The notion of washback is a prominent concept in language teaching and testing. Examinations are considered to be powerful determiners of what goes on in classrooms and their results can play a significant role in setting educational standards of an institution. Moreover, awareness of the possible negative or positive consequences of certain modes of assessment can enhance teachers' as well as learners' level of self-direction in the process of language acquisition. The connection between testing, teaching and learning is addressed by a number of terms. Washback is one that refers to the influence of tests on teaching and learning. The aim of this study was to investigate whether the centralised final examinations in Payame Noor University (PNU), Iran's distance education university, have any washback effect on teaching and learning and if so what kind of washback it might take. After conducting a pilot study, data collection was done by using two questionnaires and an observation scheme. The data was analysed through descriptive statistics, Chi-square test, independent t-test, one-way ANOVA, and Pearson Correlation. The results indicated that PNU English and Foreign Languages (EFL) final examinations have washback effect on teaching and learning and this washback effect is more positive than negative. The study also investigated the factors that contribute to positive or negative effects including difficult aspects of teaching in distance education EFL and revealed that the effect of final examinations and the effect of such factors on teaching methodology is the same at this university.