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77

Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

For-Profit Higher Education and CPA Exam Success Rates: Comparing For-Profit 

Institutions with Public (State) Institutions and Private Not-For-Profit Institutions of 

Higher Education 
 

John Morgan, Winona State University 

Frederic Ihrke, Winona State University 

 

 

Public perceptions about the quality of business education received at commercial (for-profit) 
universities, relative to the quality of business education received at publicly supported state universities 

and private not-for-profit universities are mixed and somewhat controversial (Verschoor, 2011). 
Relatively little information exists concerning the quality of education received with a bachelor’s degree 
from a commercial university (U. S. Government Accountability Office, 2011). This research compares 

average CPA exam pass rates of graduates from three types of higher education institutions: for-profit 
universities, state sponsored public universities, and private not-for profit universities. Comparing 

average CPA exam pass rates of graduates of each type of university is one means to assess the quality of 
accounting education provided by each type of university. Our findings indicate the average CPA exam 
pass rates of candidates completing their accounting educations at commercial for-profit universities are 

strikingly lower than those of candidates completing their accounting educations at either publicly 
supported state schools or at private not-for-profit universities. In addition we find that a much lower 

fraction of graduates from commercial universities sit for the CPA exam compared to publicly supported 
state universities and private not-for-profit universities. Together these empirical data suggest if passing 
the CPA exam is a goal, then the educational path of commercial for-profit accounting education may not 

be optimal. 
 

   

 An increasingly visible and fast growing segment of the U.S. higher education market is private for-

profit higher education. In recent years a growing fraction of the total higher education market is being 

served by large publicly owned commercial organizations (corporations) that actively advertise various 

business and other professional degree programs on television, the internet, and elsewhere. Because these 

entities are commercial concerns, a key motivating factor in their administration is to earn profits for 

corporate investors. And to promote the larger enrollments that lead to larger profits, commercial 

educational institutions are known to be aggressive in assisting entering students to obtain federal student 

grants and federal student loans in order to finance their commercial educations (Bennett, Lucchesi, and 

Vedder, 2010).   

 The U.S. Department of Education has for three decades collected and reported data on higher 

education characteristics in America. The Department of Education tracks the relative proportions of 

students receiving higher education degrees from publicly supported state institutions, private not-for-

profit institutions, and privately owned for-profit commercial organizations. Furthermore Department of 

Education data distinguishes between commercial “for-profit chain education” and commercial “for-profit 

independent education”. Commercial chain education is defined by the Department of Education as for-

profit education offered by an institution at multiple geographic locations. For-profit independent 

education is defined as for-profit education offered by an institution at a single geographic location or in a 

narrow geographic region.   

 Deming, Golden, and Katz (2012) analyzed aspects of U. S. Department of Education data and have 

identified several major trends in for-profit higher education. These include: 1) enrollments at for-profit 

educational institutions are 100 times larger than they were in the 1970’s; 2) enrollments at for-profit 

educational institutions now account for approximately 11.5 percent of all higher education enrollments in 

the U.S.; 3) for-profit educational institutions grant approximately 5 percent of all bachelor’s degrees in 

the U.S, but they grant almost 12 percent of all business degrees in the U.S.; and  4) nearly 90 percent of 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 
2013, Vol. 4, No. 1, 77-86 

