I had the occasion to look at the trends in the Philippines’ Certified Public Accountants (CPA) licensure examinations and its counterparts in other countries.
For the Philippines, interesting numbers and observations can be noted in the past year’s trends. I point to the trends in the number of examinees in the CPA licensure tests, the passing (and failing) rates, and, in passing, the performance of the accounting schools in the examinations.
I was the Chairman of the Professional Regulatory Board of Accountancy from 2014 to 2018. During this period, the BOA held 13 CPA examinations. These included nine examinations conducted in the Philippines and four administered abroad. I remember that the very first licensure examination that my board of four examiners conducted in 2014 needed to be deferred from the regular schedule of May to a later month of July. The reasons for the postponement of the tests were due to the limited time for the board to prepare for the first time the examinations and the excessive load of conducting seven examinations by four newly appointed BOA members-examiners.
During my term of less than five years, the total number of passers come up to just below 32,000, with the most number of CPAs of 5,468 entering the profession after the October 2015 examinations. For the 13 examinations conducted during my term as Chairman, there were about 94,000, with a record number of 14,816 taking the examinations in October 2017. These numbers translate to an average passing percentage of about 34%. Every so often, I encounter persons approaching me and confiding that they became CPAs during my term. During these situations, I take great pleasure in knowing that I made a difference for these successful individuals.
Prior to my term, the passing rates for CPAs were nearing the high 40 percent level, with a peak of 48.36 percent attained in October 2010. While the passing rates have moderated to the mid-30 percent levels during my term for the period 2014 to 2018, the CPA licensure examination situation is undergoing a new trend at present. There were six examinations conducted starting with the October 2018 tests up to the last one given last October 2022. Three of these examinations were administered during the Covid pandemic when face-to-face engagements were not allowed. Thus, for this three-year pandemic period, there were only these three examinations held compared to what ordinarily would have been nine board examinations given in the Philippines and abroad.
The trend in 2019, where two tests were given and three pandemic-era examinations, indicates passing rates reaching the lowest levels for the CPA examination in recent history. For these five examinations, only 6,847 out of 35,918 examinees passed. This represents a passing percentage of 19 percent. I understand that the American Institute of CPAs examination has passing rates historically averaging from 45 percent to 55 percent.
This declining trend of both new CPAs passing and examinees applying for the licensure examination is disturbing. This raises questions and issues such as whether the pandemic caused these declines; if there is a growing disinterest in students pursuing the accountancy profession; the state of accounting education and schools in the Philippines; the impact of the decreasing supply of new CPAs to employers in the local and global markets; the image of the Philippine CPA or accountancy brand in the global business and accounting communities; and even the state of the CPA licensure examination process and system.
These urgent issues must be addressed by the key stakeholders of the accountancy sector. Failure to respond to these may result in further declining or deteriorating trends in the profession.
Joel L. Tan-Torres was the former Dean of the University of the Philippines Virata School of Business. Previously, he was the Commissioner of the Bureau of Internal Revenue, the chairman of the Professional Regulatory Board of Accountancy, and partner of Reyes Tacandong & Co. and the SyCip Gorres and Velayo & Co. He is a Certified Public Accountant who garnered No. 1 in the CPA Board Examination of May 1979. He is now back to his tax practice and can be contacted at email@example.com