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CPA Program

Exam Report


© CPA Australia 2013

Leading the world in accounting education
The CPA Program is a leading professional education program in accounting, finance and business.
Its success is reflected in its continual growth over 25 years. The Program is portable, international and
requires self‑directed and independent learning. It is a complete education and practical experience program,
carefully structured to provide maximum benefit to candidates now and as they progress in their careers.

CPA Australia undertakes continuous improvement to enhance the CPA Program’s global relevance and
currency of content, and provide more ways for people to develop a career built on professional accounting
skills. CPA Australia provides entry pathways designed to offer flexible entry modes for those who have not
previously completed an accounting degree. These changes are part of CPA Australia realising our goal to
maximise the share of people who want a career built on professional accounting skills.

Recognising the complex business environment in which organisations operate, CPA Australia has a broad
education program that is designed to produce high-quality graduates with well-rounded business skills and
sound technical competencies.

The CPA Program consists of two levels:

n Foundation level—core knowledge requirements that can be fulfilled through CPA Australia’s
eight foundation level exams or through an accredited or recognised higher-education degree program.
n Professional level—six postgraduate level segments plus three years of mentored experience in an
accounting, finance or business role.

The syllabus for the CPA Program focuses on strategy, leadership and international business. The content
of the Program is globally relevant, with a focus on providing flexibility of learning and delivery modes.
The CPA Program is designed to meet the requirements of the International Education Standards issued by
the International Federation of Accountants. Importantly, the CPA Program continues to address the needs
of employers and leads to a highly valued and globally recognised designation. CPA Australia continues to
apply the same rigorous standards of competence as has always been required to achieve the CPA Australia

The flexible learning focus ensures that those who successfully complete the CPA Program—more than 77 000
to date—have much more than a solid working knowledge of accounting, finance and international business.
CPAs have initiative and strong organisational and time management skills, and are positioned to be future
leaders of the profession. They are committed and motivated self-starters who are work-ready. Graduate and
employer surveys continue to show extremely high levels of satisfaction with the skills developed through the
CPA Program.

Starting with the CPA Program, we believe CPAs offer a unique combination of skills that drives employer
demand for CPAs. They drive business success through their technical expertise and ability to see the
bigger picture.

The Professional Qualifications Advisory Committee meets four times a year to provide management with
the best possible advice on the educational and training framework for members of CPA Australia so that
management may develop and monitor educational and training strategy relating to the professional programs.
This continual review ensures that the CPA Program remains at the forefront of international accounting
education programs.

All CPA Program learning materials are updated regularly. A Learning Management System with interactive
online learning support provides candidates with additional support in their studies. In addition to this Learning
Management System, a range of additional learning resources and tools are available to complement the
distance learning materials, including workshops, webinars, tuition providers, revision kits and passcards.

CPA Program exams are a comprehensive assessment of the learning objectives for each subject area.
High standards are maintained by processes that include expert monitoring at all stages, from the development
of the exam questions to the full statistical analysis of every question and every exam paper. The CPA Program
is supported by processes certified externally under ISO 9001:2008 as meeting international quality
management standards.

The CPA Program provides a challenging, rewarding and world-class program that ensures the high standards
of the profession are maintained. It is a benchmark for professional accountants and the foundation for lifelong
professional learning.
The CPA Program 1 2012 CPA Program exams—Professional level 9
Introduction 1 Introduction 9
The Professional Qualifications Advisory Exam enrolments 10
Committee 1 Exam venues 10
The objective of the CPA Program 2 Exam preparation process 11
Structure of the 2012 CPA Program 2 Exam quality process 12
Foundation level 2 Setting the passing standard 13
Professional level 3 Maintaining the standard 13
Practical experience requirement 3 Psychometric evaluation 13
Level of difficulty 13
2012 CPA Program exams—Foundation level 4
Discrimination power 14
Introduction 4
Distractor functioning 15
Retake policy 5
Reliability 15
Exam enrolments 5
Exam Policy Advisory Committee 16
Exam venues 5
Exam preparation process 6 Candidate performance 17
Exam security process 6 Foundation level 17
Setting the passing standard 7 Professional level 17
Standard Setting using the Modified Bookmark Reporting of results 18
method 7
Definition of a ‘minimally competent candidate’ 7 2012 committees and staff 20
Number and criteria of SMEs 7 Professional Qualifications Advisory Committee
Duration of standard setting exercise 7 Members 20
Statistical equating methodology 8 Exam Policy Advisory Committee Members 20
Scaled scoring ranges 8 Special Consideration Committee Members 20
Equating of exam forms 8 CPA Program Staff 20

The CPA Program

The CPA Program commenced in 1986, and is CPA Australia’s professional education program.
Completion of the CPA Program is required for candidates to advance to full membership and
CPA status. The CPA Program is designed to provide graduates with a solid base of technical
accounting knowledge, together with the broad business knowledge and skills required to
prepare them to become the strategic business leaders of the future.

CPA Australia has strict quality assurance processes in place to ensure the CPA Program
continues to be recognised as a leading professional accounting education program.

The Professional Qualifications Advisory Committee

The CPA Program has been developed by CPA Australia in consultation with senior academics
and industry experts to ensure that it provides a practical, up-to-date, postgraduate approach
to business studies.

