A burning question among CPAs is, why aren't recent accounting graduates taking the CPA Exam?The answer is complex, and it also opens up a need to evaluate two other questions: Why should CPAs focus on who is passing the exam, and what can we do to increase participation?

It is clear that the dearth of individuals taking the CPA Exam is not due to fewer accounting graduates. The number of accounting graduates has actually increased in recent years, while those sitting for the exam has not.

For a long time, there was a steady decline in accounting enrollment at colleges. This trend has been reversing itself over the past five years. The American Institute of CPAs, in fact, found that enrollment in accounting programs increased 19 percent between the years 2000 and 2004.

The failures of Enron, WorldCom and others were certainly a dark period in the history of our profession, but they contributed to the marked increase in enrollment in accounting programs across the country. Suddenly, a career in accounting was viewed as rewarding and exciting, and students recognized the important role that we play in the world financial markets.

Adding to the increase of students interested in accounting was the subsequent bust of many of the dot-com businesses that started up in the late 1990s, and a stubborn economic recession that began around 2000. Traditionally, when the economic climate heads downward, the number of accounting majors trends upward. Similar growth patterns were experienced in the early 1980s.

Although there are more college students studying accounting, many graduates are not pursuing their CPA certificates. It isn't as if accounting students aren't willing to put in the extra effort it takes to attain the CPA designation. In 2004, the number of accounting students who received Master's degrees jumped 5.4 percent. Career goals and time constraints, however, are cited as reasons keeping graduates from seeking CPA certificates.

Numerous articles have been written on this subject, and I have spoken to many colleagues regarding this issue. I have come to the conclusion that there are three reasons why recent graduates are not taking the exam:

1. Not enough time, specifically time to prepare for the exam;

2. Accounting graduates do not believe certification is important or that it is aligned with their career goals; and,

3. The change to the computerized exam.

No matter what some CPA executives might believe, time is a critical issue when it comes to the dismal exam turnout. When I began my career in 1978 as a staff accountant at Touche Ross in Denver, there were no questions about sitting for the CPA Exam. The exam was something all staff accountants knew they had to take, even though they looked forward to it about as much as a visit to the dentist for a root canal. All non-CPA staff accountants were expected to sit for the exam every time it was given, until all parts were passed. Because of this, our line on the scheduling sheet was blocked the first week in May and November with the words "CPA Exam." Not taking the exam and not passing the exam were not options.

What has happened to impact this attitude toward the exam? Certainly, the volume of work generated by Sarbanes-Oxley - and the resulting cascade of work down to all sizes of firms over the past few years - has limited the time that candidates have had to study.

If you look at the revenue growth of public accounting firms over the past couple of years, you will see that our industry is in the midst of an economic boom. According to a March 2006 special supplement to Accounting Today on the Top 100 Firms, over 75 percent of these firms experienced double-digit growth over the previous year.

There is a great deal of pressure to allocate resources to all of this expanding work, but it is short-sighted to pile so much work on our staff people that they cannot adequately prepare for and pass the exam. And "eventually" is not a good game plan. We cannot assume that they will eventually study and pass the exam. The further removed these candidates are from their college graduation, the more difficult they perceive passing the exam to be.

We need these people to become CPAs, and if we truly believe that, then we need to give them the resources - both time and money - to study and sit for the exam.

Regarding the second point, one reason accounting graduates may not jump at the chance to become certified may be that CPA firms have expanded the amount and types of consulting services that they provide, so a smaller percentage of recruits are following the traditional career paths of tax and auditing. They may believe they can move forward and upward without the CPA designation.

The AICPA conducted a survey of partners and new hires about the importance of passing the CPA Exam. While over 90 percent of partners said that it was very important for new staff to pass the CPA Exam, only 47 percent of new staff members felt that it was very important.

Talk about a disconnect! This is a serious problem.

We are not doing a good enough job when it comes to letting our staff know the importance of the CPA designation. We need to improve our performance in this area immediately, beginning by developing new ways to impress this message upon young recruits. The evolution of our ideas should be a driving force as we discuss ways to increase exam participation.

Another reason for exam drop-off may be the exam itself.

In June 2005, the National Association of State Boards of Accountancy, the AICPA and Thomson-Prometric Inc. released a study that found that the number of candidates taking the uniform CPA Exam dropped almost 37 percent after the introduction of the computerized version of the test in April 2004. The survey found that the primary reason given for not taking the exam was that candidates were too busy.

There is no question that the sheer volume of work generated by Sarbanes-Oxley over the first two years after the new exam was introduced severely limited the amount of time that candidates had to study for the exam. I believe, however, that the "Mikey factor" also played a role in this drop-off. No one wanted to be the first to experience the new exam. Prospective exam-takers wanted to wait to see how "Mikey liked it." (If you don't get that Life cereal reference, ask someone over 35 to explain it.) Quite possibly, as new accountants become more familiar with all aspects of the exam, this negative factor can be eliminated.

The points above are the reasons I believe that the number of exam participants has slipped. But, as I alluded to in the opening, the question of the exam drop-off also raises a couple other important questions.

1. Why do we need to focus on passing the exam?

The CPA designation is an extremely important and valued credential in the world business community. With all of the complexities of the financial markets, it is important to have CPAs available to businesses for attest, compliance and a wide range of consulting services. This is the broader, more global importance of growing the number of CPAs. On the more personal, local level, young accountants need to pass the CPA Exam for the survival of our own firms.