the increases in enrollment at for-profit institutions over the past decade come from expansion at for-
profit chain institutions. 
 The release of a 2010 U.S. Government Accountability Office (GAO) report entitled “For-Profit 
Colleges: Undercover Testing Finds Colleges Encouraged Fraud and Engaged in Deceptive and 
Questionable Marketing Practices” brought for-profit higher education industry under the scrutiny of the 
public and Congress. The GAO in a 2010 report (U.S. Government Accountability Office, 2010) alleged 
widespread abuse by chain commercial education universities. It criticized the larger chain institutions for 
practices such as paying commissions to its admission officers based on number of students recruited, 
using unethical marketing practices that either failed or deceptively represented total tuition costs to 
prospective students before asking them to sign long-term contracts, providing misleading information 
about the institution’s accreditation status, encouraging students to engage in what constituted fraud when 
applying for federal financial aid, and for failing to disclose graduation rates before asking students to 
sign long-term contracts (Verschoor, 2011).     
 Another controversy in commercial higher education has been the markedly higher usage of federal 
student aid by students at these institutions, and also the much higher student loan default rates by 
students attending these institutions. Deming, Goldin, and Katz (2012) note that federal student financial 
aid under Title IV (Pell grants and Stafford loans) makes up approximately 75 percent of all revenues 
received by for-profit institutions of higher education. In 2008-2009 fourteen of the largest for-profit 
chain institutions received 87 percent of their total revenue directly from the federal government 
(Verschoor, 2011). And although enrollees at for-profit institutions utilize approximately 24 percent of all 
Pell grant distributions and 26 percent of all federal student loan disbursements, they comprise only 11.5 
percent of total higher education population (Deming, Goldin, and Katz, 2012).   
 In 2012, the U.S. Department of Education reported student loan default rates by students who had 
attended for-profit institutions were nearly 23 percent. This is more than double the default rate of 
students attending public institutions and nearly three times the default rate of students attending private 
not-for-profit institutions (U.S. Department of Education, Ed.Gov., 2012).   
 Higher student loan default rates by those who attended for-profit institutions are thought to occur for 
several reasons. Historically there is a lower graduation rate at for-profit institutions averaging only 22 
percent compared to graduation rates averaging 55 percent at public universities (Hechinger, 2011).  
Evidence suggests that students who do not graduate are generally more likely to default on student loans 
after leaving school (Hechinger, 2011).  In addition, student borrowers default more often when they have 
been promised high paying jobs after graduation upon entering school that never materialize at graduation 
(Clark, 2011). The GAO (U.S. Government Accountability Office, 2010) criticized for-profit chain 
institutions for many of these very practices.    
 Yet another reason for higher student loan default rates by students at for-profit higher education is 
believed to be that the total dollars borrowed per capita by enrollees at for-profit institutions tends to be 
higher than at either public or private not-for-profit universities. This in turn makes it harder to repay 
those loans (Clark, 2011). Graduates (and also those who do not graduate) leave commercial institutions 
with higher overall debt burdens and find them hard to pay especially when jobs have not materialized as 
expected. The average borrowing of students attending for-profit institutions (and earning a bachelor’s 
degree) is $33,050 at graduation, nearly 50 percent more than the average borrowing by students 
graduating from either publicly supported or private not-for-profit institutions (Clark, 2011).   
 Finally, enrollees at for-profit chain schools are disproportionately made up of students considered 
under various metrics as economically disadvantaged. Government data show students attending for-
profit educational institutions on average have lower family incomes, include proportionally more single 
parents, and include a larger proportion of students holding only general education diplomas (GEDs) 
rather than high school diplomas, than do public and private not-for- profit institutions (Cellini, 2012).  
All together these factors lead to less ability to draw upon stored or pre-existing family resources to repay 
large educational loans (Cellini, 2012). 
    



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

 In a December 2011, a GAO report to Congress entitled “Postsecondary Education—Student 

Outcomes Vary at For-Profit, Nonprofit, and Public Schools” (U. S. Government Accountability Office, 

2011) data were gathered on educational outcomes of those attending publicly supported, private not-for-

profit, and commercial for-profit educational institutions. The data included comparisons of graduation 

rates, employment outcomes, student debts at graduation, loan default rates, and success of graduates on 

ten professional licensure exams completed shortly after graduation. The 2011 GAO report (U. S. 

Government Accountability Office, 2011) confirmed many of the findings in U.S. Department of 

Education data.  Conclusions in the 2011 GAO report include: 1) on average only 3 percent of entering 

low-income students ultimately complete a bachelor’s degree if they attend a for-profit institution 

whereas a full 49 percent of entering low-income students complete a bachelor’s degree if they attend a 

public institution; 2) graduates of for-profit schools, when able to find work in their field of study after 

graduation, generally have similar annual earnings to those from public and private not-for-profit schools, 

but they are less likely to find a job in their field; 3) a higher proportion of students at for-profit 

institutions take out student loans, and the total amount of those loans at graduation is higher relative to 

students attending public and private not-for-profit institutions; 4) student loan default rates are higher for 

those who attended for-profit institutions; and 5) on nine of ten licensing exams, recent graduates of for-

profit schools had significantly lower pass rates. The single exception was the licensure exam for funeral 

directors. Lower pass rates on professional exams were found on registered nursing exams, licensed 

practical nursing exams, radiographers’ exams, emergency medical technician exams, paramedics’ exams, 

surgical technologist exams, massage therapist exams, legal associate exams, and cosmetologist exams. 

