The CPA Evolution initiative aims to transform the CPA licensure model to recognize the rapidly changing skills and competencies the practice of accounting requires today and will require in the future. It is a joint effort of the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA).
The AICPA Governing Council and the NASBA Board of Directors have both voted to support advancing the CPA Evolution initiative. NASBA and the AICPA will move forward with implementing a new core + discipline CPA licensure model, with the goal of launching a new Uniform CPA Exam in 2024.
As part of the CPA Evolution initiative, the leadership of NASBA, in collaboration with the AICPA, determined that the Uniform Accountancy Act Model Rules around educational requirements for licensure needed to be updated to incorporate additional subjects and skills reflective of the evolving profession, and create more consistency. Those changes, which were endorsed by AICPA’s Board of Directors, were exposed by NASBA for public comment from May 26, 2020 through August 31, 2020. NASBA expects to issue final model rules this fall. You can find the exposure draft here.
Over the course of three years, NASBA and the AICPA heard from over 3,000 stakeholders from across the profession to gather input on how to transform CPA licensure. Their feedback indicated:
Thanks to your valuable insights, we are advancing a new model to transform CPA licensure.
NASBA and the AICPA carefully reviewed all of the feedback received, studied other professions’ licensure models and considered multiple options for updates to the licensure model before developing the below approach, which we expect to launch in 2024. We believe this approach is responsive to stakeholder input and propels the profession into the future.
The new model is a core + disciplines licensure model. The model starts with a deep and strong core in accounting, auditing, tax and technology that all candidates would be required to complete. Then, each candidate would choose a discipline in which to demonstrate deeper skills and knowledge. Regardless of chosen discipline, this model leads to full CPA licensure, with rights and privileges consistent with any other CPA. A discipline selected for testing would not mean the CPA is limited to that practice area.
For more information about the proposed model and why our two organizations believe it is the best approach for CPA licensure, read the FAQs below and download a summary of the initiative here.
The AICPA Governing Council and the NASBA Board of Directors voted to support the CPA Evolution initiative. Our goal is to launch a new Uniform CPA Exam in January 2024.
NASBA and the AICPA will continue to work collaboratively with stakeholders from across the profession to implement this new licensure model. We are eager to move forward with a core + discipline model to meet the needs of the profession and the public.
Q: What is CPA Evolution? (+) Show answer
The CPA Evolution initiative is transforming the CPA licensure model in recognition of the rapidly changing skills and competencies practice requires today and will require in the future. It is a joint effort of the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA).
Q: Why does CPA licensure need to evolve? (+) Show answer
A: The environment in which CPAs operate is changing at a rapid pace.
As complexity in the marketplace has increased, the body of knowledge required for newly licensed CPAs has expanded. For example, today there are three times as many pages in the Internal Revenue Code, four times as many accounting standards and five times as many auditing standards as there were in 1980.
Procedures historically performed by newly licensed CPAs are being automated, offshored or performed by paraprofessionals. Now, entry-level CPAs are performing more procedures that require deeper critical thinking, problem-solving and professional judgment, and responsibilities traditionally assigned to more experienced personnel are being pushed down to the staff level.
While technological innovations are creating new opportunities for CPAs, they are also serving to expand the requisite skillset for new licensees, who need a deeper understanding of systems, controls and data analysis to execute their responsibilities.
As a result, newly licensed CPAs need to know more than ever before to meet the needs of practice. However, the Uniform CPA Examination ® (“Exam”) and education requirements can only cover so much information in our current model for CPA licensure.
All of these changes have led NASBA and the AICPA to consider if the CPA licensure model should be updated to continue to equip newly licensed CPAs with the skills and competencies needed as practice evolves. NASBA and the AICPA believe the profession must embrace these changes to maintain its relevance and support evolving business and firm needs while continuing to serve the public interest.
That’s why NASBA and the AICPA are working to evolve licensure requirements for new CPAs: so the profession can continue to effectively meet the needs of organizations, employers and the public.
