PREDICTIVE VALIDITY OF THE ACCA EXAMINATION

TO FINANCIAL ACCOUNTING AND REPORTING LICENSURE

PERFORMANCE

A Thesis
Presented to the Faculty of the Department of Accountancy
Far Eastern University
Sampaloc, Manila

In Partial Fulfillment of the Requirements for the Degree

Bachelor of Science in Accountancy

by

Dimacali, Ryan Joseph A.

Estrada, Mark Kennedy B.

Paragas, Angelika Joy R.

Ronquillo, Ramainne Chalsea L.

Solisa, Dexter Neil V.

Victorio, Jeramel M.

Villapando, Cyndy G.

May 2020
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TABLE OF CONTENTS

Page

TITLE PAGE ​………………………………………………………………​……………...i

CHAPTER I: INTRODUCTION

Background of the Study​….……….……………………...………....2

Theoretical Framework...​….……….………………………………...2

Conceptual Framework...​….……….………………………………..2

Statement of the Problem​….……….………………………………..2

Hypothesis…………….....​….……….………………………………..2

Scope and Limitation of the Study.​…….……………….…………...2

Significance of the Study….​.……….………………………………...2

Operational Definition of Terms..​…..………………………………...2

CHAPTER II: REVIEW OF RELATED LITERATURE

Modernization on the language of business…………….………....2

Certified Public Accountant Licensure Examination.……………...2

​Factors affecting performance in

CPA licensure examinations​…….……………………………...…...2

​Relevance of Certifications​….……….…………….………………..2

​ACCA Certification​…….​….……….………………………………....2

​ACCA in the Philippines​………..​…….……………….……………..2

​ACCA F3 Examination.​….​.……….………………………………….2

​Synthesis and Relevance of the Reviewed Literature​...​………….2

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CHAPTER 1

INTRODUCTION

Background of the Study

The overall decreasing passing rate of the Certified Public Accountant

Licensure Examination (CPALE) becomes alarming to both educators and

students. ​In the recent October 2019 CPALE, only 2,075 out of 14,492

examinees passed resulting in a 14.32% passing rate (Manila Times, 2019).

Given that one of the critical success factors of an institution is the number of its

accountancy graduates who passed the CPALE, the ​decreasing passing rate

indicates a need to determine the identifiable factors contributing to the CPALE

performance. Most of the previous studies focused on the qualitative factors

affecting the performance of a CPALE candidate, however there has been no

study regarding the results of international certification examination as a

predictive tool for the CPALE performance, particularly the Association of

Chartered Certified Accountants (ACCA) examinations.

The implementation of ASEAN metamorphosis geared the CPALE to

become globally competent. The ASEAN metamorphosis enables Certified

Public Accountants (CPA) in the Philippines to be mutually-recognized with its

neighboring ASEAN countries, wherein Filipinos need not take any further
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examinations or additional extensive qualifications in order to be recognized as

such. As a result, the licensure examinations are now adopting foreign-based

questions instead of the traditional theory concepts and problems

retrieved from local authors (Association of Southeast Asian Nations, 2015). ​A​s

the accounting standards continuously evolve, candidates must adapt to the

relevant and recent developments of the CPALE.

The ACCA F3 examination, ​which covers the international standards and

concepts relating to financial accounting, encompass most of the CPALE

Financial Accounting and Reporting syllabus (Association of Chartered Certified

Accountants, 2019). ​One of the reasons why examinees have a hard time in the

actual licensure examination is due to lack of preparation in answering questions

taken from international sources. ​Therefore, the ACCA F3 examination may

serve as a mock examination for dealing with foreign-based questions aside from

those provided by local authors. ​(The Summit Express, 2019). Hence, the

researchers will determine the predictive validity of the ACCA F3 examination to

the FAR licensure performance.

Theoretical Framework

Examinations are common methods used to test memory retention when

learning new information. By encouraging students to regularly recall information,

this allows information to be retained and be retrieved at a later stage of the

learning process (Brown, McDaniel, & Roediger, 2014). In this study, eight
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theories are relevant in understanding the predictive validity of undergraduate

certification examinations to licensure performance. The first theory is the

constructive alignment theory of Biggs. Constructive alignment is an

outcomes-based approach in teaching wherein the objectives of the

assessments are aligned or match with the objectives of the course in order to

enhance learning and performance (Biggs, 2014). Both the licensure and

certification examinations provide evidence of a person's competence based on

assessment procedures that are the same for all candidates. In addition,

certification examinations can be effective in providing an additional check on the

preparation of individual candidates for licensure (Kane, 2012). In relation to the

present study, the ACCA course curriculum was developed to match international

accounting standards (Sakshi, 2018). Therefore, there is a constructive

alignment between the ACCA F3 examination and Financial Accounting and

Reporting licensure examination, wherein both assessments intend to evaluate

the candidates' technical proficiency in FAR. Hence, the researchers tend to

determine whether there is an effect between the constructive alignment of the

ACCA F3 examination to FAR licensure performance.

