African American Students and the CPA Exam

Mentoring, internships and scholarship programs can draw students into the profession.

DESPITE DECADES OF EFFORT by organizations such as the AICPA and NASBA to bring more minority candidates into the profession, the numbers are still small. Still, there were 5,731 African American candidates for the CPA exam in 2002—the largest for any year since 1997.

THE DATA SUGGEST A SEVERE SHORTAGE of African American males under age 25 holding graduate degrees.

SINCE MANY STUDENTS DECIDE TO major in accounting as early as high school, employers should begin to build relationships with high school juniors and seniors through summer job opportunities.

THE VAST MAJORITY OF CANDIDATES are concentrated in 10 states. Employers in other states need to be more creative in finding and hiring CPAs.

PROGRESS IS BEING MADE. Much of the success can likely be attributed to mentoring, internship and co-op programs, and scholarship programs at the undergraduate, master’s and doctoral levels.

QUINTON BOOKER, CPA, DBA, is professor and chairman of the department of accounting at Jackson State University, Mississippi. His e-mail address is .

he news is good—more African Americans than ever are taking the CPA exam. But it could be better—the profession has a long way to go before it is fully integrated. This article highlights the performance of African Americans on the Uniform CPA Examinations for 2000, 2001 and 2002, using data extracted from candidate-supplied questionnaires collected by the National Association of State Boards of Accountancy (NASBA). We’ll look at the number of African Americans sitting for and passing the exam to help determine how best to attract minority students to the profession, and provide commentary on the research results to help employers, accounting educators and candidates adapt to the new computerized exam format.

To see the original paper written by Dr. Booker, from which this article was excerpted, go to .

There’s very little hard evidence about the numbers of African Americans who are CPAs, even after decades of effort by the AICPA (see “ AICPA Diversity Initiatives ”) and NASBA to bring more minorities into the accounting profession. African Americans in 2000 made up 12% of the U.S. population, but only 5% of CPA exam candidates. Fortunately the statistics for CPA candidates are better-documented. An average of 2,598 African Americans—653 first-time and 1,945 repeat candidates—sat for each exam between 2000 and 2002 (see exhibit 1 ).

A Gap in Representation
African Americans make up 12% of the U.S. population, but only about 5% of CPA exam candidates.

The data for 2000, 2001 and 2002 show no consistent trend for first-time candidates. Comparing them with the 1997–1999 exams does reveal a decline, however. The number of first-time African American candidates fell sharply from 2000 to 2002—a worrisome trend. But the total number of candidates rose steadily from 1997 to 2002, hitting a new high of 5,731.

Exhibit 1 : Number of African American Candidates
    2000 2001 2002
May First-time 583 (25%) 457 (22%) 609 (22%)
  Repeat 1,768 (75%) 1,661 (78%) 2,197 (78%)
  Total 2,351 2,118 2,806
November First-time 717 (29%) 865 (30%) 690 (24%)
  Repeat 1,770 (71%) 2,037 (70%) 2,235 (76%)
  Total 2,487 2,902 2,925
Year First-time 1,300 (27%) 1,322 (26%) 1,299 (23%)
  Repeat 3,538 (73%) 3,698 (74%) 4,432 (77%)
  Total 4,838 5,020 5,731

Commentary. About half the states that enacted the 150-hour education requirement made it effective between 2000 and 2002; several of those states had significant numbers of African American candidates. This may explain the decline in first-time candidates. States typically have a bulge in the first-time category before their 150-hour rule takes effect, since sitting prior to the effective date allows candidates to be grandfathered in under pre-150-hour rules.

Sex. A majority of African American candidates—between 62% and 65%—were female. While the percentage of males did increase in November 2001 and all of 2002, females still clearly dominated the African American candidate pool.

Age. The age of the candidate pool has been fairly consistent over the six exams, with about half the candidates less than 30 years of age ( exhibit 2 , below). Nearly one-third of all candidates were in the 30–39 age group. The under-25 group, which includes recent college graduates, made up between 19% and 24% of candidates on each exam.

Exhibit 2 : Age and Degrees Obtained*
    2000 2001 2002
    May November May November May November
Gender: Female 65% 65% 65% 62% 62% 62%
  Male 35 36 35 39 38 38
Age: Under 25 23 23 22 24 19 20
  25–29 28 27 27 26 26 26
  30–39 33 34 34 34 37 36
  40+ 16 16 17 16 17 18
Education: Doctorate 0.1 0.1 0.1 0.2
  Master’s in accounting 6 6 8 9 9 10
  MBA in accounting 4 3 4 4 5 4
  MBA in other business subject 6 5 6 6 7 7
  Master’s in nonbusiness subject 1 1 1 1 1 1
  Law 0,04 0.2 0.2 0.2 0.2
  Bachelor’s 79 80 77 75 74 73
  No degree 4 5 4 5 4 5
Total hours: Fewer than 120 2 3 3 3 4 4
  120–130 37 38 35 32 32 30
  131–149 26 25 24 22 22 21
  150–160 16 17 20 23 23 25
  More than 160 18 17 19 20 20 20

* Percentages are based on number of candidates in exhibit 1 who answered each question. Numbers may not total 100% due to rounding.

