ELE is one of several initiatives The Powers That Be have launched in response to the decline in CPA candidates that’s been underway since numbers peaked in 2016.

There is typically a flood of candidates ahead of major exam changes (like CPA Evolution that dropped at the start of this year), you can see this in the chart above as candidate numbers swelled in 2010 ahead of the large CBT-e change in 2011. However, Surgent’s Liz Kolar said in late 2023 that her CPA review company was “seeing more of a ripple than a tsunami this year.” Uh-oh.

Journal of Accountancy said in April that the ELE program had 38 participants. In a recent announcement, NASBA says ELE now has 105 students enrolled for this fall, representing more than 50 employers.

This is the list of ELE-registered employers as of October 2024:

Notice who is suspiciously absent from the above list: the four firms that employ the most accounting graduates on the planet. EY has its own 150-hour alternative called the EY Career Path Accelerator while PwC launched a pilot program with St. Peter’s University in New Jersey to offer a “work for credit” situation for their CPA aspirants.

Registration for the ELE’s spring 2025 semester is currently open until Jan. 1, 2025 and, as mentioned above, is now open to any accounting graduate who is “earning a paycheck from an employer not associated with the program.”

Here’s what NASBA said in their announcement:

“While we designed the program for accounting graduates and entry-level professionals, it’s gratifying to see participants from a diverse range of states, age groups, gender and ethnicities,” said Mike Decker, AICPA’s vice president of CPA examination and pipeline. “That’s a testament to the enduring value of the CPA credential, from the newest graduates to mid-career professionals.”

The ELE program is for individuals who have completed their bachelor’s degree and core accounting classes but possess fewer than the 150 credit hours required for licensure. Here’s how the program works:

• Full-time, employed accounting graduates can either join through an ELE-affiliated employer or sign up on their own.
• Program participants earn up to 30 university credits through online courses, and credit-hour costs are set at highly affordable rates.
• Participating employers are expected to support their employees, examples of which may include, but are not limited to:
  • flexible work schedule
  • tuition reimbursement
  • mentoring to help program participants work toward their CPA license
• The program is open to all employer types, including not-for-profit, businesses and government entities.
• Accounting graduates who sign up on their own rather than through participating employers may not necessarily have the same support or mentoring opportunities as those who have direct sponsorship.

IDK, this is smelling a little desperate no? 105 is 0.16% of the 67,336 people who sat for the CPA exam in 2022. Really making a difference there, guys.

Dear reader is invited to weigh in on the Experience, Earn & Learn program or any other pipeline initiative in the comments or via email.

The post The Powers That Be Are Getting Desperate For People to Do This Experience and Learn Thing appeared first on Going Concern.

Obviously the answer is that they’re sadists and they enjoy fucking with people.

For real though, people have been asking this since the CPA exam was computerized in 2004. The answer is not “because there’s a conspiracy to artificially inflate/deflate passing numbers to keep the credential prestigious” but that questions are weighted so it isn’t as simple as pass/fail for all questions and a passing score of 75 or above doesn’t translate into “75% or more correct answers.” Throw in the additional complication of moving to a new exam format this year and it takes even longer for The Powers That Be to ensure exams are being scored properly. “It is a necessary part of the high-stakes testing process,” says NASBA.

Here’s what the AICPA said about the current atrocious score release schedule earlier this year:

Whenever a new exam is launched, additional analysis is needed before candidate scores can be released. The schedule for score releases in 2024 is like 2011 and 2017, when new versions of the CPA Exam were launched. With the new CPA Exam Blueprints, there is a significant amount of new exam content, and this requires additional analysis after candidates have completed testing.

Ensuring the accuracy and fairness of the redesigned CPA Exam requires careful attention to detail, precision and the utmost care, which is why the AICPA has implemented score holds, which are brief delays in when scores are available following exam completion. These score holds help ensure consistency, fairness and statistical validation of the exam content.

Standard protocol for licensure exams with significant changes involves placing score holds so that test scores can be thoroughly reviewed and analyzed for accuracy and fairness. This process ensures that the test results are reliable and can be trusted to make crucial pass or fail decisions.

It doesn’t happen often but there have been cases of them getting scoring wrong. See this incident with FAR and REG exams taken between Q1 2011 to Q3 2012. But for the most part this tedious and annoying (to candidates) process works as intended. They’re really trying to avoid a hanging chad situation here (old people will understand the reference).

Hey, while we’re here, get a load of this guy.

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The post CPA Candidates Would Like to Know Why We Can Determine Presidents in a Day But Not CPA Exam Scores appeared first on Going Concern.

There are only a handful of closures listed as of today (October 9), two of which are in North Carolina due to Helene — testing center 1610 in Asheville and 1747 in Wilmington — and one at the NYC MegaCenter on Broadway that’s been closed since June after a burst pipe caused flooding and electrical damage at that location.

Two Tampa locations are closed — 0657 and 5006 — along with one in Fort Myers (5022), one in Longwood (5836), one in Sarasota (0606), one in Boca Raton (5134), and one in West Palm Beach (0603). These appear to be preemptive closures, more could certainly be added as the hurricane rolls through the state [Ed. note: see below for an update].

If your testing center is closed due to extreme weather, Prometric’s Outbound Team will reach out and you’ll be able to reschedule after 24 hours as long as you still have time remaining on your NTS. Contact NASBA with any concerns and they’ll take care of you.

Please be safe and don’t do anything stupid. The exam will still be there after Milton makes his way out to sea.

Update: A few more testing centers in Florida have been added to the list as of October 10.

• 0629 in Gainesville
• 0080 in Longwood
• 0610 and 0612 in Ft. Lauderdale

See the most current list on the Prometric closures page here.

The post PSA to Florida CPA Candidates: Milton Might Close Your Testing Center (UPDATE) appeared first on Going Concern.

These are CPA Evolution pass rates for the first and second quarters of 2024. If you have working eyes, you’ll see Tax Compliance and Planning (TCP) has an obscenely high pass rate; 82.36% for Q1 and 75.67% for Q2.

I’m actually glad they covered this in the webinar because I’d wondered myself if TCP was just crazy easy or what. 82.36% is ridiculous.

The benevolent overlords of the CPA exam like to say that pass rates are not indicative of easier or harder exams but rather a reflection of the preparedness of candidates for any particular testing window. Meaning pass rates are higher when candidates are better prepared. To demonstrate this, I lifted this graphic of CPA exam section pass rates from Gleim that covers 2010-2023. Pay special attention to the red line representing BEC (RIP):

Did BEC suddenly get hard in 2023 when it went from a 60% pass rate in 2022 to about 47%? No. I mean, probably not. What did happen was a ton of people rushed to take it before the year ended because any active candidate who hadn’t passed BEC by the launch of CPA Evolution in January 2024 was going to have to choose one of the new disciplines and ain’t nobody got time for that. We can safely assume that many of these people weren’t well prepared thus the section’s pass rate tanked.

Looking at pass rates for 2023, we see a very predictable drop off at the end of the year across all sections except AUD. Again, expected. It’s the end of the year, people are distracted by the holidays, and with CPA Evolution coming around the corner you had a higher number of candidates rushing to sit.

Do they make FAR even harder at the end of the year? Unlikely. But you do get a lot of people who have been dragging ass all year and want to squeeze in a section once it dawns on them that the year is almost over. Those people tend not to be overly prepared.

Back to the topic of TCP. In the NASBA webinar, Joe specifically said that TCP’s pass rate is higher — for now — because “a smaller number of well-prepared candidates did really well” on it in Q1. The AICPA even mentions this on their website:

In review and analysis of candidate performance across Discipline Exam sections in the 24Q1 testing window, the AICPA and the Board of Examiners noted TCP candidates were generally better prepared to take TCP than the BAR candidates were to take BAR and ISC candidates were to take ISC.

If you don’t know, BAR is FAR’s slightly less intimidating cousin. And contains cost accounting which so many people struggle with. So of course candidates didn’t kill it on BAR.

In the webinar, Joe added that he thinks TCP pass rates will go down over time as things normalize. Meaning the hardcore super studiers got it out of the way already, now it’s up to the average CPA exam candidates to take a stab at it.

All this to say, don’t take TCP just because it has the highest pass rate of the disciplines by far. Take it because you fucking love tax.

Related:

The post CPA Exam Tip: Don’t Choose TCP Just Because It Has an Insanely High Pass Rate Right Now appeared first on Going Concern.

Tinfoil hat – Personally feel like it’s a money grab, AICPA/NASBA/State Boards purposely don’t tell you what questions you got wrong and how they grade the tests so it’s not about application of what you know, it’s more about memorizing as much as you can while hopefully getting lucky on what questions you get on the exam. They’re hoping you fail at least once so they can make more money off it. If they cared about actually testing you on accounting principles and knowledge, they’d remake the test to be standardized, but with a large question bank, and inform you on how it’s scored and what you got right/wrong each time. But they don’t because they want you to keep taking it until you blindly pass.

The question they were responding to was why does FAR have such a terrible pass rate. For Q1 2024, FAR has the lowest pass rate of the core exam sections at 41.92%.

Core Exam Sections

• AUD: 44.63%
• FAR: 41.92%
• REG: 63.42%

Check out that Business Analysis and Reporting (BAR) pass rate tho:

Discipline Exam Sections

• BAR: 42.94%
• ISC: 50.93%
• TCP: 82.36%

But let’s address the tinfoil hat theory. If you aren’t aware, NASBA publishes an annual report every year. In this report, we can see total revenue broken down by revenue source. This is from 2023 [PDF]:

Keep in mind 2023 revenues were temporarily inflated as a result of candidates rushing to sit for the exam before CPA Evolution launched in 2024.

And 2022:

Apologies for the potato quality screenshot, that’s how it looks in NASBA’s PDF.

And let’s revisit 2021, a recovery year that followed significant revenue hits in 2020 due to lockdowns and Prometric closures on top of declining CPA examination numbers. This one is also potato quality unfortunately.