The second theory is Bjork and Bjork's new theory of disuse which states

that there are two processes involved with human memory namely, encoding and

retrieval (Bjork and Bjork, 1992, as cited in Paul, 2015). Encoding is the process

of storing information in the long-term memory while retrieval is the process of

accessing learned information (Malamed, 2012). According to the Theory of

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Disuse, retrieval at the point of forgetting has a greater impact on memory than

repeated retrieval when retrieval strength is high. This implies that study is as or

more effective as testing when the delay before a final test is very short; but at a

greater delay, experiences that build retrieval strength like practice tests confer

greater benefit than studying. The idea of using practice tests to recall

information is a more effective learning strategy for long-term retention than

repeated study (Roediger, 2012). Moreover, retrieval practice is especially

powerful compared with students' most favored study strategies which are

highlighting and rereading their notes and textbooks. According to the study of

Karpicke (2008, as cited in Paul, 2015), retrieval practice does not use testing as

a tool of assessment but rather it treats tests as occasions for learning.

Moreover, students may also gain familiarity with various kinds of test items

which will improve memory retention. Likewise, in the present study, ACCA F3 is

a competency-based examination that evaluates FAR proficiency and one’s

familiarity to foreign-based questions which may serve as a practice test for the

licensure examination.

The third theory is the Classical Test Theory (CTT), also known as the

true score theory. This theory states that the observed test scores are composed

of a true score and an error score, where the true and error scores are

considered independent. The theory assumes that systematic effects between

responses of examinees are due only to variation in ability of interest, and all

other potential sources of variation existing in testing materials such as the

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external and internal conditions of examinees are assumed to be constant (Van

der Linden & Hambleton, 2004, as cited in Magno, 2009). Another theory is the

Item Response Theory (IRT) which is synonymous to Latent Trait theory. It

focuses on the individual items of the questions rather than CTT that focuses on

the test as a whole. Moreover, IRT allows the use of adaptive testing and banked

tests which tailor the difficulty of the test to each examinee where each of them is

given a unique set of questions (Behrens, Cheng & Diao, 2016). Both the CTT

and IRT will demonstrate the estimates based on item difficulty and variation of

test questions of the ACCA F3 examination to the examinee's FAR licensure

performance.

The fourth theory is the Metacognitive Theory. According to Gurung (2005,

as cited by Bord, 2008), students are often unaware of what they do not know or

do not understand until closer to the examination, often a day before it occurs.

Hence, Metacognitive Theory would be applicable to provide an opportunity for

students in examining what they know and do not know. The root “meta” means

“beyond,” so the term refers to “beyond thinking.” Specifically, this means that it

encompasses the processes of planning, tracking, and assessing your own

understanding or performance.​ This theory stressed out the importance of

possessing a self-assessment skill which was beneficial to every student

(Nonyel, 2015). It helped students to discover their own learning potential. In

addition, students could discover their knowledge gaps and opportunities for

self-improvement. This could also be used to improve morale, strengthen the

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commitment to competent performance, and enhance motivation to take

responsibility for one’s professional growth. Likewise, taking the ACCA F3

examination during undergraduate studies can be used as a self-assessment

since it incorporates feedback on the technical proficiency of the student in

Financial Accounting and Reporting that could be an indicator of his or her

performance during the licensure examination.

The fifth theory is the Test Anxiety (TA) Theory. This is relevant to our

study as it affects a student’s performance during the licensure exam​ination​.

According to Mowbray (2017), Test Anxiety is an emotional, physiological,

behavioral and cognitive construct that plays a vital role in a student’s

underachievement and reduced wellbeing. Test anxiety can be experienced both

before and during an examination. Buchwald (2010) and Schwarzer (2010)

believed that test anxiety was a major predictor of student’s performance on

every examination as those students who tend to be more relaxed during an

examination performed well compared to those who were tenser as having

mental block was more apparent to them. In addition, lack of confidence

subscale as a valid and reliable measure of TA (Mowbray, 2017) and hence,

taking the ACCA F3 examination could boost the student’s morale in their

preparation for taking the CPALE.

The sixth theory related to our study is the Course Structure Theory or

Curriculum Theory which refers to the choice of topics, and the organization and
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sequencing of course content that support the learning objectives for the course

(Carnegie Mellon University, 2019). The CPALE itself is considered as

comprehensive as it covers a variety of topics that determines the technical

proficiency of the examinees based on simulated real-world tasks. To pass the

licensure examinations, one must have mastery of the topics covered by the

syllabus. Nevertheless, the long coverage of the syllabus can impede student

learning by crowding out opportunities for them to practice applying the skills and

knowledge they gain. Organization and sequencing of subjects on a certain

institution or university might have a major impact on a student's mastery and

preparedness on each licensure examination subject. Different accounting

courses in colleges are normally arranged from theory-based to

application-based.

