There’s an ongoing shortage of accountants. Fewer students are pursuing careers in accountancy, and fewer people are sitting for the Certified Public Accountant (CPA) exam. In 2021, 72,000 people took the CPA exam, whereas just 67,000 sat for the exam a year later in 2022.
The National Association of State Boards of Accountancy (NASBA) and the American Institute of CPAs (AICPA) have banded together to respond to this recent shortage. In particular, they’ve drafted a proposal that would allow accountants to become CPAs with fewer schooling hours.
These groups published revisions to the Uniform Accountancy Act in late 2024. If adopted at the state level, the changes could address the CPA shortage. Here’s what you need to know about these new developments.
What Changes Are Being Proposed and Why?
The NASBA and AICPA have proposed that accountants should be eligible to sit for the CPA exam if they have a bachelor’s degree in a relevant field and two additional years of relevant work experience. Per the proposed changes, applicants would need a year of general experience and a year of “certified work experience” in a field such as:
- Tax advising
- Financial advising
- Management advising
- Accounting
Under the current rules, accountants typically need 150 college credit hours, which equates to a fifth year of higher education, to sit for the CPA exam. Some critics suggest that this discourages interest in the accounting profession and makes it harder for those with bachelor’s degrees in finance and accounting to become CPAs.
If the changes are adopted, individuals interested in obtaining a CPA license could opt to complete the fifth year of college courses or complete two years of relevant work experience. By creating an additional pathway to CPA licensure, the AICPA and NASBA hope to bring more people into the field and end the shortage.
Which of the Big Four Accounting Firms Are Supporting the Changes?
KPMG was the first to publicly back the 120-credit hour licensure pathway in early October 2024, and Deloitte followed suit about a week later. Thus far, the other two big four accounting firms, Ernst & Young and PricewaterhouseCoopers, have not officially supported the move.
Previously, Deloitte voiced concerns about cutting the credit requirements because doing so could lead to inconsistencies in state licensure rules. Detractors of the changes also worry that these inconsistencies could negatively impact “mobility” or the ability of a CPA to work in any state.
Deloitte’s concerns are understandable, as it is a national accounting firm and wants to ensure its CPAs enjoy continued mobility. As long as the proposed changes include automatic mobility, it is likely that Deloitte will continue supporting the move.
The AICPA and NASBA will need the Big Four’s backing if they hope to get all state licensure agencies to adopt these amendments. Proposed changes in a few states have already stalled, including those in Minnesota. However, proponents did not have backing from the big four during the initial push for new licensure rules.
Implications for State CPA Societies
While national bodies and at least two of the big four firms are in favor, the adoption of these changes requires approval from state CPA societies and boards of accountancy. Each state holds the authority to set its own licensure requirements.
Uniform adoption is essential for maintaining consistency and mobility across all jurisdictions. State boards must carefully evaluate the proposed changes to ensure they uphold the profession’s standards while addressing the current talent shortage.
Potential Challenges Created by the Changes
The main anxiety surrounding the proposed changes is preserving the rigor and integrity of the CPA designation. The 150-hour requirement was first established to demonstrate that CPAs go beyond the bare minimum college education requirements to become experts in the field. Critics are concerned that the change might dilute the skill of CPAs.
Another major concern is that the changes could negatively impact the mobility of CPAs unless all state societies adopt the new rules. This could limit accounting professionals’ ability to explore new career opportunities outside of their home states and hinder the activities of national firms like the big four.
How Your Organization Can Adapt
Step one involves closely following the proposed changes to the education requirements for CPA licensure. If the changes are approved in your state, it could create a new pathway for accountants to obtain CPA licensure, which may have trickle-down benefits for your finance team that resolve efficiency and talent challenges.
However, your organization must continue to vet the skills and experience of accounting and CPA professionals during the hiring process. This step is vital in finding the right fit for your team.
As a finance leader, you play a crucial role in adapting to this transition and ensuring that the CPAs are compliant with the new standards while also upholding high professional standards.