There’s a bit in the 2021 annual report that I think is relevant if we’re going to be donning our tinfoil hats. Said NASBA of 2021 revenue:

Total revenue in fiscal 2021 increased by 27.2% from fiscal 2020. Most of this increase is from examination-related services. This revenue rebounded in fiscal 2021, after a decline in the prior year, due to the effects of the pandemic. One-time anomalies, such as the extension of notice to schedule expiration dates from fiscal 2020 into fiscal 2021, along with other pandemic-related circumstances, brought upon significant swings in revenue between fiscal 2020 and fiscal 2021. In addition, expanded testing opportunities to assist CPA Examination candidates living in countries outside the United States increased examination-related international testing revenue. The increase in this service is shown in the international section volume on the previous page.

It was announced in early 2020 that candidates in India could sit for the CPA exam at eight Prometric testing centers across the country without having to leave home. Well, they’d have to leave their home. Just not their home country. At the time, NASBA said the decision was driven in part by concern for candidate safety related to the pandemic as if this decision was made in March 2020 and implemented the following month and not something that had been in the works long before the Rona existed:

At the time of the announcement they said:

During this extraordinarily challenging time, we know you have many concerns — the health of your families and friends, your coworkers and your communities. The Coronavirus pandemic has affected all of us in ways we could not have imagined. Nearly overnight, the world has changed.

Amidst this disruption, we want to help alleviate one concern you may have — taking your U.S. CPA Examination. We know you have dedicated an incredible amount of time preparing for this next step in your professional development. We also recognize that current travel restrictions, test center closures and other factors make it difficult or impossible for you to take the U.S. CPA Examination as planned. So, to support you on your pathway to CPA licensure, and to maintain your health and safety, we will now administer the Exam in India at eight Prometric test centers (Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi and Trivandrum). We hope the convenience of taking the Exam in your country eases some of your burden while you think about your family, friends and colleagues.

Sure, they could intentionally fail domestic CPA candidates to pump up those examination fees — which, by the way, have increased over the time period discussed here both nationally and in some states — but wouldn’t it be more lucrative in the long run to open up CPA exam testing to international markets like they just did in the Philippines? It’s not like they have to personally build testing centers, Prometric is already set up abroad.

Since international CPA exam testing was first launched in 2011 with Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates, many more countries have been added. This is the full list as of September 2024:

• Bahrain
• Brazil
• Egypt
• England
• Germany
• India
• Ireland
• Israel
• Japan
• Jordan
• Kuwait
• Lebanon
• Nepal
• Philippines
• Republic of Korea
• Saudi Arabia
• Scotland
• United Arab Emirates

I’ll see if I can dig up some numbers on international CPA exam testing revenue. Then we can really get the foil burning.

The post Unsubstantiated Conspiracy Theory of the Day: The AICPA Wants You to Fail the CPA Exam appeared first on Going Concern.

From the press release they put out today about the proposed CPA Competency-Based Experience Pathway:

Designed to increase flexibility for candidates, respond to market conditions, and protect the public, the pathway allows candidates to meet the final stretch of licensure requirements by exhibiting competencies according to a model framework that has been developed by AICPA and NASBA. The framework was developed with significant input and advice from a diverse cross-section of the profession, including members of an AICPA and NASBA working group made up of practitioners, regulators, academics, and state society leaders.

Recycling this gif from “Did the Anti-150 Hour Crowd Finally Beat the AICPA Into Submission? Looks That Way” because lol:

“The proposed pathway encompasses the perfect mix of flexibility for CPA candidates while maintaining rigor for public protection,” said NASBA President and CEO Daniel J. Dustin, CPA. “We look forward to the input and direction from the 55 U.S. Boards of Accountancy on this important and necessary framework to strengthen the CPA pipeline.”

Let’s remember this is the same group that fought hard to keep the 150-hour rule in place even when everyone else, even academia, was saying the profession should think about ditching or at least modifying it. The 150-hour rule has been successful in artificially inflated Underwater Basket Weaving 101 class lists at universities across the country for two decades, making better CPAs not so much. But sure, let’s talk about “maintaining rigor for public protection” now.

Said Journal of Accountancy in their write-up:

The proposed professional competencies are:

• Ethical behavior;
• Critical thinking and professional skepticism;
• Communication;
• Collaboration, teamwork, and leadership;
• Self-management and continuous learning;
• Business acumen; and
• Technology mindset.

The proposed technical competencies are:

• Audit and assurance;
• Tax; and
• Business and financial reporting.

The competencies, which would be verified in the workplace by licensed CPAs, are expected to take most candidates a year, but there is flexibility in the timing for completion.

Comments on the CPA Competency-Based Experience Pathway are open until December 6. If you have unhelpful troll comments to make or shitposting to do, please do so in our comment section and not the AICPA’s form. I’m serious.

Exposure draft in its entirety below:

Exposure draft: Proposed “CPA Competency-Based Experience Pathway” [AICPA]

The post Benevolent Overlords of CPA Licensure Float Batshit Insane Idea to Prove Competency, Not Just Credits appeared first on Going Concern.

On September 10, NASBA received and processed the following scores from the AICPA: pic.twitter.com/fU2fBiPuYN

— NASBA (@NASBA) September 10, 2024

Alright so in this batch of scores for people who sat between July 1 and July 31 we have:

Excluding the international test-takers, that gives us 4,954 discipline scores released in July. We’d say “discipline sections taken” but there are no doubt people who walk out or whose exams get messed up at Prometric so for the purposes of this article, we’re speaking specifically about the number of scores as reported by NASBA.

Going back to the two earlier score releases on June 28 (testing dates: April 20 to May 19):

On June 28, NASBA received and processed the following scores from the AICPA: pic.twitter.com/MCuNsOsKWK

— NASBA (@NASBA) June 28, 2024

And April 24 (testing dates: January 10 to February 6):

On April 24, NASBA received and processed the following scores from the AICPA: pic.twitter.com/WZg939rFs6

— NASBA (@NASBA) April 24, 2024

Adding the number of scores processed in the three score releases of this year gives us this total number of exams taken:

Total domestic discipline sections completed and scored as of July 31, 2024: 9,539

There is one more discipline score release remaining for 2024, due on December 10 for the upcoming testing window of October 1 to October 31. We’ll revise our numbers then.

As always, the mathletes in our audience are encouraged to double-check our math because this author flunked Algebra 2.

The post Doing the Math on CPA Evolution: How Many Discipline Scores Have Been Released So Far This Year? appeared first on Going Concern.

It is now 13 days into August, past the window most people would consider “the beginning” of any month. As one would expect, the CPA candidates are getting restless.

2025 Dates?????????
byu/Catch_Late inCPA

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I went back to the copious notes I took during NASBA’s CPA Evolution informational webinar in January and the only direct reference to 2025 I found was one of the presenters saying “We don’t know right now what the score schedule will look like in 2025. Hopefully it will be improved.” LOL

The first score release schedule post-CPA Evolution deployment has been unpopular to say the least. Candidates used to regular — I dare say frequent — score releases up until the new exam launched are now waiting weeks to months in some cases. For example, people who sat for CPA exam core sections (AUD, FAR, and REG) between April 1 to June 25 were expecting to receive scores on July 31. For the new disciplines (BAR, ISC, and TCP), candidates who sat between April 20 and May 19 had a target score release date of June 28.

So you can understand why current candidates are eager to see next year’s score release dates show up. “Hopefully it will be improved.” (LOL, again)

We’ll let you know when the dates finally drop. Prepare to be disappointed and you might be pleasantly surprised.

Update: We checked the score release page today, August 16, to see if there had been any update and there was…the language was edited to say “coming soon.”

The post “The AICPA Can Eat a Bag of Dicks,” or Here’s What CPA Candidates Are Mad About Today (UPDATE) appeared first on Going Concern.

Thanks to the tipster who reached out to alert us to this situation.

Apparently eager CPA exam candidates have once again crashed NASBA’s delicate and temperamental system leaving candidates who sat for core sections AUD, REG, and FAR looking for hints of their scores ahead of the July 31 target release day highly disappointed. And they aren’t showing any remorse for having done it either.

The story as relayed by our tipster:

Just wanted to let you know, in case you hadn’t heard, that all of us CPA candidates have managed to crash the NASBA CPA portal as we constantly refresh it in the hope of seeing our exam scores. The official release date is tomorrow, but that usually means a pass/fail indicator would come today. And for all we know it has, but all we can see is “Sorry, the server encountered an internal error.” You’d think NASBA would plan for this when they created such infrequent score release dates. Sigh.

As expected, NASBA’s Twitter is getting reply-bombed. Is this what the kids call a ratio?

In preparation for the score release you will need to set up your CPA Portal account (if you haven’t done so already) to view your score online (unless you receive your score from your board). Click to learn how: https://t.co/TK8LQSCpxT

— NASBA (@NASBA) July 30, 2024

Let’s hope they get it together by the next core release day of Halloween. We’ll keep you updated on this developing situation.

UPDATE: We were told moments after publication that the system is back up. Whew.

The post BREAKING NEWS: CPA Exam Candidates Broke NASBA’s Sh*t. Again. appeared first on Going Concern.

Anyway, this became effective on July 1:

The AICPA and the National Association of State Boards of Accountancy (NASBA) announced an expansion of international testing availability of the U.S. CPA Exam, adding the Philippines.

CPA candidates in the Philippines can begin registering for the CPA Exam now. There will be three testing centers in the country — two in Manila and one in Cebu City.

The AICPA and the Philippine Institute of CPAs agreed in April to work together to share continuing professional education courses and access to conferences and live events, according to a news release.

The AICPA and NASBA offer the CPA Exam in 18 countries besides the Philippines.

I remember a time not too long ago when all international candidates had to travel to the US to sit. About 13 years ago — August 1, 2011 to be exact — the first international CPA exam candidates not required to travel to the US sat for the exam in Japan, Bahrain, Kuwait, Lebanon and the United Arab Emirates.