To ensure the CPA Program remains at the forefront of professional business education,
the Professional Qualifications Advisory Committee advises on the educational framework for
members of CPA Australia. This ensures relevance and quality, so that the program continues
to meet the needs of members and business.

The Professional Qualifications Advisory Committee is made up of eight eminent individuals from
academia, industry, large firms and the public and not-for-profit sectors.

The Professional Qualifications Advisory Committee is chaired by Professor Kim Langfield-Smith,

FCPA, Pro Vice-Chancellor (Academic Performance) Monash University. A full list of members is
provided on page 20.

Key responsibilities of the Professional Qualifications Advisory Committee are to:

n provide strategic oversight and quality assurance of the CPA Program, including ongoing
development and maintenance;
n provide advice, direction and oversight to the design, curriculum, conduct, assessment
and quality assurance of the CPA Program;
n provide advice on the development of the CPA Program, including its design,
curriculum, assessment and quality assurance so that it is positioned as the highest-
quality professional education program by professional accounting bodies and the
business community;
n review and advise on all educational components of the CPA Program;
n provide advice on the use of leading-edge technology to enhance and complement
the delivery and assessment of the CPA Program;

n provide advice and recommendations in respect of the strategic position of the

CPA Program with undergraduate and postgraduate university education, the education
continuum and within the professional work environment; and
n provide advice on the development of the practical experience requirement of the
CPA Program.

The objective of the CPA Program

The CPA Program provides graduates with a world-class, internationally recognised professional
qualification. The program is designed to enhance a CPA’s competitive advantage for
leadership positions in finance, accounting and business in the private and public sectors.
Distinctively professional in orientation, the CPA Program is strategically integrated with other
tertiary education in a continuum of learning for career success. The CPA Program offers
an exceptionally high standard of quality and is recognised by ISO 9001 certification. It is
a rigorous, integrated education and experience program. CPA Program professional level
integrates postgraduate education with practical experience to provide opportunities to develop
technical and strategic knowledge and skills, and implement these in authentic situations.

As well as ensuring that graduate CPAs are well informed about the latest technical issues
and developments in the profession, the program is positioned within the broader context of
contemporary business. The professional level compulsory segments include emphasis on:
n corporate governance, ethics and integrity;
n development and implementation of business strategy; and
n decision-making and leadership.

The CPA Program equips graduates with strong analytical and problem-solving capabilities
designed to add real value.

In 2012 there were over 27 000 candidates enrolled in the CPA Program professional level,
with over 52 000 individual enrolments per annum. The CPA Program professional level is the
largest postgraduate program in Australia and possibly the largest postgraduate accounting
program in the world. The CPA Program is based on the core knowledge that all new
members have completed through their studies in accounting, commerce or business.

All professional level segments are prepared by authors drawn from industry, commerce,
the public sector and tertiary education. Segment outlines, learning objectives and related
materials are reviewed annually by CPA Australia technical staff and independent panels of
subject matter experts. The CPA Program utilises high-quality open-learning educational
resources including printed study material, online learning tasks and workshop materials.

Structure of the 2012 CPA Program

The CPA Program comprises two levels:
n Foundation level—foundation level exams test candidates’ knowledge of core accounting
knowledge required to satisfactorily enable them to undertake the professional level; and
n Professional level—incorporates postgraduate educational units together with a practical
experience requirement.

Candidates must satisfy the core knowledge requirements of the foundation level and complete
the professional level education units and experience in order to attain the CPA designation.

Foundation level
The foundation level consists of eight exams designed to test candidates against a series
of learning objectives. The learning objectives are designed to incorporate focus on core
knowledge areas required for successful entrance into the professional level of the CPA Program.

The average foundation level candidate is required to complete three exams.

The foundation level exams offered are:

n Foundations of Accounting
n Accounting Concepts and Principles
n Financial Accounting and Reporting
n Fundamentals of Business Law

n Economics and Markets

n IT and Business Processes
n Business Finance
n Management Accounting

Foundation level candidates must complete all their required foundation level exams and
advance to Associate status within 10 years of their first foundation level enrolment.

Professional level
Candidates enrolling in the CPA Program professional level are required to pass six segments
and complete the Practical Experience Requirement to complete the CPA Program.
Each segment is one semester in duration with a recommended 150 hours of self-study.
The total study time for six segments is 900 hours.

Candidates must complete four compulsory and two elective segments. These candidates must
complete the following segments as part of the new structure of the program.

Three compulsory segments:

n Ethics and Governance
n Strategic Management Accounting
n Financial Reporting

Two elective segments selected from the following:

n Advanced Taxation, Singapore Taxation or Malaysia Taxation
n Financial Risk Management
n Advanced Audit and Assurance
n Contemporary Business Issues

Capstone (compulsory):
n Global Strategy and Leadership

Associate members joining CPA Australia from 1 July 2007 must complete the CPA Program
and advance to CPA status within six years of joining CPA Australia. Associates who joined
from 2004 to 30 June 2007 must complete the CPA Program within its required timeframe
and advance to CPA status within eight years of joining CPA Australia.

Further information on the CPA Program professional level segment offering is available on
the CPA Australia website.

Practical experience requirement

All candidates are required to complete three years of supervised practical experience in a
professional accounting, finance or relevant business role. The practical experience requirement
is designed to complement the theory in the professional level segments. Candidates are
required to demonstrate competence in the technical, personal effectiveness, business and
leadership skill areas. A full member of an IFAC body will need to verify that a candidate has
successfully demonstrated the required skills.