Of note to this research is that the uniform CPA exam was not one of the exams included in the GAO 

study. 

 In response to growing public concerns about both the costs and outcomes of commercial higher 

education especially to economically disadvantaged students, the U.S. Department of Education recently 

decided to implement new regulations over higher education. These new regulations were published in 

the 2011 Federal Register under the title, “Program Integrity: Gainful Employment-Debt Measures” (The 

Federal Register, 2011). The regulations were intended to impose sanctions on postsecondary educational 

institutions whose graduates, on average, failed either of two metrics. The first metric is that at least 35 

percent of former students must be current in repaying their student loans (not be in default). The second 

metric is either that the average annual loan payments of former students do not exceed 30 percent of the 

average graduate’s discretionary income, or the total annual loan payments of the average graduate do not 

exceed 12 percent of their total income on average. These new regulations were intended to limit future 

access to federal student aid (Title IV payments and loans) to institutions whose graduates could not meet 

both metrics.   

 However, less than a month after the regulations were released, a U.S. District Judge in Washington, 

D.C. struck them down on the basis of inadequate support for the 35 percent loan repayment metric 

(Equal Justice Works, 2012). As a result the new regulations are not being enforced until such time as the 

U.S. Department of Education reworks its loan default metric to the satisfaction of federal courts.      
 

Motivation 
 

 The motivation for this research is to determine whether CPA exam pass rates of graduates from three 

different types of higher education institutions---publicly supported state universities, private not-for-

profit universities, and private for-profit commercial universities differ systematically.  We pose several 

questions.  First, are there systematic differences in the average CPA exam pass rates of students 

completing a bachelor’s degree in from each of the three types of institutions?  And if so, how large are 

these differences and in what direction?  We believe answers to these questions will be important to 

students (and also to their parents) who are looking for universities that will provide the type of education 

needed for passing the CPA examination and for entering the profession of public accounting.  We have 

found no other published (or unpublished) research reporting these comparisons.   

 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

CPA Exam Pass Rates: An Available Operational Measure of Accounting Education 
 

 The CPA exam is a long-standing and highly respected licensure examination whose passage is 

required prior to the granting of professional licensure as a certified public accountant (CPA) in all 51 

U.S. jurisdictions. Surprisingly, the CPA exam was not included on the list of the 10 professional 

licensure exam outcomes evaluated by the GAO in the December 2011 GAO report to Congress entitled 

“Postsecondary Education - Student Outcomes Vary at For-Profit, Nonprofit, and Public Schools” (U. S. 

Government Accountability Office, 2011). The research results reported here are intended to rectify this 

omission. 

 CPA exam pass rates are published each year by the National Association of State Boards of 

Accountancy (NASBA). NASBA data includes the pass rates of nearly all accounting programs in 

America. NASBA data however does not separately identify the pass rates of “very small programs” 

which are defined as those accounting programs whose graduates take fewer than 5 total sections of the 

CPA exam during a reporting (calendar) year. Since NASBA data do not include the data of “very small 

programs”, our research sample could not either.  Nevertheless, our data include the well over 95% of all 

CPA exam sections taken during 2011.  