India joined the party in 2014 at which time the AICPA said this in a press release:

The U.S. CPA Exam is administered internationally as a service to U.S. citizens living abroad and foreign nationals, as well as in response to the escalating international demand for the U.S. CPA license. In recent years, Indian candidates are among the largest groups of international candidates who have traveled to the U.S. to take the CPA Exam. Opening the CPA Exam in the Middle East to Indian candidates increases their testing options.

At that time, candidates from India still had to travel to the Middle East to test (duh, it’s right there in the preceding paragraph). In April of 2020, the overlords of the CPA exam announced they were opening up testing in India to candidates from India and partially credited the Rona for the change. Said NASBA in that announcement:

During this extraordinarily challenging time, we know you have many concerns — the health of your families and friends, your coworkers and your communities. The Coronavirus pandemic has affected all of us in ways we could not have imagined. Nearly overnight, the world has changed.

Amidst this disruption, we want to help alleviate one concern you may have — taking your U.S. CPA Examination. We know you have dedicated an incredible amount of time preparing for this next step in your professional development. We also recognize that current travel restrictions, test center closures and other factors make it difficult or impossible for you to take the U.S. CPA Examination as planned. So, to support you on your pathway to CPA licensure, and to maintain your health and safety, we will now administer the Exam in India at eight Prometric test centers (Ahmedabad, Bangalore, Calcutta, Chennai, Hyderabad, Mumbai, New Delhi and Trivandrum). We hope the convenience of taking the Exam in your country eases some of your burden while you think about your family, friends and colleagues.

And here we are. This is a current list of international locations offering the US CPA exam as of, well, now (source: NASBA):

• Bahrain
• Brazil
• Egypt
• England
• Germany
• India
• Ireland
• Israel
• Japan
• Jordan
• Kuwait
• Lebanon
• Nepal
• Philippines
• Republic of Korea
• Saudi Arabia
• Scotland
• United Arab Emirates

Related:

Update: r/accounting is reacting to this news and it isn’t pretty.

The post You Can Sit for the CPA Exam in the Philippines Now appeared first on Going Concern.

I wasn’t able to find any information on the average cost of those extra 30 units, probably because it varies so much so instead let me drop two relevant links. You all are welcome to tell us how much you paid for your 30 units in the comments (or by email).

Rethinking the 150-Hour Requirement for CPA Licensure [CPA Journal] This one does a pretty good job of explaining the current debate over 150 units as well as the arguments for and against.

Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities [Center for Audit Quality] This CAQ research, now exactly a year old, dives deep into why students aren’t pursuing accounting or, if they did, why they aren’t interested in getting licensed. According to their research, 81% of undergraduate accounting majors plan to get their CPA. This research talks extensively about why the remainder don’t go that route and the cost of those extra units comes up quite a bit. As you can see from the chart below, cost is a hurdle to both the to CPA and to not CPA groups.

What doesn’t come up at all in that research is how people who scrimped and saved to make those 30 units happen are going to feel if the requirement is suddenly lifted in their state. Hell, even people who could afford it might feel some type of way.

Discuss. And let’s keep in mind this is tagged as a crazy idea, not a plausible and immediately actionable one.

The post Crazy Idea of the Day: If 150 Units Goes Away, Refund Everyone’s University Fees appeared first on Going Concern.

As expected, the one-star reviews are hitting Google.

This particular testing center does appear on Prometric’s closure page. Extreme weather, natural disaster, power outages, technical issues, pandemic impacts or other circumstances are among the “unforeseen issues” that can lead to a closure. “We provide test takers with as much advance notice of upcoming site closures as possible,” says Prometric on their website. “We recognize in some cases there is limited opportunity to reach test takers well in advance.”

The obvious solution here is to find a new test center nearby but easier said than done sometimes (especially if this “chaos and hell at Prometric” rumor is at all accurate) and it’s ridiculous to give people 48 hours notice to do so.

6/24 Appointment Cancelled by Prometric
byu/Successful-Object-48 inCPA

Could be worse, you could be this person flying in from Ireland.

If anyone knows what happened, let us know.

Update 10.9.24: Prometric now says right on its site closures page in bold text what happened at 1250 Broadway. Not sure when they added this, we only happened to see it today while looking for hurricane closure info.

The testing center located at 1250 Broadway, Suite 2500, New York City is currently closed due to a burst pipe and the subsequent flooding and electrical damage it caused. We are working with building management to restore power and reopen as soon as possible; please check back or talk to your test sponsor for updates.

The nearest alternative testing centers are located at:

Brooklyn (4235/4236)
384 Bridge St.
4th Floor, Suite 4A
Brooklyn, New York 11201

Queens (4212/4213)
59-17 Junction Blvd
Suite 0202
Queens, New York 11368

Fairlawn (0033/4102/4252)
33-00 Broadway (RT 4)
Suite 205
Fairlawn, New Jersey 07410

The post Prometric is Canceling Exams in NYC With Very Little Notice and People Aren’t Happy [UPDATE] appeared first on Going Concern.

As much as I enjoy reading Going Concern, I find the article titled “Did the Anti-150 Hour Crowd Finally Beat the AICPA Into Submission? Looks That Way” troubling.  Busy people might read only the title and believe that the “extra 30” is dying. It is not. Rather, the proposal is to eventually do away with ALL university-based education but keep a weakened 150-hour requirement until that day comes. 

The National Pipeline Advisory Group has joined those who question the value of a university education. A college degree is not needed for many valued trades. Society needs plumbers, electricians, and just about every service provider imaginable. I am surprised that leaders of a profession that compares itself to lawyers and medical doctors are willing to eliminate the requirement for their future colleagues to have a university education.   

The National Pipeline Advisory Group’s (NPAG) Draft Report proposes a three-step process to reduce the cost and time of education. Step one is referred to as a now concept. The second, a near-term concept. The third step, a next concept, is a competency-based licensure model. The proposal is to measure competencies rather than time going to college. The model “moves the discussion completely away from 90, 120, or 150 hours.” Individuals could gain competencies any way they like, including self-study. The model envisions people who do not have a four-year degree developing expertise through work experience. This sounds like an apprenticeship program commonly used by the trades. 

The proposal would put the CPA on similar footing with the Association of Chartered Certified Accountants (ACCA) qualification.  The ACCA is a professional organization, headquartered in London, that has over 250,000 members, and 526,000 future members, spread across 180 countries. The path to ACCA qualification is open to everyone; there are no academic entry requirements. Candidates complete a maximum of 13 exams, complete an Ethics and Professional Skills module, and have three years of practical work experience in a relevant role.

Similarly, members of the Institute of Chartered Accountants in England and Wales, do not have to go to university to become an ICAEW Chartered Accountant in the UK. ICAEW has 165,000 members in 147 countries. 

Just because a candidate does not have to go to school does not mean they won’t choose to do so.  What might the ability to pursue a CPA without a college education do to starting salaries, even for those who choose to go to school?  In June 2023, the Financial Times reported that new graduates joining a Big Four firm in London might make as much as £35,000 or about $44,000.¹ The 2023 graduates of our Master of Accountancy program started at over $70,000, most of them in Denver. The cost of living in London is higher.  Is the profession pursuing a path that will result in even lower salaries? And does the AICPA want to be compared to the ACCA? 

The NPAG Draft Report recommendations are based on six major themes that emerged from the data. Interestingly, none of the six are starting salaries. Page 21 of the report copies a chart from the Center for Audit Quality’s study that shows 61% of students who chose NOT to major in accounting cited the ability to earn a higher salary with a different major as reason. Only lack of interest scored higher with 70% of students reporting that reason for not majoring in accounting.  

Starting salary is the return one earns on an investment in education. The NPAG cannot address starting salaries; instead, they try to address the investment in education. If you take the cost of education by the person receiving the education to zero, would starting salaries stay the same? I suggest not. As firms absorb the cost of education, it is the firms who are making the investment and they will recalculate their return. Firms already invest in training staff, and the value of the training is a reason they pay less starting salary than graduates can earn with other employers. As firm investment goes up, starting salaries should naturally decrease. If starting salaries in London are a predictor of where we are heading, is that where we want to go? 

Wouldn’t firms pay students who choose to go to college more than those who enter a structured learning program with the firm straight out of high school?  If that logic held, we would expect to see firms to pay CPA candidates who hold a graduate degree more than CPA candidates who obtain 150 hours with a collection of unrelated hours. We don’t see that.

The now solution proposed by NPAG is to point students to lower-cost, on-the-transcript learning options like one I have criticized before – the AICPA’s Experience, Learn and Earn (ELE) program. The near-term solution would move the extra 30 hours off-transcript by giving credit for on-the-job learning. Neither the now nor the near-term recommendations remove the extra-30 requirement.  

¹Junior auditors: Stunted salaries: Lex. (2023/06/19/, 2023 Jun 19). Financial Times Retrieved from https://du.idm.oclc.org/login?url=https://www.proquest.com/newspapers/junior-auditors-stunted-salaries/docview/2838872394/se-2 

View all articles authored by Sharon Lassar published on Going Concern.

The post Does Accounting Education Belong in the University Curriculum?  appeared first on Going Concern.

On May 29, NASBA received and processed the following scores from the AICPA: pic.twitter.com/K2MYH6Lj0a

— NASBA (@NASBA) May 29, 2024

Candidates were just as surprised as we were to see scores appear early, the target score release date for people who sat for the core sections between January 10 and March 26 was June 4. So some people have been spared another weekend of suffering.

The official score release thread on r/CPA is a good read if you have an afternoon to waste.

Score Release Thread (EARLY) FAR, AUD, REG 05/29/2024 – Good Luck!
byu/Galbert123 inCPA

The remaining core section score release dates for 2024 are as follows.