There were over 18 000 Associate members enrolled in the practical experience requirement
through 2012. These members, on average, show consistently stronger results in the distance
education units than those who are not enrolled, with more than a 70 per cent higher success
rate in exams.

2012 CPA Program

Applicants for Associate membership of CPA Australia are required to undertake a Member
Entry Pathways Assessment. Each applicant is assessed against the core knowledge
requirements to commence the professional level of the CPA Program. Applicants who do
not meet all the core knowledge requirements are advised of the foundation level exams that
they must successfully complete to progress to the professional level of the CPA Program.

Candidates are not obliged to complete the exams with CPA Australia. They can complete
their required core knowledge at a higher education provider and apply for a reassessment of
their qualification.

In 2012 CPA Australia introduced an extended exam window for all foundation level exams. This
meant that all eight exams were offered continuously from 7 May through until 14 December.
The introduction of this extended exam period allows greater flexibility for candidates, who can
now schedule their exams at times to suit their work and lifestyle.

Foundation level exams are closed book. Each exam is of 3 hours and 15 minutes duration.
All foundation level exams consist of 100 multiple choice questions and are offered using
computer-based testing. All exams comprise a combination of scored and unscored items,
thus providing an opportunity for CPA Australia to confirm the statistical validity of an exam item
before it is scored. Questions are delivered randomly and results are available to candidates on
the day of their exam.

Foundation level exams:

n Foundations of Accounting
n Accounting Concepts and Principles
n Financial Accounting and Reporting
n Fundamentals of Business Law
n Economics and Markets
n IT and Business Processes
n Business Finance
n Management Accounting

Each foundation level exam has a set of learning objectives. Candidates are examined against
each of these learning objectives. Foundation level is not a distance education program,
nor a program of study in the same mode as the professional level, but is a series of exams
to test candidates’ knowledge and skills in the required core knowledge areas.

Success in the foundation level ensures candidates have met all the prerequisites to enable
them to enter the professional level with the same chance of success as those who have come
through with an accounting degree. The professional level builds on the knowledge examined in
the foundation level exams.

Retake policy
In 2012 CPA Australia introduced a retake policy for those candidates undertaking foundation
level exams. The retake policy limits the maximum number of times a candidate can retake the
same exam, and also the timeframes within which exam resits are permitted. This policy was
introduced for the benefit of those candidates for whom the foundation level may not be the
most suitable study method.

All candidates have a maximum of four attempts at any one exam, with a requirement for a
minimum of 30 days between exam sits. The required waiting period has been implemented
to ensure candidates allow adequate study time between exams. Candidates who are not
successful in their foundation level exams are provided advice on available learning support and
possible alternative arrangements to assist them in meeting the core knowledge requirements to
be able to commence the professional level.

Exam enrolments
Total foundation level enrolments are shown in Table 1.

Table 1
Foundation level enrolments

Total 2012
Exam enrolments
Foundations of Accounting 274
Accounting Concepts and Principles 1887
Financial Accounting and Reporting 870
Fundamentals of Business Law 1352
Economics and Markets 248
IT and Business Processes 626
Business Finance 377
Management Accounting 519
Total: 6153

Exam venues
Foundation level exams are conducted by Pearson Vue on behalf of CPA Australia. All exams
are conducted at computer testing centres operated by Pearson Vue or their authorised
representatives around the world. In 2012 there were a total of 6153 enrolments in foundation
level exams. The exams were offered in over 65 countries, at more than 145 exam locations,
including Lebanon, Kuwait and Kenya. Candidates are required to schedule their own exam
date within the relevant exam window, which provides flexibility for them to plan their study
around work and other commitments.

Figure 1
Exams delivered by country in 2012
Other countries 8%

Indonesia 1%
China 1%
New Zealand 2%
Malaysia 4%

Hong Kong 6%

Singapore 7%

Australia 62%

Vietnam 9%

Exam preparation process

CPA Program exam questions are written by experienced practitioners and academics who are
specialists in each subject area. Writers are contracted by Pearson Vue and undergo a training
program designed to ensure skills in the structure, design and analysis of multiple‑choice
testing items. CPA Australia is involved in the design and management of the training sessions,
together with educational experts from Pearson Vue. Training is conducted using a variety of
delivery methods including face-to-face and webinars, thus ensuring ease of accessibility for
writers all over the world.

All items are reviewed by educational experts from Pearson Vue and CPA Australia to ensure
items meet the requirements for testing learning objectives, and testing the required levels of
knowledge. Detailed ongoing analysis is undertaken to ensure all items are performing as required
during the testing process. Each exam consists of a prescribed distribution of new and pre‑tested
items. All new exam items are pre-tested to evaluate statistical reliability and performance, and
these items are not included for the purpose of a candidate’s score in the exam.

All exams are prepared in accordance with a prescribed weighting for each learning objective.

To protect the integrity of exam content, great care is taken to ensure that only those that need
to see exam content have access to it. File access is restricted, printing is kept to a minimum
and the distribution of all information is tracked.

Security audit documentation is maintained to keep track of the flow of documents

between Pearson VUE, CPA Australia and subject matter experts throughout each phase of
exam development.