In general, Accountancy was built towards greater complexity, starting

with component pieces and working towards synthesis and integration. To

conclude, the goal was to sequence the topics so that they build on one another

in a way that allows students to integrate each new idea, topic, or theme with the

preceding ones as the course proceeds (Carnegie Mellon University, 2019). The

Course Structure or Curriculum Theory is related to the present study since the

ACCA F3 examination is integrated to Far Eastern University’s Bachelor of

Accountancy curriculum wherein students are encouraged to take the

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certification as preparation for foreign-based questions integrated in the Financial

Accounting and Reporting of the CPALE.

Another theory relevant to the present study is the Test of Validity which is

a criterion that measures the quality of an examination. An examination is

considered valid when the test measures what it claims to measure (Professional

Testing Inc., 2006). According to Messick (1989), validity refers to the degree to

which evidence and theory support the interpretations of test scores used in

examinations. One way to estimate validity of an examination is through the

predictive validity approach, which entails the comparison of test scores with

some other measure for which the same candidates had taken sometime after

the test has been given (Anastasi, 1988, as cited in Bailey and Shaw, 2011). In

psychometric terms, predictive validity is the extent to which a scale predicts

scores on some external or future criterion. Likewise, in the present study, the

researchers will determine the consequences of the ACCA F3 examination by

measuring its predictive extent to one’s performance in the FAR licensure

examinations.
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Conceptual Framework

Figure 1

Research Paradigm

The present study will determine the causal effect of the ACCA F3

examination to the CPALE performance in Financial Accounting and Reporting.

The data will be gathered through survey questionnaires, which will be

administered to Far Eastern University graduates of year 2019 who earned a

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degree in Bachelor of Science in Accountancy (BSA). From those students, the

respondents will be restricted to those who took the ACCA F3 examination during

their undergraduate studies last 2018 and to those who took the CPA licensure

examination conducted last October 2019. Hence, the study will focus on those

who took both the examinations with their numerical scores as our center of

interest . Likewise, the present study will focus on the mediator variables which

affect the predictive validity of ACCA F3 examination in the Financial Accounting

and Reporting licensure performance. In addition, the respondents’ insights will

also be extracted from the survey questionnaire to determine their perceptions

regarding their performances for both examinations.

Statement of the Problem

This study aims to determine the consequences of taking the ACCA F3

Examination by measuring its predictive extent to ones’ performance in the

Financial Accounting and Reporting CPA licensure examination. In particular, the

researchers are in pursuit to answer the following questions:

1.) What are the positive and negative effects of taking the ACCA F3?

2.) How effective is ACCA F3 examination results as a predictive tool in

passing the FAR course of the CPA of the CPA licensure examination?
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3.) How does the exposure to foreign and computerized based questions

on ACCA F3 affect the candidates performance in the CPALE?

Hypothesis

There is no significant relationship between the ACCA F3 examination

results and the Financial Accounting and Reporting CPALE results.

Scope and Limitations of the Study

Academic performance plays a vital role in passing the CPA licensure

examination. While there are several factors linked in passing the CPALE, this

study will focus on the effects of taking internationally-recognized certification

program, particularly the the ACCA examination, since one of the reasons why

examinees have a hard time in the actual licensure examination is due to the lack

of preparation in answering questions based from international authors. One of

the examinations offered by the ACCA certification, is the F3 examination ​which

covers the underlying principles and concepts relating to financial accounting that

evaluate the candidate’s technical proficiency in the preparation of basic financial

statements and the use of double-entry accounting system. ​Likewise, the present

study will focus on the consequences of taking the ACCA F3 examination to a

candidate’s Financial Accounting and Reporting performance in the CPA

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licensure examination. The data will be gathered through survey questionnaires,

which will be administered to Far Eastern University graduates of year 2019 who

earned a degree in Bachelor of Science in Accountancy, and took the CPA

licensure examination conducted last October 2019. From those students, the

study will focus on those who took the ACCA F3 examination during their

undergraduate studies last 2018. Hence, the study will focus on those who both

took the ACCA F3 examination and CPALE regardless whether they are passed,

failed or conditional.

However due to the constraints pursuant to the provisions of Data Privacy

Act of 2012, the survey questionnaire will collect sensitive personal information

like the respondents’ scores in both the ACCA F3 examination and FAR CPALE.

Likewise, consent from the respondents will be obtained and with their discretion,

the proponents will allow their names or identities to remain anonymous.

Moreover, due to various constraints in conducting this study, data presented

herein were limited to the interpretations extracted from the survey

questionnaires.

Significance of the Study

The Association of Chartered Certified Accountants certification is being

offered not just to professionals, but also to undergraduate students. This paper

will explore the effect of taking the undergraduate certification to ones’

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performance in the Certified Public Accountant Licensure Examination. In doing

so, this study will promote the development of the accountancy profession. The

following will benefit from this study:

● Accountancy Students. They will be able to recognize the significance of

taking undergraduate international certifications and distinguish it with

CPALE. This will foster globally competency that will contribute to the

quality of the CPA profession in the country.