Q: What are some examples of the skills new CPAs will need? (+) Show answer
A: NASBA and the AICPA have heard from stakeholders across the profession that new CPAs increasingly need deeper skills and knowledge in areas such as, but not limited to:
Q: Who else is involved in the CPA Evolution project? (+) Show answer
A: CPA Evolution is a profession-wide effort. Along with NASBA and the AICPA, state CPA societies, state boards of accountancy, academia, firms of all sizes and CPAs in all areas of practice from across the country are vital partners in preparing the profession for the future. Their collaboration and support in implementing the new CPA licensure model will help the profession remain strong and relevant while protecting the public interest in a constantly changing business environment.
Q: How have NASBA and the AICPA been working with these stakeholders? (+) Show answer
A: In 2018, NASBA and the AICPA sought feedback on an initial licensure concept from stakeholders across the profession. The two organizations also formed a working group of stakeholder representatives to provide further perspective.
After reviewing this feedback, NASBA and AICPA leadership drafted five guiding principles to inform the creation of a new licensure model. Throughout spring and summer 2019, NASBA and the AICPA sought input on the principles from stakeholders throughout the profession, academia and the regulatory community. NASBA and the AICPA held discussions with a wide variety of stakeholder groups, met with NASBA and AICPA committees, spoke with state boards of accountancy and state CPA societies and asked for input from AICPA members and state board licensees.
In June 2019, NASBA and the AICPA launched a joint website, EvolutionOfCPA.org, where they shared the guiding principles with the broader profession. The two organizations launched a communications campaign asking stakeholders to share their feedback by August 9, 2019.
Throughout Fall 2019 and Spring 2020, NASBA and the AICPA held over 20 more discussion groups with stakeholders from across the profession.
NASBA and the AICPA have heard input from over 3,000 stakeholders thus far..
Q: What feedback did NASBA and the AICPA receive? (+) Show answer
A: The number one comment received was support for the need to change licensure. Most respondents also supported a greater emphasis on technology skills and knowledge as a prerequisite for licensure. Respondents said CPA licensure should emphasize and be built around a strong core of accounting, auditing, tax and technology.
NASBA and the AICPA also heard that evolving licensure would bring needed skills to the profession, position the CPA for the future and protect the public interest.
The feedback included questions about the specifics of implementing a new licensure model, such as how core CPA knowledge would be defined, how education requirements might be modified and how licensure changes would be effected in the current legislative environment.
The original driver behind CPA Evolution was the impact of technology on the profession. In the feedback they received, NASBA and the AICPA also heard an underlying theme that, while greater technological expertise should be required for licensure, there are other factors disrupting the profession as well. The effort to evolve the licensure model should focus more broadly than just attracting those with technological and analytical skills to become CPAs; it should be about ensuring the CPA license remains fit for purpose to assure continued public protection. NASBA and the AICPA needed to think bigger.
Q: What did NASBA and the AICPA do with that feedback? (+) Show answer
NASBA and AICPA leadership carefully reviewed all of the feedback received, studied other professions’ licensure models and considered multiple options for an updated licensure model. NASBA and AICPA leadership then used this feedback and research to develop a new approach to licensure that is responsive to stakeholder input while still propelling the profession into the future.
Q: What licensure models did NASBA and the AICPA consider? (+) Show answer
A: Some of the possibilities NASBA and the AICPA considered were:
Stretching CPA Exam and curriculum requirements to cover more material with less depth
Since the body of knowledge required of newly licensed CPAs continues to grow—but, given the current licensure model, Exam and education requirements can only cover so much information—some stakeholders suggested revising the Exam and curriculum to cover a greater range of material with less depth. However, this could water down licensure requirements, and candidates could know less about what matters most.
Increasing Exam and curriculum hours
Some stakeholders suggested increasing the content covered by licensure through methods such as adding a fifth section to the Exam or adding additional educational requirements. However, this approach could increase barriers to entry for the profession and would not be sustainable over time as increases in complexity cause the body of knowledge to continue to grow.
Discrete paths to licensure based on specialties (CPA—Audit, CPA—Tax, etc.)
Another suggestion was a licensure model with distinct paths to licensure for different types of CPAs, resulting in different designations such as CPA-Audit and CPA-Tax. However, in their feedback, the profession’s stakeholders emphasized that maintaining one unified CPA license was a priority, and that all CPAs should share a robust common core.
Two-tier licensure model
NASBA and the AICPA discussed a licensure model used by some international accountancy bodies in which CPAs are split between certificate holders and licensees who meet different requirements. However, past experience with this model in the United States showed that it can create market confusion and make certificate holders feel like second-class citizens.
