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The CPA Exam pass rates, which average about 50%, are one of the most intriguing aspects of the CPA certification process. The AICPA releases the pass rate for each exam section once a quarter. These percentages reveal how well candidates who sat for the CPA Exam during the previous exam testing window performed. Historically, the average CPA Exam pass rate for each section ranges between 45-55%. But the pass rates shouldn’t discourage you, because they don’t mean you can’t pass.
Candidates, review providers, and other individuals invested in the CPA industry try to read the pass rates like a crystal ball. They look to these 4-digit percentages to divine the future of their success with the exam. However, the numbers never really say as much as we would like them to. But I myself find the pass rates fascinating, so I’ll tell you about the most recent pass rates, possible explanations for them, and the historical data. Most importantly, I’ll let you know what the CPA Exam pass rates really mean for you so you don’t get too obsessed with them.
As you may recall, CPA candidates can only sit for the CPA Exam during the 4 annual testing windows. The testing windows are open during the first 2 months and the first 10 days of the third month of every quarter. Usually, the AICPA gives the CPA Exam scores for a testing window to the state boards and NASBA on several score release dates each quarter. But the AICPA only publishes the pass rates for that testing window in the following quarter. Pass rates from 2006 to the present used to accompany the latest pass rates. But now, the AICPA’s pass rates web page only features the current year’s pass rates.
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The year 2019 has been a great one for CPA Exam pass rates. In 2019, the cumulative pass rates for all 4 CPA Exam sections were higher than those of 2018. And, most of the quarterly pass rates were higher too.
When we compare the 2019 CPA Exam pass rates up to pass rates of the more distant past as well, we can make these observations:
When we compare the 2018 CPA Exam pass rates to those of 2017, we see that almost all the 2018 pass rates were higher than the 2017 pass rates. When we compare the 2018 CPA Exam pass rates to those of the past as well, we learn the following:
So, what causes the pass rates to rise and fall? Well, we can never know for certain which factors had the greatest effect on the pass rates from a particular quarter. But we can offer possible explanations that can probably account for most of the changes.
Right above the pass rates on their website, the AICPA reminds us that “candidates are evaluated against an established standard of competence, and the Exam is scored and scaled so that scores are comparable across test forms and over time.” To summarize this concept, the AICPA simply states, “The Exam is not harder or easier to pass at different times”. The AICPA then offers their own theory about the pass rates flux: “An increase in pass rates simply means that candidates are better prepared.”
So, the AICPA believes candidates are better prepared for the CPA Exam each time the pass rates rise (meaning, candidates are studying more efficiently and using a high-quality CPA review course). However, I also have a few other speculations as to why we’ve seen some higher pass rates (and even record-breaking pass rates) in recent quarters. One of these simply elaborates on the AICPA’s statement. Additionally, I have some theories as to why we’ve seen some pass rates drop when we didn’t expect it.
AUD and FAR scores were the lowest in Q4 than they were in any previous 2019 quarter. However, BEC pass rates were slightly higher in Q4 than they were in Q1. And REG’s pass rates were much higher in Q4 than in Q1.
It’s normal for CPA candidates to have more going on in Q4, so we always expect to see a bit of a decrease in pass rates. However, the jump in REG scores from Q4 to Q1 didn’t mirror the REG Q4 and Q1 variances from 2017 or 2018. In fact, the REG jump in pass rates from Q4 compared to Q1 is quite encouraging.
Historically, both the number of candidates and the pass rates are higher in Q3 than any other time of year. For both students and accountants alike, Q3 is a less hectic time. Classes have ended for the summer, and busy season has concluded for the year. Consequently, candidates have more time to study and sit for the exam. Their sufficient preparation then serves to push the pass rates up.
But for Q3 2019, this increase has not consistently been the case. While BEC and FAR pass rates were up, the AUD and REG rates were down. In total, more people sat for the CPA Exam in Q3 (40,391) than in Q2 (37,098). A few more candidates took BEC in Q3 than in Q2, but many more sat for FAR in the third quarter than in the second. However, REG also saw an increase in candidates from Q2 to Q3. So, the additional numbers helped BEC and FAR push up their pass rates, but REG wasn’t so lucky. And AUD had fewer candidates in Q3, so that could account for the pass rate decrease there.
CPA Exam candidates shouldn’t have been anything but excited to see the pass rates for all 4 CPA Exam sections rise so much from Q1 to Q2. While Q2 pass rates are typically higher than Q1 pass rates, the substantial increases were surprising due to the fact that this quarter did not bring any positive or negative CPA Exam changes. And at 43,192, the number of candidates was not very high. So, these candidates must have been super prepared for the CPA Exam, which suggests that their study habits were good and their CPA review courses were great.
