Any reform of the current medical curriculum requires a reappraisal of the principles and practices of the evaluation system. The norm-referenced test which at this time is the primary method of evaluation was initially designed to rank order students for the purpose of selection. Difficulties arise when it is used, as it currently is for the assessment of competence. The norm-referenced test is often insensitive to instruction and, while it provides information regarding the relative strengths and weaknesses of students in comparison to their peers, it does not provide an estimate of the absolute level of performance achieved. In addition to promoting competition among students, the norm-referenced test is less suitable for programme evaluation. As it is the principal responsibility of a medical school to produce competent physicians and not to rank order them, it is more reasonable to compare student achievement to an external standard of performance or criterion. Criterion-referenced testing, then, is more suitable for the assessment of competence and, within this setting, percentage competency scores can be utilised when there is a need for the rank ordering of student achievement for the purposes of selection. It is recommended that criterion-referenced testing be the primary method of evaluation, as it best meets the objectives of the medical school by emphasising the achievement of clearly established external standards and, thereby, ensuring a high quality of performance.