● Board of Accountancy (BoA). This study will assist BoA in their various

undertakings and initiatives as well as in reforming the educational and

licensure system with the objective of meeting the requirements and

demands of global standards.

● Internal Auditing and Accountancy Department. The analyzed data

can be used by different colleges and universities, in their efforts and

initiatives in improving their accountancy program.

● Proponents of the Study. ​Through this study, the proponents would be

able to determine and comprehend the cause and effect of taking the

ACCA F3 examination in the FAR CPALE.

● Future Researchers. ​This study would aid future researchers interested in

conducting a similar or related study.

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Operational Definition of Terms

For better understanding, the meaning of the terms used in the study are

the following:

● ACCA – or Association of Chartered Certified Accountant, is an

international Accountancy body that provides international qualifications

requiring 13 examinations pertaining to different subjects such as Financial

Accounting and Reporting (OpenTuition, 2020).

● ACCA F3 examination ​- pertains to the Financial, Accounting and

Reporting examination offered by the ​Association of Chartered Certified

Accountants. This refers to the certification examination taken by the

respondents during their undergraduate studies at Far Eastern University.

● CPALE – or Certified Public Accountant Licensure Examination, is a

written technical examination held last October 2019 provided by the

Philippine Regulatory Commission for CPA Aspirants which covers 6

subject areas including Financial Accounting and Reporting (Cruz, 2019).

● Examinees - pertains to Bachelor of Accountancy graduates for the year

2019 and took the CPALE October 2019, regardless of their pass, fail or

conditional remarks.

● Examination Score- ​pertains to the numerical average of the correct

answers to the overall number of items given in an examination. The

numerical equivalent acts as an indicator of the examinee’s performance in

a test.
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● FAR ​- or Financial Accounting and Reporting, is one of the Certified Public

Accountant Licensure Examination topics which is also included in the 13

examinations offered by the ACCA certifications.

● IFRIC - or International Financial Reporting Interpretations Committee, is

an interpretative body of the International Accounting Standards Board

which can explain proper interpretation and application of the Standards

including the concepts in Financial Accounting and Reporting (IFRS

Interpretations Committee, 2020).

● IFRS – or ​International Financial Reporting Standards, is a set of standards

issued by the International Accounting Standards Board (IASB) that can be

encountered in a Financial Accounting and Reporting section in a CPA

Licensure Examination​ (​Palmer, 2020).

● Respondents​- pertains to students who have taken the 2018 ACCA F3

examination during their undergraduate studies at Far Eastern University

and those who took the October 2019 CPALE, regardless of their pass, fail

or conditional remarks.

● Predictive - ​a term to describe how the consequences of the ACCA F3

examination can forecast the performance Financial, Accounting and

Reporting of CPALE.

● Validity - ​pertains to the reasonableness of the ACCA F3 examination’s

ability to predict the performance in the Financial, Accounting and

Reporting of the CPALE.

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● Predictive Validity - refers to the degree to which the ACCA F3

examination can reasonably predict the performance ​in the Financial,

Accounting and Reporting of the CPALE.

REVIEW OF RELATED LITERATURE

This chapter provides an overview and synthesis of pertinent resources

that are relevant to the present topic.

Modernization on the language of business

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The business world continues to expand and are being challenged by

globalization, technology and innovation, disruptive business models and political

shifts. Accountancy has become a medium of registering and reflecting the

economical-financial standing of an organization, a system that has adapted to

the needs of users, and a means of management and communication that

assures integration and its exchange with the external environment (Valeriu,

2008). Accountants need to evaluate the implications of these transformative

factors to businesses and to develop the necessary skills, continually learn and

adapt to be relevant to the business landscape (Burao, 2016). According to ​Nur

Maula, Trisnawati, and Anggara (2008), ​accounting has experienced so many

developments that it caused the elimination of boundary phenomenon or “world

with no boundary”. Recently, accounting has new accounts like ‘foreign

exchange gain/loss’ and a taxation issue ‘transfer pricing’ that came from

transactions between countries.

In an article by O’Brien (2016), he wrote professional development needs

to coincide with changes through practice so that individuals can challenge and

renew their expertise. The Board of Accountancy changed the required CPD

units from 60 to 120 to comply with International Federation of Accountants

(IFAC). In 2004, IFAC issued International Education Standard 7 (IES 7):

Continuing Professional Development: A Program of Lifelong Learning and

Continuing Development of Professional Competence. It required IFAC's

member bodies to commit to the continuous learning of professional accountants

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and to put in place mandatory continuing professional development (CPD)

schemes for all accountants, with expectation that each of them will comply.

