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The CPA Board Examination Results: A Statistical Analysis

Presentation Outline
Research Background Research Objectives Scope and Limitations Methodology Summary of Findings
Performance of HEIs in the period 2001-2005 Comparison with Previous Period Results per Subject and Topic

Conclusions Recommendations
John S. Bala, Ph.D. Vice Chairman, Board of Accountancy
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Research Background
q Statistical Report on the Performance of Schools in the Various Licensure Examinations was first released in December 1999. q Statistical data, do not merely serve as indicators of quality of higher education. They are useful in the areas of curricular upgrading admission and retention standards state-of-the-art facilities and faculty development.

Research Objectives
q Main Objectives: (1) To determine how our higher education institutions (HEIs) have performed in the CPA licensure examinations and (2) identify areas for reform. q Research Questions: What has been the performance of our HEIs in the said examinations from 2001-2005 as to Number of examinees School type Region

How do the results compare with that of the five-year preceding period? What have been the results of the said examination per
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Subject Topic
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Scope and Limitations

q Mainly relied on the statistical data provided by Education Statistics Task Force of the CHEd and the PRC 2001 up to 2003 PRC Rating Division for 2004 and 2005. q School performance is operationally defined as the percentage of passing examinees from a particular school. q There may be discrepancies in the data especially on school codes as these were captured from the data supplied by the examinees on the application forms.

Methodology
q A five-year percentage passing was computed based on the five-year total of passing examinees (P) relative to the overall number of examinees (N) of the school for the five-year period. %P = P/N x 100%. q In the analysis of school performance, the schools are categorized based on the total number of examinees fielded for every examination. Category 1 includes schools with 1,000 or more examinees Category 2 includes schools with 100 to 999 examinees Category 3 includes those with 10 to 99 examinees Category 4 includes those with less than 10 examinees

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Summary of Findings (1)

Table 1 Performance of HEIs in the CPA Licensure Examinations 2001-2005

Summary of Findings (2)

Table 1.1 Performance of HEIs As to Number of Examinees 2001-2005 Category No. of Schools Percentage Total No. of Examinees 2004 12,325 2005 11,869 Ave. 64,503 Category 2 500 to 999 16 2.8% 11,134 2,778 25.0% Category 1 - 1,000 or more 9 1.6% 17,222

2001-2005 Total No. Passed 4,034 Percentage Passed 23.4%

2001 Total No. of Examinees 13,829

2002 13,495

2003 12,985

Total No. Passed Percentage Passed

2,453 17.7%

2,551 18.9%

2,529 19.5%

2,505 20.3%

2,917 24.6%

12,955 20.1%

Category 3 -100 to 499 Category 4 - Less than 100 Total

122

21.7%

25,388

5,072

20.0%

416 563

73.9% 100.0%

10,759 64,503

1,071 12,955

10.0% 20.1%

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Summary of Findings (3)

Table 1.1.1 Performance of Category 1 HEIs As to Number of Examinees 2001-2005 Name of School Total No. of Examinees Above national passing average (20.1%): 1.University of Santo Tomas 1.Saint Louis University 1.Polytechnic University of the Philippines- Sta. Mesa 1.University of San Carlos Below national passing average (20.1%) 5 schools Sub-total
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Summary of Findings (4)

Table 1.1.2 Performance of Category 2 HEIs As to Number of Examinees 2001-2005 Name of School 2001-2005 Total No. Passed 934 523 1,036 400 1,141 4,034 Percentage Passed 59.9% 28.2% 22.6% 22.1% 12.6% 23.4% Above national passing average (20.1%): 1.De La Salle University Taft Manila 1,559 1,852 4,587 1,810 9,084 17,222 1.University of the Philippines Iloilo 1.Pamantasan ng Lungsod ngMaynila 1.Holy Angel University 1.Ateneo de Davao University 3 Others Below national passing average (20.1%): 8 Others Sub-total
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2001-2005 Total No. of Examinees Total No. Passed Percentage Passed

922 639 922 628 874 2,009

622 307 286 193 236 478

67.5% 48.0% 31.0% 30.7% 27.0% 23.8%

5.140 11,134

656 2,778

12.8% 25.0%

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Summary of Findings (5)

Table 1.1.3 Performance of Category 3 HEIs As to Number of Examinees 2001-2005 Name of School Total No. of Examinees Above national passing average (20.1%): 1.University of the Philippines - Diliman 1.Silliman University 1.University of Saint La Salle 1.Xavier University 1.University of the Philippines - Tacloban 35 Others Below national passing average (20.1%): 82 Others Sub-total
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Summary of Findings (6)

Table 1.1.4 Performance of Category 3 HEIs As to Number of Examinees Name of School 2001-2005 Total No. Passed Percentage Passed Above national passing average (20.1%): 1.Mariano Marcos State University Batac 482 131 244 285 153 8,211 421 104 181 176 76 2,357 87.3% 79.4% 74.2% 61.8% 49.7% 28.7% 1.Colegio de San Agustin Bacolod City 1.Saint Scholasticas College 1.Chiang Kai ShekCollege 1.New Era University 41 Others Below national passing average (20.1%): 137 Others 15,882 25,388 1,757 5,072 11.1% 20.0% 232 Zero Performers Sub-total
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2001-2005 Total No. of Examinees Total No. Passed Percentage Passed

