Evolving CPA

CPA Evolution

Evolving initial CPA licensure requirements to build a future-ready

profession for a rapidly changing marketplace

Background

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).

In summer 2019, NASBA and the AICPA developed five guiding principles to inform the creation of a new licensure model. We sought feedback on these principles from stakeholders across the profession.

What We Heard From You

More than 2,000 of you responded to the guiding principles. Thanks to your valuable insights, we are one step closer to a solution for evolving CPA licensure. The original driver behind CPA Evolution was the impact of technology on the profession. From your feedback, we heard an underlying theme that, while greater technological expertise should be required for licensure, there are other factors disrupting the profession as well. You told us the effort to evolve the licensure model should not solely be focused on 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. We needed to think bigger and approach this challenge with a different mindset.

Proposed New Model for CPA Licensure

NASBA and the AICPA carefully reviewed all of the feedback we received, studied other professions’ licensure models and considered multiple options for updates to the licensure model before developing the below approach. We believe this approach is responsive to stakeholder input while still propelling the profession into the future. This is a draft licensure model and is not considered final.

We recommend 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.

This proposed model:

  • Enhances public protection by producing candidates who have the deep knowledge necessary to perform high-quality work, meeting the needs of organizations, firms and the public.
  • Is responsive to feedback, as it builds accounting, auditing, tax and technology knowledge requirements into a robust common core.
  • Reflects the realities of practice, requiring deeper proven knowledge in one of three disciplines that are pillars of the profession.
  • Is adaptive and flexible, helping to future-proof the CPA as the profession continues to evolve.
  • Results in one CPA license.
...

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.


What’s Next

Through the end of 2019 and into 2020, we’ll gather more feedback on this approach from stakeholders and build out more details of the model. We aim to finalize an approach for an updated CPA licensure model in summer 2020. After the approach is finalized, we will establish implementation plans for what is expected to be a multi-year effort.

CPA Evolution is still a work in progress. NASBA and the AICPA will continue to work collaboratively with stakeholders from across the profession and beyond to develop a solution that best meets the needs of the profession, organizations, the regulatory community and the public.

If you’d like to share your thoughts on the proposed licensure model, you can email Feedback@EvolutionofCPA.org.

CPA Evolution FAQs

Q: What is CPA Evolution? (+) Show answer

A: The CPA Evolution initiative aims to transform 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:

  • Critical thinking
  • Professional judgment/skepticism
  • Problem-solving
  • Understanding of the business (including systems, controls and risk)
  • Data management and analysis
  • Performance of System and Organization Controls (SOC) engagements

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 evolving the 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.

More than 2,000 stakeholders gave feedback on the guiding principles. NASBA and the AICPA heard input from:

  • 250 AICPA Council members
  • 30 state CPA society boards of directors
  • 300 state board members and executive directors
  • CPAs working in firms of all sizes
  • Over 100 academics, including leaders from the American Accounting Association (AAA) and the Association to Advance Collegiate Schools of Business (AACSB)
  • NASBA and AICPA committee members
  • Federal regulators
  • Accounting students
  • Technology experts
  • CPAs working in business, nonprofits and government
  • Young professionals

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:

  • One to demonstrate their fundamental knowledge of math, physics and other core concepts
  • One to demonstrate their knowledge in their chosen discipline (e.g., chemical engineering, industrial engineering)
Regardless of discipline, all successful candidates ultimately earn the same PE license. For example, a civil and a mechanical engineer would pass similar fundamental exams, then pass separate discipline exams, ultimately earning the same PE license. To sign and stamp an engineering plan, PEs must adhere to their Code of Ethics, and only do so when they are competent.

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 new licensure model is NASBA and the AICPA recommending for the CPA profession? (+) Show answer

A: At the AICPA’s Fall Council Meeting and at NASBA’s Annual Meeting in October 2019, NASBA and AICPA leadership presented the feedback they heard from stakeholders and shared a draft model. NASBA and the AICPA believe the following approach is responsive to stakeholder input while still moving the profession forward for the future.

Similar to the approach of the PE licensure model, the leadership of NASBA and the AICPA are recommending a core + disciplines licensure model. The model starts with a robust core in accounting, auditing, tax and technology that all candidates would have to complete. Then, each candidate would 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 would not mean the CPA is limited to that practice area.

The proposed disciplines reflect three pillars of the CPA profession:

  • Business reporting and analysis
  • Information systems and controls
  • Tax compliance and planning


Q: Why are NASBA and the AICPA recommending a core + disciplines licensure model? (+) Show answer

A: This proposed model provides numerous benefits for positioning the profession for the future amidst an ever-changing business environment:

  • It enhances public protection by producing candidates who have the deep knowledge necessary to perform high-quality work, meeting the needs of organizations, firms and the public
  • It is responsive to feedback, as it builds accounting, auditing, tax and technology knowledge requirements into a robust common core
  • It reflects the realities of practice, requiring deeper proven knowledge in one of three disciplines that are pillars of the profession
  • It is adaptive and flexible, helping to future-proof the CPA as the profession continues to evolve
  • It results in one CPA license

Q: What would 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 would be determined based on an analysis of current curricula and the necessary changes to adopt the new licensure model. These changes would result in revisions to the Uniform Accountancy Act Model Rules for education and may require changes to state board education and licensure requirements. A CPA Exam practice analysis would follow. 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. Once a new Exam model is adopted, a practice analysis will commence to determine the specific content and skills tested in the Exam for the core and the disciplines.


Q: What percentage of the Exam would fall under the core vs. the disciplines? How many educational hours would be required for each topic? (+) Show answer

A: The proposed model is a framework for licensure and is in the theoretical stage, so details have not been established yet. Throughout the end of 2019 and into 2020, NASBA and the AICPA will build out more specifics for this revised licensure model for consideration. Ultimately, the allocation of content of the core and disciplines would be determined by revisions to state board education requirements and through a CPA Exam practice analysis.


Q: Would 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: How will this affect current CPA candidates? (+) Show answer

A: NASBA and the AICPA aim to finalize an approach for an updated CPA licensure model in summer 2020. After the approach is finalized, the two organizations will outline implementation plans for what is expected to be a multi-year effort. If a core + disciplines model is the final approach, NASBA and the AICPA anticipate this effort could include changes to the Uniform Accountancy Act and Model Rules, implementation of new educational requirements and the design and implementation of a new Uniform CPA Examination. As such, it will likely be several years before candidates are subject to the new licensure requirements.


Q: How would this model affect accounting education and curricula? (+) Show answer

A: NASBA and the AICPA are working closely with the academic community to determine a best path forward. This includes identifying possible conforming changes to the Uniform Accountancy Act and model rules for consideration by the state boards of accountancy, and then working with educators to explore how curricula might evolve.


Q: What is next for CPA Evolution? (+) Show answer

A: Through the end of 2019 and into 2020, NASBA and AICPA will gather more feedback on the draft model from stakeholders and build out more details for a possible revised licensure model.

The two organizations aim to finalize an approach for revisions to the CPA licensure model by summer 2020. After the approach is finalized, the two organizations will establish implementation plans for what is expected to be a multi-year effort.

CPA Evolution is still a work in progress. NASBA and the AICPA will continue to work collaboratively with stakeholders from across the profession and beyond to determine a solution that best meets the needs of the profession, organizations, the regulatory community and the public.




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About NASBA

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.