 18-month testing window. Missouri had 144 candidates attempting 474 sections for the first time in 2018.

Those students passed 366 sections at a 77.2 percent raw pass rate. Therefore, students from Missouri have a 77.2 percent chance of passing one section of the CPA Exam successfully. However, keep in mind that only 144 candidates pass these 366 sections, which indicates that, on average, each candidate passed 2.54 sections.

Which means, on an average, candidates from the University of Missouri passed 63.5 percent of the exam in one year. Now, taking it one step further, on average, Missouri students pass 63.5 percent x 18/12, or 95.3 percent, of the CPA Exam in the first 18-month testing window, which results in them reaching the No. 1 ranking on our CPA Success Index.

Insights into the top universities for CPA Success:

Most of the programs in our top 10 universities have exceptional incoming students as measured by high standardized test scores. On the other hand, our top three universities — the University of Missouri, Texas A&M University and the University of Northern Iowa — are public universities with acceptance rates way above the group average, tuition rates way below the group average, and these universities enrol students from families with the lowest household incomes. Also, their students have relatively lower standardized test scores compared to the other programs that are in the top 10. So how do they have the highest CPA Success Rates considering these hurdles? Let’s take a look at the mechanisms that differentiate their programs.

The most distinguishing feature of the accounting program at the University of Missouri is that it is a 150-hour program with a combined bachelor’s and master’s degree. The accounting program at Texas A&M University also finds most students pursuing their CPA certification through a five-year (bachelor and master) integrated professional program.

The distinguishing feature of the University of Northern Iowa is a for-credit CPA review program, taught by department faculty, integrated into a student’s final semester. Most CPA candidates from the University of Northern Iowa sit for all four parts of the CPA exam before graduation as part of that review program.

Key takeaways:

Our CPA Success Index at Accounting Today is a better measure of students’ likeliness to complete the exam. Our research shows that schools which recruit high-quality students have high pass-rates, but additional mechanisms can elevate average students to the same heights as those who come into college with higher accolades. Two such mechanisms include integrated graduate coursework and CPA review.

Good and hard-working students, more accounting coursework and CPA review courses result in greater candidate success in the CPA exam and help reduce the “CPA gap.” Students looking for college to give them the best chance in order to cross the finish line and successfully become a CPA should look for a program that integrates bachelor’s and master’s degrees and/or offers formalized CPA review.

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