Education. Three of every four African American candidates—73% to 80%—held bachelor’s degrees only, though 40% had earned 150 or more semester hours of college credits. Many candidates completed more accounting hours than the 24 to 30 hours typically required for a bachelor’s degree; the majority completed 31 hours or more and about a third completed 37 or more.

Decision to study accounting. The data suggest candidates decided to study accounting quite early (see exhibit 3 ). More than half (52%) made their decisions by high school and 28% did so during their first two years of undergraduate school. Only 7% to 9% decided to study accounting after obtaining their undergraduate degrees.

Exhibit 3 : Accumulated Hours and Early Interest in Accounting Studies*
    2000 2001 2002
    May November May November May November
Accounting hours earned: 0–9 3% 3% 3% 3% 3% 4%
  10–14 0.8 0.8 1 1 1 1
  15–23 5 5 5 5 5 5
  24–30 35 34 32 31 30 29
  31–36 25 25 26 26 26 25
  37–42 14 13 12 14 13 14
  43+ 18 20 21 20 22 21
Decision to study accounting: By high school graduation 53% 55% 53% 50% 50% 51%
  First half of college 29 27 29 29 28 27
  Second half of college 8 9 8 9 9 10
  Post-undergraduate 7 7 7 9 8 9
  Other 3 2 3 4 5 4

* Percentages are based on number of candidates in exhibit 1 who answered each question. Numbers may not total 100% due to rounding.

State origins. The majority of African American candidates are concentrated in 10 states: California, Georgia, Illinois, Maryland, New Jersey, New York, North Carolina, Pennsylvania, Texas and Virginia, which account for nearly three-fourths of all African American candidates ( exhibit 4 ).

Exhibit 4 : Top 10 States With Average Percentage of Three-Year Total
New York 15%
Maryland 10%
Virginia 9%
California 8%
Illinois 8%
Texas 6%
Georgia 5%
North Carolina 5%
Pennsylvania 4%
New Jersey 3%

Commentary. The data suggest a severe shortage of young (under age 25) African American males holding graduate degrees, though candidates fitting that profile likely would command above-average salaries. Several large CPA firms have been outstanding in attracting new hires without graduate degrees by offering specialized master’s degrees in conjunction with several major universities; employers should note that offering tuition reimbursement for graduate education helps attract African Americans.

Employers also could start to build relationships with would-be African American CPAs as early as high school, when many candidates make their career choices, by offering summer jobs to juniors and seniors who have expressed an interest in accounting. Employers in states other than the 10 where candidates are concentrated may need to be more creative to attract a diverse employee base.

Five states allowed first-time candidates to sit for fewer than all four subjects during the years we studied, so not all candidates included in exhibit 5 completed all the exam subjects. Over the three years studied, a total of 304 first-time candidates passed all subjects attempted. Annual pass rates for first-time candidates ranged from 5% in 2000 to 9% for 2001 and 2002. The number and percentage of repeat candidates passing all parts attempted were significantly better. The number of repeat candidates passing all subjects attempted was 549 in 2000, 570 in 2001, and 753 in 2002 with annual passing rates of 15% to 17%. Pass rates of repeat candidates were almost double—and, in 2000, triple—that of first timers. A total of 2,176 candidates passed all subjects attempted over the three years—an average of 725 candidates per year.

Exhibit 5 : Pass Rates—Passed All Subjects Attempted*
  2000 2001 2002
First-time 63/1,300 = 5% 122/1,322 = 9% 119/1,299 = 9%
Repeat 549/3,538 = 16% 570/3,698 = 15% 753/4,432 = 17%
Total 612/4,838 = 13% 692/5,020 = 14% 872/5,731 = 15%

* Passing defined as scoring 75% correct.

Commentary. The computerized CPA exam has shifted much of the attention away from the statistics for passing all four subjects during one exam administration. The exam now is administered during four “exam windows” (two-month periods of testing) each year. Most states allow candidates to sit for as few as one subject per window, but once candidates sit for and pass one subject, they must complete all remaining subjects within 18 months. Still, the fact that more and more African American candidates are passing all subjects they attempt is encouraging: 260 more candidates—43% more—passed all subjects in 2002 than in 2000.

Average subject pass rates, ranked from highest to lowest, for first-time candidates were: law and professional responsibilities (LPR) about 22%, auditing (AUDIT) 18% and then either accounting and reporting (ARE) or financial accounting and reporting (FARE) at about 13% each. For individual exam administration periods, the ARE pass rates exceeded the FARE pass rates for three of the exams; the opposite was true for the other three exams (see exhibit 6 ). The highest first-time pass rate was on LPR in November 2001, 27%; the lowest was on ARE in November 2000, 7%.

