By Meg Killian, PICPA's Vice President of Member Relations
You may or may not be aware that the education requirements to become a CPA in Pennsylvania recently changed. (I hope you are aware, because we’ve been spreading the word for more than two years!) Applicants now need 150 credit hours to obtain a CPA license. Because these new requirements just went into effect in 2012, we thought we’d see a record number of successful candidates in 2011. But we didn’t. To be fair, you only had to pass one part prior to December 31, 2011 to be grandfathered in to the old 120-hour requirement, so we may yet see an influx of passers as examinees continue to take parts in 2012. However, we do know there was a notable increase in examinees overall, but the pass rate was less than stellar when compared with previous years. What happened?
I think back to the 2006 Pennsylvania CPA Journal
article penned by Andy Weidman, Are We Failing the Exam?, and his 2009 follow-up, Failing the Exam No More! In 2004 and 2005 successful candidate numbers were dismal for many reasons. One was the introduction of the computerized exam and multiple testing periods, and another was a perceived lack of emphasis on passing the exam at firms. Both articles tackled what firms were doing, or could be doing, to ensure success among their ranks. A steady growth in successful candidates in subsequent years seemed to indicate that things were improving…until 2011.
There were 4,815 unique candidates in Pennsylvania in 2011, and the pass rate was 38.8 percent. This was down from 49.1 percent among 3,002 candidates in 2010. One promising trend was a remarkable increase in new candidates in the third and fourth quarters of 2011 compared with the same period in 2010. This seems to indicate that the awareness campaign about the new requirements was successful, prompting more people to get their first attempt in before the new requirements went into effect. The drop in pass rate is a bit alarming, and we want to make sure that firms are not once again shifting focus away from the CPA exam.
Many think that kids have it easy these days. But the fact is that the CPA Exam is still hard, just as hard as when you took it. It may be on a computer in a temperature-controlled testing center with indoor plumbing. It may not be crammed into two and half days. It does, however, still require a great deal of dedication from the individuals and support from those around them to be successful…maybe even more so when consider all the distractions and challenges of the current work/life environment.
I don’t want to generalize about generational trends; I know not everyone lived the classic nuclear family, even back in the day. But think back to when you took the exam…what else was going on in your life? Did you have a spouse or partner? Children? Were you in a two-income household? What was your workload like at your firm? Did you get time off to study? Did you get a reward or promotion when you were done? Were you connected 24/7 to everyone in your life – family, boss, clients – with little time to disconnect and focus on studying?
These are some of the issues that current candidates are dealing with when trying to prepare and pass the CPA Exam. Now tack on the added requirements of essentially another year of school, another year of tuition, and another year of not earning income as a CPA. Add the cost to take the exam, which has greatly increased – it’s now more than $1,000 to apply for all parts – and a review course and which is a few more thousand dollars.
Don’t get me wrong. All of this is still worth it. The CPA credential continues to be highly regarded. CPAs earn more and have more job stability and they also can segue into many different professions with their experience working as a CPA. Also, with the new requirements, a Pennsylvania CPA license is substantially equivalent to licenses in most other states, making it easier seek work and/or to serve clients across the country.
We know many firms provide incentives and support to their CPA candidates, but are they doing enough? And are enough firms doing something? Some of the firms with the most successful candidates provide things such as bonuses and raises for passing, assistance with preparation and application costs, time off to study, decreased workload during a testing week, mentor or buddy programs, and setting exam passing as a goal for annual reviews.
What is your firm doing to help your candidates? What are you doing if you are the supervisor of a candidate? Has your firm begun to consider new hiring, compensation, and promotion policies as they relate to the increased credit requirements? The group of interns you’re interviewing now will probably be asking those questions as they consider their future employment options. Many of the tactics outlined in those2006 and 2009 articles still hold a lot of merit and as we enter into a period of another potential drop in candidates.
I know PICPA will be looking closely at these numbers and trying to identify trends and areas we can address. Now is a great time for you to assess your firm’s policies and incentives to ensure the success of your own candidates.