Through the schemes, it was mandatory for professional accountants to

progress and maintain competence significant to their responsibilities (IFAC,

2004).

As explained by Lindsay (2016) in her new framework for professional

learning, while learning relating to the development and maintenance of

professional competence remains a priority, learning that relates to career

adaptability helps professional accountants be more successful in their current

roles, gain new roles and search for diverse and longer careers. In this approach,

they will benefit personally and professionally and along with the public interest.

Audit is continuously evolving as technology expands and clients expect

more. Therefore audit professionals must continually acquire new skills to meet

the high standards of audit quality. Moreover, as businesses become more

complex, the auditing and accounting profession must continue to expand its

horizons on giving value to its clients. According to a report by Forbes Insights

(2017), organizations are increasingly expecting more from auditors to help in

identifying and addressing critical issues. With the firm’s corresponding limits on

resources, they need to be flexible and adapt to the demands of its reporting

environment (Ernst & Young, 2016). ​Globalization has led to a more complex

business structure coinciding with an increasingly complex reporting environment

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therefore firms must comply with the constant flow of regulatory and accounting

requirements.

Aside from changing regulatory environments, the continuous

improvement of technology helps in solving audit problems. Technology,

combined with the expertise of a skilled auditor, allows firms to make the right

business decisions. According to ​KPMG (2017, as cited in Forbes Insights,

2017), clients expect their auditors to keep track of trends and issues. It is not

enough to have the latest technology, but auditors must also be able to mine and

communicate data that is important to clients. Moreover, an approach to

education and training will instill a culture of innovation among audit

professionals.

As the development of audit is essential for underpinning and enhancing

economic growth, the financial statement audit is a gateway to a stronger

accountancy profession. With corresponding complexities of business, the

language of the business itself must continue to develop. Therefore, the audit

profession will undoubtedly continue to change, and only those who evolve and

innovate will succeed​ (Forbes Insights, 2017).

Certified Public Accountant Licensure Examination

Selection is a normal process of nation-building and a driver of

competition. Likewise, standardized assessments in the form of licensure

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examinations influence the overall competency of examinees based on the

standards set by a regulatory body and the relevant skills needed by a

profession. Moreover, a license may constitute a standard mark of professional

competence recognized by the government and public that enhances and

maintains occupational standards and ethics.

Certified Public Accountant Licensure Examination is a written technical

examination provided by the Philippine Regulatory Commission through the

Philippine Accountancy Act of 2004. The examination evaluates the competence

and proficiency based on the standard entry-level skills needed by the

profession. The examination covers six subject areas including Management

Advisory Services (MAS), Advanced Financial Accounting and Reporting

(AFAR), Taxation, Regulatory Framework for Business Transactions (RFBT),

Auditing, and especially Financial Accounting and Reporting. A general average

of 75 percent and grades no lower than 65 percent in any of the said subject

areas is required to pass the licensure examination and earn the Certified Public

Accountant title ​(Cruz, 2019).

Many changes have been included in the 2020 Financial FAR examination

of the CPALE, which include the recent amendments on Philippine Financial

Reporting Standards (PFRS) 9 concerning credit losses in financial instruments

and PFRS 3 amendments on business combinations. In addition, there is a

recent proposal regarding the process of taking the CPALE which will become a
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two-level examination, the core licensure examination for certified accountants

and the advanced licensure examination for certified public accountants and

certified professional accountants. The proposal also requires examinees to earn

three years of meaningful experience before taking the second level of the

examination. Moreover, non-accountancy degree holders of accounting

technology and management accounting will be eligible for the examination, in

contrast to the previous CPALE which was exclusive for Bachelor of Science in

Accountancy degree holders. (Professional Regulation Commission Board Of

Accountancy, 2016)

​Factors affecting performance in CPA licensure examinations

In the recent October 2019 CPALE, only 2,075 out of 14,492 examinees

passed resulting in a 14.32% passing rate. According to an article of Manila

Times (2019), the recent October 2019 CPALE results showed that out of 474

colleges and universities offering accountancy in the country, 200 of which

received a zero performance rating.

One of the critical success factors of an institution is the quality of its

accountancy graduates which passed the CPALE. Based on the Professional

Regulation Commission (PRC) performance list of universities based on the

national passing rate, Far Eastern University (FEU) has a downward trend on its

performance based on the last 5 examinations. The significance of the

examination to the large number of candidates and to the accounting profession

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indicates a need to determine the identifiable factors highly correlating with the

success of passing the CPALE.

There are several factors influencing the performance of an examinee in

the licensure examinations. According to ​Chua (2018), demographics such as

families with low monthly income and good GWA or scholar of certified public

accountant licensure examination takers comprises of great influence in passing

the licensure examination, and school factors give rise to moderate influence.