Exam security process

Candidates are required to present photographic and signatory identification before taking their
exams. An electronic signature and a digital photograph is captured and compared with the
identification previously provided. This biometric data is also used when the candidate first takes
a seat in the exam room. The candidate’s digital photograph appears on the screen and the
test administrator confirms the right candidate is sitting the right exam.

Setting the passing standard

Standard Setting using the Modified Bookmark method
The CPA Program foundation level uses the Modified Bookmark method1 for setting the passing
standard for all exams. The passing standard is set on a triennial basis, with additional standard
setting undertaken as learning objectives change for each exam. Following the initial standard
setting process, all exams are pre-equated using statistical information related to the level of
competence required and level of item difficulty.

The Modified Bookmark method is a widely used item-centered method for setting a passing
score. In this method, the standard setting process is done after the results have been analysed.
The following steps are generally carried out during this method:
1 A group of subject matter experts (SMEs) for each exam is convened, forming the
Standard Setting Committee (the Committee).
2 The items are ordered from easiest to hardest based on their location (difficulty) on the
underlying measurement scale.
3 SMEs review items, beginning with the easiest item, and decide if a minimally competent
candidate has a 0.50 probability of answering the question correctly. The assumption is
that the easy items at the beginning of the scale will be marked as ‘Yes’ and, as the judge
progresses to the harder items, there will be a transition point to the items being marked
as ‘No’.
4 The SMEs are asked to place a bookmark at a transition point where the majority of
responses change from ‘Yes’ to ‘No’.
5 There are usually multiple rounds of placing the bookmark, with discussions between
the SMEs between rounds.
6 The pass score is determined by averaging the item difficulties corresponding to the
bookmark locations.
7 Once the pass score has been determined, the percentage of candidates passing
the score will be reviewed to determine the preliminary impact of the pass-score setting
8 The result is then submitted to the Committee. If the result is not acceptable, the
Committee should nominate an acceptable pass percentage (informed by the knowledge
of the exercise) and then set a new preferred pass score.
9 The SMEs would then be asked to examine the items in the vicinity of this new pass score
to see whether or not they agree with the modified image of the minimally competent
candidate. If so, the new pass score is accepted for recommendation to the Committee;
if not, there would have to be a further round of discussions among the SMEs to reach
consensus on the refined image of the minimally competent candidate.

Definition of a ‘minimally competent candidate’

The description of the minimally competent candidate is developed during the standard setting
meeting using the course Learning Objectives and test specifications. For the purposes of this
standard setting exercise, a ‘minimally competent candidate’ is defined as the least capable
candidate able to pass (at a minimum level) the CPA Australia professional level.

Number and criteria of SMEs

Each foundation level exam requires the attendance of between six and eight SMEs. SMEs are
selected on the basis of meeting the following criteria:
1 Expertise in the subject matter.
2 Familiarity of undergraduate studies subject matter.
3 Knowledge of CPA Program professional level content.

Duration of standard setting exercise

The standard setting process for each foundation level exam is conducted over a full day.

Sessions are carried out in a face-to-face and virtual environment using WebEx and
teleconference technology.

1 Additional information on this method can be found in Cizek, G. J. (ed.) (2001), Setting Performance
Standards: Concepts, Methods, and Perspectives, Lawrence Erlbaum, Mahwah, New Jersey.

Statistical equating methodology

As new items are seeded in exams, they are calibrated onto the existing measurement scale
according to the Rasch Unidimensional Model. Once this has been done, it is possible to use
any of the calibrated items in the bank to generate an exam and the resulting measure will
locate a candidate along the scale. The cut-score is also located on the scale so it is possible to
compare the location of the candidate to the cut-score. If the candidate is located at or above
the cut-score then they have passed; if they are located below the cut-score, they will fail.

Scaled scoring ranges

Foundation level candidates receive a pass or fail mark in addition to a candidate feedback
report, which is a graphic to indicate a candidate’s relative strength or weakness against each
learning objective.

In Semester 1, 2011 CPA Australia introduced the use of scaled scoring for each exam.
In addition to receiving a pass or fail result, candidates receive their score and information
disclosing the score required to pass.

Table 2 demonstrates the score scales (the lowest possible score to the highest possible score)
and the passing score required for each foundation level exam. A different scale range is used
to easily identify each exam.

Table 2
Exam scale ranges

Exam scale ranges

Exam Lowest score passing score Highest score
Foundations of Accounting 250 320 375
Accounting Concepts and Principles 875 945 1000
Financial Accounting and Reporting 625 685 750
Fundamentals of Business Law 375 430 500
Economics and Markets 125 190 250
IT and Business Processes 0 65 125
Business Finance 500 570 625
Management Accounting 750 820 875

The scaled score allows candidates to judge how their score relates to the pass mark.
The scale does not compare their score to other candidates, it is a unique view of their overall
performance in the exam.

Equating of exam forms

Item response theory is used to calibrate scores from two or more exam forms on the same
scale. Exam forms are drawn from the calibrated item bank and no item appears on an
exam before it has been trialled and equated to the benchmark scale. Through equating,
passing standards are set so that an equivalent level of proficiency is required to pass
different forms of the exam. Each candidate who is administered a set of exam items receives
a statistically equivalent exam: one that is neither statistically easier nor harder than any
other candidate.

