CHAPTER 7

Grading and Scoring the

Computer-based CPA Exam

THE GRADING AND SCORING PROCESS

Think positively! That’s how the CPA exam is currently graded and scored. This chapter
is written under the assumption that the current grading model is also used for the
computer-based test (CBT). As of the publication date of this supplement, the AICPA
has not yet formally discussed the model. They have only hinted that the exam will
continue to be positively graded. Why would your students in Intermediate Accounting
care about how the CPA exam is graded?
Students tend to obsess about the grading process. Fear and doubt creep in whenever
exam grading is discussed. A standardized exam, like the CPA exam, is already
somewhat of a mystery. Students don’t know who wrote the exam, how the exam was
written, and what it looks like. Understanding how the exam is graded gives students
enough knowledge to put their fears at rest. When they know the process is fair, they
relax and concentrate more on the real task at hand – providing correct answers to exam
questions.
Recall, the financial accounting and reporting (FAR) section is 80% multiple-choice
and 20% simulations. All of the multiple-choice questions are graded by machine.
Students are very familiar with a multiple-choice question format. The real concern lies
with the format and grading approach for the remaining 20% of the exam – the
simulation section. See Chapter 4, The Simulation Component, for a detailed description

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of this new exam section. In general, the simulation component consists of three broad
question types:
1. Research
2. Communications
3. Problem Computation

All of the above question formats require some form of human grading. It is believed
that the grading process used to grade the essays and problems on the pencil-based exam
will be the same model used to grade the simulation component. It’s a positive approach.
What is meant by a positive grading approach? How does it work? In this chapter you
will learn to grade and report scores using a positive approach, similar to the AICPA.
Who knows, you might even discover a new method to inspire students to perform
better. Here’s how the process works.

The Grading Process – The Positive Approach

As students sit down to write the CPA exam, they begin with zero points. All points are
earned rather than deducted. This is a different grading process than most faculty use.
Usually, students are told the exam is worth 100 points. If they make mistakes, points are
deducted. When they receive their exam papers back, they see the number of points that
are deducted, rather than added. This is the negative approach. CPA exam graders have a
different mindset – they use a positive grading approach.
When faculty use negative grading, as opposed to positive grading, students worry
about what they are doing wrong. They hesitate during the exam and think about ways to
avoid the loss of points. As they encounter test areas where they are less prepared, they
become discouraged because they focus on the negative approach. They know that as
they make mistakes, they lose points. The whole idea of losing rather than earning has a
negative impact upon their confidence and their feelings about the exam and possibly the
entire classroom experience. They begin to look upon the examination process as unfair
and far too difficult. They begin to blame the professor for preparing an unfair exam.
Rigorous exams are necessary, especially when you plan to help students pass the
CPA exam. There is no sugarcoating the amount and depth of material tested in a
difficult area like financial accounting. With over 148 Statements of Financial
Accounting Standards and a great deal of formulas, definitions, and computations to
learn, the financial accounting area is a beast! The more rigorous the exam, the higher
level you expect your students to reach. You hold the bar high. Why not use a grading
process that expects them to climb up to the bar rather than fall from the bar?

The Benefits of Positive Grading

There are many benefits to a positive grading approach. First, your students see that
the process is built around earning points. You utilize a process to support a positive
event. You don’t plan to take points away from them. You want them to learn the
 Chapter 7 Grading and Scoring the Computer-based CPA Exam 71

material so they can climb the ladder and reach the top of the bar by earning points. You
designed a model built upon success rather than failure.
Second, students feel freer to respond when they know they won’t lose points for
saying or presenting the wrong thing. The positive grading approach allows them to
experiment. It allows them to respond without penalty. A key learning component is
experimentation. Let them present wrong answers. Give them room to make mistakes.
When you grade, simply ignore the wrong answer. Award points only for correct
answers.
Don’t ignore that wrong answer entirely. Read it to see what your students think.
Their wrong answers just might give you insight into what they have learned so far.
Their thoughts and mistakes can lead you to the areas where they are most confused.
Positive grading provides better feedback as the difficulty level of the technical
material increases. For example, students often experience trouble learning deferred tax
concepts. They just don’t get the whole picture. They don’t understand the basic premise
that the tax return will differ from the numbers reported on the financial statements. By
using positive grading, they feel free to share their ideas with you. The faculty member
can then see what the students’ basic level of understanding is. There is little chance of
understanding deferred taxes until the basic premise is understood. You can’t compute
the deferred tax liability until you realize what caused the book and tax differences to
begin with. Positive grading helps them to learn by developing building blocks of
knowledge. Begin with a base of fundamental concepts and proceed from that point on.
Try positively grading a financial statement preparation question. Give them the
numbers and the facts. Ask them to prepare a financial statement. Instead of deducting
points for wrong items, give them points for the correct items. Divide the points up into
categories. For example, just listing an item in the Statement of Cash Flows might be
worth one point per item. However, knowing how to compute the depreciation amount
when there has been a sale or disposal might be worth two to three points. The more
difficult the concept, the more points they earn. At the end of the exercise, their point
tabulation will tell them where they fall in relationship to easy points versus difficult
points. If a student earns most of his points by answering the definitional, one-point
concepts, then he knows he has mastered the basic understanding level, but he has not
yet mastered the application level.