Meanwhile, enrolling in prestigious review schools are positive factors and as to

personal attributes such as age and gender bears no relationship at all. In

addition, the findings suggest a correlation between scores on pre-review course

to the student’s GPA. This was supported by findings of Herrero (2015) wherein

candidates with higher grades have greater success on the CPALE. As Dunn

and Hall (2009) c​ommented, a lesser quality of candidates would tend to

represent a relatively larger proportion of repeat candidates.

Several studies dwell on the factors which affect students’ academic

performance where researchers correlate academic performance with inherent

attributes and behavior of the students. According to ​Gajghat, Handa, & Himte

(2017, as cited by Sibanda, Iwu, & Benedict 2015), f​irst-year and senior students,

and lecturers consider self-motivation and self-discipline as a factor in

succeeding academic examinations. Chua (2018) found that there is a great

relationship between intrinsic motivation and the overall performance of the

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students'. Moreover, students who yearn for meeting their goal perseveres more

as a result of their extrinsic motivation. As a result, extrinsic motivation provides a

promising outcome in taking up the CPALE. Moreover, high confidence levels,

learning styles and techniques directly correlates with students’ performance.

According to the constructive alignment theory of ​Biggs (1991, as cited by

Juwah & Sundari 2011), m​atching the objectives of assessments to the

objectives of the course through curriculum development is one way to enhance

student learning. In relation to the recent study of Casanaan et al. (2013) which

found that adapted changes in the Accounting Standards or Generally Accepted

Accounting Principles (GAAP) taught in the undergraduate curriculum are

becoming less relevant or worse non-admissible nowadays both in the licensure

examination and even in the accounting practice. ​Delos Angeles (2019) ​further

explained that undergraduate curriculum congruency influences the performance

of candidates in their licensure examinations. Curriculum is defined as the list of

subjects and topics that will be discussed throughout the course. A recent study

of Herrero (2015) showed that the CPALE performance can be improved through

refinement of the curriculum to a more focused streamlined subject matter,

maintaining the rigorous process of the retention policy in the accountancy

program rather than being lenient about it, the adaptation of more challenging

problems and updated type of questions in the review centers, and strengthening

the in-house review schools administer. However, in contrast with the findings of

Tan (2015), ​a university or course’s curriculum does not significantly affect the
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performance of a candidate in the CPA licensure examinations. Moreover, it was

concluded that provisions on instruction and administration support to examinees

correlate more to licensure performance.

Relevance of Certifications

Certification is commonly associated with one's personal achievement.

According to ​Gallagher & Blegen (2009 as cited by Wakim & Cheong, 2017),

obtaining a certification is an affirmation of acquired knowledge and continued

competency. Every profession has a wide range of certifications that are offered

and recognized globally. ​Lawrence (2018) mentioned that obtaining such

qualification relevant as to what the industry needs is a worthwhile investment

which provides a foundation towards an individuals’ growth. In fact, during the

course of study, a professional can strengthen his skills which may increase

efficiency and effectiveness of performance in the workplace. Moreover,

continuing education helps a professional to enhance his or her expertise in a

particular subject matter that is valuable in practice.

Hargadon and Fuller (2019) ​argue that attainment of one or more

certifications is a way for students to differentiate themselves and put them in a

competitive advantage over those who do not have any certification at all.

Likewise, in certain countries, having such enables the student to further

demonstrate their acquired skills which is useful in obtaining another milestone of

their career, taking a professional license examination. Hargadon and Fuller

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(2019) further mentioned in the study that state examination provided by

professional regulatory body such as Professional Regulation Commission in the

Philippines pertains only for the purposes of obtaining a minimal level of

competency as compared to those certification examination conducted in

attaining professional recognition which provides a more proficient level of

competence. Enhancing the core competency of students lies in the quality of the

teachers employed in an institution, imposing strict requirement to students,

creates a positive impact which are helpful in preparing them in taking the

licensure examination ​(Boyd et al., 2007 as cited by Bagadion & Tullao, 2018).

The results of the policies implemented by the institution are manifested in the

performance of the students in the actual licensure examination. It was found out

in the study that teachers who do well in the professional examination

administered by the state somehow give the student an extra motivation to take

further step in their career in pursuit of additional knowledge.

As stated in an article of ​Undercover Recruiter (2017), ​obtaining a certain

certification during bachelor’s degree is an advantage for a new professional

seeking for a job. In addition, certificates gained from a popular, well-respected

and established institution is more beneficial compared to an unknown provider.

Dumont (2018) ​mentioned that recruitment managers notice a job applicant's

qualification through certificates which have been acquired. It is also a

manifestation of applicant’s commitment to excel in the industry. Another

advantage of being globally certified is an opportunity to elevate employees’

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standing within the company and to receive a competitive compensation scheme

coupled with bonuses.