All foundation level exams have been pre-equated from Semester 1, 2012. The use of
pre‑equating allows candidates to receive their results on the day of their exam

2012 CPA Program


Exams were offered for each CPA Program professional level segment at the end of
each semester. The exam periods were between 1 May and 4 May 2012 for Semester 1,
and between 23 October and 26 October 2012 for Semester 2. Each exam was of 3 hours
and 15 minutes duration.

The exams for most elective segments consist of 100 per cent multiple-choice questions.
The exams for compulsory segments in 2012 comprised a multiple-choice component
(worth approximately 70–75 per cent) and a written-response component (worth approximately
25–30 per cent). The exams for Singapore Taxation and Malaysia Taxation consisted of
written‑response questions only.

The exam for the capstone segment Global Strategy and Leadership consisted of a written
component (worth 80 per cent) and a multiple-choice component (worth 20 per cent).
The written component was based on two case scenarios and an extended case study,
each of which had been made available to candidates before the exam. The questions were
based on the case facts given in the case scenarios and extended case study.

All professional level exams were open book and non-disclosed. Open book exams are exams
where candidates are generally permitted to bring notes and books of their choice into the
exam. As candidates have access to such material, open book exams emphasise application
and analysis-type exam questions. Exams are open book because this more closely parallels
the conditions candidates are likely to experience in their working environment. The exam for
Singapore Taxation restricts the materials which may be brought into the exam to relevant
legislation only. In non-disclosed exams, questions and answers are confidential and they
are not published after the exam results are made available.

Exam enrolments
The total number of exam enrolments for the CPA Program professional level in 2012 was
59 904. Exam enrolments by country are shown in Figure 2.

Figure 2
Exam enrolments by country in 2012

Vietnam 1%
Fiji 1%
New Zealand 1% Other countries 2%
Singapore 5%
China 5%

Malaysia 7%

Hong Kong 8%

Australia 70%

Exam venues
DeakinPrime conducts exams each year on behalf of CPA Australia in over 300 venues
worldwide. DeakinPrime adheres to its own and CPA Australia’s strict quality requirements in the
selection of exam venues and supervisors. Matters such as the availability of adequate parking
and the provision of quiet and comfortable venues for candidates are considered. Candidates
were individually advised in writing of the exam date and venue for the CPA Program
professional level segment(s) they were enrolled in. Semester 1, 2012 had exams at 270 exam
venues. Of these, 44 per cent of all locations were within Australia and 56 per cent were
overseas. Overseas exam centres included Kenya, Turkey, India, Cayman Islands, Canada and
Zambia. Semester 2, 2012 had exams at 319 exam venues. Of these, 43 per cent of all
locations were within Australia and 57 per cent were overseas. In 2012 the major centres were
in capital and provincial cities around Australia, and Hong Kong, Kuala Lumpur and Singapore.

Figure 3
Distribution of exam enrolments

33 000

32 933
32 000

31 000

31 424
30 000

30 488

30 521
30 545
30 031
30 092
29 416

29 826
29 000

28 000

28 085
27 000

26 000

26 272
25 000

24 000

24 345
23 000

22 000

22 381
21 000

21 290
20 000

19 000

18 000

17 000

16 000

15 000

Sem. 1 Sem. 2 Sem. 1 Sem. 2 Sem. 1 Sem. 2 Sem. 1 Sem. 2 Sem. 1 Sem. 2 Sem. 1 Sem. 2 Sem. 1 Sem. 2
2012 2011 2010 2009 2008 2007 2006
Total Total Total Total Total Total Total
59 904 60 123 61 066 64 357 57 911 50 617 43 671

Exam preparation process

CPA Program professional level objective exam questions are written by experienced
practitioners and academics who are specialists in each segment area. A review panel
analyses each question to ensure they are clear and unambiguous, that answers are technically
correct and that the questions are examining the knowledge, skills and abilities that candidates
should have acquired from their study of the segment. Each semester CPA Program staff
prepare the objective question section of exam papers for each segment by drawing on the pool
of available questions, using several key criteria. CPA Program staff ensure that the percentage
of questions in an exam that relate to each module (part of a segment) is consistent with
the percentage of study time recommended for that module. CPA Program staff also ensure
that there is an appropriate balance between knowledge, application and analysis questions.
Table 3 illustrates the template completed by the CPA Program staff to ensure the content
validity of a typical CPA Program segment. The constructed response questions in the exams
for compulsory segments, Ethics and Governance, Strategic Management Accounting
and Financial Reporting, and the capstone segment Global Strategy and Leadership,
were prepared by academics and practitioners, and reviewed by a panel of experts. Exams for
Singapore Taxation and Malaysia Taxation comprise 100 per cent constructed response
questions. These exams are prepared by practitioners and academics who are specialists
within the relevant taxation systems. All exam papers are moderated by a minimum of two
expert members.

Table 3
Exam checklist

Number of
questions as
a percentage Recommended Number of Number of Number of
Module Number of of the exam proportion of knowledge application analysis
number questions paper study time (%) questions questions questions
1 2 2 2 1 1 0
2 9 10 10 4 4 1
3 11 14 12 0 8 3
4 7 9 8 0 4 3
5 15 19 20 2 5 8
6 6 8 7 0 3 3
7 7 9 10 0 5 2
8 6 8 8 1 3 2
9 4 5 6 1 1 2
10 5 6 6 1 3 1
11 5 6 7 1 1 3
12 3 4 4 1 1 1
Total 80 100 100 12 39 29
As a percentage of the exam paper: 15 49 36

Exam quality process

All printing and handling of exam papers was performed in locations which require secure
access and are under 24-hour video surveillance. All associated material used in the printing
process was securely stored and destroyed immediately after printing. Exam papers were
transported by a secure courier service and required a specified individual’s confirmation of
delivery. Supervisors notified DeakinPrime on the receipt of exam materials and also upon the
despatch of completed exam papers. Candidates were required to present official photographic
identification at all exams. Candidates who were unable to provide photographic identification
were required to complete a statutory declaration that stated and confirmed their identity.

