An Alternate State in Mind: The Effect of Out-of-State CPA Exam Candidates and their Effect on State-Level Exam Pass Rates

• In Event: Breakfast with Roundtable Forum
  In Paper Session: Table 3 CPA--The Profession

Abstract

Abstract: State Boards of Accountancy and other regulators monitor state-wide pass rates on the CPA exam in fulfilling their mission to protect the public. These metrics can prompt important policy decisions such as state CPA exam requirements as well as the accounting curricula and resource allocation at a state’s colleges and universities. Using the test center location of CPA candidates, we analyze the pass rates of U.S. jurisdictions regarding the performance of both in-state and out-of-state candidates. We document a positive relationship between states allowing a candidate to sit for the exam at 120 credit hours (instead of 150 credit hours) and its importing of out-of-state CPA candidates. Also, after controlling for variables describing the economic conditions of the state, we document a negative relationship between the 120-hour rule and the pass rate difference between out-of-state and in-state candidates. After controlling for a state’s 120-hr vs. 150-hr policy, we find a positive relationship between the economic vitality of the state and the pass rate difference between attempts from candidates applying to the state and attempts from candidates taking the exam at in-state test centers. We suggest that our results can help equip State Boards, educators, and other stakeholders with valuable information to make better-informed policy decisions regarding the CPA exam environment in their state.

Authors

• Gregory Gaynor, University of Baltimore

• Phillip J Korb, University of Baltimore