Exhibit 6 : First-Time Pass Rates by Subject*
    2000 2001 2002
May LPR 18% 22% 23%
  AUDIT 16 17 19
  FARE 11 13 15
  ARE 12 12 14
November LPR 13 27 26
  AUDIT 12 23 22
  ARE 7 17 18
  FARE 8 16 17

* Passing defined as scoring 75% correct.

Subject pass rates for repeat candidates were much higher than those for first-time candidates ( exhibit 7 ): law and professional responsibilities (LPR) 28%, auditing (AUDIT) 24%, accounting and reporting (ARE) 18% and financial accounting and reporting (FARE) 15%. Pass rates for repeat candidates were consistently in double digits. The highest repeat candidate pass rate was 31% for LPR in November 2002; the lowest was 13% on ARE in November 2000.

Exhibit 7 : Pass Rates by Subjects—Repeat*
    2000 2001 2002
May LPR 30% 24% 29%
  AUDIT 23 24 27
  ARE 19 19 19
  FARE 15 15 17
November LPR 27 29 31
  AUDIT 22 24 26
  ARE 13 20 20
  FARE 14 15 14

* Passing defined as scoring 75% correct.

Commentary. Educators, employers and students should note that persistence does pay off—as pass rates for repeat candidates were higher than those for first-time candidates—and that single-subject pass rates were significantly higher than rates for all subjects. This point has strategic significance for candidates who may now select the number of subject areas they attempt during an exam window. Note that subject areas on the computerized exam have been reconstituted and renamed, and new topics—such as a new business environment and concepts subject area—are being tested.

The primary limitations of this study lie in its data-gathering technique. With the exception of exam scores, data were gathered through questionnaires provided to all African American candidates; numbers therefore were self-reported. Since only questionnaires of candidates who participated were considered, the numbers may not be precise.

This study shows that substantial numbers of African Americans are taking the CPA exam, and participation and success rates are on the rise. As many as 725 per year are passing the exam—significant progress from 1989, when the total number of African American CPAs in the United States was just 2,500. While two-thirds of the candidates were female, the number of males is growing. Much of the progress shown in the study can be attributed to mentoring, internships and co-op programs and scholarship programs at the undergraduate, master’s and doctoral levels. Still, the profession has a long way to go before it is fully integrated in fact as well as in the ideal.

AICPA Diversity Initiatives

Statistics from the AICPA’s 2004 study, The Supply of Accounting Graduates and the Demand for Public Accounting Recruits, confirm Dr. Booker’s findings. Even now, only 7% of CPAs employed by accounting firms are minorities. While the problem is easy to observe, finding a solution is much more complex. With a membership base of over 340,000 CPAs, the Institute realizes that it takes 3,400 new CPAs to move the needle one percentage point. We need programs that have a wide and deep impact into all communities of color. The strategic programs the Institute has put together to address the challenge of diversifying the accounting profession therefore address several fronts, targeting high school and college students as well as educators. Key AICPA programs include:

The “Be A Star in Business” and “Start Here, Go Places” advertising campaigns connect print and interactive advertising developed specifically to expose young people of color to the accounting profession. (For more information see .)

College Residency Programs
Weeklong programs expose minority high school students and their parents to opportunities in accounting and other business careers. Students learn accounting, business, and social skills while living on college campuses. Since the program began in 1997, 25 programs have been funded nationwide; 90% of them are operational today. (See

Minority Scholarship Program
The AICPA has awarded more than $6 million to 1,300 students in the past 10 years. In 2004 students at 107 universities received 157 scholarships totaling $488,000. Judged most likely to become CPAs, these students earned overall and accounting GPAs averaging 3.80. (See .)

Accounting Scholars Leadership Workshop
Two-day workshops focus on leadership, team-building, communication and presentation skills. They are designed to expose top college minority accounting students to leaders in the profession and reinforce the importance of the CPA designation. Over the past 10 years 800 undergraduate and graduate students have participated. (See .)

The PhD Project
This partnership of forward-thinking corporations, led by KPMG, provides a critical support system for PhD candidates during their doctoral programs and creates a pipeline of potential professors of accounting and other business disciplines. The program has doubled the number of minority PhD’s in the classroom—and the number of role models for today’s students.

Minority Doctoral Fellowships
Leveraging the efforts of the PhD project, the fellowships provide financial support to minority PhD candidates studying accounting. Fifty-three recipients of AICPA fellowships completed their PhD programs; 98% are teaching accounting at the university level and 86% are accredited CPAs. This year there are 18 PhD candidates in the pipeline. (See .)

Strategic Partnerships
The AICPA has developed key partnerships with the Association of Latino Professionals in Finance and Accounting (ALPFA), the National Association of Black Accountants (NABA), the Diversity Pipeline Alliance, INROADS and the National Academy Foundation to attract and support minority students interested in pursuing a career in accounting.

If you are interested in helping bring the message of the AICPA or your local state society to the high school or college classroom, please go to the Academic and Career Development (ACD) Team Web site at . To speak with a manager about the programs, contact Daniel Hobson, manager, minority initiatives, at or Jodi Ryan, manager, recruiting programs, at .

—Daniel Hobson, manager, minority initiatives, AICPA


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