Ed. note: The following is a guest post by Liz Kolar, EVP at Surgent. It is of particular interest to professors, accounting department chairs, other assorted academics, and any accounting profession meteorologists who are tracking the perfect storm of pipeline problems and a completely revamped CPA exam debuting in just a few months. Comments from all perspectives are welcome.
Unless you’ve been living under a rock, you’re likely aware that the accounting profession is experiencing two simultaneous massive shocks.
These shocks (of our own making) are the collapse of the CPA candidate pipeline and launch of the CPA Evolution, the largest change to the CPA exam since the exam went digital nearly 20 years ago. Of course, exam computerization came after current partners had to walk uphill in the snow both ways to make it to and from the client site. Cue the violins.
Many of the discussions about these shocks have come in a vacuum, mentioning either the pipeline collapse or CPA Evolution, but the two are as connected as they’ve ever been. I’ve seen several major changes to the CPA exam throughout my career as a practicing accountant, university professor and exam prep instructor: 1994 – the exam was shortened from 19.5 hours to 15.5 hours; 2004 – the exam went from a paper and pencil exam to a computerized exam; 2011 – the first Computer-Based Testing Evolution (CBT-e) was enacted and the task-based simulation format was introduced; 2017 – higher order skill testing was introduced; and 2018 – Excel was added as a tool, along with a new user experience. Now, we’re facing the CPA Evolution’s arrival in 2024. Typically, each major change is accompanied by a tsunami of candidates rushing to test before the change takes effect and is followed by a drought of candidates signing up to test immediately after the new exam changes go live. We’re seeing more of a ripple than a tsunami this year and could be in for a massive drought in 2024 and 2025.
It doesn’t look like our profession or university accounting programs should expect the calvary to be coming anytime soon. It’s likely the well-documented pipeline shortage is going to get worse initially because of the CPA Evolution, not better. Fewer candidates are racing to test before the changes despite Business Environments and Concepts (BEC), having the highest pass rate and being a known evil, being eliminated as a section in 2024. This is why Surgent, along with the editors at Going Concern, are encouraging any candidates to sit for BEC (and AUD!) before 2024.
Exam review providers like Surgent know what BEC questions and writing prompts look like. We know how to prepare candidates. And so do professors in accounting programs. The discipline sections replacing BEC are all new: Business Analysis and Reporting (BAR), Tax Compliance and Planning (TCP), and Information Systems and Controls (ISC). Exam candidates must pass one of the three to be licensed. We don’t know how these disciplines will be scored. And the AICPA will need time to collect data and assess performance; it’s why they are bringing back testing blackout periods in 2024.
The change to a discipline-focused CPA exam brings us to the most pressing pipeline issue – the impact that the CPA Evolution will have on enrollments in accounting programs at colleges and universities. Sure, we need more CPA exam candidates to have more CPAs, but given licensure requirements, we need even more collegiate accounting students to have more CPA exam candidates. Exam candidates are in the middle of the funnel. Because the current licensure model requires 150 hours of collegiate credit and a set number of hours in accounting specific courses, accounting students are the top of the funnel and the most important piece. If we don’t get more students to major in accounting, there is no pipeline.
The CPA Evolution may squeeze the funnel even more for colleges and universities by further focusing the exam on more analytical and information systems topics such as digital acumen, data literacy, data analytics, and internal control structures. Do these sound like subjects many accounting students learn in their typical accounting courses? They aren’t in most traditional curricula.
And most universities outside of elite schools and large state schools don’t have the resources or ability to integrate them into the curriculum before 2024. Many universities typically need four to five years, at a minimum, to implement large scale curricula changes. That’s just the nature of the academic beast. There’s already only one semester remaining between now and the CPA Evolution. So, students will be left to rely on exam review providers, YouTube, and other self-study programs to fill the gaps.
At least students knew the old exam matched their coursework. The new one will in time, but that will take four to five years, not the 18 months’ notice the industry was given.
Many accounting degree programs have gone largely unchanged this millennia apart from some added Excel assignments and data analytics courses sprinkled in. And getting those changes took years! The CPA Evolution ignores the pace of play in higher ed. Universities were given less than three semesters to adapt their curricula and prepare their students – the future CPA candidates – and single biggest pipeline fillers. Many have not adapted and are questioning if they even can. Others are wondering which courses they need to change – implying they’ve not responded at all. I believe all the schools want to give their students the best education to match the needs of the profession. But, higher ed is more bureaucratic than the federal government. It does move. It just doesn’t move in three semesters. It rarely moves in three years.
I’ve been in the accounting industry my entire life. I want the profession to succeed. I want the pipeline to grow. Change is often good for industry. But too much change, too quickly, can make our already difficult problems even worse. I worry the CPA Evolution solves a future problem in preparing students for the needs of the firms but comes at the cost of fewer people available to the firms. We could have had both if we gave universities and students the time to prepare.