CPA certification program offers an opportunity to its students to fully

understand the course taken during bachelor’s degree and to lessen confusion in

choosing the right designation. This also provides an experience to students in

order to have a glimpse in meeting the desired requirements of the industry

(Ryan, Lento & Sayed, 2012). Certified Management Accountant (CMA) and the

Association of Chartered Certified Accountants are two of the leading

professional programs globally recognized. Association of Chartered Certified

Accountants, offers a diploma in accounting and numerous ACCA

competency-based certifications. According to ​Metha (2019), i​nvesting in an

accounting certificate provides several benefits such as, (1) cost-effective in

obtaining knowledge, (2) opportunity to work abroad, and (3) networking

opportunities. Specializing in a certain field of study is a matter of time, effort and

commitment. In an article by Guthrie (2019), ACCA offers an option to choose

between a diploma in accounting or obtaining certification in a specific course of

study. The difference between the two alternatives is the span of time to finish

the course since a diploma in accounting requires a full-time and longer

commitment than obtaining ACCA certificates which is based on the progress

and dedication of the professional.

ACCA Certification
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Association of Chartered Certified Accountants, is an international

accountancy body which is recognized as the largest and fastest-growing global

professional accountancy body in the world. It has already reached 170 countries

and has gathered over 500,000 members and students. This body provides

highly respected and valued international qualifications which covers all areas of

business such as business taxation & law, audit, management accounting,

business ethics, and most importantly financial statements. A maximum number

of 13 examinations should be passed in order to qualify and earn the ACCA

certifications. These examinations are very related to Accountancy and Business

degree in universities and there are possibilities that one can be exempted from

some of the ACCA examinations depending on the policy and discretion of the

university, particularly its business department ​(OpenTuition, 2020). ​ACCA

provides flexible examination schemes which leads this body to gain thousands

of members from different countries. Most of the ACCA qualified professionals

originated from India which made Indian employers such as Ernst and Young,

Deloitte, PriceWaterhouseCoopers, and KPMG to be very fortunate to hire these

ACCA members ​(Proschoolonline, 2020).

Sakshi (2018) stated that the ACCA course curriculum was developed to

match international accounting standards. It aids on being conversant in the

rules, laws and policies of one’s country as well as international standards and

thus making the member more valuable in an organization because of the

technical expertise one had possessed. Moreover, having an international

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certification like ACCA gives an extra key for climbing the corporate ladder as it

became a norm among employers to secure a top tier position. According to

EduPristine (2018), it was mentioned that ACCA is a great option if you are an

accountancy aspirant seeking to scale heights of professional success in this

domain. In addition, an exhaustive skill set would earn faster increments and

promotions compared to MBA or similar degree holders. Hence, members can

play an active role in designing organizational strategies as their knowledge

would not be limited to finance and accountancy only.

Being a public accountant necessitates the understanding of sustainability,

challenging the current manifestation of integrated reporting, and designing new

accounting practices that change the mindset, culture, or behavior of managers,

policy-makers, and society to create social changes. In effect ACCA had

embedded Integrated Reporting in its curriculum, and discussed future

curriculum development such as the challenges associated with sustainability.

Integrated reporting required integrated and holistic thinking, multi-faceted

stewardship, prospective thinking, strategic information, longer time-frames,

wider disclosures, transparency, and principles orientation. According to ​Owen

(2013, ​as cited by ​Correa Ruiz 2013), ​the adoption of integrated reporting to the

accounting curriculum by ACCA may seem to be difficult but is still feasible.

Legolas (2016) ​added that the syllabus of ACCA focused entirely on global terms

wherein the applicability may vary because every economy has different issues

to address with. Hence, the local accountants are preferred over those who have
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ACCA certification because they have first-hand knowledge of such matters.

Therefore, integrated reporting must be re-constructed sustainably to form a

basis of ‘accounting FOR sustainability’ education ​(Correa, 2013).

The challenge for accounting educators is to design and deliver programs

that reflect leading edge sustainability theories and practices as well as critically

examining the role of different theories and accounting practices that contributed

to society’s unsustainability which ACCA had been addressing progressively.

Correa (2013) further added that accountants need to understand the world and

businesses from a sustainability perspective and to make it possible, the

accounting profession must aspire to influence businesses (in a sustainable

direction) and accountants should demonstrate an authentic understanding of

stakeholder engagement, materiality, boundary-setting, and multi-disciplinary

team-working.

ACCA in the Philippines

As a member of IFAC, ACCA seeks to enhance the technical accounting

education framework by conducting computer-based qualification examinations

that are recognized technical certifications valued by several countries including

the Philippines (Philippine Institute of Certified Public Accountants, 2018).

According to Tan-Torres (2018) the “Expanding Horizons” (EH) initiative of the

BOA was launched last June 14, 2014 which represented various undertakings

and plans of BOA to pursue mandates prescribed in the Accountancy Law

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(Republic Act 9298) which aided in the regulation of the practice of accountancy.