From a public accounting perspective, there is a responsibility to hire and train your replacements. The demographics of public accounting are, to put it bluntly, gray. A significant percentage of partners in CPA firms are 50 or older, and will probably be retiring at some point in the next five to 15 years. From a self-serving standpoint, younger CPAs are the people to whom we will eventually want to sell our firms. But there is also the very real short-term need for new CPAs to help develop and expand our practices.

Then there is the responsibility of strengthening the business community. It may not always be thrilling to view the prospect of training our staff accountants for careers in industry, but the reality is that today's staff and senior accountants in public accounting firms are tomorrow's controllers, chief financial officers and chief executive officers. To strengthen the quality of our profession and our employers in public accounting and industry, we must encourage all staff accountants to pursue their CPA credential.

2. How do we increase participation?

Getting accounting graduates to pass the CPA Exam is the shared responsibility of the prospective CPA and all CPA managers and executives. As I have shown, it is in the profession's best interest to see our young accountants succeed.

All exam candidates, as well as firm administrators, office managers and partners, need to get a copy of "CPA Exam in Pennsylvania - Get the Facts You Need to Pass." This document is available from the Pennsylvania Institute of CPAs at www.picpa.org/exam. It lays out the requirements to sit for the exam, the exam costs and fee structure, how and when to apply, a schedule of when and where to take the exam, how to prepare, and other relevant information. It is an excellent starting point for passing the CPA Exam.

Educators, the front line of developing tomorrow's CPAs, need to stress to their students that it is imperative to prepare and sit for the exam as soon as possible. Reinforce to them that the designation is an extremely important and valued business credential. The longer students wait to take the exam after graduation, the harder it gets.

CPA firms need to reassert the expectation that new accounting staff will sit for and pass the exam. Use their firm orientation, among other vehicles, to be clear that it is important to their careers.

All CPA firms should strongly consider implementing some or all of the following:

* Pay the fees for candidates to sit for the exam the first time they take it.

* Pay for a review course.

* Give them paid time-off to sit for the exam.

* Let them study in the office during work hours if they are not scheduled.

* Provide a bonus upon successful completion of all certification requirements.

* Recognize new CPAs in your firm with a celebration.

* Mentor your staff to pass the exam.

* Incorporate attaining the CPA designation into the annual review process.

* Track employee progress.

* Establish a "study buddy" system among co-workers.

There is an excellent tool available on the PICPA Web site that helps firms track the progress of candidates. Download the CPA Exam Candidate Tracking Tool, which is a spreadsheet developed exclusively to help firms track employees taking the CPA Exam and monitor their results. This and other helpful tools can be found at www.picpa.org/exam.

Public accounting firms can also aid staff members' pursuit of the CPA designation by restoring a semblance of the traditional model, under which many of us were able to take and pass our version of the CPA Exam. We can begin by blocking off time to take the exam during slower periods. During this time, CPA firms would make sure that they didn't schedule prospective test takers for audits or other such arduous tasks.

Of course, we all know that in our profession a slow period is an extremely relative term, but these are the steps that must be taken to ensure the long-term health of our profession. It may be difficult to find the flexibility, and the temptation to wait for next time will always be there. However, consider identifying specific exam times for your firm, or for the different departments within your firm, and work your schedule like we did during our formative years.

The flexibility of the new exam allows you to pick the best time for your organization, and, by defining a specific month according to client needs and practice areas, you will take a major step toward defining expectations for your staff, and infusing the importance of passing the CPA Exam back into your firm's culture.

Other ideas include inviting a professional review course instructor into your firm to help staff identify best study practices, or assigning a project owner, such as your firm administrator, to monitor the progress that your staff makes toward achieving the CPA designation.

CPAs in industry and government are in a different, though still very important, situation. These CPAs need to tell new accountants that just because they chose a path in industry or government over public accounting, the CPA credential is still a valuable career resource that gives them more flexibility and upward mobility. If an accountant is an internal auditor or an auditor with a unit of the federal, state or local government, and is supervised by an individual who is a licensed CPA, they will be able to meet the experience requirement once they pass the exam.

Finally, CPA candidates must make passing the exam a priority, and take it as soon as possible following graduation. They must have a plan, and we must help them with it. Encourage them to take exam tutorials and simulations online at www.cpa-exam.org. They can also visit PICPA's exam preparation Web pages to see a list of companies that offer exam reviews. Help them pick a review course and set aside time to study for the parts they plan to take.

Make sure that they take the parts that they are most comfortable with first. They must familiarize themselves with the timing of the exam testing windows, and figure out when they need to apply in order to sit when it best fits into their schedule. With the new exam, candidates do not need to take all of the parts at once. Make sure that test-takers sign up and get the date on their firm's schedule.

The CPA designation is valuable and important, and it is imperative that we all work together to ensure that our profession will continue to flourish and that there will be an adequate number of CPAs to support the world's business and financial markets in the future.

J. Andrew Weidman, CPA, is chief executive of Reinsel Kuntz Lesher LLP, in Wyomissing, Pa., and is 2006-2007 president of the Pennsylvania Institute of CPAs. Reach him at jweidman@rklcpa.com. Reprinted with permission from the Pennsylvania CPA Journal.

Letters may be sent to: Editor, Accounting Today, 1 State Street Plaza, New York, N.Y. 10004, or by e-mail to AcToday@sourcemedia.com. Accounting Today reserves the right to edit all submissions.

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