CHAPTER I.

INTRODUCTION

1.1 Introduction of the Study

In today’s environment, business methods and processes are becoming more complex.

Businesses necessitate a variety of highly technical accounting services requiring well-educated

individuals with competency to address this kind of business complexity. In the Philippines,

accounting profession is truly recognized for its skills and capabilities in building the nation’s

financial structure. The primary goal of accounting education in the Philippines is to produce

competent professional accountants capable of making contributions to the profession and

society in which they work.

All applicants for registrations for the practice of accountancy are required to undergo a licensure

examination that is taken every October and May. The applicant must be a Filipino citizen, has a

good moral character, has not been convicted of any criminal offense involving moral turpitude,

and most especially, a holder of the degree of Bachelor of Science in Accountancy (BSA)

conferred by a government-recognized institution according to Republic Act No. 9298 (An Act

Regulating the Practice of Accountancy in the Philippines, Repealing for the Purpose

Presidential Decree No. 692, Otherwise Known as the Revised Accountancy Law, Appropriating

Funds Therefor and for Other Purposes).

Becoming a Certified Public Accountant (CPA) is not an easy journey in the Philippines,

because one has to take the said CPA Licensure Examination (CPALE) which according to

critiques is one of the most difficult board examinations in the history of the Philippine career
profession. Before taking the licensure examination, BSA students may take their review in

review centers and work hard to study all the necessary topics involved.

Passing the CPALE even with a grade ranging from 75% to 79% is nonetheless an

accomplishment for the new CPA’s. This study is focused in finding out the effect/s of having

the said average in the CPALE in terms of landing a job on different auditing firms in the

Philippines.

1.2 Statement of the Problem

In the latest CPA Licensure Examination which was held on October 2017, there were 4,511

passers out of 14,816 which equates to 30.45% passing rate. In the past three years, the highest

national passing rate is 42.84% which was on May 2016. It is safe to say that being able to pass

the said examination is not easy.

This study aims to provide answers to the following questions:

 Do auditing firms prioritize a CPA’s grade in the CPA Licensure Exam over other

factors?

 What other qualities do the employers look for that may compensate in having a low

CPALE grade?

 Will CPA’s with 75% to 79% CPALE grade have difficulties in terms of being employed

in different auditing firms in the Philippines?

1.3 Objectives of the Study

This study generally aims to:

 assess the trend of the auditing firms’ employment activities

 identify what auditing firms mostly take into account when hiring CPAs

 understand the effect of passing the CPALE with 75% to 79% grade

 analyze the gathered information to answer the problems indicated in this research

1.4 Significance of the Study

This study will contribute knowledge and additional information to:

This study is for:

 Accounting students

 CPA’s with 75% to 79% CPALE grade

 Auditing Firms -

 Future accounting researchers

1.5 Scope and Delimitation of the Study

This study is a qualitative research that focuses on the impact of having 75% to 79% passing rate

in the Certified Public Accountant Licensure Examination (CPALE) to the auditing firms in the

Philippines in terms of employing.

The primary instrument used was conducting of surveys with questions that aim to cater to the

problem stated in this research. The survey was given to different auditing firms and answered

by Human Resource Managers and other Officers that are involved in the hiring process.
This study doesn’t include auditing firms outside the Philippines and board passers that have

above 79% CPALE grade. This research

1.6 Definition of Terms

 Accountancy – it is the practice of identifying, recording, measuring, classifying,

verifying, summarizing, interpreting, and communicating of business transactions for a

business.

 Certified Public Accountant Licensure Examination – it is an examination taken by the

students who graduated as Bachelor of Science in Accountancy (BSA) to ensure that a

particular BSA graduate has a authority to become a certified public accountant.

 Competency – it is an attitude to maintain professional knowledge and skill at the level

required to ensure that clients and employers receive competent professional services

 Certified Public Accountant (CPA) – a member of an officially accredited professional

body of accountants
CHAPTER II. REVIEW OF RELATED LITERATURE

2.1 Related Literature I.

“Performance of BSA Graduates in the CPA Licensure Examination: Basis of Enhancement”

The passing rate is a key factor measuring the kind of students and quality of instruction the

faculty provided. It is also an indicator of the kind of faculty and teaching competence that

prevail in a school. Moreover, the performance of the graduates reveals to a certain extent how

well equipped they are which could also be attributed to the instructional materials provided by

the institutions. (Basaen, Bejar & Bambao, 2005).

This study conducted by Candido Perez was all about the performance of BSA graduates in the

CPA Licensure Examination. The focus of this study was to evaluate the trend of passing rate of

the BSA graduates in the CPA Licensure Examination (CPALE) and analysis of what board

exam subjects BSA graduates were weak or strong at.

This study will help the researchers to have more knowledge about the importance of passing

rate of BSA graduates after they take the CPALE in applying in for work. This study will also be

an indicator if the 75% to 79% passing rate or grade of BSA graduates has an impact to their

employability. Additionally, this may determine if it is enough for BSA student who take the

CPALE having a passing grade of 75% to 79% to be employed by auditing firms.

2.2 Related Literature II.

Performance of BSA graduates in the Certified Public Accountant Licensure Examination: Basis

of Enhancement

“The study determined the number of graduates who became licensed accountants, the number of

times they took the exam before they became licensed and the board subjects in which the

graduates performed weak based on date of exams and batch or year of graduation. A

comparison between the list of students provided by school with that of the list provided by

Philippine Professional Regulation Commission was done to evaluate the individual student’s

board exam mean rating according to date of examinations and year of graduation. The means of

board rating of first takers who passed the exam were ranked to identify the subjects which

graduates found difficult.”

This study focuses on the result of the latest CPA licensure examination in the Lyceum of the

Philippines – Laguna. This study aims to look on how to enhance the performance of the faculty

and enhance the program of the course. This is related to our study in terms of the result of the

CPA licensure examination effect on the universities and the enhancement needed. This study

focuses on the university only. This also applies to the individual students who is still studying

for the examination to know what is needed to do in their studying habits

2.3 Related Literature III

Testing Teacher Candidates: The Role of Licensure Tests in Improving Teacher Quality (2001)

Chapter 6: Using Licensure Tests to Improve Teacher Quality and Supply

Licensure tests are only one factor that influences the overall quality of teachers and teaching.

Changes in the quality and effectiveness of teachers depend on many things. Salaries and

working conditions affect who enters teaching, as do schooling conditions. The quality of teacher

education and of professional development influences teachers’ knowledge and skills.

Furthermore, as noted earlier, teaching rests on more than teachers; school organizational factors

such as use of time, quality of curriculum materials, and student/ teacher ratios affect the quality

of teaching.

According to this article, there are lots of other factors that the employers consider in hiring. The

grade in the CPALE is not merely what the employers are concerned about. One claim in this

article is that there are numerous resumes that the HR will receive and the chances of them

arranging it from highest to lowest CPALE grade is slim. It also listed several factors such as

extracurricular activities, skills/abilities, and education which will have an impact on the chances

of being hired. The bottomline is that “Employers are not going to be able to discern these

important things (competent qualities) though your scores (in the CPALE).”