If you take AUD, FAR, and/or REG between April 1 and June 25, 2024:

If you take AUD, FAR, and/or REG between July 1 and September 25, 2024:

If you take AUD, FAR, and/or REG between October 1 and December 26:

If you sit for your exam between any of those dates but the AICPA doesn’t receive your exam file by the deadline for that window, you’ll be waiting until the next target score release date. And of course, as always, these dates are subject to change. Usually that change doesn’t work in favor of anxious CPA exam candidates but as we just saw, every now and then the universe smiles down upon them.

Congratulations to those who passed — especially those who are DONE! — and to those who didn’t, better luck next time. Remember you’re in good company, last year’s cumulative pass rate across all four parts (RIP BEC) was just a little over half (51 percent).

The post It’s a Miracle in May As Long-Awaited Core CPA Exam Scores Are Released Early appeared first on Going Concern.

The leaders of the US accounting profession have signaled they could cut the education requirements for becoming an accountant, amid growing alarm about a shortage of new recruits.

The American Institute of Certified Public Accountants on Tuesday dropped its opposition to calls to reduce the amount of university education needed to qualify as a CPA.

Before anyone gets too excited, we have to remember that under normal conditions, implementing changes across all 55 CPA jurisdictions could take years. There’s a long, tedious process that often ends in the state capitol with a bunch of non-CPA lawmakers ultimately deciding whether or not to bequeath an education break on the state’s future professionals. No doubt the states have many enthusiastic amateur lobbyists happy to enlighten the legislature on why this change is not just a good thing but a necessary one if Minnesota is representative of the rest of the nation. Proponents of reducing education requirements have been nothing if not vocal about their opposition to the AICPA’s official position.

And before we beat up the AICPA too hard for only just now conceding ground on 150, we have to remember that their most valid talking point throughout this battle — a battle they were pretty much guaranteed to lose as a chorus of voices rose up from all corners of the profession against it — has been mobility. “Because this system was put in place decades ago, many CPAs practicing today may not remember life before CPA mobility,” said the National Pipeline Advisory Group in their recent draft strategy report [PDF]. They put it in bold blue text, no less. The subtext here is that currently practicing professionals may take it for granted because they’ve never had to think about it.

Substantial equivalency basically means the states agree that they trust other states to adequately gatekeep the CPA rather than requiring individuals to be licensed in each state they practice.

The official definition of substantial equivalency as it appears in the NPAG report:

Substantial Equivalency: Substantial equivalency is the determination by a state that CPAs from another state meet the threshold to practice public accounting under CPA mobility. While there are some variations and exceptions, licensing requirements are remarkably consistent from state to state and that has powered the unique mobility system the profession enjoys today. The most consistent and critical elements are the 3 Es, education, exam, and experience, which underpin substantial equivalency and mobility.

And here’s what NPAG said about discussions they’ve had about the future of CPA education. We suppose they figured out what the AICPA couldn’t, that mobility has to take a back seat to a critical shortage. It was getting harder and harder to ignore the evidence that 150 is actively driving students — in particular minority ones — away from accounting.

While the AICPA Council resolution convening NPAG aimed at preserving mobility while also addressing the pipeline challenge, NPAG members agreed they needed to explore all options to ease the time and cost of education – even those that might impact substantial equivalency and mobility. As a result, the group committed to and has practiced an “everything’s on the table” approach to its learning and solutioning.

FT continues:

An AICPA advisory group that included representatives from large and small firms said on Tuesday that the profession needed to “address the cost and time of education” as a priority for fixing the shortage.

It called for “a competency-based licensure model not tied to university credit hours”, among other reforms. The AICPA, in turn, expressed “directional support” for the group’s recommendations.

“While expanding approaches to CPA licensure alone will not solve the accounting talent problem, we believe our licensure process does need to acknowledge changing market conditions,” the AICPA said.

The AICPA’s answer thus far has been the Experience, Earn, and Learn Program. For more on that see What Would the Accreditors Say About AICPA’s ELE Program?

The FT piece also says that AICPA CEO of Public Accounting Sue Coffey (not to be confused with outgoing AICPA CEO of Everything Barry Melancon whose retirement in December was announced today) said the AICPA “aimed to propose an alternative to the current requirements by this time next year, but getting state accountancy boards or state legislatures to embrace the changes could take significantly longer.”

“I really hope Minnesota and others talking about this see value in working with the rest of the country,” Coffey said. “This is our attempt to bring everybody together.”

Kind of funny the group most in opposition to what the rest of the country has been saying is saying that now.

As always, I remain skeptical of how this will actually shake out. I wouldn’t celebrate the death of 150 units just yet.

The post Did the Anti-150 Hour Crowd Finally Beat the AICPA Into Submission? Looks That Way appeared first on Going Concern.

Five months after the national search began, a successor has been found.

The NASBA board of directors announced on April 26 that Daniel J. Dustin, CPA, has been selected to become NASBA’s next president and chief executive officer. His tenure begins August 1, 2024.

“Dan’s long history and expertise in accounting regulation makes him uniquely qualified to assume the role as president and CEO of NASBA. I have had the distinct opportunity to collaborate with Dan over the years on key initiatives and programs including the Uniform Accountancy Act, CPA Evolution and Professional Licensure,” said NASBA Chair Stephanie M. Saunders, CPA. “This is an exciting time for our organization, especially as he will lead NASBA into the future to fulfill the mission of enhancing the effectiveness and advancing the common interests of the 55 U.S. Boards of Accountancy.”

Dan’s been serving as NASBA’s vice president of state board relations for as long as Ken Bishop has been in the CEO seat, since 2012.

In this capacity, he works as an advocate for the 55 U.S. State Boards of Accountancy, assessing their needs and concerns while exploring new opportunities to provide support and services to NASBA’s member boards as an extension of the Association’s mission. He also collaborates with NASBA’s executive leadership team, regional directors, and state board executive directors, to identify emerging issues for discussion during NASBA’s annual conferences, including its Annual Conference for State Board Executive Directors and Staff, Regional Conferences and Annual Meeting. Additionally, Dustin is the staff liaison to NASBA’s Ethics, Executive Directors, Peer Review Compliance, Relations with Member Boards, and Uniform Accountancy Act committees.

It makes a lot of sense they’d choose someone with this pedigree given the issue of individual jurisdictions upsetting the apple cart on the 150-hour rule that took 20 years to get aligned across all 55 boards of accountancy. Naturally, he sits on the 23-member National Pipeline Advisory Group.

Dustin’s participation on the joint NASBA-AICPA CPA Evolution initiative resulted in changes to the CPA licensure model, which recognize the rapidly changing skills and competencies the practice of accounting requires today and will require in the future. Currently, Dustin is a member of the National Pipeline Advisory Group (NPAG), established by the AICPA to explore hurdles to earning a CPA license and ways to strengthen the accounting pipeline. He is also working with NASBA’s Professional Licensure Task Force, which is charged with considering new concepts for CPA licensure that may be included in the Uniform Accountancy Act to update the current licensure model.

Before joining NASBA, he served as executive secretary of the New York State Board for Public Accountancy beginning in 1988. Here’s a nice little article in the Times Union of Albany about his vacating his position as councilman on the town board of Albany suburb Colonie to move to Nashville and work for NASBA. Choice quote from that article:

“Good for him,” Supervisor Paula Mahan said.

And some drama because we love messiness:

Patricia A. Halpin wrote a letter to Town Supervisor Paula Mahan contending the incident occurred Sept. 13 at the restaurant at Mill Road Acres golf course. She said Town Board member Daniel Dustin used a racial slur twice in addressing her husband, H. Paul Thomas.

“At a members’ gathering of their league, of which my husband is president, Mr. Dustin uttered a racial slur at my husband after a joking comment referring to Mr. Dustin’s golf handicap,” Halpin wrote.

Dustin’s alleged tirade included using the same expletive four times and repeating the racial slur twice, wrote Halpin, who was at the gathering and said she heard the comments.

The article doesn’t repeat the slur and the two friends eventually made up.

But let’s get back to the NASBA press release and his relevant experience:

As executive secretary, he was responsible for professional licensing, practice and conduct, including professional discipline of Certified Public Accountants and Public Accountants in New York. As a key point person in the regulatory process, he monitored the evolution of professional practice at national and state levels and developed and drafted proposed legislation and amendments to New York State accountancy rules and regulations.

Again, makes sense.

“I was fortunate to meet Dan more than 25 years ago at NASBA’s Executive Directors Conference in California,” recalls exiting President and CEO Ken Bishop in the press release. “He was the new executive secretary for the New York Board, and I was the new executive director for the Missouri Board. We have remained good friends since that initial introduction.

“I congratulate Dan Dustin for being selected to lead the association into the future. He has done an outstanding job as vice president of state board relations, and I know he will be successful as NASBA’s president and CEO.”

Dustin has a BS and MS in Accounting from Clarkson University and became a licensed CPA in 1988. In 2010 he was awarded NASBA’s Lorraine P. Sachs Standard of Excellence Award for distinction in accountancy regulation and public protection.

A few more resume items:

• NASBA’s CPA Examination and Administration Committee
• NASBA’s Executive Directors Committee
• NASBA’s Accountancy Licensee Database Task Force
• AICPA’s Peer Review Task Force
• AICPA Board of Examiners, including chairing the BOE’s Operations Committee.

Congrats to Mr. D! We eagerly await your first President’s memo.

Earlier:

The post Let’s Meet NASBA’s Next President and CEO appeared first on Going Concern.

The Rider University CPA Apprenticeship Program, announced here on March 11, allows new graduates to earn the required 150 units for CPA licensure in New Jersey through coursework and real-world professional experience. Unlike the Saint Peter’s initiative, the Rider program hopes to partner with multiple firms.

“Our new program is a novel and powerful tool to bridge the gap between academic learning and real-world accounting experiences,” says Dr. Evelyn A. McDowell, the chair of Rider’s Department of Accounting. “We’re proud to offer recent graduates a low-cost alternative to advancing their careers.”

