Correlates of Certified Public Accountant (CPA) Examination: An Analysis of Five Year Performance

Emma V. Sagarino and Deogracia B. Corpuz Abstract With the goal of developing an intervention program to further improve the performance of the UIC accountancy graduates in the CPA board examination, the researchers were motivated to conduct this particular investigation which examined the performance of the accountancy program in the areas of academic performance (average grade), retention rates, mock board and CPA board examination ratings covering the five Academic Years 20052006 to 2009-2010. Using Pearson r correlation coefficient it established the relationship between each of the academic performance and mock board to the board examination. Interviews with selected UIC accountancy graduates who are now CPAs determined the facilitating and hindering factors in passing the board examination. The UIC accountancy graduates showed improvement in their academic performance over the years. Yet in terms of mock board examination, the earlier graduates (2006 to 2009) performed better as compared to those who graduated in 2010. UIC board examination passing rates marked an upward trend in the last three years (2008 to 2010). Statistical analysis indicates that only academic performance has a moderately positive relationship with the board examination. Facilitating factors include intrinsic and extrinsic motivation, support and encouragement of family members and mentors, and the academic and spiritual preparations. Lack of confidence hindered them to succeed on the first take of the CPA board examination. Keywords: academic performance, analysis of CPA board exam performance, correlates of CPA, mock board, retention rates

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Introduction Philippine accounting practices date back to the pre-Spanish period, when Filipinos started engaging in business with Chinese, Indians and Malays from neighboring countries. These trading activities forced Filipinos to prepare crude accounting records that were based mainly on cash receipts and payments (Agustin, 2004). Through Act No. 3105 which was approved by the Sixth Legislature on March 17, 1928, the Philippine Accountancy was recognized as a profession. This Act entitled An Act Regulating the Practice of Public Accounting has expressed the following purposes: creation of the Board of Accountancy; provision for professional licensure examinations, issuance of certificates, registration of CPA; suspension or revocation of certificates. It paved the way for local accountants to do the work which, up to that time was performed by foreign accountants in the country (Ballada, 2008). For accountancy graduate to be allowed to practice accountancy, he or she must successfully pass the Certified Public Accountant CPA licensure examination. Passing the CPA board examination is a tough undertaking for anyone who aspires to become a CPA. According to Abrugar (2009) many critics say that it is one of the most difficult professional board examinations in our country. The difficulty of passing the CPA board examination is reflected in relatively low passing rates both in national and local levels. The University of the Immaculate Conception (UIC) was ranked among the low-performing schools in the past in terms of the CPA board examination passing rates. However, its performance has improved as reflected in the recent CPA board examination results published by the Philippine Regulation Commission. In fact, in May 2010 CPA board examination, with a passing rate of 58 percent; UIC has surpassed the national passing rate of 39.52 percent. With these encouraging trends it is imperative that innovative and continuous intervention programs be undertaken in order to maintain or improve the UIC accountancy graduates performance in CPA board examination. This intervention program must be research-based and therefore this investigation was conducted to derive findings to be used as basis for the program. 130

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Methods This study used the descriptive design employing both the quantitative and qualitative approaches. Quantitatively, correlation was performed to determine the relationship of each of the two variables-academic performance and mock board to board exam. Qualitative method was employed in identifying the facilitating and hindering factors in passing the CPA board examination. The academic ratings were requested from the University Registrar. The mock board results were provided by the ABA program while the CPA board exam results were requested from the Professional Regulation Commission (PRC). In order to elicit information on the facilitating and hindering factors in passing the CPA Board Examination, interviews were conducted to selected examinees composed of those who failed but took the examination again and finally passed it. An interview guide with open-ended questions was used during the conduct of the interview. However, an exploratory approach was employed to avoid delimiting information generated through this data gathering method. Results and Discussions Performance of the Accountancy Program Table 1 shows that the performances of 2010 and 2009 graduates are better compared to the graduates of 2006, 2007 and 2008. This implies that the academic performance of the accountancy students has improved over the years. In contrast as revealed in Table 2, the performance in the mock board exam is inconsistent with the academic performance. The graduates in 2010 have poor ratings even if they receive very good ratings in the academic performance. In addition, the 2007 graduates obtain average ratings in the academic performance but they garner very good ratings in the mock board examination.