We predict the high pass rates of the CPA Exam will persist, as the CPA requirements remain quite strict among the state boards. And, the increasing demands placed on CPA candidates simply make them more qualified to pass the exam.
The first quarter’s worth of CPA Exam pass rates for 2019 was fairly interesting. Half of them (BEC and FAR) stayed true to form by being lower than the Q4 2018 pass rates, but the other half (AUD and REG) were higher than the Q4 2018 pass rates (though not by much). However, as mentioned, only AUD’s Q1 2019 pass rates were lower than the Q1 2018 pass rates. BEC, FAR, and REG all outshone their 2018 quarterly counterparts.
Therefore, 2019 has been beating 2018 in the CPA Exam pass rate race. This possibility becomes even bigger when we consider that more candidates sat for the exam during Q4 2018 (55,870) than sat in Q1 2019 (41,554). Normally, higher candidate numbers help improve pass rates, but in this instance, this smaller batch of candidates was apparently just more prepared, as the AICPA says.
The pass rate increase from Q4 2018 to Q1 2019 was especially good news for REG takers, as REG incorporated new tax law changes on January 1, 2019. In an attempt to avoid being caught off guard by these changes and having to repeat REG, the Q1 2019 candidates managed to outperform the Q4 2018 candidates who were trying to dodge the 2019 version of REG altogether. Looks like the Tax Cuts and Jobs Act of 2017 may have made tax preparation easier.
Honestly, Q4 followed the trends. The pass rates were still pretty high for Q4 pass rates, but they all went down from Q3, which is to be expected. There are generally fewer people sitting in Q4 than in Q3, and Q4 is a hard season in which to study with the holidays and rush to end the year well. Therefore, Q4 2018 looked like most other CPA Exam Q4s.
The Q3 2018 pass rates were a bit surprising due to the fact that 3 of them bucked the typical Q3 pass rate trend.
As mentioned, pass rates are usually higher in Q3 than in Q2. What’s more, Q2 also sees a swell of candidate numbers and pass rates, potentially for similar reasons as those of Q3. But Q2 doesn’t have as much of a reputation for high pass rates as Q3. The 2017 pass rates, in particular, illustrated the common scenario.
In 2017, all of the pass rates were higher in Q3 than in Q2. However, no pass rate other than that of BEC went above 50% until Q2 (AUD), and no exam section other than BEC could maintain such a high pass rate past Q3. As the pass rates for Q2 2018 have already outpaced those of 2017, I was hopeful Q3 2018 would continue the trend.
But strangely enough, Q3 2018 supplied fewer pass rate thrills than Q2. What was the deal?
First of all, fewer candidates sat during Q3 2018 than sat during Q2 2018. While NASBA processed 49,479 scores in Q2, they processed just 18,325 in Q3. That’s a significant drop. However, a smaller number of candidates sitting for the exam in 2018 seems to have been the theme, as only 11,517 scores were processed for Q1. So, that was the first way that Q3 broke with testing window tradition, and this could have contributed to the lower pass rates.
Secondly, the Q3 candidates may have been less prepared for the CPA Exam than Q2 candidates. Potentially, the Q3 candidates might have suspected that the CPA Exam was easier to take now since the new version launched on April 1, 2018. Consequently, some of them probably underestimated the exam and did not study as much as necessary.
But what about the REG situation? Well, I have one theory for that surprising pass rate rise as well.
The REG CPA Exam section changed on January 1, 2019, to reflect the recent tax law changes. Prior to this occurrence, the tax law changes were still so new that many accountants and accounting professors were still adapting to them. For this reason, current CPA Exam candidates were probably more familiar with the old tax law than the new. Therefore, many candidates who had yet to take REG were most likely motivated to pass this section ASAP before 2019. It looks like those candidates who sat for REG in Q3 maxed out their preparations so they could avoid a retake with the coming version. And thankfully, their efforts paid off.
At the end of 2017, we learned that the CPA Exam would be changing on April 1, 2018, once again (just like it did on April 1, 2017). These changes arrived right on time, and they seem to have positively affected the Q2 pass rates.
Unlike the 2017 exam changes that altered the content, question counts, skill levels tested, and overall difficulty of the exam, the 2018 revisions modernized the exam design and functionality. The purpose of the 2018 changes was to make the testing experience easier for candidates. The AICPA even integrated the desktop version of Microsoft Excel into the exam so candidates could use a spreadsheet they were more familiar with.
Knowing these changes should help alleviate the challenges of the exam, many candidates seem to have waited to take the exam until those changes launched. I say this because, on February 5, 2018, NASBA announced that they had processed a total of 11,517 scores for Q1. While this figure doesn’t directly represent the number of unique Q1 candidates, it does suggest that not a lot of people came out to Prometric during the first testing window of 2018.