To obtain 150 hours after graduation, Rider is offering as many as five online courses — worth six academic credits each and offered at $250 per credit — over seven weeks along with at least 34 hours a week “doing meaningful and substantial work as an accounting professional” at a participating accounting firm. So far WilkinGuttenplan (INSIDE Public Accounting #149, $33 million revenue) is the first and only firm to partner with Rider. “The cooperation and commitment of employers are integral to the program’s success, and we are extremely proud to collaborate with WilkinGuttenplan to support aspiring professionals,” said Dr. Ev.

A bit more from the announcement:

The program will begin accepting participants beginning in May, and the University is currently establishing partnerships with firms and companies. McDowell notes that participating in Rider’s CPA Apprenticeship Program can serve as a powerful recruitment tool as they seek both short-term and permanent talent.

Because it is open to partnering with a variety of firms, Rider’s program is the first of its kind in New Jersey. “By inviting multiple firms to participate, we are creating flexible opportunities inclusive to a wide range of individuals that will ultimately strengthen the pipeline of CPAs,” McDowell says.

More here. It appears the program is open only to Rider graduates.

Rider University launches CPA Apprenticeship Program [Rider University]

The post Another New Jersey University Debuts Another Work-For-150 Program appeared first on Going Concern.

INSIDE Public Accounting has shared key takeaways from a recent survey of 1,060 members of the New Jersey Society of CPAs (NJCPA) that aimed to get members’ view on the 150-hour rule. Those takeaways are:

• More than 40% of those surveyed said that new hires working in accounting-related roles who had not completed 150 credit hours “rarely” or “never” pursue CPA certification.
• No skills difference was detected between those with 120 hours and those with 150, according to 62% of respondents.
• An overwhelming majority, nearly 80%, believe it would be beneficial to the profession to provide alternative pathways to certification so 150 credit hours is not the only option.

You can view the full podcast here:

Anyone interested in adding their voice to this important debate is invited to submit a letter to the editor.

The post New Jersey Weighs In on the Usefulness of 150 Hours appeared first on Going Concern.

Thank goodness for the Connecticut Society of CPAs! Without their posting, it would have taken me longer to learn about the latest half-baked idea by NASBA regarding the education requirements to become a CPA. It seems NASBA wants to keep this under wraps. I could not find mention of this exposure concept on NASBA’s website, and certainly no link for comments. I suppose they only want to hear from the echo chamber. Requesting comments during busy season was not safe enough, I suppose, to keep them from possibly hearing things they don’t want to hear.

What is NASBA up to now? They have formed a task force to look at the licensure model and their first idea is to further weaken, rather than repeal, the worthless education requirement of an extra 30 hours of course work. There are no educators on the task force. Not only does NASBA not want to hear from CPAs who are not members of the entrenchment club, but they also don’t want an educator’s voice in a discussion of the education requirements.

To become a CPA, one must meet the requirements of three Es: education, exam, and experience. The AICPA and NASBA want to retain the 150-hour education requirement that has been questioned repeatedly by rigorous peer-reviewed academic studies, by the Center for Audit Quality, and on these pages from the multiple perspectives including diversity and learning efficacy. Many potential CPA candidates never enter the pipeline due to the tuition cost and time involved to obtain an extra 30 credit hours. Rather than proposing to do away with the extra-30 requirement that has no demonstrated value, the AICPA created an Experience, Learn, and Earn (ELE) program. I have previously questioned the wisdom of the ELE approach. ELE candidates work for a sponsoring firm in a benefited position while enrolling in low-cost fully online courses where they earn credit hours on a transcript. Low cost might mean low value. A determinant of low value might be low effectiveness. We don’t know. ELE is currently promoted as a pilot program.

Ideally a pilot program would inform us about the efficacy of the pathway. Will ELE candidates complete the credit hours in a reasonable time frame? Will they pass the CPA exam in one 30-month window? Will they stay in the profession even a year beyond what might be required to not repay tuition benefits under their sponsoring firm’s employment contract? I would bet 20 to 1 that we’ll never know.

We won’t know for two reasons. The AICPA will not collect and report the relevant information. Secondly, NASBA and the AICPA will push through an alternative scheme that makes questions about the current form of ELE moot. NASBA is focusing discussions on an equivalent path to licensure without the need of having those extra 30 hours on a transcript. Instead, candidates could complete a “structured professional program” while they work. Hmm. That sounds like an experience equivalent to me.
Why not simply allow students who hold a bachelor’s degree to become CPAs with an additional year of experience over students who hold a master’s degree?

Oh, I know! Allowing bachelor’s degree holders to become licensed after two years of experience would remove the need for a “structured professional program” and the fees that such a program could generate for AICPA and NASBA. ELE could be offered solely by the AICPA. There would be no need for a university partner who would charge tuition. The AICPA could capture enrollment fees. And, who would certify a program as “structured”? That sounds like a potential revenue stream for NASBA. Like how CPE providers pay to join NASBA’s National Registry of Sponsors, firms that provide structured professional programs could pay to have their programs approved by NASBA.

Enough already! NASBA’s exposure concept of creating a structured professional program would evidently require legislative action in at least some states. If a “solution” that requires legislative action is being proposed, that solution should be to change the education and experience requirements to be what they once were in many states – license with a master’s degree plus one year of experience, or license with a bachelor’s degree and two years of experience.

The post Just Eliminate the Extra 30 For CPA Licensure Requirement! appeared first on Going Concern.

Write this down. Or bookmark it, I’ll update if new information comes up.

Score Extensions

Unsurprisingly, the Q&A box was on fire with score questions throughout the hour-long webinar. People are angry about the 2024 CPA exam score release schedule, and they are allowed to be, and there’s all kinds of confusion about the various extensions. Different jurisdictions have different rules and unfortunately, while there is a uniform CPA exam there is not a uniform set of rules followed by each state.

SO. One important thing to get out of the way first. If your jurisdiction has adopted credit extensions, NASBA is still in the process of updating the records. Meaning don’t freak out if your portal doesn’t show a credit extension you’re expecting. Patricia Hartman, Director of Client Services at NASBA and recipient of many angry emails from candidates, said they are still working on updating thousands of candidate records to reflect extensions. They initially hoped to be done with this process by the end of this month but need more time. So be patient and don’t blow up NASBA’s emails screaming at them about your extension.

On the topic of credit extensions themselves, you should note there are two different ones and only one has been adopted by all 55 jurisdictions.

On the recommended Credit Extension Policy (NASBA page on that here), ALL jurisdictions have approved the policy that states any candidate with Uniform CPA Examination credit(s) on January 1, 2024 will have such credit(s) extended to June 30, 2025. So if you had any passing scores still valid as of January 1, regardless of when you sat for those exams, those credits will be pushed all the way to June 30 of next year. Hopefully you’ll be done by then. As mentioned above, your portal may not reflect this extension yet.

The second extension is the one NASBA approved last year that changes the 18-month testing window to 30-months. A map of the credit period decisions by jurisdiction is below (I mean, it says that right in the heading):

This one is very dependent on jurisdiction as some states require a longer process to adopt than others. Additionally, some states are going by the date you sat for the exam while others have made or will make it retroactive to the date of passing credit so in short, it’s a bit of a mess. NASBA has an email you can use specifically for questions on YOUR jurisdiction and YOUR scores: CRI@NASBA.org

“CRI” as in “Credit Relief Initiative” not “y dont u cri moar about it, candidates.”

Exceptions

Don’t expect exceptions if you fall outside of the newly implemented credit periods, this is what you’re getting. You can always petition your state board for additional time due to extenuating circumstances (we all know this means “I dragged ass for 18 months and now I’m bugging out”), good luck with that.

That said, the NASBA representative reminded candidates that they “will work with you” to set a free retake for any candidate affected by circumstances outside of their control on test day. She gave the example of excessive construction noise at the Prometric site but this could also be computer issues, potentially even a severely gassy test-taker next to you disrupting you with farts the whole time. It’s at their discretion so, you know, doesn’t hurt to ask if you meet up with any acts of God on exam day.

2024 Score Release Schedule

They’re aware the score release schedule for 2024 sucks and they’re painfully aware that you all think it sucks. The bad news: AICPA Examinations Team Associate Director Joseph Maslott said, I quote, “Those days are set.”

The good news (I guess?) is that they’re hoping 2025 will be better. “We don’t know right now what the score schedule will look like in 2025,” Maslott said. “Hopefully it will be improved.”

Hopefully.

This is the revised 2024 CPA exam score release timeline they shared:

Note the highlight at the bottom. Expect these to change.

And that’s about it.

The post CPA Evolution Update: What You Need to Know About Scores and Credit Extensions appeared first on Going Concern.

Traipsing haphazardly across the internet as one does, I came across this ancient scroll dated 1988 and entitled “Education requirements for entry into the accounting profession: a statement of the AICPA
policies.” When I say ancient, I mean ancient. Serif fonts hadn’t even been invented yet.

The introduction looks familiar. As the profession evolves, the profession’s gatekeepers are tasked with periodic review of the requirements to become a CPA. This is how BEC got killed off and we ended up with CPA Evolution, because the necessary entry-level knowledge of a CPA today is much different from that of a CPA 15 years ago. Reasonable.

It is the policy of the American Institute of Certified Public Accountants (AICPA) that “ the knowledge to be acquired and abilities to be developed through formal education for professional accounting are proper and continuing concerns of the AICPA” and “the AICPA should review periodically the standards of admission requirements for CPAs.” To fulfill the AlCPA’s responsibility under this policy, the Education Executive Committee decided in 1986 to review the 1978 Education Requirements for Entry Into the Accounting Profession (the Albers report) to determine how the sample program contained therein should be modified to reflect changes that had taken place and trends that were expected to continue. After identifying significant changes occurring in public accounting, industry, and not-for-profit organizations, the Education Executive Committee engaged in extensive discussions of the impact these changes should have on education for CPAs.