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Furthermore, it can be noted that despite of the excellent performance of the 2007 graduates in the mock board exams they got the lowest CPA board examination passing rate over the five-year period as shown in figure 2. This inconsistent performance can be attributed to the selection and preparation of the mock boards test questions. As reflected in Table 3, the retention rates from 2006 to 2010 range from 12.29 percent to 25.32 percent. The highest is observed in the Academic Year 2008-2009 and the lowest is observed in the Academic Year 2009 to 2010. This implies that accountancy is really a tough course as very few survive and finish the course. The elimination of non-deserving students in the accountancy program is also a manifestation that it really upholds to its vision of producing quality graduates. Presented in Table 4 are the details of the board examination performance of graduates from 2006 to 2010. It shows that of the 67 accountancy graduates of this five-year period, 41 or 61 percent attempted to become CPAs by taking the board exam. Out of these 41 examinees, 33 or 80 per cent passed the board exam. Of the 33 passers, 21 or 64 percent successfully attained their goal to become CPAs in their first take of the licensure examination. Shown in Figure 1 is the trend of the CPA board examination passing rate of UIC from 2006 to 2010. Except for the decline in the passing rate in 2007 which is only 60%, UICs performance in the CPA Board examination has increased from 77.78% in 2006 to 87.50% in 2010. This improved performance could be attributed to more comprehensive reviews conducted within the university, intensified monitoring of reviewees, motivation of Accountancy graduates to take the Board exam and the moral support extended during their review not only by the Accountancy Program faculty but also by non-teaching personnel such as the librarians, the secretary and the security guards. Table 5 shows the profile of the UIC Board examinees from 2006 to 2010 in terms of board and mock board ratings. Their average rate in the mock board exam is greater at 85.30% as compared to 77.40% in the board exam. The middle most value which also serves as the most dominant score among the examinees in the board exam is 81% and 85% in the mock board. 132

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Table 1 Academic Performance 2006-2010 Graduates

Year 2010 2009 2008 2007 2006 Average 89.42 89.47 88.50 88.73 86.73 Description Very Good Very Good Average Average Average

Table 2 Mock Board Performance 2006-2010 Graduates

Year 2010 2009 2008 2007 2006 Average 78.82 86.10 87.69 89.00 85.87 Description Poor Average Average Very Good Average

Table 3 Retention Rate

Academic Year 2009-2010 2008-2009 2007-2008 2006-2007 2005-2006 Number of Students per Batch 122 (2006) 79 (2005) 43 (2004) 79 (2003) 76 (2002) Number of Graduates 15 20 9 12 11 Percentage 12.29 25.32 21.93 15.19 14.47

Table 4 Details of Board Examination Performance

Year Graduated 2010 2009 2008 2007 2006 Total Percentage Number of Graduates 15 20 9 12 11 67 Number of Takers 8 14 5 5 9 41 61 Exam Results Failed 1 2 1 2 2 8 20 Passers 7 (88%) 12 (86%) 4 (80%) 3 (60%) 7 (78%) 33 80 6 9 2 2 2 21 64 Passers Take 1 Repeater(s) 1 3 2 1 5 12 36

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100 80 60 40 20 0 2006 2007 2008 2009 2010

Figure 1. UIC Board Exam Passing Trend for 2006-2010

Table 5 Profile of the Board and Mock Board Performance 2006-2010

Type of Exam Board Mock Board Statistical Measures Mean 77.40 85.30 Mode 81.0 85.0 Median 81.0 85.0 SD 8.17 4.18 Skewness -1.879 -.737 Range 40 17

The standard deviations of 8.17 for the board exam and 4.18 for the mock board exam indicate the distance of each score from the mean average. It connotes the homogeneity of the scores. This means that the scores in the mock board examination are more homogenous or are closer among the values with respect to the mean as compared to the board exam scores. Negative values for the skewness indicate data that are skewed left which apparently suggests that for each type of exam there are fewer graduates who scored low but comparing the two exams, there are more low scorers in the board exam as compared to the number of low scorers in the mock board. It can also be noted in Table 5 that there is a gap of 40 between the highest score of 88.86 and the lowest score of 48.71 in the board exam while a lower gap of 17 is noted in the mock board exam results. 134

