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Startling rise in chartered accountancy failure rates

The profession is going all out to clean up its image, but the backlash has begun.

The embattled South African Institute of Chartered Accountants (Saica) – already under unprecedented professional criticism for the role CAs played in corporate scandals at Steinhoff, VBS Bank, KPMG and elsewhere – is now under attack for flunking nearly a third of candidates who sat the board exams late last year.

Some 32% of candidates failed the exams last year, a big increase on the 20% and 11% who failed in each of the previous two years.

The clear aim is to clean up the profession’s image after CAs were found at the centre of a string of corporate scandals. Several aspiring CAs who flunked the exams seem mystified by the outcome, particularly as they had aced all previous exams – both at Saica board and university levels.

One candidate, who asked not to be named, says the results are suspect for a number of reasons. “My real gripe is the lack of transparency in marking. No percentages are given, just letters such as C (Competent) and BC (Below competent). So we never quite know what was expected of us.”

Candidates in the dark

Candidates also complain that they have no idea what weighting is attached to these different markings, nor how they should prepare for the repeat exams.

What has alarmed some is the 48% pass rate for African candidates in 2018, as opposed to 86% for whites, 78% for Indians and 73% for coloureds. This compares with a pass rate in 2017 of 69% for Africans, 89% for whites, 84% for Indians and 80% for coloureds.

A letter from several dozen affected candidates from each of the Big Four accounting firms – EY, PwC, Deloitte and KPMG – challenges Saica on steps taken to address the “unique and complex” issue of the high African failure rate, and argues against generalised solutions to remedy the specific socio-economic factors behind this failure rate.

The candidates also question Saica’s motive for reducing the pass rate, given the deluge of recent corporate scandals, often enabled by CAs. The clear aim is to raise the bar to professional entry, but candidates who failed see it differently: a far higher percentage of candidates who took their study course through University of Johannesburg (UJ) failed than did those who studied at University of Cape Town, the two universities where most CA candidates prepare for the exam. “We were told at UJ to answer questions with less technical language, and communicate as if we were speaking to someone on the street – which we did. Then we failed,” says one. “Those of us who failed have to sit the exam again at the end of the year, but we don’t know what is expected of us.”

This fear appears grounded in fact: 45% of repeat candidates who sat the exam in 2018 failed, while 71% of first-time candidates passed.

Marking strategy ‘allows for manipulation’

The candidates who wrote to Saica claim the accounting body has been less than responsive and forthcoming to opinions and inputs from various stakeholders, and has instead blamed the candidates for the high failure rate. They claim Saica has not adopted a transparent marking strategy, and that this allows for manipulation by individual exam markers.

In reply to questions from Moneyweb, Saica’s head of communications and marketing, Willi Coates, says the body’s training and examination processes are “rigorous, robust and fair and are in line with international best practice”, as outlined by the education and training standards of the International Federation of Accountants (IFAC).

“These processes are also reviewed by our peer institutes for reciprocity purposes to ensure these standards are being met and maintained. In addition, Saica is recognised by the Independent Regulatory Board for Auditors (Irba), which undertakes regular and detailed reviews of the Saica qualification process.

Many checks and balances, says Saica

“In particular, there is significant emphasis on processes governing the Saica examinations, with many checks and balances in place. This includes evaluating the standard of the paper year on year. There is, therefore, no substance in your stated ‘reasonable conclusion’ that Saica might have taken a decision to raise the academic bar in light of the CA designation being somewhat tarnished by recent corporate scandals.”

“The exam-setting process is managed by the Initial Professional Development Committee (IPD), an independent committee of the SAICA Board, which is, by definition, independent of SAICA’s management and its operations. The IPD, in turn, delegates the setting of the exams to two committees (ITC Examco and APC Examco) comprising members with relevant expertise and experience. There is, further, an independent group of qualified chartered accountants (CAs(SA)) appointed to undertake the marking of the exams. And various levels of external review are performed over the paper before the exams are written. Accordingly, a significant number of checks and balances are in place at every step of the process.”

The Saica examination is written electronically and marked using an electronic tool, which provides real-time and granular information throughout the marking processes, in line with worldwide CA Institute best practices. This tool has many benefits for the marking process including identification of inconsistencies in marking during the process.

Adds Coates: “Importantly, all candidates’ scripts are anonymous, thereby removing any assumed prejudice, as markers do not know which candidate’s script they are marking, from which training office they emanate, or which professional programme they have completed.