 Topics tested on the CPA exam are determined by the American Institute of Certified Public 

Accountants (AICPA). The AICPA carefully designs and updates the CPA exam, an exam whose purpose 

is to evaluate the accounting as well as general business knowledge (and application skills) of accountants 

wishing the CPA designation. The CPA exam itself is a total fourteen hours in length.  It covers topics in 

accounting, auditing, income tax, wealth transfer tax, business law, accounting systems, economics, 

management, and finance. The exam has been carefully and professionally developed based on state-of-

the-art testing and psychometric principles to ensure construct and test validities much in the way SAT 

and ACT tests are developed. According to the AICPA: “the content of the Uniform CPA Examination is 

developed through an extensive and integrated process. At each step in the process expertise in various 

disciplines is applied to ensure that the test materials are accurate and appropriate for use on the CPA 

Exam. The process incorporates expertise in a number of key areas. The first key area of expertise is in 

accounting. Individuals who draft, review, and finalize test materials are experienced CPAs. A second 

area of expertise is in the science of testing, called psychometrics. At each stage in the test development 

process, psychometricians are involved in the design, development, and implementation of test materials. 

These include test specifications, test questions, and data analysis. A third area of expertise is in test 

development. Experts in the design and development of test questions are involved in the process.” 

(AICPA, 2011i).  

 Passing the CPA exam after graduation is a goal of many accounting students. Pass rates on each of 

the four parts of the CPA exam for students whose highest degree earned is a bachelor’s degree have 

averaged just below 50% over the past decade. These low pass rates occur in spite of the fact that only 

educationally qualified individuals are permitted to sit for the CPA exam. In all 51 U.S. jurisdictions 

minimum requirements include substantial university level accounting and general business coursework 

be completed prior to sitting for the CPA exam. For example, in the state of Minnesota regulation requires 

candidates possess (or be within 90 days of possessing) a bachelor’s degree that includes at a minimum 

24 semester hours of accounting coursework (beyond the principles level), and a minimum of 24 semester 

hours of general business coursework before sitting for the exam. Other jurisdictions have comparable 

educational requirements to sit for the exam. 

 The CPA examination itself is uniformly graded under the auspices of the National Association of 

State Boards of Accountancy (NASBA) and thus provides a uniform and unbiased operational measure of 

the knowledge and skills of graduates from accounting programs from across the nation who take the 

exam. According to the official website of the American Institute of Certified Public Accountants, the 

central purpose of the CPA examination is “to admit individuals into the accounting profession only after 

they have demonstrated the entry-level knowledge and skills necessary to protect the public interest in a 

rapidly changing business and financial environment.” (AICPA, 2011ii). Additionally, NASBA says this 

about the CPA exam: “since 1917, the Uniform CPA Examination has proven to be a highly valid and 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

reliable measure of candidate abilities. This focus on quality has made it possible for all United States 

jurisdictions to rely on the results in determining who is competent to practice public accounting in order 

to protect the public.” (NASBA, AICPA, and Thomson Prometric, 2007: p. i).   

 We have chosen average CPA exam pass rates of each institution’s graduates as the operational 

measure in this research as our dependent variable. Tens of thousands of college graduates from 

accounting programs at many hundreds of institutions of higher education take the uniform CPA exam 

annually. Using CPA pass rates as our dependent variable (and as a proxy for the quality of accounting 

education received before taking the exam), we are able to compare the CPA exam pass rates of recent 

accounting graduates from three types of institutions, namely publicly supported state schools, private 

not-for-profit universities, and privately owned commercial institutions (our three independent variables).  

Comparisons are made to determine if there are statistically significant differences among the three 

groups in terms of their CPA exam pass rates, and if so, how large the differences are, and in what 

direction. 
 

Data  
 

 Schools selected for analyses include all schools intersecting two separate databases. The first 

database is the Institute of Education Sciences, National Center for Education Statistics (NCES, 2011) an 

online database maintained by the U.S. Department of Education listing information about all four year 

colleges and universities located in the United States and the District of Columbia. This database was also 

our source of data on each institution’s undergraduate enrollment (size) and school type (see Table 1).   

 The second database, whose intersection with the first, determined our final research sample, is 

NASBA 2011 Uniform CPA Examination Candidate Performance (NASBA, 2012).  As explained above, 

CPA exam pass-rate data are collected and reported annually by NASBA. These data include all but the 

very smallest accounting programs in the U.S.; accounting programs whose graduates take fewer than 5 

total CPA exam sections during a calendar year are not separately identified in NASBA data. Our 

resulting research sample contained all 905 four year U.S. colleges and universities identified in U.S. 