87 74 83 42 90 862

50 39 43 21 37 275

57.5% 52.7% 51.8% 50.0% 41.1% 31.9%

8,182 1,339 10,759

606 0 1,071

7.4% 0.0% 10.0%

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Summary of Findings (8) Summary of Findings (7)

Table 2 Performance of Category 3 HEIs As to School Type 2001-2005 School Type PN Private NonSectarian Schools PS Private Sectarian GS State Colleges/Universitie s and their Satellite Canpuses GO Local Colleges/Universitie s and CHEDSupervised Institutions 2001 22.9 11.6 26.8 2002 24.4 12.7 25.8 2003 17.4 13.4 28.4 2004 16.2 14.2 26.0 2005 31.7 18.3 31.9 Ave. 26.0 13.9 27.8 Table 3 - Performance of Category 3 HEIs As to Region 2001-2005
Region I II III IV V VI VII VIII IX X XI XII 2001 14.6 17.7 14.0 17.1 10.1 25.1 17.1 13.0 21.4 19.6 10.3 22.0 20.7 21.1 0.0 8.1 17.7 2002 10.6 19.7 17.8 15.0 12.0 30.8 20.7 8.2 15.5 21.5 17.7 20.8 21.6 22.3 9.0 13.5 18.9
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2003 11.3 17.0 14.3 19.1 10.9 31.1 21.5 12.3 18.5 26.0 17.7 17.9 22.9 19.6 0.0 10.9 19.5

2004 11.8 19.9 17.2 16.7 12.7 35.1 24.4 12.9 23.6 18.3 19.3 16.1 23.8 18.5 25.0 11.8 20.3

2005 13.9 22.7 21.1 22.0 16.2 40.2 31.4 16.9 24.0 24.2 24.2 28.7 27.1 22.3 20.0 19.7 24.6

Ave. 12.5 19.2 16.7 18.0 12.1 32.2 22.1 12.7 20.2 21.8 17.1 21.0 23.2 20.8 9.0 12.7 20.1

21.7

21.6

16.9

23.7

23.3

21.8

NCR CAR ARMM CARAGA National Passing Percentage

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Summary of Findings (9)

Table 5 Comparison of Performance Ratings with Previous Five Year Period 2001-2005 vs 1996-2000

Summary of Findings (10)

Table 6 Performance of HEIs as to Subject Area 2001-2005
Subject 1997 17.9 13.4 15.2 19.2 28.5 21.6 1998 19.3 15.0 21.7 18.9 20.5 22.3 1999 19.9 16.5 15.5 14.6 40.3 19.9 2000 24.1 13.6 15.6 12.7 45.6 21.9 2001 24.3 16.8 16.6 14.2 20.1 21.1 2002 27.2 16.7 17.1 18.3 22.6 19.9 2003 28.8 19.7 19.1 19.0 17.2 25.1 Ave. 23.1 15.9 17.3 16.7 27.7 15.8

1996 Total No. of Examinees Total No. Passed Percentage Passed 8,304 1,127 13.6%

1997 9,540 1,815 19.0%

1998 11,950 2,201 18.4%

1999 13,306 2,591 19.5%

2000 14,223 2,590 18.2%

Ave. 57,323 10,324 18.0%

Theory of Accounts Business Law & Taxation Management Services Auditing Theory Auditing Problems

2001 Total No. of Examinees Total No. Passed Percentage Passed 13,829 2,453 17.7%

2002 13,495 2,551 18.9%

2003 12,985 2,529 19.5%

2004 12,325 2,505 20.3%

2005 11,869 2,917 24.6%

Ave. 64,503 12,955 20.1%

Practical Accounting Problems I Practical Accounting Problems II Ave. Natl%

26.2

21.9

17.9

18.7

19.8

20.8

21.1

20.9

13.6

19.0

18.4

19.5

18.2

18.9

19.5

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Summary of Findings (11)

Table 7 Performance of Candidates in the CPA Licensure Examination per Topic May 2006
Subject Theory of Accounts Topics Where Examinees Scored 80% and Above
Income determination revenue recognition Accounting changes changes in estimates and accounting polies Intangibles Construction contracts Accounting process trial balance Accounting for income taxes interperiod tax allocation Noncurrent liabilities convertible bonds Financial statements events after balance sheet date Presentation of financial statements - notes to financial statements Government accounting Accounting for equity stock splits and reserves Cash and cash equivalents accounting for petty cash fund Inventories change of inventory method Expenses and losses recognition Employee benefits prior service cost, defined benefit plan 17 Interim financial statements

Summary of Findings (12)

Subject

Topics Where Examinees Scored 20% and Below

Business combinations and consolidation of financial statements Impairment of assets Standard setting process the internal organization of the SEC Financial assets classification of money markets