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Relationship of Academic and Mock Board Performance to Board Examination Statistical data show that generally there is no significant relationship between the mock board results and the board examination results as manifested by overall p-value of 0.645 which is greater than 0.05. This means that passing or garnering of higher scores in the mock board examination does not give an examinee an assurance of passing the CPA board examination. According to Jessee (2002) evaluating the influence of clinical mock boards to the success rate on qualifying board found that no single aspect of a mock board had a statistically significant effect on the outcome of qualifying examinations. However, as shown in Table 6 significant relationship between mock board and board exam is noted in 2010 and 2007. This can be attributed to the fact that those who conducted the review for the mock board examinations were not the same people who prepared the test questions. In this sense, impartiality is observed. In addition the significant relationship in this twoyear period is a manifestation that the level of difficulty of the mock board test questions is at par with that of the actual board examination test questions. Generally the mock board does not show significant relationship with the board examination. Nonetheless, findings from the qualitative analysis revealed that interviewees have recognized its important role. An interviewee considered it as a good tool for preparation in the actual board examination. Table 6 Pearson Correlation Coefficient of Mock Board and Board
Variables Paired MB - B 2010 MB - B 2009 MB - B 2008 MB - B 2007 MB - B 2006 Over-all
Legend:

Pearson r coefficient 0.824 0.410 0.734 0.920 0.333 0.076

p-value 0.023 0.164 0.158 0.027 0.381 0.645

Remarks SR NSR NSR SR NSR NSR

MB Mock Board B Board SR Significant Relationship NSR No Significant Relationship

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Another said it is a study-habit forming as one will be trained to study harder in preparation for the mock board examination. She also added that it helps boost our confidence level in taking the actual board examination because we have been used to it through the mock board exams we have undergone since we were in first year college. In fact, because of this confidence, two of the March 2011 graduates took and passed the CPA Board in May 2011. In the past, graduates would take extensive review (6 -14 months) before taking the board examination. Moreso, there were areas included in the mock board which really came out in the actual board exam. Another interviewee has commented that the mock board practice must be continued because it is the best way of gauging the capability of the students in taking the board examination. As shown in Table 7, the academic performance is found to have a significant moderately positive relationship (r=0.502) with the board examination results (p=0.001). This means that a good four-year preparation through the effective learning approaches and appropriate learning materials significantly contribute to the ability of the examinees to perform well during the board examination. This further implies that the faculty members of the UIC accountancy program are really instrumental in the success of its graduates. One of the factors that motivate a student to perform well in class is the quality of instruction rendered by the teachers. According to Kirk (n.d.) teachers behavior and teaching style, the structure of the course, the nature of the assignments and informal interactions with students all have a large effect on student motivation to perform well. This finding which manifests a significant relationship between academic performance and board examination is consistent with the result of the study of Heupel as cited by Edenfield and Hansen (2000). Using Table 7 Pearson Correlation Coefficient of Academic Performance and Board
Variables Paired Academic performance Board Examination
Legend: SR Significant Relationship

r-value 0.502

p-value 0.001

Remarks SR

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the Pearson correlation and regression analysis, she found that of all the independent variables (grade point average (GPA) and theory grades), GPA had the most significant correlation with the National Council Licensure ExaminationRegistered Nurse scores. Facilitating and Hindering Factors Factors which help accountancy graduates become CPAs are varied. These include intrinsic and extrinsic motivation, support and encouragement of family members and mentors, and the academic and spiritual preparations. An interviewee revealed that it has always been her dream to become a CPA. According to her, it is a prerequisite of finding a job for an accountancy graduate. A response of another interviewee confirms this notion that CPAs have more opportunities than accountancy graduates who are non-CPAs. In addition an interviewee had revealed that his motivation to really achieve his goal of being a CPA is triggered by his dream of augmenting the financial condition of their family. The enduring moral support provided by the accountancy program particularly the dean and the teachers have motivated the examinees to exert extensive effort and strategize in the preparation for the examination. The provision of study room with free snacks during the review was also cited to be facilitative in their preparation. The support of the family members in all aspects of their preparation for the examination was also identified as factors which have helped them succeed. Their parents unconditional love has nurtured their optimism to reach their goal of becoming a CPA. Merit was also given to the teachers who have molded them to be critical thinkers. Teachers who have implemented learning approaches forced them to dig-up and learn the details of every topic they have discussed. Consequently, these preparations have assured them that they were academically equipped to face the challenge of passing the board examination. On the other hand the accountancy graduates who failed in the first take said that their classmates who were able to successfully pass the board examination during their first had motivated them to re-take the licensure examination bearing in mind the principle if others can do it, why cant I.
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The spiritual nourishment through prayers was also cited as an important factor in boosting the examinees confidence in taking the board examination. Their faith in Gods power has sustained their composure and presence of mind during the examination. The hindering factors on the other hand were attributed more to the personal aspects particularly during the review stage. An interviewee had shared that lack of focus was one of the culprits why she did not succeed in her first take. She failed to undergo intensive review due to various extracurricular activities that she could not let go. The study habits she had developed in college were all wasted. One has also recalled that she was not enjoying the review process feeling she seemed to have been forced to do it. Interviewees had disclosed that their confidence level declined upon encountering some unfamiliar questions. These led them to be very tense during the actual board examination. It was also revealed in an interview that there were items which came out in the board examination drawn from topics least discussed in the class like government accounting and accounting for non-profit organizations. Some lessons in economics such as marginal propensity to save and to consume and PERT-CPM in quantitative analysis are included in the board examination. These topics are often neglected since they have been excluded in the mock board. Conclusions The academic performance of the UIC accountancy graduates has improved over the years as manifested by very good ratings obtained by the graduates of 2009 and 2010 as compared to only good ratings obtained by 2006 to 2008 graduates. The performances in the mock board examination of the earlier graduates (2006 to 2009) are higher as compared to the 2010 graduates. Inconsistency in the mock board and board exam results was noted because in spite of very good ratings (Average- 89%) obtained by the 2007 graduates in the mock board they still got the lowest board examination passing rate (60%) within the last five years. 138