Department of Education data and also listed by NASBA as having graduates who took at least 5 or more 

sections of the CPA exam during calendar 2011.   

 To get a better sense of the 905 schools included in our sample, we sorted the institutions by 

enrollment size, by institution-type, and by the number of CPA exam sections completed by graduates of 

each type of school during calendar 2011. Keep in mind that institution-type refers to categorizing 

institutions into one of three categories: publicly supported state schools, private not-for-profit 

universities, and for-profit commercial universities. School size refers to the number of undergraduate 

students enrolled at each institution during the 2011-2012 school year per Department of Education 

statistics. See Tables 1, 2, and 3 below. 
 

Table 1: Number of Institutions by Institution Type 
 

 

Undergraduate Enrollment 

Number of Institutions 

 

All Institutions 

 

Public 

Private 

Not-For-Profit 

Private 

For-Profit 

> 15,000 155 138 13 4 

10,001 – 15,000 97 83 12 2 

5,001 – 10,000 199 129 67 3 

0 – 5,000 454 69 373 12 

Totals 
 

905 

100.0% 
419 

46.3% 
465 

51.4% 
21 

2.3% 

 

The source of this data is “NASBA  2011 Uniform CPA Examination Candidate   
Performance, Appendix D”(NASBA, 2012)  and U.S. Department of Education, Institute for  Education  

    Sciences, National Center for Education Statistics (NCBS, 2011).   
 

 

 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

Table 2: Total Undergraduate Enrollment by Institution Type 
 

 

 

School Size 

Total Undergraduate Enrollment 

 

All Institutions 

 

Public 

Private 

Not-For-Profit 

Private 

For-Profit 

> 15,000 3,949,289 3,302,257 285,536 361,496 

10,001 – 15,000 1,182,219 1,008,442 148,942 24,835 

5,001 – 10,000 1,412,970 943,456 450,666 18,848 

0 – 5,000 1,148,374 236,771 877,958 33,645 

Totals 
 

7,692,852 

100% 
5,490,926 

71.4% 
1,763,102 

22.9% 
438,824 

5.7% 

 

The source of this data is “NASBA  2011 Uniform CPA Examination Candidate   
Performance, Appendix D”(NASBA, 2012)  and U.S. Department of Education, Institute for   

   Education Sciences, National Center for Education Statistics (NCBS, 2011).   
 

Table 3: Total Number of CPA Exam Sections Completed by Graduates of Each Institution Type 
 

 

 

School Size 

Total Number of CPA Exam Sections Completed 

 

All Institutions 

 

Public 

Private 

Not-For-Profit 

Private 

For-Profit 

> 15,000 39,260 35,734 2,996 530 

10,001 – 15,000 11,041 9,905 1,077 59 

5,001 – 10,000 13,017 6,402 6,569 46 

0 – 5,000 14,571 1,551 12,665 355 

Totals 

 
77,889 

100% 
53,592 

68.8% 
23,307 

29.9%) 
990 

1.3% 

 
The source of this data is “NASBA  2011 Uniform CPA Examination Candidate   

Performance, Appendix D”(NASBA, 2012)  and U.S. Department of Education, Institute for   

   Education Sciences, National Center for Education Statistics (NCBS, 2011).   
 

 Table 1 indicates that only 21 schools in the sample of 905 universities (2.3%) were commercial for-

profit universities. These 21 schools included many of the larger commercial chain institutions such as 

Kaplan University, Strayer College, University of Phoenix, Grand Canyon University, Devry University, 

Liberty University, and Excelsior College. We had expected a larger number of for-profit institutions to 

be in our sample. However after reviewing Department of Education statistics and NASBA data 

separately, we discovered that while approximately 600 commercial for-profit schools are listed in 

Department of Education statistics, only 21 of the 600 had graduates who completed the requisite 5 or 

more sections of the CPA exam in 2011 and therefor merited separate identification in NASBA data.  