“All markers are appointed by Saica and are required to have marking experience. The process starts with extensive training for all markers and all markers are required to mark a benchmark examination script before they are eligible to start marking.

Saica provides the following responses to questions from Moneyweb:

Question 1: Can you explain the reason for the lower pass rate this year?

There is no single reason for the lower pass rate in the November 2018 APC [Assessment of Professional Competence]. The explanations are complex, interrelated and currently being carefully analysed. Preliminary findings are set out below. Declines in pass rates should be assessed against the background of the following subsets of the exam-writing population where there was an:

1. Increased number of repeat candidates (previously unsuccessful) writing the November 2018 APC. Consider that repeat candidates generally receive reduced support from their employers in terms of (a) being given less time off for study leave as well as (b) no longer paying for candidates’ examination fees/professional programmes;

2. Increased proportion of candidates writing the APC who completed their Saica-accredited postgraduate degree through a distance learning institution;

3. Increased number of repeat candidates who wrote the APC November examination (a practical examination assessing professional competence). They did so three months after writing and passing the theoretical June Initial Test of Competence (ITC) examination. As such, these candidates may not have been adequately prepared for dealing with the APC, which by its very nature is different to the ITC, as it assesses professional competence; and

4. Appreciable number of trainees who may not yet have received sufficient practical experience (depth and breadth) to enable them to fully prepare themselves for this APC.

Further, please note that in order to obtain an in-depth understanding of all the underlying factors that could have contributed to the declining pass rate, Saica is undertaking a number of initiatives to explore and better understand the challenges faced by the failed 2018 APC candidates – initiatives that include a survey of failed candidates as well as meetings with Saica accredited training offices and professional programme providers. The outcomes of these engagements should help Saica provide candidates a better opportunity to achieve success when they next attempt the APC. 

Question 2: How is Saica endeavouring to achieve uniformity among markers where no percentage scores accompany the pass grades (HC, BC etc)?

Please refer to the introductory part of this response, which sets out Saica’s rigorous examination and marking process.

Question 3: Are there any avenues for candidates to appeal where they have failed?

Due to the rigorous marking process already followed, Saica’s examination regulations do not enable candidates to appeal the outcome of their APC result. However, candidates can, for a fee of R230 (including Vat), request a copy of their script and mark plan, which reveals their level of competence by task. A more detailed report, providing detailed reasons for that candidate’s failure, can be compiled at an additional fee of R2 875 (including Vat). This fee covers the cost of having one of the senior markers drafting a comprehensive report on the individual candidate’s script by task. 

Question 4: In light of (Comair CEO) Erik Venter’s public resignation from Saica, can you give some indication of how many others have resigned or failed to renew their membership over the last 12 months?

Our membership resignations over the past 12 months are in line with the number of resignations in previous years and are, therefore, insignificant. Indeed, our 2019 resignation statistics indicate that only 109 resignations during this period can be directly attributed to members’ unhappiness or discomfort as to the state of the chartered accountancy profession and/or the value of their Saica membership. The other resignations, small in number, stem from reasons such as death, ill health and disciplinary matters. Saica’s membership continues to grow by, on average, 4% per annum. We can also confirm that, to date, Mr Erik Venter has not resigned as a Saica member. Taking a line through the several factors above discussed, we can categorically state that no individual or group can influence the percentage pass rate. Your objective assessment of our analysis will surely persuade you to the same conclusion.

Willi Coates Saica Senior Executive: Brand, Communications & Marketing Division

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COMMENTS   52

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What some people fail to understand is that the APC has become the tougher of the two exams. Gone are the days of FQE1 and FQE2, where FQE2 was just a formality.

Second factor to consider is that work based experience play a huge role in passing the APC, basically candidates who enjoy more challenging roles at work are better problem solvers and better equipped to tackle the APC.

Thirdly, this is just my personal opinion (not a fact), the UJ preparation programme is not on par with the UCT prep programme. To advise candidates to answer the questions as if “they were talking to a man on the street” is shocking. You give professional answers in a professional exam,always!

Workplace experience is crucial in any profession. Also, the failing education system (especially at primary and secondary level) is coming home to roost, with universities unable to “catch-up” everything that should have happened at those levels. The culture of entitlement is not helping either. When something like this happens, it is very easy to look for the problem within the exam. In some cases it may be the right place to look, but many times it is not.

That last point has been taken out of context I feel. I believe the same thing was said when I took the course many years ago but the intention was state the obvious, not write like you talking to someone on the street. The tone is not the point but rather that you do not take short cuts because you assume the person marking understands the context.

