Via the ABC:
It is said “success breeds success”, but at troubled professional accounting body CPA Australia, it seems failure is delivering a pretty healthy revenue stream.
Amid mounting controversy about CPA Australia’s management style, heavy spending on promoting its chief executive officer Alex Malley as well as his $1.8 million pay packet, heavy losses of its financial advice start-up and the departure of more than half its board en masse, members are questioning the professional system they are propping up with their expensive fees.
CPA is one of several organisations in the business of providing so-called “professional” accreditation courses.
Having already completed tertiary degrees, aspiring accountants are obliged to pay thousands of dollars more — on top of existing HECS debt — to gain further qualifications from groups like CPA.
Failure most commonly means doubling up on those expensive post-graduate fees.
Graduate accountants ‘strong-armed’ to pay for accreditation
Young accountant Kirsty Hinner is studying financial reporting for her CPA accreditation and is one of a growing number of graduates unhappy with system.
“It’s not ideal to have to do a three-year university degree and then fork out thousands more for a private accreditation,” she said.
However, Ms Hinner is in a bind knowing if she wants to get ahead, accreditation is essential.
“As a young accountant you feel a little bit strong-armed,” she said.
“I don’t have a choice but to choose from one of the associations. If I want to get a job, that is it.”
She knows that almost half the students who sit the financial reporting exam will fail. And this semester there have been last-minute problems.
“So there was quite a bit of grumbling this semester,” she said.
“CPA published a five page errata document with corrections to the textbook just days before the exam block started. So not very many people are happy about that, considering how much money we spend for that textbook.”
CPA’s accreditation exams cost more than $6,000 in total — even more for those who fail an exam and pay to try again.
Ms Hinner says students also shell out hundreds more for an associate CPA membership.
“We are the source of revenue,” she said.
“So it is understandable that there is an textbook and an exam.
“If you fail your exam there is no resit fee, you pay your full fees including your membership fees again next semester.”
Between a quarter and a half of CPA candidates have to resit exams
Industry observers have noticed failure rates of post-graduate candidates at CPA have been rising in recent years.
“We believe that’s about 18,000 students a year failing, so if they all re-enrol that’s $18 [million] or $19 million — a few of those people will leave the program — so you could conservatively say [there’s] at least $15 million a year coming in from failed students having to re-enrol,” he said.
That’s almost 10 per cent of CPA’s entire revenue.
Mr Clowes says the CPA’s drive for growth is to blame.
“If you open the doors widely and let more people they’re still going to get stuck at the exam point,” he says.
And he says there is increasing commercialisation at his professional organisation.
“The tension there is, if you pre-screen rigorously you’re going to have fewer enrolments which means lower revenues and lower membership numbers,” he said.
“So if your KPIs are aiming at revenue growth and membership growth, you’re going to be conflicted.”
CPA Semester 2 2016 exam results
High distinction
(per cent)
Distinction (per cent)
Credit (per cent)
Pass (per cent)
Fail (per cent)
Advanced audit & assurance 8.7 8.6 11.6 41.6 29.3 Strategic management accounting 6.1 7.8 14.5 40.0 31.6 Financial risk management 7.0 5.4 13.3 40.3 34.0 Financial reporting 3.9 4.9 10.0 38.7 42.5 Contemporary business issues 9.3 7.7 13.0 42.5 27.5 Global strategy and leadership 7.0 8.3 18.4 38.2 28.1 Ethics and governance 3.2 5.6 10.6 38.7 41.7 Singapore taxation 1.2 1.2 4.9 36.6 56.1 Malaysia taxation 0.0 7.3 7.3 36.6 48.8 CPA has defended its accreditation courses, and told the ABC in a statement that its students, “are required to demonstrate a high level of knowledge and skills”.
“[CPA is] committed to protecting the integrity of the profession through the maintenance of high standards,” the statement read.
The statement added CPA provided digital resources for students, including videos and online forums.
Better screening of candidates to reduce failure rate urged
Mr Clowes — one of a growing number of external providers offering extra tuition to accounting graduates facing professional exams — says there needs to be a better screening process for prospective CPA students.
“I think it’s unfair to students to let them in to an exam that they have no chance of ever completing. And the associate membership movement where people have left the organisation is enormous,” he said.
CPA’s main competitor, CA, says it has fewer students but rigorous pre-screening.
CA says it investigates if more than 20 per cent of students fail its technical subjects.
A third player, IPA, has less than 1,000 students each year.
Its course costs more than $25,000 to complete and has a fail rate of about 15 per cent.
Regardless of which organisation they choose, accounting graduates like Ms Hinner have to pay thousands for a private accreditation, if they want to get ahead.
“It just is the way that it is to be honest,” she said.
“I’m a young accountant, not particularly in a position to change this system that has managed to be in place.”
