Um, what is this?
The CPA Exam remains broken.
— Dr. Josh McGowan, CPA (@Jmcgowan3838) February 8, 2025
Q4 2024 Pass Rates:
Core:
FAR – 36.80%
AUD – 43.50%
REG – 60.40%
Discipline (Candidates Choose 1):
BAR – 33.70%
TCP – 72.20%
ISC – 56.40%
A few thoughts:
The consensus on the new exam was FAR would see higher pass rates as difficult material…
Full text of Dr. McGowan’s post:
The CPA Exam remains broken.
Q4 2024 Pass Rates:
Core:
FAR – 36.80%
AUD – 43.50%
REG – 60.40%Discipline (Candidates Choose 1):
BAR – 33.70%
TCP – 72.20%
ISC – 56.40%A few thoughts:
The consensus on the new exam was FAR would see higher pass rates as difficult material moved to BAR.
Unfortunately, we see the lowest quarterly FAR pass percentage in at least the last 15 years.
Additionally, BAR’s pass rate is almost 40% lower than TCP’s.
The difference in difficulty between disipline sections is 100% influencing decisions on which section to attempt.
This is a major issue and needs to be corrected asap.
Audit Q4 results also raise concerns. Only 1 other quarter in the past 15 years resulted in a lower pass percentage.
Overall, current test-takers seem to be at a major disadvantage compared to those that sat for the exam in the past.
Off the top of my head, I definitely don’t remember FAR pass rates this low in the 18 years (yikes) I’ve been paying attention to the CPA exam. Ninja CPA’s list of pass rates going back to 2006 confirms that my memory is accurate for once. This research paper has a comparison of scores from 2004-2007 (with bonus 150 hour rule figures):
And the paper has pre-CBT (computerized) pass rates compared to post-computerization scores:
So FAR scores haven’t been this low since 2003, and have never been this low since the exam went computerized in 2004. They aren’t entirely comparable but we had to go back that far just to find pass rates below 40%. I question this table though since CPA exam sections in 2003 were Auditing (AUDIT), Business Law and Professional Responsibilities (LPR), Financial Accounting and Reporting-Business Enterprises (FARE), and Accounting and Reporting-Other Areas (ARE). This is from the 2004 edition of NASBA’s Candidate Performance report so it has the sections as they were named at that time:
Whatever, we’re veering off topic a bit. We’re here to talk about…
2024 CPA exam pass rates
| Section | Q1 | Q2 | Q3 | Q4 |
|---|---|---|---|---|
| AUD | 44.63% | 46.58% | 47.80% | 43.50% |
| FAR | 41.92% | 40.58% | 39.82% | 36.80% |
| REG | 63.42% | 63.45% | 62.97% | 60.40% |
| BAR | 42.94% | 40.26% | 40.11% | 33.70% |
| ISC | 50.93% | 57.93% | 61.88% | 56.40% |
| TCP | 82.36% | 75.67% | 72.91% | 72.20% |
A drop-off in the last quarter of the year is expected, people try to cram in one last section (or two) before the end of the year and may not be (read: usually aren’t) as prepared. As the AICPA says, quarterly pass results do not mean the exam was easier or harder that quarter, only that candidates who sat in that quarter were better/less prepared.
FAR is already the hardest exam part for many but pass rates in the upper 30s and low 40s are pretty bad especially when you take into account that CPA exam fees have increased in many jurisdictions. Hiccups were expected after CPA Evolution debuted at the beginning of 2024 but FAR being a Core section shouldn’t have been too significantly affected by these changes as it wasn’t brand new like BAR, ISC, and TCP.
What’s happening here? The benevolent overlords of the CPA exam definitely need to tweak this one because it’s clearly not working correctly unless the goal is to extract as much money as possible out of failing candidates.
Related:
Sorry, but pass rates are not a good measure to use. The exams are there to be a barrier to entry and protect the profession so they need to be a definitive measure of the knowledge required and should be difficult to pass. Pass rates for the exams are only a reflection of the skills and preparation habits of candidates. Making them easier helps nobody except places who want CPAs on staff to rubber stamp things without actually understanding what’s really going on. The exams are not broken, but it’s possible the curriculum the candidates are taking prior to sitting is. More data is needed about the candidates sitting before any further adjustments are made to make it easier to pass.
If you think about it, there’s nothing really to worry about because AI is going to make accountants obsolete about 2 years from now. Or so I’ve been hearing.
The barrier to entry is influencing the pipeline, and not in a good way. Right, wrong or indifferent, it’s a problem that needs to be solved.
Alternative theory: Exam scores are declining because candidates are getting dumber.
There may be something to this. Maybe the smart kids are majoring in accounting anymore…
Meant to say are *not* majoring in accounting anymore. I’m apparently not one of the smart kids.
I wouldn’t dare suggest you’re wrong, I’m sure the universal dumbing down of this decade has something to do with it. But if that were the main factor you’d expect to see more drag across the board, especially in AUD.
All of this seems so pointless. So what if audit failure rates are going up? I’m sure Trump and Elon will be repealing SOX and disbanding the PCAOB soon. Problem solved!
AI would get 100% on every part of the CPA exam.