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The retention rates which range from 12.29% to 25.32% from batches of AY 2005-2006 to 2009-2010 are low. The lowest retention rate is noted in the AY 2009-2010. Except in 2007 when it declined from 77.78% to 60.00%, the UIC board examination results manifest an upward trend (77.78% to 87.50%). Statistical data show that the average grades in the board exam results for this five year period is 77.40% while the most dominant score is 81%. Between the two factors - academic performance and mock board, only academic performance showed a significant moderately positive relationship with the board examination. Factors which are vital to help accountancy graduates to become CPAs are intrinsic and extrinsic motivation, support and encouragement of family members and mentors, and the academic and spiritual preparations. On the contrary, factors which hindered success in obtaining passing scores in board examination are lack of focus during the review, poor study habits, and neglected topics in the mock board which result to a lower level of confidence during the actual board examination. References Abrugar, V. (2009). Tips and secrets on how to pass the Certified Public Accountant (CPA) Board Exam. 10 June 2010. www.BusinessAccent.com Agustin, E., P. (2004). The Accountancy Profession in the Philippines and the Philippine Institute of Certified Public Accountants (PICPA). Accountants Journal. Vol. 44: 12-17. Ballada, W. (2008). Basic Accounting. Manila: DomDane Publishers. Dadian, Guerink, Olney and Littlefield. (2002). The Effectiveness of a Mock Board Experience in Coaching Students for the Dental Hygiene National Board Examination. Journal of Dental Education. 643, 646.

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Edenfield, S. and Hansen J.(2000). Relationships Among Dental Hygiene Course Grades, A Mock Board Dental Hygiene Examination, and the National Board Dental Hygiene Examination. 12 May 2011. http://findarticles. com/p/articles/mi_hb6368/is_2_74/ai_n28778558/ Ganzon, T. (2009, October 10). Batanguenos top CPA board exams. 15 June 2010. www.abs-cbnnews.com/nation/regions/ Grolier Academic Encyclopedia (1990). USA: Grolier International, Inc. How to Help Students Stay and Succeed (2009). The Chronicle. 13 July 2010. http://proquest.umi.com/pqdweb?index=)&sid=3&srchm ode=1&vins Ivancevich, Konopaske and Matteson (2008). Organizational Behavior and Management 8th Edition. New York: McGraw-Hill/Irwin. Jessee, S. (2002). An Evaluation of Clinical Mock Boards and their Influence on the Success Rate on Qualifying Board. Journal of Dental Education. 12 May 2011. http://www.jdentaled.org/cgi/reprint/66/11/1260.pdf Kirk, K. (n.d.) Student Motivations and Attitudes: The Role of the Affective Domain in Geoscience Learning. 12 May 201 http://serc.carleton.edu/ NAGTWorkshops/affective/motivation.html Lussier, R. (2006). Management Fundamentals Concepts Applications Skill Development 3rd Edition. USA: Thomson. Narasimhan and Reid (n.d.) Diagnostic Study of Accounting and Auditing Practices in the Philippines. 15 June 2010 http://www.adb.org/ Documents/Books/Diagnostic_Study_Accounting_Auditing/PHI/ default.asp

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