Because the majority of commercial for-profit universities (most offering accounting degrees) had too 

few or zero graduates taking the CPA exam in 2011, these institutions could not separately identified in 

NASBA data and could not be included in our sample.   

 Here are several examples of this phenomenon. ITT Institute of Technology is a large commercial for-

profit university having campuses in 38 states and having undergraduate enrollment totaling more than 

80,000. ITT Institute of Technology offers bachelor’s degree in accounting at nearly all of its campuses. 

ITT Institute of Technology did not have graduates sitting for 5 sections of the CPA exam during 2011 

per NASBA data. Ashford University has undergraduate enrollments in excess of 67,000, offers many 

different business degrees including bachelor’s degrees in accounting, but also did not meet the 5 section 

threshold for separate listing in NASBA data. This pattern of large commercial universities having very 

few or zero graduates sitting for the CPA exam is the main reason only 21 of approximately 600 

commercial for-profit universities ended up in our final sample.   

 From Tables 2 and 3 it can be seen that while private for-profit institutions account for 5.7% of the 

total undergraduate enrollment at the 905 schools, these students accounted for only 1.3% of total CPA 

exam sections taken in 2011. This is another way of measuring the smaller fraction of for-profit school 

graduates taking the CPA exam when compared to graduates of public and private not-for-profit schools.  

Graduates of publicly supported state schools took 68.8% of all CPA sections taken in 2011. Graduates of 

private not-for-profit universities took 29.9% of all CPA sections taken in 2011. Graduates of for-profit 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

schools took only 1.3% of all CPA exam sections taken in 2011, this in spite of the fact that graduates of 

commercial universities account for approximately 12% of all business school graduates in the U.S. 

(Deming, Golden, and Katz, 2012). 
 

Methods 
 

 Statistical tests were undertaken for the purpose of determining whether average CPA exam pass rates 

of graduates of three types of schools - publicly supported state schools, private not-for-profit universities, 

and for-profit commercial universities were significantly different from each other. All statistical 

comparisons were conducted using one-way analysis of variance (ANOVA). ANOVA is a commonly 

used test statistic when comparing the means of two or more groups for the purpose of rejecting the null 

hypothesis that no significant statistical differences exist among groups. In the present situation, the 

dependent variable in our ANOVA was defined as the average CPA exam pass rates of candidates from 

each group. The independent variables were the three types of universities - publicly supported state 

schools, private not-for-profit universities, and for-profit commercial universities. In short, ANOVA was 

our method of comparing the average 2011 CPA exam pass rates on 77,889 CPA exam sections taken by 

graduates from 905 universities classified into one of three school types, publicly supported state schools, 

private not-for-profit universities, and for-profit commercial universities.    
 

Results 
 

 Table 4 shows the results of the overall one-way ANOVA. The null hypothesis is rejected in the 

sample of 905 schools (p. < .001). Average CPA exam pass rates of graduates of schools in the three 

groups were found not to be statistically the same. Table 5 presents the mean pass rates and standard 

deviations for each of the three groups. Table 6 presents group-to-group post hoc comparisons - 

comparing each group separately to the other two groups and noting the size and statistical significance of 

these differences in each comparison made. 
 

Table 4: ANOVA Rejecting the Null Hypothesis That No Significant Differences Exist Among Groups  

(n = 77,889 total testing events) 
 

Dependent Variable (Percentage Passing) Sum of Squares Df Mean Square F Sig. 

Between Groups 678504.432 2 339252.216 1590.440 .000* 

Within Groups 16613645.375 77886 213.307   

Total  17292149.807 77888    

   * -statistically significant differences exist among groups; p. < .001 

 

Table 5: Mean Percentage Pass Rates By Group (with standard deviations) 
  

Institution Type N Percentage Pass Rates of Candidates Std. Deviation Std. Error 

Public (state schools) 53592 50.4 13.63929 .05892 

Private (not-for-profit) 23307 48.4 16.72198 .10953 

Commercial (for-profit) 990 24.8 11.33981 .36040 

Total 77889 49.5 14.90010 .05339 

 

Table 6: POST HOC Comparisons: Group-To-Group Least Significant Difference Tests 
  

 Mean Pass Rate Differences Std. Error Sig. 