The Asean Mutual Recognition for Accountancy Services was also signed in

November 2014. As part of this initiative, a partnership agreement between BOA

and ACCA was then signed last August 13, 2015 to combine efforts towards

sharing best practice and expertise, holding high level conferences, events and

forums in the Philippines and working with universities to ensure that their

programs meet international standards. Their partnership also extended to

developing a comprehensive Continuing Professional Development program to

ensure that finance professionals will remain updated regarding the latest

developments and standards in accountancy.

ACCA F3 Examination

In order to gain the ACCA Qualification and to qualify as an ACCA

member, candidates must complete thirteen examinations and the Professional

Ethics Module, and should gain relevant practical work experience. One of the

examinations include Financial Accounting (ACCA F3 Examination), which

covers the underlying principles and concepts relating to financial accounting that

evaluate the candidate’s technical proficiency in the preparation of basic financial

statements and the use of double-entry accounting system. Furthermore, the

ACCA F3 examination concentrates on evaluating proficiency on the accounting

process of recording, processing, and reporting business transactions and events

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that are essential skills to the preparation and interpretation of financial

statements​ (Association of Chartered Certified Accountants, 2019).

Undergraduate students are encouraged to take the ACCA F3

examination to enhance and evaluate their technical proficiency in Financial

Accounting and Reporting (FAR). In addition, the examination may serve as a

competency-based examination for undergraduates in preparation for the

Philippine Certified Public Accountant Licensure Examinations since it covers

more than half of the topics included the CPALE May 2019 syllabus (​Association

of Chartered Certified Accountants, 2019). ​However some of the questions would

apparently unfavor the ACCA materials unless the student had already covered

the entire scope of the CPALE and serve only as a practice examination to

expand knowledge ​(Legolas, 2016). Therefore, ​Sheil (2017) suggested that

ACCA certifications should not be the case for undergraduates whenever

considering to top the examination or advance in the field of accounting and

should further consider the significance of the proficiency in their respective

careers. Likewise, ACCA allows candidates to choose the respective ACCA

diploma or certification that is fit for their career.

ACCA F3 examination may also serve as a mock examination that may

serve as a practice for the actual CPALE condition. According to Busch (2015),

mock examinations let students improve knowledge and recall information and

allow revision strategies to prepare for final examinations. Based on a study

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conducted by ​Karpicke and Roediger (2006), ​they observed that students who

took a mock examination scored higher than those who didn't take it. Moreover,

mock examination results can identify target areas that need further improvement

necessary to improve performance. In the present study, the researchers will

conduct an analysis on the consequences of taking the ACCA F3 examinations

to Financial Accounting and Reporting CPALE performance.

Synthesis and Relevance of the Reviewed Literature

Globalization has led to a more complex business structure. The

implementation of the Mutual Recognition Agreement (MRA) for accountancy

services intends to ​promote the flow of relevant information and exchanging

expertise, experiences and best practices within the Association of Southeast

Asian Nations (ASEAN). The MRA seeks to provide mobility of accountants in

the ASEAN by providing minimal restrictions in their pursuit of employment

opportunities within the ASEAN region ​(Tan-Torres, 2019). ​As a result, the

licensure examinations are now adopting foreign-based questions instead of the

traditional theory concepts and problems which are retrieved from local authors,

in order to adapt to the relevant and recent developments of accounting.

Previous studies have indicated that examinations are effective methods

to actively and frequently test memory retention when learning new information.

The idea of using practice tests to recall information is a more effective learning

strategy for long-term retention than repeated study (Roediger, 2012). However,
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studying is more effective in testing when the delay before an examination is

short and with a greater delay, experiences that build retrieval strength like

practice tests confer greater benefit than studying. ​Given the broad topics

covered by the CPALE and the limited amount of time for preparation, previous

studies suggest that it is more effective to recall previously discussed information

during one's undergraduate studies through practice examinations. Furthermore,

examinees must familiarize themselves to foreign-based questions since it is one

of the reasons why examinees have a hard time in the actual licensure

examination (The Summit Express, 2019). Accordingly, the aforementioned

literature suggests that the ACCA F3 Examination may be considered as a mock

examination for the ​FAR section of the CPALE since it covers more than half of

the topics indicated in the May 2019 syllabus (​Association of Chartered Certified

Accountants, 2019). ​Moreover, it also provides ​foreign-based questions

regarding the international accounting standards that may appear in the CPALE

questions​.

The researchers aim to determine the consequences of the ACCA F3

examination through its predictive extent on one’s performance in the FAR

licensure examination. The aforementioned related literature and studies indicate

that international certifications and mock examinations provide a positive effect in

an examinee’s performance. Likewise, the ACCA F3 examination may be

considered as a mock examination that may influence the examinee’s

performance in the FAR section of the CPALE. Moreover, the ACCA F3

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examination ​is considered valid when the test measures what it claims to

measure (Professional Testing Inc., 2006). Therefore, the researchers will

determine the consequences of the ACCA F3 examination through its ability of

predicting the FAR licensure performance.