Perhaps SAICA body is indeed chocking off a few more new entrants to their elite profession..

A few years ago first worlds were over run by qualified actuaries from the third world countries so the Actuarial societies quickly changed rules and made qualifications based on location of study…

What we are witnessing here is the Playstation generation hitting the wall. When it’s game over just press the play again button and play again – or try again in this case.

These days, if you trust a CA you will most likely end up in jail.

The funny thing is that as a CA you are criminally liable if you overlook fraudulent or negligent dealings.

Yet, amazingly, the likes of KPMG are still alive and well.

How?! Is our ANC government really that toothless and corrupt?

Oh wait…

“….. the “unique and complex” issue of the high African failure rate, and argues against generalised solutions to remedy the specific socio-economic factors behind this failure rate.“

How exactly is this to be achieved? I think I can guess.

Time to eat some cement and harden up. Obtaining a professional qualification is no joke.

Rather use your time studying than wining to the media.

Couldn’t agree more!
And as for the journalist who even bothered to listen to the whining and publish it….

Pass rate used to be between 42% and 55% back in the days. This thing of 88% pass rate is unusual and suspicious.

You can check the pass rates for years 2000 to 2011, a 55% pass rate was considered an excellent year!

I am not convinced that the students have become more intelligent over the last few years. It’s either the standards were intentionally lowered to get more people through (to justify the huge amount of money the gov is injecting through Thuthuka bursary fund) or all the universities adopted the UJ/UCT strategy of having inside information of what is discussed in the SAICA examination Committee meetings and passing that information to the students.

I am less concerned about the pass rates of candidates than the failure of SAICA to come down on the multitude of scandal tainted CA’s.

Anoj Singh is listed as member in good standing. I get that we cannot bullet a CA without guilty verdict, but the profession relies on reputation and being seen to be honest, we should suspend members pending them being proven to be dishonest for harming the reputation of the profession.

How can CA’s such as Steve Booysen & Len Konar, that so obviously failed basic CA skills in Steinhoff still be CA and be on any company boards?

What is the CA status of Jooste, La Grange, etc from Steinhoff?

You can verify members on the SAICA website. Jooste and la Grange are still listed as members. SAICA issued a statement on Wednesday to say that they are requesting the relevant info from Steinhoff to conduct their own investigations and disciplinary procedures.

While I agree there should be some form of suspension these guys have caused irreparable damage to the reputation already in my opinion.

What really gets to me though is that not only have the other members of SAICA been hit by the damage in reputation, they have also had an additional levy added to the annual fees because SAICA has had to hold so many disciplinaries this past year.

Marcus Jooste is still a member … Google SAICA – verify a member – and you will get your answer. SAIPA has far higher standards.

This is surely just an example of “ supply and demand”. Not enough demand equals limiting the supply! Lots of retrenchments out their due to the dubious practices of some auditing companies who have been found out. Sadly it’s the lower orders that face the music whilst the perpetrators ( partners) continue unabated. Time for a real cleanout methinks! Just my opinion.

The corporate scandals at Steinhoff, VBS Bank, KPMG and elsewhere are mostly due to human greed and not just incompetent accountants or accounting.
Up the emphasis on governance.

When organisations refers to Bantu as “African” it delegitimises all other races.
A discriminatory practice akin to that of the the Nats who refused to consider Bantu as S Africans.
Both instances have perverse ideological foundations!

It’s a direct result of the lowering of standards and passmarks, for those who are unable to reach the high standards of the “privileged”

Funny headline

They even fail in the workplace

Thinking Bosasa, Steinhoff, SOEs, etc.

That’s not failure per se, in the workplace it’s straightforward greed and corruption, criminal intent.

Well, on the one hand, sometimes you’re just not good enough. So, go and get better. And while you are at it, don’t look for excuses in gender, race, colour or creed, when it is, by virtue of the process, completely eliminated. On the other hand, it is a bit of a lottery when you are dependent on the firm you’re with to ensure that you get enough and the right exposure to enable you to pass a practical exam.

Yes, looking for excuses gender, race, colour and creed with a journalist who plays right into their hands!

Coinciding with the country’s descent into clown show level of the basic education system. No surprises here. Just another good ANC story.

Wait, how can one obtain a degree, pass CTA and if their basics aren’t right? If they are ll getting the same education and training, then we might need to verify if other issues have played a role here, like deliberate racism.

I agree with your point regarding the basic education. The APC exams are a struggle even for top matric students.