Public (state schools) to: 

                            Private (not-for-profit) 

                            Commercial (for-profit) 

 

2.00 

25.66 

 

.11460 

.46845 

 

.000 * 

.000 * 

Private (not-for-profit): 

                           Public (state schools) 

                           Commercial (for-profit) 

 
- 2.00 

23.66 

 
.11460 

.47393 

 
.000 * 

.000* 

Commercial (for-profit):                           

                           Public (state schools) 

                           Private (not-for-profit) 

 
-  26.58 

- 24.59 

 
.46845 

.47393 

 
.000 * 

.000* 

     *-statistically significant differences exist between groups; p. < .001 

 



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Morgan and Ihrke                                                                                                                                                          Advances in Business Research 

2013, Vol. 4, No. 1, 77-86 

 Table 5 indicates that candidates from public universities (state schools) have the highest overall 

average CPA exam pass rates at 50.4% followed closely by private not-for profit universities with average 

pass rates of 48.4%. Commercial (for-profit) universities have notably lower pass rates than either of the 

other two groups averaging only 24.8%. This is approximately half the pass rate of the other two groups. 

Differences of this size are not only statistically significant (in the sense of ANOVA), but are also 

important in the real-world sense with implications for tens of thousands of future college students/ CPA 

exam takers.   
 

Conclusions and Limitations 

 

 We draw two major conclusions from these data. First, similar to 2011 GAO findings that show lower 

pass rates by students educated at commercial for-profit universities on 9 of 10 professional examinations 

(U.S. GAO 2011), we find the same phenomenon regarding the pass rates on the uniform CPA exam. 

Students who complete their accounting educations at commercial for-profit universities have strikingly 

lower pass rates on the uniform CPA exam than do others. Pass rates are roughly half those of students 

who complete their educations at public universities or private not-for-profit universities. 

 Our second major conclusion is that a much smaller fraction of students who attempt an accounting 

education at commercial institutions actually complete it, and a much smaller fraction of those who do 

complete their accounting educations at commercial for-profit universities appear to take the CPA exam.  

Based on Department of Education statistics commercial universities now grant a full 12% of all business 

bachelor’s degrees in the U.S. (Deming, Golden, and Katz, 2012). These same graduates account for only 

1.3% of all CPA sections taken during 2011 (see Table 3 above). Further, inferring from differential pass 

rates, commercial universities apparently graduate only about six tenths of one percent of all those 

passing the CPA exam each year.   

 Together our conclusions suggest that education at commercial universities may be a poor choice for 

students who someday hope to take the CPA exam and enter the field of public accounting. Factors such 

as higher average debt at graduation, lower overall graduation rates, and much lower pass rates on the 

uniform CPA exam are all factors of commercial education that suggest this conclusion. 

 Nothing in our data are intended to be used for inferring unambiguously why lower CPA exam pass 

rates occur at commercial universities. Since our research design is not an experimental design (i.e. 

random selection, random assignment of subjects to groups, and independent variable manipulation), 

causal inference about the reasons for discovered systematic relationships in not possible (Bryman and 

Cramer, 2005). Causal inference requires a fully randomized experimental design in which researchers 

manipulate a single research variable differentially among groups. (All other systematic differences 

among groups are presumed nonexistent due to random selection and assignment of subjects to groups.)  

In the present case such a design is not feasible or possible. In our society, one cannot reasonably 

randomly assign students to public universities, to private not-for-profit universities, and to commercial 

for-profit universities for a research in order to be certain groups do not differ systematically at the outset.  

Therefore, due to the limitation of our research design, the particular reason or reasons graduates of 

commercial universities have lower average pass rates on the uniform CPA exam cannot be reasonably 

inferred from the data.   

 Lower CPA exam pass rates by the graduates of commercial universities could result from any number 

of factors or combination of factors. For example, one might speculate our findings result solely from 

selection bias - commercial universities attract, on average, a lower quality student than do traditional 

universities, and thus these lower quality students, regardless of the quality of education they have 

received, score lower on the uniform CPA exam due to their lower abilities. One might just as reasonably 

speculate that commercial education itself is of low quality, and therefore is the main determinative factor 

in lower CPA exam pass rates of graduates of commercial universities. Or one might also speculate that a 

combination of factors, some that may not have even been imagined, together are the determinative 

factors of the lower CPA exam pass rates by the commercially educated. The point is there is no logical 

way to unambiguously draw causal inferences based on a correlational research design. 