In contrast, NASBA processed 49,479 scores on June 27 and 28. The number of candidates sitting for the exam each quarter has actually been decreasing in the last few years. Yet, that enormous digit hearkens back to the golden age of exam candidate populations from 5 years ago. With the jaw-dropping Q2 pass rates these candidates achieved, that decision was totally worth it.
This is just another way of saying the candidates were better prepared, but it includes a reason why. In the last 2 years, several CPA review providers released courses with major technological upgrades. At this point, almost all current candidates will be using one of these courses. Therefore, this enhanced exam prep seems to have been just what candidates need to manage the more challenging exam version that arrived in 2017.
If you’re anything like me, you’re probably wondering, “So, what will happen next with the pass rates?” Well, based on the historical data, we can make predictions about the future of the pass rates.
As we all know, what goes up must come down. When it comes to pass rates, the going down usually starts again in Q4 and continues into the following Q1. The last quarter of the year seems to be the busiest for candidates. School is back in session, and the holidays overwhelm the calendar. While the number of candidates sitting for the exam often decreases between Q3 and Q4, the pass rates do too. It seems that candidates just can’t prepare as well when the year is coming to a close.
And when the new year arrives, busy season begins again, a new semester starts, and everyone is trying to get into a new pattern for life. At this point as well, fewer candidates are sitting for the exam. Some have already started studying for Q2, but others are just initiating the application process. But when Q2 and Q3 come around again, the majority of candidates who will sit that year have their testing appointments scheduled. Therefore, pass rates typically go back up during this time.
Though 2019 broke its fair share of CPA Exam pass rate records, 2020 will not necessarily do the same. Major CPA Exam changes are scheduled, which always gives cause for concern as far as pass rates go.
Therefore, pass rates may also go down again as new candidates come to the CPA certification process underestimating the difficulty of the exam. Such a decline is apt to happen because when pass rates are low, the majority of the candidate populace consists of only the most committed individuals. These candidates often match their preparation to their dedication and consequently pull the pass rates up again with their high scores.
Then, as the pass rates go up, the more apprehensive candidates become more confident. They soon convince themselves the exam isn’t so hard after all and start sitting for it. As less-prepared candidates infiltrate the exam process again, the pass rates slip down once more. At this point, the cycle refreshes.
Now that we have learned so much about the present and have speculated so much about the future of the pass rates, let’s travel back in time to relive the pass rates of the past.
As we look at these lines representing more than a decade of pass rates, we see that pass rates for most exam sections have congregated together in the same areas at the same time. BEC broke away from the pack at one point and pushed the limits of what’s possible in pass rates. Yet, the pass rates for the remaining exam sections rested right around 45-49% for a while there.
That is until we entered 2018. Then we witnessed the amazing happen as 3 pass rates crested the 50% mark in 1 quarter, which was unheard of for the last 12 years. We can get a better idea of how exceptional this year’s pass rates have been by looking at the pass rates for each section separately.
AUD hasn’t had quite as impressive pass rates as BEC in the last decade. Nevertheless, AUD has made a notable effort to compete for first place. From 2006-2010, the AUD pass rate was content to settle for second, but in 2011, it almost gave up the fight. AUD had the lowest pass rate for several years. Yet, especially in the last few quarters, it’s made quite the resurgence. AUD is now neck-and-neck with REG, and they’re both creeping up on BEC.
AUD’s pass rate history is understandable. This exam section has had a stint putting up the lowest pass rates. This may be due to the fact that AUD looks relatively straightforward, but then the vagueness of the questions often catches people off-guard. There are often multiple correct answers, but you must pick the best one.
This deception has made the exam a lot more difficult. Still, candidates have apparently been able to fortify themselves against AUD’s schemes in the last several quarters. The fact that AUD is making a run for the top spot is actually surprising. AUD is the only section to test at the Evaluation level of skill, which is the most difficult in the context of the CPA Exam.
BEC’s pass rate story is the opposite of AUD’s. BEC seems to have been the hardest exam section from 2006-2011. Then, the exam change of 2011 positioned candidates for better BEC success. Ever since BEC has stolen the show by sporting the top pass rate for 7 years straight. And things didn’t change in 2019 either, as BEC continued to reach new heights.
How has BEC managed to become the reigning king of pass rates? BEC is the least technical part of the exam. Additionally, more than half of BEC only tests for Application, the second lowest skill level. Furthermore, BEC has only had task-based simulations (TBSs) for about a year and a half now, having received them in 2017. But with only 4 total TBSs compared to the other exam section’s 8, BEC remains half as hard in the realm of simulations.
BEC also has the fewest multiple-choice questions (MCQs) with 62. And finally, BEC has 3 written communications (WCs). The BEC WCs account for 15% of your score and are basically there to ensure that you can write an organized, well-developed document of clearly expressed correct information.
