Any high-stakes assessment that leads to an important decision requires careful consideration in determining whether a student passes or fails. Despite the implementation of many standard-setting methods in clinical examinations, concerns remain about the reliability of pass/fail decisions in high stakes assessment, especially clinical assessment. This observational study proposes a defensible pass/fail decision based on the number of failed competencies. In the study conducted in Erbil, Iraq, in June 2018, results were obtained for 150 medical students on their final objective structured clinical examination. Cutoff scores and pass/fail decisions were calculated using the modified Angoff, borderline, borderline-regression, and holistic methods. The results were compared with each other and with a new competency method using Cohen’ s kappa. Rasch analysis was used to compare the consistency of competency data with Rasch model estimates. The competency method resulted in 40 (26. 7%) students failing, compared with 76 (50. 6%), 37 (24. 6%), 35 (23. 3%), and 13 (8%) for the modified Angoff, borderline, borderline regression, and holistic methods, respectively. The competency method demonstrated a sufficient degree of fit to the Rasch model (mean outfit and infit statistics of 0. 961 and 0. 960, respectively). In conclusion, the competency method was more stringent in determining pass/fail, compared with other standard-setting methods, except for the modified Angoff method. The fit of competency data to the Rasch model provides evidence for the validity and reliability of pass/fail decisions. © 2021 Tehran University of Medical Sciences. All rights reserved.