The Hindu Business Line : Forget CA after five failures midway

IN A YEAR from now, two-lakh students currently pursuing the CA course would be pushed out from the system, and their common sin would be not passing PE-II (earlier Intermediate level) exam within the allotted five attempts. Call it a `five-strikes-and-you-are-out law' or a relentless Siberian march, what is sad is many students may not know they would be falling off the CA precipice soon if they fail in the exams.

Conservative estimates peg the figure at 1,50,000, that is, the likely number of students belonging to the earlier stream who would be affected seriously in May 2005 if they don't clear the exam.

While they would have completed their articleship, they would have nothing to claim as degree because of not passing the mid-way exam, PE-II, the counterpart of the old `Intermediate'. For the Institute of Chartered Accountants of India, they are chaff, not fit to be retained in the education system.

Since the five-attempt rule applies to new students too, reckoning from November 2002, an approximate half-a-lakh of them, would get jettisoned in November 2004, if one were to go by the current pass rates.

And for every semester thereafter, a like number would face a similarly sealed fate, assuming enrolment to continue as now.

One simple message for these castaways is this: "Forget CA." How these stranded students are going to pick up the broken bits of their failed dreams and piece together their lives is something for sociologists to enquire into, just as much as ICAI-watchers may extrapolate the revenue dent in the Institute's accounts when exam receipts dwindle because of shrunken numbers taking their exams.

History

In the report of the Committee for Review of Education and Training (1998), the council of the ICAI analysed the need for timely exit for unsuccessful candidates joining the chartered accountancy course.

It was felt that students completing the articles but not successful in the examinations should be provided an opportunity for withdraing at an early stage.

From October 1, 2001, the ICAI amended the regulations to the effect that articleship can be taken up only after passing the PE II (earlier Intermediate) examination.

This is despite the fact that nearly 63 per cent of the students who responded were in favour of starting the practical training after the foundation (Currently PE I) exam. By this process, the committee felt that there will be uniformity of students who will join the course and they also will have the potential to complete the course.

How the backlog builds up

To overcome the problem of the "huge backlog" of unsuccessful students, the committee imposed five consecutive attempts as restriction for passing the PE II course against no restriction in the earlier system.

However, no such restriction has been imposed at the final stage. The basic question is that whether the restriction of five attempts will really enhance the possibility of students successfully completing the course.

For this, it will be better to analyse the performance of the Intermediate as well as final students from 1992 onwards. The the backlog position as at the end of March 31, 2003, is presented in the accompanying table (Source: Annual reports of the ICAI).

A look at the table indicates that the backlog has been increasing because of the output being always less than the input.

However, it is necessary to analyse the figures further to address the following issues:

Would the current system, in any way, enhance the quality?

What would be the effective success rate?

Is the restriction of the number of attempts to five at the PE II stage too rigid?

What was the average duration within which a student completed the CA course in the earlier system?

Will it really reduce the backlog at the PE II as well as final stage?

Under the earlier system, a student registering for articleship is normally eligible to write the Intermediate examination after a gap of one year from the date of registration of articleship. Most of the registrations used to be from July to March. For example, students who register between April 1, 1991 to March 31, 1992, would be eligible to write the November 1992 and May 1993 examinations at the earliest.

Therefore, students who pass both the groups at these examinations will be the ones who would have taken at least two attempts from the date of their enrolment.

Further, the same set of students who pass this examination would be eligible to write the final examination in May 1994 and November 1994 respectively. The the input/output from 1992 onwards is presented in the table `How many finish in the first attempt'.

Not everybody passes in the first go

From the table `For some students one attempt is not enough', one can conclude that 14 per cent of the students complete Intermediate in two attempts and 8 per cent of them who enrol complete the CA course within three years. This brings us to the issue as to the timeframe within which students would clear the course ultimately.

Further, what is the proportion of such students and what is the backlog? For this, it is necessary to analyse the backlog table little more deeply.

A further analysis of the backlog indicates that 50 per cent of the students complete the course within five years effectively (proportion of students who pass Intermediate x proportion of students who pass Final, that is, 60 per cent x 80 per cent). This is on the ratio of the number of students at the end of five years compared with the opening backlog.

This is worked out on the `optimistic' assumption that without any further enrolment, how many students would clear within five years.

It can be seen that around 60 per cent of the students who enrol for Intermediate complete the same within five years, including the articleship period. That means the number of attempts is around 10. Hence, under the current system, if the number of attempts is restricted to five, around 40 per cent of the students will alone complete the PE II exam.

This means that 20 per cent of the students who would otherwise have the opportunity to complete later will not be able to complete the course.

Even the students who pass will have to wait for a minimum of three years before they take they Final exam. Overall, under the current system it can be seen that 40 per cent of the students who enrol for PE II will have to wait for a minimum of six years before they write the Final. The fruitful time of students is thereby wasted. On the other hand, if the students are allowed to do the articleship side by side, they would have an opportunity to complete the course within four years and thereby enter into effective practice or employment.

It is therefore necessary that the ICAI should think of reverting to the original system of articleship.

No `exit' for failed finalists

The problem of backlog cannot be solved by restricting the number of attempts. The backlog issue should have been addressed not at the Intermediate but Final level.

Reduction of the backlog can be achieved more by changing the pattern of the examination and evaluating the practicalities. That would be a better move on the part of the ICAI.

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