Medical and legal licensure models
NASBA and the AICPA discussed licensure models similar to those of the medical and legal professions, in which greater experience or education is required before licensure. However, international accounting licensure models with a similar approach have seen higher dropout rates and lower enrollment due to the barriers to entry.
Professional Engineer (PE) licensure model
NASBA and the AICPA then considered the Professional Engineers’ (PEs) licensure model. Before licensure, engineers take two exams:
Given the stakeholder feedback NASBA and the AICPA received, the research conducted and the other options considered, this approach showed the most promise for evolving CPA licensure.
Q: What is the new model for CPA licensure? (+) Show answer
A: NASBA and the AICPA believe the following approach is responsive to stakeholder input while still moving the profession forward for the future.
The leadership of NASBA and the AICPA are moving forward with a core + discipline licensure model. The model starts with a robust core in accounting, auditing, tax and technology that all candidates will have to complete. Then, each candidate will choose a discipline in which to demonstrate deeper skills and knowledge. Regardless of a candidate’s chosen discipline, this model leads to a full CPA license, with rights and privileges consistent with any other CPA. A discipline selected for testing does not mean the CPA is limited to that practice area.
The anticipated disciplines reflect three pillars of the CPA profession:
Q: Why are NASBA and the AICPA recommending a core + discipline licensure model? (+) Show answer
A: This model provides numerous benefits for positioning the profession for the future amidst an ever-changing business environment:
Q: What will be included in the core? (+) Show answer
A: NASBA and the AICPA anticipate that not all of the content covered by the current CPA Exam and curricula will be considered “core” under the new licensure model. Instead, certain advanced content in the current core could be incorporated into the disciplines.
The specific content of the core and disciplines will be determined by state board education requirements and a CPA Exam practice analysis. As a part of its ongoing efforts to maintain the validity and reliability of the Exam, the AICPA conducts periodic practice analyses to gather information about the current state of the profession and the work of newly licensed CPAs. These research initiatives inform potential changes and updates to the CPA Exam and maintain its alignment with professional practice. An upcoming practice analysis will determine the specific content and skills tested in the Exam for the core and the disciplines.
Q: What percentage of the Exam will fall under the core vs. the disciplines? How many educational hours will be required for each topic? (+) Show answer
A: Ultimately, the allocation of content of the core and disciplines will be determined by revisions to state board education requirements and through a CPA Exam practice analysis. As a part of its ongoing efforts to maintain the validity and reliability of the Exam, the AICPA conducts periodic practice analyses to gather information about the current state of the profession and the work of newly licensed CPAs. These research initiatives inform potential changes and updates to the CPA Exam and maintain its alignment with professional practice.
As part of the CPA Evolution initiative, the leadership of NASBA, in collaboration with the AICPA, determined that the Uniform Accountancy Act Model Rules around educational requirements for licensure needed to be updated to incorporate additional subjects and skills reflective of the evolving profession and create more consistency. Those changes, which were endorsed by AICPA’s Board of Directors, are currently exposed for public comment through August 31, 2020. You can find the exposure draft here.
Q: Will candidates who become CPAs under this model be able to practice outside of their chosen discipline? (+) Show answer
A: Yes, given they have the required competence.
Regardless of chosen discipline, this model leads to a full CPA license, with rights and privileges consistent with any other CPA. This includes rights to sign audit and attest reports, as the core will give every candidate a strong base in accounting, auditing, tax and technology.
However, ethical requirements dictate that CPAs only undertake those professional services that they can reasonably expect to complete with professional competence. Competence means the CPA or their staff possess the appropriate technical qualifications to perform the professional service and that, as required, the CPA supervises and evaluates the quality of work performed.
Q: What is next for CPA Evolution? (+) Show answer
A: The AICPA Governing Council and the NASBA Board of Directors voted to support the CPA Evolution initiative. We will now move forward with implementing the core + discipline licensure model. Our goal is to launch a new Uniform CPA Exam in January 2024.
NASBA and the AICPA will work collaboratively with stakeholders from across the profession to implement this new licensure model. We are excited to move forward with this licensure model to meet the needs of the profession and the public.