And this is the AICPA’s official policy on education requirements for entry into the accounting profession in 1988:

1. The CPA certificate is evidence of basic competence of professional quality in the discipline of accounting. This basic competence is demonstrated by acquiring the body of knowledge common to the profession and passing the CPA examination.
2. Horizons for a Profession is authoritative for the purpose of delineating the common body of knowledge to be possessed by those about to begin their professional careers as CPAs.
3. At least 150 semester hours of college study are needed to obtain the common body of knowledge for CPAs and should be the education requirement. For those who meet this standard, no qualifying experience should be required to sit for the CPA examination.
4. The scope and content of the educational program should approximate what is described in Academic Preparation for Professional Accounting Careers and should lead to the awarding of a graduate degree.
5. At the earliest practical date, the states should adopt the 150-semester-hour education requirement. The date by which implementation of this policy may be practical may be dependent upon the following factors: (1) the current education requirement in each jurisdiction, (2) the availability of graduate accounting education in each jurisdiction, and (3) appropriate lead time to permit individuals to meet proposed education requirements.
6. Candidates should be encouraged to take the CPA examination as soon as they have fulfilled the education requirements, and as close to their college graduation dates as possible. For those graduating in June, this may involve taking the May examination on a provisional basis. [Ed. note: At the time this was published the CPA exam was given only twice a year, in May and November]
7. Student internships are desirable and are encouraged as part of the education program.
8. The AICPA should encourage the development of quality programs of professional accounting (or schools of professional accounting) and participate in their accreditation.
9. Educational programs must be flexible and adaptive, and this is best achieved by entrusting their specific content to the academic community. However, the knowledge to be acquired and abilities to be developed through formal education for professional accounting are proper and continuing concerns of the AICPA.
10. The AICPA should review periodically the standards of admission requirements for CPAs.

Published prior to the moon landing, Horizons for a Profession – The Common Body of Knowledge for Certified Public Accountants [PDF] is so old it may have initially been written on papyrus paper. That’s what they’re referring to when they say “Horizons” above.

The scanned version is 346 pages so we won’t dig too deep into it but there are some interesting bits in there if you are a nerd who’s into accounting history (me).

Like how many firms performed what services:

Point being, Horizons gets many mentions in the 1988 report as does the “Education requirements for entry into the accounting profession” report published ten years before the one we’re talking about [PDF]. Dubbed the Albers report, the 1978 version came out five years before Florida became the first state to adopt the 150-hour rule.

But let’s get back to 1988 and this part in particular. Many people have questioned why the 150 hour rule lacks any requirement for specific education, especially so now that there’s a contentious debate raging about its continued existence. I mean, if it’s so critical to the public interest then why can it be met with whatever? The 150 hour rule may not have improved the quality of professionals since its widespread adoption but it sure gave us a lot of expert underwater basket weavers.

This is what the report says:

The profession requires that its entrants be men and women whose education has provided them with the foundations for lifelong learning, development, and growth. No attempt is made here to completely delineate the content of a CPA’s general education because it does not always relate directly to the demands of professional practice. Students should come to understand humankind, its history, the philosophies by which it lives, the languages in which it communicates, and the arts and sciences that enrich its existence. Emphasis should be on developing analytical abilities and problem-solving skills, as well as perception, judgment, and integrity. [emphasis ours]

Huh. Who knew.

The post We Get to the Bottom of Why the 150 Hour Rule Doesn’t Require Specific Courses appeared first on Going Concern.

Attention all CPA Exam Candidates… pic.twitter.com/YwBD3uym2l

— NASBA (@NASBA) December 27, 2023

Make sure you check out the comments.

The funniest part is they posted this on Tuesday like everything was going to be normal:

#CPAExam candidates! Waiting for your score(s)? They will be released tonight at 7 p.m. CDT. Good luck!

— NASBA (@NASBA) December 26, 2023

Reddit reaction:

NASBA update
byu/cpacandidate1 inCPA

Our deepest condolences to everyone who was hoping to be done with this crap before 2024 hits. Here’s hoping you all get good news!

The post CPA Exam Candidates Got F**ked Over One Last Time Before the Year Ends Because of Course They Did appeared first on Going Concern.

Bishop joined NASBA in 2007 and has held the president and CEO position since January of 2012. Prior to ascending to the role of president over the entire shebang, he was executive vice president and chief operating officer.

A committee has been established to find his replacement and consideration will be given to current NASBA staff as well as qualified outside candidates. The right president will be “a visionary, one who possesses strong financial and business acumen, executive decision-making abilities, dynamic public speaking skills, and has knowledge of the profession and the importance of accounting regulation” according to comment by 2023-24 NASBA Chair Stephanie M. Saunders, CPA. We nominate Big4Veteran.

Requirements for consideration:

• Bachelor’s degree required; master’s degree or CPA preferred
• Experience in executive leadership
• Strong strategic planning and execution skills
• Excellent communications and interpersonal skills
• Demonstrated commitment to ethical behavior and public protection
• Experience managing a diverse workforce and promoting an inclusive work environment
• Must be willing to relocate to the Nashville, Tennessee area
• Must be willing to be in the office 2-3 days a week (when not travelling)
• Must be willing to travel domestically and internationally

Excellent communications and interpersonal skills

We humbly rescind our nomination for Big4Veteran. If you want to throw your hat in the ring, by all means have at it.

We’ll wrap this up with Mr. Bishop’s August 22, 2023 President’s Memo: “You are not listening!”

As the president and CEO of NASBA, I have always felt comfortable in my ability to monitor and measure what I describe as the temperature of our stakeholders. While the State Boards of Accountancy are our primary stakeholders, we are certainly interested in the opinions and ideas of Board of Accountancy staff members, State CPA Societies and their staff members, and other national associations, all of whom we consider to be important stakeholders. I have recently written and spoken about some current disagreements between our various stakeholder groups (mostly pipeline related), and more importantly, the tension that it has created. In our discussions about those disagreements, I occasionally heard either “they are not listening, or “you are not listening.” When “you” is NASBA, I take that criticism very seriously.

This is a relatively new phenomenon. While I try to never be defensive, I have always considered NASBA’s efforts to communicate, including listening, to be effective. As I have stated many times, NASBA is you. Through our regional director led regional calls, state board relations staff, executive director monthly Zoom meetings, and open participation in conferences with breakout sessions, there are many opportunities for listening and dialogue. Similarly, through our State Society Relations Committee, inviting society staff to our conferences, and other visits, there should not be a dearth of communication. Despite these efforts, the “not listening” criticism is ever present.

I have spoken of the “distortion” of behavior after the tremendous disruption of the COVID-19 pandemic. Folks are just behaving differently and that includes challenging institutionalized and historic ways of doing things. This is not necessarily a bad thing as change is often painful, but ultimately proves to be positive.

In trying to interpret or understand what is behind the “not listening” commentary, I have begun to have some empathy. If we appear to be listening, but not willing to seriously consider viewpoints and express the need for change, then are we really listening?

At the recent NASBA Western Regional meeting, I approached a longtime friend who is a senior staff member of a state society, which has proposed legislation that could disrupt substantial equivalency and mobility. I was surprised when he commented that he didn’t know if I was speaking to him because of the society’s legislative actions. While his remark may have been made somewhat facetiously, it sensitized me as to the importance of how we communicate and the tone of our conversations, particularly when we disagree.

In my last President’s Memo titled The 150 Legacy, I wrote of the tremendous amount of work of generations of accounting leaders who for decades worked to get all states substantially equivalent, allowing a system of practice mobility that no other profession has been able to accomplish anywhere in the world. There is no doubt that I, and others, are passionate about protecting their work and the resultant privilege U.S. CPAs and their clients have enjoyed. I am starting to recognize that passion may be seen by others as a proverbial ‘stake in the ground’ and an unwillingness to consider changes to address the shrinking number of new CPAs…in other words, not listening.

At the most recent NASBA Board of Directors meeting, there were serious discussions about legislative challenges and the resultant perceived distrust, with a focus on the best ways to move forward. We have already reached out to key stakeholders to establish communication channels and opportunities. While there are disparities in opinions as to how we should address the pipeline issue, there seems to be consensus that no party wants to disrupt substantial equivalency or mobility. That provides an avenue for negotiation and middle ground opportunities.

This coming year (NASBA’s new fiscal year begins August 1), we are going to face unprecedented challenges, but also significant opportunities. After years of development and investment, we will soon be launching the new CPA Evolution examination with changes that will bring currency and flexibility into the entry examination for the accounting profession. We are already seeing signs of renewed interest in joining this great profession with increasing numbers of students enrolling in accounting programs at colleges and universities across the country. If we can muster the where-with-all to work together, I am confident that we can reach consensus as to changes in the process that should be considered.

I am personally committed to being open to new and innovative ideas, and most importantly, to listening!

Semper ad meliora (Always toward better things).

— Ken L. Bishop
President & CEO

And then he dipped out. Happy trails, Mr. B.

The post ICYMI: NASBA Is Looking For a New President appeared first on Going Concern.

Wyoming and Idaho were the states with the latest application deadline for BEC — November 15 — while most others cut off re-exam NTSs on November 12 and first-time NTSs on October 1. Basically if you were going to do it, you’ve long missed the window. That’s it, it’s gone. Finito. Shame, too, as it has consistently been the section with the highest pass rate since 2011.

We shall now observe a minute of silence for the junk drawer of the CPA exam.

…

…

…

Those who got a section in just before tomorrow’s deadline should expect their scores on December 27. Anyone who didn’t sit before the cut off will be having a good old time waiting for scores come 2024.

The post RIP BEC appeared first on Going Concern.

One CPA candidate is able to meet the 150-hour requirement by using dual enrollment credits earned five years ago while still in high school. In contrast, a workplace associate is pursuing the needed additional 30 hours by obtaining a master’s degree at a cost of $30,000. The National Association of State Boards of Accountancy (NASBA) considers these to be equivalent college credit hours. Clearly, they are not.