Exam answers to objective questions were double-marked by two separate computer-driven

optical scanning systems. The individual results from one system were then matched with the
results from the second system to ensure the validity of the scanning process. Comprehensive
audit procedures ensure the accuracy of the scanning process and comprehensive statistical
review techniques are employed to identify any anomalies in the results.

Exam answers to the constructed response section of the Ethics and Governance, Strategic
Management Accounting, Financial Reporting, and Global Strategy and Leadership papers
were marked by a panel comprising CPA Australia members (all of CPA or FCPA status) and
experts drawn from academia, commerce, industry and practice. A detailed marking grid was
completed for each candidate response.

The exam for Singapore Taxation was marked by a panel comprised of senior tax specialists
with experience in the Singapore tax profession. The exam for Malaysia Taxation was marked
by a panel comprised of senior tax specialists with experience in Malaysia tax.

The constructed response answers in Ethics and Governance, Strategic Management

Accounting, Financial Reporting and Global Strategy and Leadership were marked by markers
who received extensive briefings and marked to an agreed marking grid. Marking grids are
developed by the exam panel, including the Chief Examiners. They are detailed documents
that clearly outline the marks allocated to points in each constructed response question.

Markers are guided and monitored by the Chief Examiners, CPA Australia technical experts
and DeakinPrime to ensure that marking is consistent. Statistical analysis is conducted on each
marker’s scores to ensure consistency of marking and reliability of marks. At least two markers
were involved in the assessment of each paper. Approximately 20 to 25 per cent of exam
papers that fall within a certain specified range are remarked by different markers from those
used in the original marking to ensure consistency and fairness. A number of papers are also
identified by statistical analysis for re-mark by the Chief Examiners.

Setting the passing standard

Since 1994, CPA Australia has used the Angoff method to establish passing standards for
professional level exams. The Angoff method is widely used by many professional bodies in
determining pass standards. The American Institute of CPAs (AICPA), for example, adopted the
Angoff method for determining pass scores for the American CPA exam in 1997. The Angoff
method requires a panel of experts to estimate a target level of proficiency (pass mark) for a set
of exam questions or for a given exam paper.

A separate panel is used for each of the segments. Panel members must be knowledgeable
in the particular cognate area, and about the candidate population in general, in order to
form an assessment of the target level of proficiency required. CPA Australia technical staff,
industry experts and instructional designers form the requisite panels.

In light of the knowledge, skills and abilities required of candidates who achieve the target level
of proficiency, panel members are asked to individually review each question on a particular
exam paper. In reviewing the question, panel members must ask themselves what percentage
of adequately proficient candidates should answer the question correctly.

The target level of proficiency (pass mark) of an individual panel member is an average of
their individual question difficulties and the paper as a whole. The proficiency level (pass
mark) for most exams is in the range of 60 to 65 per cent. The proficiency level is determined
by statistical analysis and expert recommendation of the appropriate level of proficiency
or standard. This ensures that candidates are graded fairly from one semester to another.
The experts are representative of the membership and the profession; consequently, the
expectations are high. There may be instances where the proficiencies are higher.

Maintaining the standard

A statistical procedure known as equating is used to ensure that standards are maintained in
semesters where there has been no structural change to the educational material. The standard
set by the Angoff method is the basis of equating the future exams. Statistical equating ensures
that the passing score for the October 2012 exam paper represents the same ability as the
passing score in the May 2012 exam paper.

Psychometric evaluation
The psychometric quality of the CPA Program objective exams is evaluated using standard
statistical relationships used in classical testing theory, such as the relationships between
candidate performance on exam questions and their exam scores, and the relationships among
candidate scores on the exam questions themselves. The goal of the psychometric evaluation
is to assess how well each exam has differentiated between candidates of different abilities
and to identify which questions should be reused, rewritten or discarded. In the psychometric
evaluation of multiple-choice questions, many psychometric characteristics can be evaluated.
Three of the more common are:
n level of difficulty;
n discrimination power; and
n distractor functioning.

Level of difficulty
The level of difficulty of multiple-choice questions is determined by measuring the percentage
of candidates answering the question correctly. A question with moderate difficulty will better
distinguish between candidates of different abilities.

Table 4 shows the levels of difficulty of CPA Program segment exams for 2012.