But rather than jumping to the race card, do you not think the exam language policy is the issue here? The exams are only offered in English and Afrikaans meaning many are writing in a second language. Why would SAICA spend millions on the Thuthuka Bursary Fund only to discriminate against those bursary recipients later on?

I meant the CTA exams, not APC

Oh please…

Back in the pre 1994 days a pass rate of 33% indicated a tough exam year. I would say that a 40+per cent pass rate was normal.
In those days one had to pass ‘all’ papers in one year. No Part One or Part 2.

Even then successful students relied heavily on the support classes of the brilliant Charles Hattingh, UCT and so on.

The South African CA (CASA) was HIGHLY rated world wide.

If the profession wants to clean itself up it will require candidates to pass strictly marked papers and exam papers (questions) prepared by competent professionals.

Affirmative Action seems to be biting itself due to the Black/White/and so on disclosure of the successful students.

Already the firms are bending over backwards to provide special support classes for todays ‘privileged’ students in an effort to help their quota numbers etc

I wonder what Charles Hattingh, to whom many of our top CAs owe plenty in terms of motivation and skills amongst other things, would say about the present situation?

Charles already had a poor assessment of SAICA twenty years ago. He took on SAICA at every level and found them wanting. There will never be another guardian of the profession like the inimitable Charles Hattingh.

In the days when Charles presented his board course, the pass rate hovered around 50% and that is without the IFRS nonsense that has been foisted on the profession.

To present results based on race is insulting to those who got through. This race based result reporting is totally misleading. Rather base the results on the matric results and then you will see a perfect correlation.

Bet you that Steinhoff used IFRS to obfuscate their results …

Spot on Robair : having thanks largely to the Charles Hattingh course back in 1970 odd managed to attain my CA(SA)at my first attempt . Scotland & RSA were at that stage considered to produce the best Chartered Accountants and all these new fangled “professional Accountants” etc did not exist .

““unique and complex” issue of the high African failure rate”

I have some theories on why the overall pass rate has come down, they are as follows:

– 30% pass rate at school and lower uni forced entrances;
– Exam standards perhaps enforced this year and if that is the case then it is a problem because how many qualified people should not have made it?
– Perhaps just a year where there was a lot of fails, it can happen I guess.

On the African focus, if I recall correctly the bulk if not all Africans I studies with or worked with got full bursaries and at UJ there was special classes for African students only to assist them to pass. This is understandable as many of them came from under privileged backgrounds. If they do not pass after all of that financial & extra assistance then what else can be done?

I understand that many African candidates are also pushed through uni to keep the numbers high going into the professional exams…that is not a sustainable practice and not fair to the individual or those relying on a certain standard when employing a CA.

Lastly, SAICA really needs a revamp in their leadership, they need to branch out and get former CEO’s along with former audit partners etc to change the landscape vs the same old tired bunch.

“I have some theories on why the overall pass rate has come down, they are as follows:

– 30% pass rate at school and lower uni forced entrances;”

Before you went further with your comment, you should indicate which saica accredited degree allows one to enroll with a 30% in both English and Mathematics.

this is one job that technology can do….but then how will CEO’s create creative fraud

Why is a professional qualification pass rate (or any pass rate for that matter) being adjudicated by race?

If there is a problem with the pass rate (overall), the examninations, the training or anything, address it by all means, but since we are all equal, this nonsense of comparing results by race groups must end?

Or is this another Curious Case of Minority Protection methods being used in the South African context as a method of majority emboldenment and entitlement?

And by the way, don’t just look at the strange things and downwards trends and growing mistrust in one profession: look at ECSA, SACQS and a few others as well. Its not just Eskom that is on a trajectory of chaos – all because we keep on measuring along racial lines.

Race only comes into it because of the way the journalist wrote the article! the writer allowed himself to be manipulated…

The pass rates have nothing to do with the character of person.

If you have someone whom have been raised with values such as
“it is acceptable to lie, cheat and steal”
then a professional qualification ain’t going to change sh-y-t.

The only time a person truly change is when they want to change.
Unfortunately, today, money outweighs values & standards.

Now, to point out the obvious. This is but an attempt for SAICA to try to keep their “professionalism market status” while they themselves failed to uphold their own set of ethics by not performing their duty as regulatory body (professional competence and due care).

The damage is done, too many CA’s in high positions have betrayed the trust that was once placed in the designation and in the public.