While CPA firms continue to have difficulty finding and retaining qualified accountants, the NASBA continues to defend the 150-hour rule. They do so using the concept of substantial equivalency, which is defined in Section 23 of the Uniform Accountancy Act (UAA). This Act sets forth three pillars of equivalency. These are (1) pass the CPA exam, (2) work for one year under a licensed CPA, and (3) obtain 150-hours of education.

Quantity Over Quality?

For the third pillar of equivalency, the NASBA emphasizes the quantity of required college credit hours, but the quality of such credit hours is not explicitly considered.

To be sure, the language in most state laws includes phrasing such as “content as approved by the board.” The problem is, the several state boards do not audit individual college or university course concept coverage. In Florida, for example, the Board of Accountancy reviews colleges’ accounting major syllabi in order to gain insight into an institution’s stated course content coverage. However, there is no subsequent assessment of whether this content is actually being delivered in a classroom.

To a significant degree, state boards rely on regional accrediting commissions as a basis for assuming quality. And, to a lesser degree, they rely on private accreditation bodies such as the Association to Advance Collegiate Schools of Business (AACSB) or the Accreditation Council for Business Schools and Programs (ACBSP). While accreditation by these bodies provides some comfort in the area of educational quality, such comfort is tenuous.

Why? Because accreditors do not examine the depth of course content coverage in specific majors or programs. For the most part, accreditors assess the financial viability of an academic institution and the degree to which its mission is being pursued. If an approved course syllabus sets forth specific concepts to be covered, accreditors have no idea whether that content is actually being delivered to students. This undermines the soundness of the 150-hour third pillar.

Quality

Sadly, quality is under pressure at many tuition-dependent institutions. As budgets are stretched and cash flow constricted, academic standards are being relaxed in order to attract students. Institutions that shorten program length, that shorten class meeting time, and that reduce course content coverage all undermine quality.

The devolution of course content coverage is not readily apparent to those outside of academia. However, some are beginning to take notice. For example, writing in Business Insider, Ayelet Sheffey noted that “there can be a significant disparity between the quality of programs offered online and in person.”

I recently delivered an 8-week online finance course at a small, private university. I won’t do so again. That course covered only about 15% of the content coverage of a traditional 15-week course, did not require a textbook, and did not have synchronous student/instructor interaction. I believe this is an example of the quality disparity to which Sheffey is referring. One CPA candidate might take this online course while another takes the 15-week course. The NASBA counts them as equivalent.

To be sure, there are quality online programs at both large and small institutions. Penn State World Campus and Purdue Global Online are examples, just to name two. But the NASBA makes no distinction between courses taken at institutions that deliver quality courses and those that do not. This undermines the soundness of the 150-hour third pillar.

What Courses Count?

Once a student in Florida has both earned a bachelor’s degree and achieved the prescribed 30 accounting and 36 general business hours, the additional 30-hours needed for licensure, pursuant to Chapter 473.308 (3) of the Florida Statutes, simply need to be college credit. Indeed, such hours can be obtained in any subject matter area (e.g., coaching, theater, or basket weaving), or at any content level (high school dual enrollment, freshman, sophomore, etc.).

Most states accept credits in a manner similar to that of Florida. Accepting any and all college credit, no matter what the subject matter area, undermines the soundness of the 150-hour third pillar.

Summing It Up

Clearly, passing the CPA exam is a solid pillar of equivalency. Clearly, working under the mentoring of a licensed CPA is a solid pillar of equivalency. On the other hand, an additional 30 hours of college credit at any content level, and in any topic area, fails the equivalency test and undermines the soundness of the 150-hour third pillar.

Both the Minnesota Society of CPAs and the South Carolina Association of CPAs are proposing legislation that will allow a CPA licensure candidate to substitute workplace training for required college credit. If workplace training trumps college credit in terms of a CPA candidate’s professional development, then such training should be validated by the NASBA. Doing so will emphasize the quality of learning, rather than the quantity of college credit hours earned.

About the author:

Dr. William Hahn is a CPA with four years of audit experience with Ernst & Young, twenty years of CFO experience with NASDAQ traded banking organizations, and thirty years of teaching both accounting and finance in both undergraduate and graduate programs at higher education institutions. He has published over thirty articles in practitioner and academic journals, and is a coauthor of a textbook published by Pearson titled Forensic Accounting.

View more letters to the editor published here.

The post The 150-Hour Rule: A Case of Quantity Over Quality appeared first on Going Concern.

This from a press release on Friday:

EY was the subject of a Securities and Exchange Commission (SEC) order that included a number of professionals licensed as Texas CPAs who were found to have cheated on ethics exams and on a variety of other examinations required to maintain their Texas CPA licenses. The SEC had further determined that EY had withheld this misconduct from the SEC staff who were involved in the investigation.

“The action represents the Board’s message to all Texas licensees that the Board will not tolerate any form of professional misconduct,” said TSBPA Executive Director William Treacy.

That’s it. That’s the press release.

Earlier:

How Exactly Did EY Auditors Cheat on CPE Exams? Details From the SEC Order

The post The Texas Board of Accountancy Slapped EY With a Huge Fine appeared first on Going Concern.

46 percent of student respondents cited “career stability and comfortable lifestyle” as one of the top motivations to pursue a career in accounting. The ability to find solutions within numbers and data (25%), the opportunity to contribute to society (23%) and the chance to impact sustainability (21%) rounded out the list. Almost 8 in 10 accounting and STEM students surveyed believe an accounting career will deliver long-term value and 34 percent of the students see a career in accounting as a steppingstone to other leadership opportunities.

Great. That’s all great. Let’s talk about this part though. There are citations littered throughout the text in EY’s report, we’ll hit each of them as we go.

The CPA career path advances opportunities

In a survey by the Center for Audit Quality (CAQ) and Edge Research, 82% of undergraduate accounting majors and 74% of recent accounting graduates find value in the CPA exam, citing respect, career advancement and higher earning potential as the top motivators for obtaining CPA licensure

They’re talking about this CAQ survey: Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities. The one that contains this quote:

The EY survey report continues:

CPAs bring desirable skills to C-level executive roles. According to recent survey data shared by the Association of International Certified Professional Accountants and the Chartered Institute of Management Accountants, the top undergraduate major among CFOs was accounting. Additionally, of the 652 CFOs surveyed in that study, close to 45% were CPAs.

They’re now referring to this: Diversity continues to rise among CFOs and CEOs, survey shows in Journal of Accountancy (January 2022).

Next:

Yet the National Association of State Boards of Accountancy’s data indicates that the number of CPA exam takers fell by almost 50% between 1990 and 2021. [Ed. note: new CPA exam candidate data came out just before EY released this survey and surprise, it’s worse]

Another cite here. The More Things Change, the More They Stay the Same: Addressing the CPA Pipeline Crisis written by Rick Reisig, CPA and published on NASBA’s blog on March 14, 2023. Choice quote from his article:

Yes, like me, many of us obtained a CPA license prior to the 150-credit hour education requirement, and we’re doing “just fine.” We need to acknowledge that we expect much more from our staff when they come to us — particularly during their first year with the firm—than we ever did before. If there were ever a time we need our young staff to come to us with more education not less, it’s now. That’s what CPA Evolution is all about–providing the education and the skillsets not needed yesterday, or even today, but those that will be needed for tomorrow! How can relying on the experience earned “yesterday” be an effective replacement for the education necessary to prepare our staff for what will be needed tomorrow?

Then EY swings back around to the CAQ report:

However, according to CAQ research on increasing diversity in the accounting profession pipeline, many students have expressed that the cost and time needed to reach the 150 credit hours required for CPA licensure serve as a big obstacle.

For 52% of the non-accounting students, not being able to afford the 150-hour obligation was a reason for not choosing the profession. This concern was even higher among Black (62%) and Hispanic (69%) respondents.

Interestingly, in the EY survey it’s the executives who support alternate paths to CPA licensure more than the students. 87 percent of executives surveyed believe the profession would benefit from alternate pathways to earning a CPA.

Said Becky Burke, EY Americas Assurance Chief Operating Officer: “Our survey findings underscore the importance of creating alternate paths for students to become CPAs. A career in accounting can open the door for many opportunities. Organizations, academic institutions and professional associations can collaborate to demonstrate the benefits that a career in accounting provides and remove potential barriers to entry.”

Right now the prevailing alternate pathway being considered is 120 units and two years of experience as introduced in Minnesota and hated on by the AICPA and NASBA. The debate on that continues.

Does the 150 Hour Rule Provide Value to the Profession or to Students as Future CPAs? No, Says Professor

The post EY Survey: Students and Executives Alike Support Alternate Pathways to CPA Licensure appeared first on Going Concern.

Today we’re going to look at CPA exam candidate numbers. In a vacuum the 2022 numbers aren’t terrible — 30,251 new CPA candidates, 67,336 unique CPA candidates, and 18,847 CPA candidates who passed their 4th section that year. These numbers are of course all down from 2021 — 32,186 new CPA candidates, 72,271 uniques, 19,544 candidates who passed their 4th section for 2021 — and very, very down from 2016’s high of 48,004 new candidates, 102,291 unique candidates, and 27,889 candidates who passed their 4th section that year but we expected that. 2021 to 2022 that’s a 6% decrease in new CPA candidates, a 6.8% decrease in unique candidates, and a 3.6% decrease in 4th sections passed. Given how ashy the pipeline is at the moment, it could be a lot worse.

Uniques are probably the most important metric here as unique candidates represent overall interest in sitting for the exam. Let’s look at the data going back to 2006.

So unique CPA exam candidates have decreased 34.2% since the last high in 2016 and 35% since the peak in 2010 and the number is the lowest it’s been in the 17 years included in the Trends report. Fun.

