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Minnesota has a CPA exam ‘gender gap’

What the stats tell us

Rodger L. Brannan, CPA (inactive) | May 2019 Footnote

Editor's note: Updated April 29, 2019

The gender gap in public accounting is real — and it is a significant problem for the profession.

Several studies have documented both a pay and promotion gap in favor of men over women both in public accounting and the workforce at large. Additionally, fewer than 20% of the partners in public accounting are women. This is astounding because, in recent years, women have made up at least 50% of the profession.

Each of these is a contentious issue. Indeed, the profession takes these issues very seriously and is working hard to ensure equity in matters of both pay and promotion.

A less recognized gender gap has developed, which might significantly impact the pay and partner gap: a performance gap on the CPA exam.

The issue that leads to the issues

The pass rate for women CPA exam candidates is significantly lower than that of their male colleagues. The pass rate is defined as the number of sections on which women received a passing score (e.g., one candidate attempting four parts in a calendar year and passing two parts would generate a passing rate of 50%).

On a national level, the gap (i.e., gap meaning that men are scoring higher than women, expressed as points) in pass rates between men and women is around 7 percentage points. This is more than a random or transitory phenomenon. In the past four years, women candidates’ pass rates have been nearly 17 points lower than their male colleagues when measured nationally, regionally and at the state level. This difference is material, significant and meaningful.

The results for Minnesota and other jurisdictions (national level and peer jurisdictions) are shown in the accompanying charts.

First-time takers of the CPA exam

Passing rates and gender gap, Minnesota
  2013 2014 2015 2016
Overall average 57.1 55.7 54.1 54.8
Male average 60.4 57.9 57.1 59.3
Female average 53.3 53.1 50.6 49.7
Gender gap 7.1 4.8 6.5 9.6
Gender gap for first-time takers of CPA exam
Peer jurisdiction comparison
Jurisdiction 2013 2014 2015 2016 Average
Minnesota 7.1 4.8 6.5 9.6 7.5
National 6.3 6.7 6.0 7.2 6.6
NCR* 8.0 8.9 7.8 10.1 8.7
Wisconsin 7.0 10.0 8.1 7.6 8.2
Iowa 15.1 17.0 10.3 15.9 14.6
South Dakota +12.4 16.0 1.5 16.4 5.4
North Dakota 4.4 6.7 6.3 11.4 7.2
* North Central Region (NCR) is an aggregation of Midwestern states grouped together for reporting purposes. Minnesota is part of the NCR.

The gap is universal

The data tables indicate that a significant gender gap exists not only for Minnesota, but on a regional and national basis. The passing rate for female candidates taking the CPA exam for the first time is significantly lower than that of their male counterparts.

The gender gap (the point differential between male and female candidates’ pass rates) consistently shows that male candidates outperform females. The Minnesota gender gap has increased from 7.1 in 2013 to 9.6 in 2016. Although some transitory improvement was made during the years 2014 and 2015, the gap spiked upwards again in 2016, reaching a new high of 9.6.

For the four years examined, the average gender gap in Minnesota is 7.5. The national average over the same time period is 6.6. In comparison, Minnesota female candidates seem to be faring worse. Nationally, the gap has held somewhat constant, but with a slight uptick in 2016. When one compares female Minnesota candidates with those in the North Central Region (states located in the central part of the United States, including Minnesota) the results are somewhat better. The NCR average for the four years is 8.7, with a low of 7.8 and a high of 10.1.

Except for South Dakota, the results for female test takers are better in Minnesota. Wisconsin has an average gap of 8.2 compared with Minnesota’s gap of 7.5. The Wisconsin gap ranges from 7.0 to 10.0 in the years examined. Among the border states, Iowa has the worst gender gap result. The four-year average for Iowa is 14.6, with a low of 10.3 in 2015 and a high of 17.0 in 2014. South Dakota had the most variability in performance gap of the states examined. It was the only state that had a positive gender gap (females outperformed their male counterparts). However, in 2016, it sustained a negative gender gap of 16.4. The average for the four years was 5.4. North Dakota had results very similar to Minnesota. The average gender gap in North Dakota was 7.2. The gap varied from a low of 4.4 to a high of 11.4.

What the gap means

This CPA exam performance gap is inexplicable. Slightly more men than women are awarded a bachelor’s degree in accounting, according to the AICPA. However, slightly more women than men are awarded master’s degrees in accounting. In addition, female candidates perform very well on other professional exams. For example, female medical students slightly outperform their male colleagues on the Step 2 exam, a University of Minnesota five-year analysis found. By the end of the third year of medical school, female performance is equal to that of their male colleagues.

Female candidates for the CPA exam are assumed to have equal intelligence, maturity, motivation and will to succeed. So why do women significantly underperform on the CPA exam but not on other professional exams?
The data shows that the CPA exam pass gap between women and men is a serious problem, and Minnesota is not exempt. As a profession, we need to act locally. Minnesotans pride themselves on being fair and equitable. Minnesota CPA firms are doing an outstanding job in promoting the personal and professional well-being of their female employees. However, there is work still to do.

What can be done?

I propose a few questions or topics of discussion that might help close this gap:
  • Can firms provide women with experienced mentors or coaches to help them navigate the difficult challenges of balancing home and work?
  • Can employers develop more career flexibility? That is, can we develop more meaningful career paths for all employees?
  • Can organizations develop programs to help all employees to better integrate the work-life balance?
  • Can we begin to view the CPA exam as only one element in building careers? Help employees develop a three- or five-year program that includes passing the exam as well as developing the professional and human relations skills necessary to succeed in public accounting.
These questions are not meant to be exhaustive. Rather, they are meant to stimulate conversation within firms to help women reach their fullest professional potential and close the CPA exam gap.

Rodger L. Brannan, CPA (inactive), CGMA, MBA, Ph.D, is an associate professor of accounting for Labovitz School of Business and department of accounting at the University of Minnesota Duluth, and is an MNCPA member. He may be reached at rbrannan@d.umn.edu.