The computer-based CPA exam tests 5 basic skills:

1. Communication
2. Research ability
3. Ability to analyze and interpret data
4. Judgment to evaluate decision making options
5. Ability to understand an issue. The ability to recognize and comprehend the
meaning and application of a particular matter.1

1
Structure, Length, and Examination Content Specifications for the Uniform CPA Examination, June
14, 2002, published by the AICPA, Page 8.
72 Chapter 7 Grading and Scoring the Computer-based CPA Exam

Discuss the above skills with your students. Design an exercise that assigns point values
to each of the above listed skills. Grade the exercise using a positive approach. Review
the results with the students, making sure they note the skill areas where they performed
poorly. In which skills did they earn the least amount of points? This is the area where
they must work to improve.
A positive grading approach helps students identify their own strengths and
weaknesses. Notice it is not your job to point out their weaknesses. They can see where
they are weak, as these are the areas where they failed to earn points. Hence it appears to
be less of a connection between you and the way you designed the exam. Students focus
more on the content instead of the exam format. They earn the points through their
knowledge and hard work. They know the material. Your grading method allows them to
be rewarded for what they have learned rather than penalized for what they don’t know.

Ignore the Wrong Information

Faculty, this is the hard part. Close your eyes and overlook the students’ mistakes.
However, learn from their mistakes. In the above example where a student is asked to
prepare a Statement of Cash Flows, you will see students list information that is not
presented on a Statement of Cash Flows. Train yourself to skip over it. Pause long
enough to see what they thought should be presented. This information might give you
some insight into the most common mistakes. In the next assignment, remind them about
those common mistakes. Encourage them to avoid making those same mistakes again.
The wrong information might also help you to identify test design flaws. Maybe it’s the
way you asked the question that elicited the response you received. Stay awake and note
your faults. Admit to test design flaws and correct the problem in the students’ favor.
They will admire you for it.

The Scoring Process – Tabulating that Grade

Life’s everyday activities aren’t always worth 100 points each. Each section of the
pencil-based CPA exam was worth 100 points. Perhaps the computer-based exam will
use a different scoring system. The AICPA has hinted at such a possibility. However, it
has been indicated that the positive grading process will continue. Get your students
accustomed to quizzes, exercises, and exams that are worth a point value less than 100.
Sometimes earning 47 points out of 47 points on an exam is wonderful. Help them to
focus on the concepts learned, rather than the point value. Earning 52% out of 90 points
just might be an excellent accomplishment. Put it in perspective and let them see a good
grade isn’t always based upon 100 points. After all, even passing the CPA exam isn’t
based upon 100%. The passing score is 75% or higher.
 Chapter 7 Grading and Scoring the Computer-based CPA Exam 73

How To Grade and Score Using a Positive Approach

Develop a grading guide. A grading guide simply lists the concepts, formula,
computational amounts, and procedures for which you will award points. It is the
positive list of points to be earned. Develop the list of gradable points when you write
the exam, not after the exam is administered. This approach helps to keep you focused on
the desired learning outcome.
The example below contains a grading guide for the preparation of a Statement of Cash
Flows. Students were asked to prepare the operating section of a Statement of Cash
Flows using an acceptable presentation method. Anything can happen. Students may
compute different amounts of cash generated or provided from operations? That’s the
point of the exercise. You are allowing them to be free. Compute what they can. List
what they can. Every time they do something right, they earn a point.
Students should see that you are willing to work through their logic. Students need to
see that their answers vary and that’s okay. The approach rewards them for what they did
right. They learn that there are different acceptable answers depending upon the
computed results. All too often, students are taught that there is one correct solution.
Here you are breaking that thought. You are showing them that real life varies. You are
also showing them that even though they make mistakes, you care enough about them to
take the time to think, read, and to consider their solution. Students will be impressed
with your dedication.

EXAMPLE:

Grading Guide for Statement of Cash Flows Exercise

Points to Awarded
Grading Concept Correctly Applied Earn Points
Proper headings and subheadings 1
OPERATING ACTIVITIES:
Net income from operations 1
Adding back increases in current liability accounts 3
Computing bond premium amortization 2
Deducting amount of bond premium amortization 1
Deducting decreases in current asset accounts 2
Ignoring the increase in the fixed asset account 1
Ignoring the decrease in bonds payable 1
74 Chapter 7 Grading and Scoring the Computer-based CPA Exam

TOTAL POINTS EARNED 12

Once the grading guide is developed, the actual grading process is quick. You simply
look for the points to be awarded. You can be as specific as you desire. For example, in
the line item above “adding back increases in current liability accounts” you could list
the three current liability accounts that increased by name and amounts and award a point
for each item such as:

• Accounts payable $60

• Unearned rent 50
• Accrued Salaries 40

Don’t feel as though you must grade everything. It’s ok to omit items from the grading
guide. Grade only the concepts that you want students to effectively demonstrate.
Positive grading is fun. Positive grading can be very effective and efficient. One thing
is for sure – very few professors use positive grading. You are sure to catch the students’
attention the first day of class when you explain your grading methods. This just might
be the change both you and your students need to re-energize the learning experience.
They will like it even more when you tell them you are helping them to prepare for the
CPA exam process. You are working to help them achieve an important professional
goal.

Grade Release
When do candidates receive their scores? Who releases the scores? The “when”
has not yet been determined. The AICPA has hinted that scores should be released much
quicker, perhaps within two to three weeks after the exam. The “who” remains the same.
The AICPA grades exams and releases the results to the National State Boards of
Accontancy (NASBA). NASBA in turn releases scores to the State Boards and the State
Boards release results to the individual candidates. Again, the AICPA has not shared the
detailed process with us. Look to the quarterly newsletter, The CPA Connection, for
more details.