As you can see, FAR’s pass rates have been a bit of a roller coaster. They have only been the highest for 2 of the past 12 years. After that, they firmly positioned FAR as one of the hardest, if not the hardest, exam section for the past 5 years. When the exam experienced big changes, the FAR pass rate responded with big falls. While FAR’s pass rates have had their quarterly moments in the 50s, even jumps above 49% have been uncommon.
As we’ve seen, some of the other pass rates have already skyrocketed beyond 50% this year. Yet FAR’s passing percentages are still stuck in the 40s as they have been for some time. With an overall average of just 46.67% and the most candidate-centric exam changes of late already in place, the FAR pass rate seems destined to dwell below 50% indefinitely.
Most everyone finds FAR to be the hardest CPA exam section. This is not because its questions are the most difficult, but because its scope is the broadest. Basically, FAR covers a lot of content, and you need more time to study for FAR than other exam sections. Candidates who don’t take FAR first but try to squeeze such an extensive amount of studying into their 18-month window may just run out of time and contribute to FAR’s low pass rates.
Furthermore, FAR features some tricky concepts, like bond, pension, and stockholder equity or governmental accounting. Candidates who don’t commit to mastering their weak areas but instead simply hope they won’t see that material on exam day are very likely to be disappointed. And, based on the pass rates, they are almost as likely to fail.
Last but not least, we have REG. This section has also undergone some major pass rate shifts in the last 12 years. REG rose and fell rapidly from 2006 to 2011, then popped up above 45% and leveled off from 2012-2017. The REG CPA Exam section had its time at the top but comes in at second or third more often. It actually kept AUD at bay from the second-place position from 2012-2016 but had a minor mishap with third place in 2017. Now it seems that REG won’t stay down, as it came back from behind to best AUD in every quarter between 2018 and 2019, and doesn’t show signs of stopping.
REG has reason to be a hard exam section. It has the greatest number of MCQs (76) and ties with FAR for testing the most at Analysis, the second highest skill level on the exam. But considering its pass rates, REG also has the potential to be less difficult for select candidates.
REG’s content mainly revolves around taxation, though it also covers business law and ethics. Candidates who love taxation have a good chance of performing well on this section and helping preserve its high pass rate. You just can’t underestimate the business law and ethics section, or they may get the better of you. Candidates who don’t really love taxation seem motivated to avoid sitting for REG ever again. So, they’ve prepared well enough to one-and-done this section, especially in Q2 2018, from the looks of it.
As accountants, we may find all of these numbers interesting. But in the end, you need to know: What do the pass rates really mean for you?
Well, pass rate changes, especially those occurring from one quarter to the next, shouldn’t affect your CPA Exam preparations. Even with pass rates on the rise, the CPA Exam is still a sizable challenge requiring a lot of time and effort to overcome. The BEC pass rate has been quite high for some time, but you still have to review all of the content and study effectively, or you won’t pass it. The same goes for the other exam sections.
In truth, with pass rates ranging around 50%, you still have almost a 50% chance of failing. Clearly, now is not the time to slack off in your studies. There are no shortcuts to CPA Exam success, even if the passing percentages seem to be trending in your favor.
What’s more, we may have come to an unprecedented moment in exam history, but additional changes are on the horizon. The REG CPA Exam section will update for the new 2018 tax law changes on January 1, 2019. The other content changes revealed in the recently released Blueprints will go into effect at that time as well. There are no guarantees that the pass rates will ever be so high again.
In fact, as I said, it’s extremely likely that they will go back down. Therefore, the key to passing hasn’t really changed. You still have to practice, practice, practice, and practice some more. If you don’t, you may not succeed, no matter what the pass rates are.
The AICPA is continuing to credit candidate preparation levels to pass rate variations. What’s the best way to prepare for the exam? Use a CPA review course. With a realistic study schedule and the right CPA review course for you, you can understand all of the exam content and be completely comfortable with the exam questions by test day.
To find the best course for you, check out my analysis of the top CPA Exam review courses on the market. You should also visit this page if you didn’t pass and feel your failure had more to do with your review materials than your study habits. Complete this self-evaluation and use these additional tools as well if you failed to pass the CPA Exam.
You may be thinking, “I know I should study hard no matter what, but should I schedule my exam during a quarter with a higher pass rate?” My answer to that question is, No, I don’t think so. While the differences between the highest and lowest quarters are statistically significant (~5%), you can’t take the exam only in the summer. The 18-month window makes this impossible. But the quarterly discrepancy between pass rates further proves that when people have more time to study, the pass rate is higher.
Whether the pass rates are high or low, thousands of candidates pass the CPA Exam every year, and you can be one of them. Passing the CPA Exam is absolutely doable, and I am more than happy to help you along the way. Get the answers you need to the CPA candidate’s frequently asked questions, or sign up for my free mini-course today!
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I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!