Topics Where Examinees Scored 80% and Above Obligations and Contracts Sales and Agency Pledge and Mortgage Corporation Negotiable Instruments

Topics Where Examinees Scored 20% and Below Partnership Profit and loss sharing Corporation Rights of stockholders Negotiable Instruments Computation of interests Principles of Taxation Tax exemptions Income Tax Deductibility of expenses VAT and Percentage Tax Transfer Tax Deduction for gross estate/vanishing deduction

Business Law & Taxation

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Summary of Findings (13)

Summary of Findings (14)

Subject Topics Where Examinees Scored 80% and Above Topics Where Examinees Scored 20% and Below

Subject

Topics Where Examinees Scored 80% and Above

Topics Where Examinees Scored 20% and Below Auditing Theory

Management Services

Information Technology Analysis of Financial Statements

Overview of the Practice of CPAs Budgeting/Responsibility Accounting Accounting for Decision Making

Reports on audited financial statements: the unqualified auditors report; basic elements of the unqualified auditors report Overview of the audit process Audit objectives, procedures, evidence and documentation Public accounting profession: Accountancy Act of 2004; CPA s professional responsibilities

Auditing in a Computerized Information Systems (CIS) Environment impact of computers on accounting and internal control systems; Unique characteristics of specific CIS; Basic approach to the audit of CIS environment Audit sampling: audit sampling concepts; factors affecting sample design; sample selection methods; evaluation of sample results

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Summary of Findings (15)

Subject Topics Where Examinees Scored 80% and Above Audit of revenue and receipt cycle: audit of receivables; cash receipt transactions and cash balances Audit of expenditure and disbursement cycle: inventory balances and trade payable balances Audit of the financing cycle: nontrade liability balances; equity balances Topics Where Examinees Scored 20% and Below Application of analytical procedures in audit planning Understanding of the internal control and tests of controls Audit of investing cycle: investment transactions and investment account balances Completing the audit: evaluation of related party transactions, going concern and contingencies; application of analytical procedures in the overall review

Summary of Findings (16)

Subject Topics Where Examinees Scored 80% and Above Accounting for equity: determination of total shareholders equity with unrealized holding loss on available -for-sale securities Inventories: determination of inventory loss by fire; computation of inventory value using FIFO method Preparation of financial statements: determination of cost of goods sold Property, plant and equipment: depreciation computation Trade and other receivables: computation of accounts receivable Cash and cash equivalents: cash balance determination Topics Where Examinees Scored 20% and Below Bonds payable: application of effective interest basis Employee benefits: determination of liability for compensated absences Accounting for equity: recording exercise of warrants Impairment of assets: impairment loss or uncollectibility of accounts receivable Intangibles: goodwill computation; accounting for R&D costs Accounting for leases: determination of gross investment in leases

Auditing Problems

Practical Accounting Problems I

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Summary of Findings (17)

Subject Practical Accounting Problems II Topics Where Examinees Scored 80% and Above Preparation of foreign currency financial Statements: foreign currency transactions Partnership accounting: admission of new partners, formation of partnership; partners capital balances Activity-based costing system (ABC costing) Commercial franchise operations: revenue recognition Cost accounting: determination of cost of goods manufactured Branch and home office accounting: transactions on the books of the home office and the branch Preparation of consolidated financial statements: reporting goodwill on a consolidated balance sheet Topics Where Examinees Scored 20% and Below Corporate liquidation Recognition of revenue percentage method Installment method of revenue recognition Foreign currency transactions: recognition of gain(loss ) on foreign current transactions in consolidated financial statements Cost accounting: loss from abnormal spoilage Preparation of consolidated financial statements: computation of goodwill in a business combination that involves determination of costs of business combination

Conclusions
q Much is yet left to be desired in terms of quality of accounting education in this country. This holds true not only for our private HEIs but also our SUCs. q While there has been improvement in school performance but such is just a small improvement. The number of schools which registered zero performance even increased. q problem of poor quality can be traced to a number of causes which include among others the following: Defective curriculum or program of studies Deteriorating quality of raw materials i.e., students Ineffective teachers Poor instructional methodologies Inadequate instructional materials Inadequate library collections and other facilities Defective board examinations
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Conclusions
q The continuing low percentage of passing in the licensure examinations could be viewed favorably in the sense that only those truly qualified academically are accepted to our professions, and therefore, can contribute to the improvement of the quality of service of the practitioners in the professions. q On the other hand, the low percentage could mean waste of precious time and resources of the school, students, community and the nation

Recommendations
q HEIs offer the program only if it has the resources and within their core competencies to offer accountancy. Quality has a price. Quality is expensive and schools must be willing to make the necessary investment. Otherwise, it should stop offering the program if it does not excel in it and which can best offered by other HEIs. q HEIs stop which registered zero performance to stop offering the program. Low performing HEIs should be a given sufficient period of time to improve their performance in the licensure examinations. If at the end of such period their performance does not improve, they should likewise stop offering such programs. q Any policy to improve accountancy education should consider the regional performance of our HEIs. Low performing HEIs concentrated in a particular region should be assisted to improve their performance

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