Table 4
Level of difficulty

Moderate Less
Number of Difficult ≥10% difficult
questions < 10% ≤90% > 90%
CPA exams—May 2012
Advanced Audit and Assurance 90 1 89 0
Strategic Management Accounting* 60 1 58 1
Advanced Taxation 60 1 58 1
Financial Risk Management 70 0 68 2
Financial Reporting* 50 0 49 1
Contemporary Business Issues 80 0 72 8
Global Strategy and Leadership** 16 — — —
Ethics and Governance* 60 0 60 0

CPA exams—October 2012

Advanced Audit and Assurance 90 0 90 0
Strategic Management Accounting 60 0 58 2
Advanced Taxation 60 0 59 1
Financial Risk Management 70 0 70 0
Financial Reporting* 45 0 44 1
Contemporary Business Issues 80 0 73 7
Global Strategy and Leadership** 16 — — —
Ethics and Governance* 60 0 60 0

* Figures for Strategic Management Accounting, Financial Reporting and Ethics and Governance are only
for the multiple‑choice components of the exam.
** Because of the restricted number of multiple-choice questions in the Global Strategy and Leadership
exam, no statistical analysis of Global Strategy and Leadership is included in this or subsequent tables.

Discrimination power
In a four-option or five-option multiple-choice exam, questions should be asked so that the
candidate scoring higher grades is more likely to answer the question correctly than a candidate
receiving lower grades.

The categories of discrimination power are described below.

Discriminating questions
Candidates receiving higher total exam scores are more likely to get the correct answer than
candidates with total lower scores.

Non-discriminating questions
Candidates with higher total exam scores are neither more or less likely to get the correct
answer than candidates with lower total scores.

Reverse discriminating questions

Candidates with total lower exam scores are more likely to get the correct answer than
candidates with higher total scores.

The discrimination power of a question is measured by the point biserial correlation coefficient.
The discrimination power of each multiple-choice question is measured by correlating
candidates’ aggregate scores to the answers for each option. Ideally, a question’s point
biserial correlation coefficient should be 0.20 or above. Table 5 shows the discrimination
power of the CPA Program segments combined.

Table 5
Discrimination power

Discriminating Non-discriminating discriminating
Semester 1 88.3% 11.7% 0.0%
Semester 2 93.1% 6.7% 0.2%

Distractor functioning:
Semester 1—99.2 per cent were functioning
Semester 2—99.8 per cent were functioning

Distractor functioning
Ideally, all the incorrect answers (distractors) of a four-option or five-option multiple-choice
question should be plausible (functioning) to a candidate of lesser ability. A distractor
is commonly deemed to be not functioning when fewer than 1 per cent of candidates
select that distractor. In the May 2012 CPA Program exams, about 99 per cent of
all distractors were functioning. In the October 2012 CPA Program exams, 99.8 per cent
of all distractors were functioning.

The reliability of exam scores is calculated to determine the degree to which candidates
are likely to earn similar grades on exams with different but comparable questions covering
the same subject matter. The coefficient alpha is a measure of the internal consistency or
homogeneity of the scores on a test. The reliability coefficient can range in value from 0 to 1,
and it is desirable for the level of reliability to be greater than 0.80. CPA Program exams have
consistently been highly reliable over many years. This is due to the exam questions being
written and refined by experts, the use of expert judgment to inform proficiency standards,
and the re-testing of exam questions for equating purposes.

Table 6 shows the reliability levels of the CPA Program segment exams.

Table 6

CPA exams May 2012 October 2012

Advanced Audit and Assurance 0.87 0.88
Strategic Management Accounting* 0.81 0.86
Advanced Taxation 0.85 0.86
Financial Risk Management 0.86 0.89
Financial Reporting* 0.84 0.83
Contemporary Business Issues 0.83 0.84
Ethics and Governance* 0.83 0.85

* Figures for Strategic Management Accounting, Financial Reporting and Ethics and Governance are only
for the multiple-choice components of the exams.

Exam Policy Advisory Committee

The Exam Policy Advisory Committee provides advice to CPA Australia on CPA Program exam
matters. It is composed of senior CPA Australia members with wide experience in education.
The Exam Policy Advisory Committee considers:
n the procedures used for the development of exam questions and the setting of
CPA Program exam papers;
n the standards of and the location of exam centres used in the CPA Program;
n the methods used and the security provisions implemented for the printing, distribution and
collection of CPA Program exam papers;
n the procedures used for the selection of, and information provided to, exam supervisors;
n the procedures used and the timelines for the CPA Program exam grading process;
n the statistical analysis provided on CPA Program candidate performance; and
n the final recommendation on the proficiency level of each CPA Program exam.


Foundation level
Candidate results for foundation level exams are provided as pass or fail only. Table 7 shows
the percentage of candidates passing each exam in 2012.

Table 7
2012 exam results

Exam Fail Pass

Foundations of Accounting 52 48
Accounting Concepts and Principles 45 55
Financial Accounting and Reporting 49 51
Fundamentals of Business Law 33 67
Economics and Markets 47 53
IT and Business Processes 39 61
Business Finance 29 71
Management Accounting 28 72

Candidates sitting foundation level exams receive their results on the day of their exam.
Each candidate receives a personal report showing their performance on the scale for the
relevant exam. Candidates also receive a report showing their individual performance against
each learning objective.

Professional level
In accordance with CPA Australia Professional Qualifications Advisory Committee policy,
the following grades were used:
n Fail
n Pass
n Credit
n Distinction
n High Distinction.

Table 8 shows the performance of candidates by grade for each CPA Program segment for
both semesters in 2012.

