Scoring the CPA Exam

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MAY 2006 - The AICPA’s decision to change the CPA exam from a pencil-and-paper–based test to a computer-based test (CBT) in 2004 was an excellent move forward in the exam’s evolution. CBTs offer several benefits over their hard-copy counterparts: They are easier to administer, more convenient for test-takers, and make analysis a breeze. But change is never easy, and although the transition to CBT has been relatively smooth, there have been bumps in the road.

One considerable problem in New York State is how the CBT is scored. The test is graded on a pass/fail basis, and candidates don’t receive scores on individual sections. That may be okay for candidates who pass the test, but what about the significant number who fail? National pass rates in 2004 were about 40% per section—lower than pass rates for lawyers, architects, and engineers on their respective professional exams. In other words, after earning a college degree and weeks (or more) of exam-specific preparation, approximately 60% of the candidates taking the CPA exam in New York State fail, and receive little guidance on where they fell short.

So how did New York State end up with a scoring system that wouldn’t pass Exam Making 101? The problem came about through a confluence of miscommunications. The New York State Board for Public Accountancy originally approved the pass/fail grading structure based on another organization’s promise to deliver a comprehensive diagnostic scoring system. The board’s thinking was that relevant and meaningful diagnostics would help students concentrate more on the substance of what they needed to study rather than a mere numerical score. But when those diagnostics were not delivered, test-takers were left holding the bag.

Regardless of how the problem originated, almost everyone agrees that it needs to be corrected, and soon. The CPA exam is extremely challenging and costly; candidates have enough to worry about besides receiving insufficient feedback on why they failed the exam. It’s also a problem for the profession. Considering the higher salaries in some other advanced-degree professions and the impact of the recent accounting scandals, the profession needs to do everything in its power to attract tomorrow’s leaders. This includes giving CPA candidates access to performance barometers that will indicate how close they are to passing and identify the topics they need to study to accomplish that goal.

Another Reason for an Interstate Compact

What’s most frustrating about this situation is that in most states, the exam is not graded as pass/fail. Standardizing the scoring system among the 50 states would go a long way toward solving the problem, and a structure already exists that would accomplish that: an interstate compact.

What is an interstate compact? Simply put, it’s a contract among states that allows them to solve multistate, regional, and national problems through voluntary agreement. Compacts carry the force of law, and, much like treaties between nations, compacting states are bound to observe the terms even if they are inconsistent with other state laws.

This concept remains the most effective alternative as the profession continues to address differences in accounting standards for public companies, the private sector, and nonprofit and government entities. Interstate compacts can also address other issues, such as practicing across state lines, substantial-equivalency standards of professional conduct, and peer review. Now we can add the CPA exam to the list. How many more issues will it take for the profession to explore the best option for its future?

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA
lgrumet@nysscpa.org

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



The CPA Journal is broadly recognized as an outstanding, technical-refereed publication aimed at public practitioners, management, educators, and other accounting professionals. It is edited by CPAs for CPAs. Our goal is to provide CPAs and other accounting professionals with the information and news to enable them to be successful accountants, managers, and executives in today's practice environments.

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