Mundane accounting processes are now done by computers. Creating less need for accountants, especially entry-level CPAs and bookkeepers. Also, the pandemic spurred the demand for contactless transactions, further aggravating things. There’s increased automation, data analytics and Blockchain incorporation in the industry. Accountants are expected to analyze big data and provide data-informed advisory services.
Firms are hiring more IT professionals than accounting graduates to perform these data-oriented roles. This is due to a skill gap that the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA) are now taking steps to close.
This article explains the measures being taken to curb the effect of the technological disruption of the accounting space as well as a new licensing model to ensure CPAs are equipped with updated skills. However, before we jump into the proposed solutions.
Why is this change happening?
The 21st century has seen some of the most radical tech inventions. Some of these inventions may wipe out certain accounting jobs. Entry-level tasks like bookkeeping, account reconciliation and balance sheet analysis are facing the highest risks. Research by McKinsey & Co estimates that about 50% of the work done by professionals like accountants could be automated.
However, as automation eliminates some jobs, it will often create new work vacuums that require human efforts. Now, entry-level CPAs are expected to take on responsibilities usually assigned to more experienced professionals. This is because the mundane tasks previously assigned to new-entry professionals are now automated.
Now, they are tasked with duties that include understanding and controlling of business systems, organization controls, and data analysis. The current CPA licensure model does not take into account all these emerging business needs. Also, the preparation process does not provide a new CPA with the skill set required to thrive in an automated world. Finding entry-level CPAs unable to perform these tasks, companies are hiring programmers and data analysts or outsourcing instead.
The gap between the licensed skills and those needed in the workplace is deeply concerning. So, TCP co-chair, Stephanie Saunders (CPA), believes that the current situation is a wake-up call for an alignment of the CPA Exam and education with “what’s really happening in practice today.”
A look at the new CPA licensure model
To retain relevance and move forward with the changing times accountants need additional skills. These skills will enable them to work efficiently and remain valuable to organizations as well as clients.
Understanding that the current model has become largely inadequate, the NASBA and AICPA founded the CPA Evolution Initiative to create an improved licensure model that recognizes the new technical skills and competencies that the profession now requires.
To decide on key components of the new licensure model, both organizations sought opinions from within and outside the industry. They reviewed feedback from over 3,000 stakeholders And also examined the updated licensure models for other professions.
The new CPA licensure model, effective from January 2024, is a core-plus discipline model. The model has both compulsory and optional disciplines. The core section delves deeply into accounting, taxation and auditing and also recognizing the tech-induced changes in those areas. The plus section comprises three disciplines, including information systems and controls, business analysis as well as reporting and tax compliance and planning.
A candidate must satisfactorily complete the core section and one plus discipline to earn a license under the new model. The skills that CPAs will get from this new model will enable them to perform data analysis, manage systems and offer data-based financial advice.
The NASBA and AICPA strongly believe that the intended changes are responsive to the needs of clients in today’s tech-dependent world. They are positive that it will protect the industry’s interest while preparing newly licensed accountants for the future. The new model is more flexible to allow further changes in the future.
The new CPA licensure exam
Having set in motion a new licensure model, the NASBA and the AICPA did not simply advocate for an extended exam, rather they intended to come up with a new exam. The exam will test candidates based on the content stipulated by the measures of the new licensure model.
Every candidate will take the core discipline tests for accounting, auditing and taxation. Afterward, a candidate is free to choose a test category in which they feel they can display greater knowledge and competence. The available choices are information systems and controls, tax compliance and planning, and business reporting and analysis.
The discipline chosen for extended testing does not limit a licensed CPA from practicing in their areas of specialization. So, it doesn’t indicate that the CPA is incapacitated in those other areas. Regardless of the candidate’s preferred area of elective competence, they are awarded a complete CPA license. The opportunities, rights, and privileges that they earn are the same as that of any other CPA.
The new CPA licensure exam is expected to hold for the first time in January 2024 while the old model will be slowly phased out through a couple of years.
The Future of Public Accounting
Technology in the accounting space has come to stay and it is in the best interests of accountants to adapt. The prediction that the accounting software market will see a 6% increase by 2024 implies that the industry will become “techier.”
This is good news for accountants who have the right skills needed to remain relevant as a new accounting ecosystem emerges. Embracing technology has made accountants more productive and businesses more profitable. About 58% of accountants have expressed a desire to improve their work through artificial intelligence.
A new license model is truly an essential step for the accounting profession to hold on to its relevance.
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Additional Resources
Could We Be In for a Change in the CPA Licensing Process?
The Top Accounting Academic Programs in the U.S.
Ten States Where Accounting Professionals’ Salaries Go Further