Q: What is a discipline? (+) Show answer
A: Under the new licensure model, the Uniform CPA Examination will consist of three core sections and three discipline sections. A candidate will be required to pass three core sections and one discipline section to meet the Exam requirements for licensure. The discipline sections provide an opportunity for candidates to demonstrate a deeper level of knowledge in one pillar of the profession but will not prevent candidates from practicing outside that discipline once licensed. The three disciplines are anticipated to be: Business Analysis and Reporting, Tax Compliance and Planning, and Information Systems and Controls.
Q: Are the names of the disciplines final, or could they change?(+) Show answer
A: The names of the disciplines and the Exam sections in the core could change as we move through the implementation process. That said, we expect the subject matter covered by the core and the disciplines will remain unchanged, with a core that focuses on accounting, audit, tax and technology; and disciplines focused on more advanced tax, accounting, analytics and information systems concepts. In the future, this model would allow for the flexibility to add or remove disciplines to reflect the reality of practice and protect the public interest.
Q: After I take the core, am I a CPA? Are the disciplines optional?(+) Show answer
A: Completing a discipline is not optional. All candidates will be required to pass the three sections of the core AND one discipline section to meet the Exam requirements for licensure.
Q: How long will the new CPA Exam be? How many sections does a candidate have to pass?(+) Show answer
A: We expect the Exam will still be no more than 16 hours and candidates will still be required to pass four sections in total (including their chosen discipline). The length of each section of the Exam will be determined through a CPA Exam practice analysis. The AICPA Examinations team maintains the professional currency of the CPA Exam through periodic practice analyses that review changes happening in the profession today and into the future, and essential knowledge/skill testing for the protection of the public interest.
Q: When will the new CPA Exam be ready? (+) Show answer
A: Our goal is to launch the new Exam by January 2024.
Q: How are NASBA and the AICPA helping universities and colleges prepare for the new licensure model? (+) Show answer
A: We are committed to develop the resources educators need in order to position their students for success. We have been actively working with the academic community to identify the resources that will aid them in this transition, such as model curricula, bridge resources focused on technology integration and a model internship framework. We are conducting a gap analysis to determine the differences between what is being taught today and what will be tested on the Exam under CPA Evolution.
Q: How will this affect current CPA candidates?(+) Show answer
A: Current CPA candidates will still be able to sit for the current CPA Exam until the launch of the new Exam. A transition plan will be developed for candidates who have started, but not completed, the CPA Exam process by January 2024.
Q: Will candidates know which discipline to pick? (+) Show answer
A: Our research has indicated that candidates are comfortable selecting an area in which to focus as early as their junior year of college. In March 2020, we conducted a survey of more than 600 university students and recent graduates. Ninety percent (90%) of respondents told us they have either selected a focus area or would feel comfortable choosing a focus area.
It’s important to note that while disciplines allow candidates to demonstrate a deeper level of knowledge in one area, CPAs who achieve licensure under this model will not be restricted to practice in their selected discipline. These new CPAs will have all the rights and privileges that all CPAs have today and can practice in any area so long as they possess the required professional competence.
Q: How do you expect the COVID-19 situation to impact the CPA Evolution initiative and timeline? (+) Show answer
A: NASBA and the AICPA are fully committed to the CPA Evolution initiative and the projected timeline. Although the COVID-19 situation is fluid; we believe this initiative is too important to delay.
Since 1908, the National Association of State Boards of Accountancy (NASBA) has served as a forum for the nation’s Boards of Accountancy, which administer the Uniform CPA Examination, license more than 650,000 certified public accountants and regulate the practice of public accountancy in the United States. NASBA’s mission is to enhance the effectiveness and advance the common interests of the Boards of Accountancy in meeting their regulatory responsibilities. The Association promotes the exchange of information among accountancy boards, serving the needs of the 55 U.S. jurisdictions. NASBA is headquartered in Nashville, TN, with a satellite office in New York, NY, an International Computer Testing and Call Center in Guam and operations in San Juan, PR. To learn more about NASBA, visit www.nasba.org.
About the AICPA
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with more than 429,000 members in the United States and worldwide, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting. The AICPA sets ethical standards for its members and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, builds the pipeline of future talent and drives professional competency development to advance the vitality, relevance and quality of the profession. To learn more about the AICPA, visit www.aicpa.org.