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2013, Vol. 4, No. 1, 77-86 

 Nevertheless, we have shown a systematic association between commercial education and much lower 

CPA exam pass rates even if unable to state precisely why this relationship exists. Knowing the 

relationship exists has value in and of itself, and becomes the basis for other research that attempts to 

clarify the causes of this relationship.   

 Finally to summarize and repeat, the purpose of our research has not been to develop or explicate a 

general theoretical model describing the causative factors in a discovered negative relationship between 

commercial education and CPA exam pass rates. Rather, our purpose has been to discover whether a 

systematic relationship exists between commercial for-profit education and CPA pass rates, and if so, to 

understand its magnitude and direction. This we have successfully been able to do.  Graduates of 

commercial for-profit universities clearly have CPA exam pass rates markedly lower than those of 

graduates of public universities and private not-for-profit universities. This result has implications for 

incoming students and their parents as they seek to identify universities that will most likely maximize the 

chances of the student someday passing the uniform CPA exam. 
 

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www.aicpa.org/BECOMEACPA/CPAEXAM/EXAMINATIONCONTENT/CONTENTDEVELOPM

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AICPA. 2011ii. Become a CPA/CPA exam/for candidates/FAQ. http://www.aicpa.org/becomeacpa/ 

cpaexam/forcandidates/faq/pages/computer_faqs_1.aspx 
 

Bennett, D., Lucchesi, A., & Vedder, R. 2010. For-profit higher education: growth, innovation and 

regulation. Center for College Affordability and Productivity (policy paper), http://heartland.org/sites/ 

all/modules/custom/heartland_migration/files/pdfs/29010.pdf. 
 

Bryman, A., & Cramer, D. 2005. Quantitative data analysis with SPSS 12 and 13, A guide for social 

scientists. Routledge. New York: Taylor, and Francis Group. 
 

Cellini, S. 2012. For-profit higher education: An assessment of costs and benefits. National Tax Journal, 

65(1), 153-180. 
 

Clark, J. 2011. The real deal on for-profit colleges. Kiplinger’s Personal Finance, 65(5) 64-68.  
 

Deming, D., Goldin, C., & Katz, L. 2012. The for-profit postsecondary school sector: Nimble critters or 

agile predators? Journal of Economic Perspectives, 26(1), 139-164. 
 

Equal Justice Works. 2012. Gainful employment regulations put on hold. U.S. News, Co., Retrieved 

from: http://www.usnews.com/education/blogs/student-loan-ranger/2012/07/11/gainful-employment-

regulation-put-on-hold 
 

Hechinger, J. 2011. For-profit college grads also earn a life of debt. Bloomberg Businessweek, 4212, 18-

19. 
 

NASBA.  2012 & 2011. NASBA uniform CPA exam candidate performance. Nashville, TN. 
 

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2013, Vol. 4, No. 1, 77-86 

U.S. Department of Education. 2012. Default rates rise for federal student loans (news release).  

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John Morgan is a professor in the department of accounting at Winona State University. He received his 

Ph.D. in accountancy from the University of Nebraska-Lincoln. His current research interests include the 

financial reporting issues related to intellectual capital, business school accreditation issues, CPA exam 

success factors, and measuring teacher effectiveness. He has published in the Journal of 21
st
 Century 

Accounting, the Journal of Business and Leadership, the Clarion Business and Economic Review, and in 

Learning and Teaching in Higher Education-Gulf Perspectives. 
 

Frederic Ihrke is a professor and chair in the department of accounting at Winona State University. He 

received his MBT from the University of Minnesota and his J.D. from William and Mitchell College of 

Law. His current research interests include income tax policy, income tax law, and accounting for 

intangible assets.  He has published in the Journal of Business and Leadership. 

 

 

 