Allow me to jolt our collective memory: The issue with corrupt CA’s started many years ago with CWI, Jeff Liebesman, Jeff Levenstein, Annette van der Laan and slightly more recently the great and bold Mr Jeff Wiggill. Note the three Jeffs. Maybe SAICA should start by never allowing someone by the name of Jeff entry even to the first examination. The problem with Jeff Wiggill is that he also used his other CA mates to rob our country of R2bn. Yes R2bn. All the risk officers at the banks that assisted him are also CA’s. The only way to stop the rot is to allow other bodies to also register with the IRBA.

Rather than stats by race gender whatever, what may be more useful is stats by path? How does the first time pass rate compare among candidates doing a classic articles with a Big 4 or Big 8, versus with a smalltown firm, versus with a leading bank or those other routes used nowadays?

The poorer performance of second/third attempt candidates is logical.

Time to transform and decolonise the CA exam, it is oppressing the people with its high standards.

decolonise?…does acountancy work diffirent in Africa..apologies it does…fraud..take from poor etc

Decolonize?

Do you have ANY idea how sore it is to have your colon removed? Plus, where do they attach the end but to?

Have a phase two weekend

What am I missing here back in my day, 2008 the pass rate was only 45% ??? now its over 70% . Are you telling me that our education of accountants has gone contrary to the the rest of the country. This does not add up . A few years back i saw the pass rate more than double and no one made any kind of noise as the standard of the of the final exams clearly decreased. . Not trying to take away from those that have completed their exams recently but you cannot go from 45% to 70-80% pass rate and say the standard hasnt dropped

A few comments:
– Maybe the second exam is more discursive, and most Accounting students are not as strong when it comes to good writing?
– Maybe the exam is being marked nore rigorously? I was involved in exam marking a few years ago and there was a lot of marking by looking for keywords, which was rather flimsy.
– Somebody mentioned that African students are disadvantaged because they have to answer in English. Wouldn’t help to let them write in an African language after doing all their prior studies in English.
– And aren’t a lot of candidates who had two years of disrupted studies due to the fees must fall circus now hitting the exams? I suspect that many of these people were passed by universities after the syllabus had been shrunk, etc., and they never really caught up.

UK did NOT say answer like that. Either classes were missed or something misinterpreted. They were very clear when they said that you need to answer for the audience you are addressing in the task. If you’re addressing the financial manager who is a CA then technical wording is fine to use because they’ll understand it. If you’re talking to an engineer then you can’t use technical wording but something more in “layman’s” terms. Who wrote this article? The whole picture was not made clear.

A sceptic would suggest that this is related to supply and demand. When there’s a chance of more CAs coming onto the labour market because of possible layoffs, or an economic contraction, or because the CA brand has been tarnished they would naturally tighten the supply by letting fewer people pass (currently, all 3 are the case).

By the time they write the exam, a candidate should have passed the “CTA” at university, ie theoretically they have all the theoretical knowledge they need. SAICA sets what it calls professional exams. Apart from being in a new situation where, unlike university, the lecturer, exam setter and marker are usually the same person, candidates are being tested on a different basis, on their ability to apply that knowledge (and to do so under the pressure of the BOARD EXAM). By analogy, it’s the difference between knowing HOW to hit a tennis ball and spending hours hitting it against a wall or the “10,000 hours” concert musicians spend practising scales.

One has to ask, if candidates can go straight from university to writing SAICA exams without real world experience, what is the point of articles or the “professional exam”.

Since candidates are expected during articles to gain insight and mentoring from seniors, managers, clients, etc, performing audits the quality of supervision and mentoring is key. The increased fee pressure of the Big Firms obviously acts against this with fast-tracked CAs in firms and clients also being a factor.

SAICA needs a complete overhaul. It has changed from a prestigious professional organisation to a poorly run quasi-government department.

Full members contribute around R250m annually, to what you may ask? A grandiose bursary scheme that has seen its fair share of looting and not much else.

It scurries around obsessing about the pass rate of certain ethnic groups to such a degree that all of their other objectives a left horribly wanting.

Don’t get me wrong, it is a noble cause but it cannot be done at all costs, the biggest of which being a catastrophic drop in standards.

I see this playing out in the workplace, out of the dozens of recently qualified CAs a handful of CV’s are marginally impressive, you then interview these candidates only to find that most of them are so entitled that it will make you want to vomit. You finally find a candidate that ticks all the boxes, appoint them, only to find that they either want to be promoted to CFO within the next couple of months, or they leave shortly after to the next firm desperately recruiting an AA candidate and the whole cycle starts again from scratch.

Gone are the days where respect was earned…

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