Table 8
Semester 1, 2012 exam results

Total number
sitting exam* HD D C P N
(26 435) % % % % %
Advanced Audit and Assurance 1 968 8.1 11.6 15.0 37.7 27.5
Strategic Management Accounting 4 762 5.3 7.1 14.6 39.9 33.0
Advanced Taxation 1 981 7.0 10.1 15.2 36.4 31.1
Financial Risk Management 1 938 7.2 9.3 16.3 38.1 29.1
Financial Reporting 4 539 5.8 6.9 14.1 38.8 34.3
Contemporary Business Issues 1 524 5.8 11.7 13.4 39.6 29.5
Global Strategy and Leadership 3 670 4.0 6.3 16.0 45.2 28.5
Ethics and Governance 5 615 7.2 12.9 16.7 37.6 25.5
Singapore Taxation 64 3.4 6.8 13.6 27.1 49.2
Malaysia Taxation 110 — 2.3 5.7 37.9 54.0

Semester 2, 2012 exam results

Total number
sitting exam* HD D C P N
(27 472) % % % % %
Advanced Audit and Assurance 2 041 8.3 10.8 14.5 36.2 30.2
Strategic Management Accounting 4 940 4.5 8.5 12.4 39.4 35.0
Advanced Taxation 2 151 4.7 11.9 13.2 39.0 31.3
Financial Risk Management 2 032 2.8 10.2 18.5 36.6 31.9
Financial Reporting 4 822 3.5 6.7 10.5 34.7 44.3
Contemporary Business Issues 1 542 6.9 9.5 16.1 38.7 28.9
Global Strategy and Leadership 3 832 2.7 5.4 13.9 46.2 31.8
Ethics and Governance 5 689 6.6 11.7 16.7 37.0 27.8
Singapore Taxation 61 — 6.6 11.5 45.9 36.1
Malaysia Taxation 102 — — 8.8 32.4 58.8

* ‘Total number sitting exam’ includes candidates sitting for the Public Practice Programs.

Reporting of results
Candidate results were released via three systems: SMS, online and conventional mail.
The SMS and online results system relies on the use of individual Personal Identification
Numbers (PINs) supplied to candidates. Result release via SMS was offered for Semester 1
and Semester 2, with approximately 10 824 candidates electing to receive their results via
SMS in Semester 1 and 10 043 in Semester 2. It is envisaged that this number will continue to
increase in the future. Both the SMS and online results systems are supported by a telephone
help line. Official confirmation of results is sent by conventional mail. Candidates who sit an
exam can review online their Personal Analysis Letter (PAL), which identifies their performance
by topic on the exam.

In the May 2012 exams, the last exam was held on 4 May and the results were released by
the online and SMS results system on 15 June. In the space of 28 days, 26 269 exam papers
were collected from over 263 locations worldwide, 1 475 610 objective answers were scanned
twice and any differences reconciled, 23 042 candidates’ constructed responses were marked,
psychometric and equating reports were produced, the Exam Policy Advisory Committee
convened and the passing proficiency levels were established.

In the October 2012 exams, the last exam was held on 26 October and the results were
released by the online and SMS results system on 7 December. In the space of 28 days,
27 291 exam papers were collected from over 257 locations worldwide, 1 506 438 objective
answers were scanned twice and any differences reconciled, 23 848 candidates’ constructed
responses were marked, psychometric and equating reports were produced, the Exam Policy
Advisory Committee convened and the passing proficiency levels were established.

The 28-day turnaround (for both May and October exams) allows candidates to review their
enrolment decision before the commencement of the enrolment period for the next semester.
The turnaround for the CPA Program compares favourably with other national and international
professional exams.

2012 committees
and staff

Professional Qualifications Advisory Committee Members

Associate Professor Foo Yin Fah FCPA
Mr Hari Iyer FCPA
Mr Neil Jackson FCPA
Professor Kim Langfield-Smith FCPA (Chair)
Dr Margaret McKercher
Ms Deborah Ong FCPA
Mr Warwick J. Spargo FCPA
Professor Kim Watty CPA

Exam Policy Advisory Committee Members

Mr Ken Devos CPA
Dr Mary Dunkley CPA
Mr Greg Ellis CPA
Dr Christine Jubb CPA (Chair)
Professor Louise Kloot FCPA
Associate Professor Denis Vinen FCPA

Special Consideration Committee Members

Ms Lynette Ellis
Ms Dianne Harvey CPA (Chair)
Dr Christine Jubb CPA
Associate Professor Les Nethercott FCPA
Dr Stephen Smith CPA
Associate Professor Irene Tempone FCPA

CPA Program Staff

Ms Janine Harper—General Manager Professional Programs & Pathways
Ms Desley Ward—Education Manager
Mr Richard Brown—CPA Program Manager
Ms Kristy Grady—Professional Level Manager
Ms Ange Rice—Foundation Level Manager
Ms Alisa Stephens—Quality Management Consultant
Ms Suzannah Andrews—Technical Consultant
Mr Irwin Bushnell—Technical Consultant
Ms Charlene D’Rosario—Administrator
Ms Jan Haverfield—Administration Executive

Ms Colleen Lai—Technical Consultant

Ms Elise Literski—Segment Coordinator
Mr John Ngiam—Technical Consultant
Ms Kylie Ross—Project Coordinator
Ms Mary Shevlin—Foundation Level Coordinator
Mr Rohit Singh—Professional Programs Systems Coordinator
Ms Katarina Uzelac—Practical Experience & Additional Learning Support Materials Coordinator
Ms Belinda Zohrab-McConnell—Technical Advisor