About that jump in 2010. I was working in CPA review at the time and remember it well because students were stampeding into the exam so they could sit before the big CBT-e change in 2011. CBT-e added questions on International Financial Reporting Standards to the exam for the first time along with “other sweeping and significant changes” per NASBA messaging at the time. “The new IFRS questions and other changes to the exam are the first major revisions since the CPA exam was computerized in 2004,” read a joint press release from AICPA, NASBA, and Prometric issued January 2011. The very idea of sweeping and significant changes scared the pants off of aspiring CPAs and led to artificially inflated candidate numbers the year prior, a phenomenon widely recognized by the AICPA and CPA review providers as a thing that happens any time there’s a big change coming down the pipe.

In 2017 the exam changed again. Test time increased from a total testing time of 14 hours to 16 hours as multiple choice questions decreased in favor of an increase of task-based simulations, the latter adding an hour of test time to both REG and BEC. Prior to this change there were no simulations in BEC so we can all understand why candidate numbers were high leading up to the April 2017 change. 2015-16 was also the year completed accounting degrees peaked at 79,174 total (BS+MS) and it’s been a downward slide since so there was also a larger potential CPA candidate pool that likely contributed to higher exam numbers in 2016.

All that to say, big change coming = big candidate numbers. There was another big CPA exam change in 2018 though that was mostly a user experience improvement (hello, Excel!) and did not appear to lead to artificially higher candidate numbers.

Being less clairvoyant and more occasionally observant, when I wrote about the 2021 AICPA Trends report last year I predicted big candidate numbers because the redesigned 2024 CPA exam is a big change, bigger even than the biggest change to date since the computerization of the exam nearly 20 years ago. Here’s what I said:

CPA Exam Numbers and The Pandemic

More than any other data point in the 2021 Trends report, CPA exam candidate numbers were most affected by the pandemic due to test center closures, government lockdown restrictions preventing in-person testing, and candidates quarantining after exposure to coronavirus or avoiding in-person testing entirely due to virus concerns. The CPA Evolution project will see the launch of a fully transformed and refined CPA exam in 2024, no doubt “artificially” inflating new candidate numbers in the next few years as we saw happen ahead of the launch of CBT-e in 2010/2011. The sweeping change will mean a flood of candidates who might otherwise have waited to take the exam if taking it at all, a thought that should be comforting to Barry Melancon as he lies awake at night trying to figure out why no one is taking the CPA exam. Should candidate numbers remain where they are or dip even lower in the next Trends report despite the massive CPA exam change in 2024 ahead we have a big, big problem. Let’s not think about that for now.

The AICPA backed up my supposition in this mention under Trends in the number of new CPA candidates by year in the 2021 Trends report:

And this under Trends in the number of unique CPA candidates by year:

Hate to say it but we all might be disappointed and probably shouldn’t play the lotto any time soon. In August of this year, Surgent EVP Liz Kolar wrote a great guest post for us covering pipeline woes and shared her own observations about expected candidate numbers as we approached the final months of testing before CPA Evolution takes over in 2024. She wrote:

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.

Of course this latest Trends report doesn’t cover 2023 so we may be surprised when the next report rolls out in 2025. But everyone’s known since 2019 that a huge CPA exam change was coming and CPA Evolution was officially announced more than three years ago. Where’s the tsunami?

If a 6.8% decrease in unique candidates is the artificially inflated number then things are even worse than they seem. The smaller decrease in 4th sections passed (3.6%) suggests that there may be people with some sections passed who are motivated to finish the exam before 2024 if we analyze historical decreases going back to 2016:

• 5.6% decrease 2020-2021
• 11.4% decrease 2019-2020
• 2.4% decrease 2018-2019
• 6.2% decrease 2017-2018
• 8.5% decrease 2016-2017

So that’s good if true. Let’s hope we’re just being unreasonably negative as usual and wait until the next report comes out before anyone starts freaking out.

The post No One Will Be Surprised to Hear CPA Exam Candidate Numbers Are Down in Every Way the Numbers Can Be appeared first on Going Concern.

[She] said having the equivalent of five years of higher education remains a good idea, and removing the requirement is no silver bullet for dealing with a talent shortage. It took about two decades of work to align all 50 US states around the current standards and get agreement to recognize each other’s licences, and trying to repeat the feat looks daunting.

“What exists is a very delicate system of agreement and trust,” she said. “This has been my challenge with Minnesota. It just takes one to upset the apple cart and that could upend mobility across the country.”

With the AICPA’s position in mind, here are some highlights from Boz’s apple cart-upsetting post on the MNCPA blog:

Simply put, the 150-hour requirement is a barrier to entry into the accounting profession. Research done by John Barrios, an assistant professor of accounting at Washington University in St. Louis, found that the 150-hour rule reduced those taking the CPA exam by 15%. When that barrier is reduced, more candidates will take the exam. Research done by Berry College professors Brian Meehan and E. Frank Stephenson found that elimination of the 150-hour rule (to take the exam) increased those taking the CPA exam by 25%.

What is troubling is there is no evidence that this barrier has elevated the profession. Barrios found that those with 150 hours did not have higher CPA exam pass rates, nor did those people stay longer in public accounting or more quickly become a CPA firm partner. Meehan and Stephenson found that elimination of the 150-hour rule (to take the exam) did not impact CPA exam pass rates, suggesting that the 150-hour rule does not necessarily eliminate poorer performing candidates.

GET OUT OF HERE WITH YOUR FACTS AND RESEARCH.

In a guest article published here on GC in August titled “150 Hours is a Barrier – Really!,” fellow educator Sharon Lassar, John J. Gilbert Professor and Director of the School of Accountancy, University of Denver, wrote of the Barrios study:

Satisfyingly, Barrios found value in earning a master’s degree. He did not find value in a hollow extra 30 credit hours. Those with a master’s degree are promoted faster. As the academic director of the MACC and STEM-Qualified Master of Science in Accounting, Technology, and Analytics at the University of Denver, I enjoy reading research that supports my personal observations. Our graduate degree holders are promoted quickly, given big raises, and constantly recruited by placement professionals.

Back to Boz:

I have not seen one single piece of research that supports the 150-hour rule. The AICPA has provided no evidence to support its claims that Minnesota’s efforts to offer alternative pathways are “lowering the bar” or that the 150-hour requirement has “elevated accounting from a trade to a profession.” For a profession that prides itself on evidence-based decision-making, the AICPA’s comments are quite troubling.

But MuH MoBiLiTY

This fall, I began my 20th year of teaching as a university accounting professor. It will be my 20th year of helping students navigate how to earn the 150 hours needed to become a CPA. I imagine very few professors in the nation advise more students than I do. When my students ask me why they need 150 hours, all I can tell them is, “Because it’s the rule.”

When they ask if the rule provides value to the profession or to them as future CPAs, all I can tell them is what the evidence has shown: No.

Students take a hit on both the revenue and expense sections of the income statement with the requirement to have 150 college credit hours: lost wages and increased tuition and fees. When aggregated, this is tens of millions of hours and hundreds of millions of dollars.

And yes, he did the math on that:

My simple estimate, which needs refining and is for discussion purposes only, is that the nation’s 33,000 new CPAs each year require an average of 20 additional credits, which is 660,000 total credits. One credit is intended to be 40 hours of work. The result is 26.4 million extra hours per year. Applying an inexpensive rate of $300 per credit, I compute an annual cost of $198 million. My sense is the number of hours is high but the cost may be low.

In summation:

Education is valuable. As a profession, we are lifelong learners. As an educator, I acknowledge that learning includes both classroom and work experience. The debate about 150 hours is not about the value of education, it is about setting practical requirements for CPA licensure that align with the demands of the profession. Flexibility in combining formal education and work experience supports the values and demands of the profession.

If you’d like to jump into the fray to discuss the topic on Boz’s LinkedIn you can do so here or let ‘er rip in the comments. If you prefer, you can write a letter to the editor with your opinions on the 150 hour rule, for or against.

We must change the conversation around pathways to CPA licensure [MNCPA]

The post Does the 150 Hour Rule Provide Value to the Profession or to Students as Future CPAs? No, Says Professor appeared first on Going Concern.

The Illinois CPA Society (ICPAS), in partnership with the Center for Accounting Transformation (the Center) and other stakeholders, has launched a survey to figure out why modern day accounting students and professionals are so uninterested in pursuing the CPA credential. ICPAS tackled the issue before in 2020’s A CPA Pipeline Report: Decoding the Decline but things have changed since then and young people who graduated into the pandemic may have unique perspectives. Or it will just be the same perspectives and the profession will have more data points echoing them. The new findings will be published and shared to bring awareness of, and renew focus on, the most relevant and effective strategies to promote the CPA credential and ensure its sustainability and relevance moving forward, said ICPAS in a press release.

They also said:

A key focus of this survey is to understand why a growing number of accounting students and young professionals in accounting and finance careers don’t finish the CPA exam or elect to never take it at all. Accounting and finance students and professionals under the age of 35, with and without the CPA credential, are encouraged to complete the survey. The organizing partners also encourage all accounting and finance professionals to share the survey link with those they know in the target audience.

The responses are anticipated to reveal recent trends and key issues that will arm CPA profession leaders and stakeholders with a deeper understanding of the current perceptions of the profession, the decision-making process regarding pursuing or not pursuing the CPA credential, and the perceived value and relevance it holds today.

“The profession is aligning on the approaches necessary to help stem the tide and ultimately reverse the negative CPA talent pipeline trend we’re collectively facing,” says Geoffrey Brown, CAE, ICPAS president and CEO. “While there’s more research than ever on this topic, interest continues to be high in learning more about the perceived barriers deterring prospective CPAs from ever pursuing the credential. A lot has happened in the three years since our last survey was issued, which is why we were compelled to partner with influential stakeholders across the country to garner a fresh look.”

Survey here, it takes about 10 minutes to complete and you have until December 15, 2023 to do so.

The post Students and Professionals Under Age 35 Are Invited to Take This Pipeline Survey appeared first on Going Concern.

If you are a first time BEC section exam candidate most states will stop processing your NTS after next Monday, Oct. 1. Do not delay! Get in your BEC NTS ASAP. BEC has a 60% pass rate – by far the highest. You don’t want to take a discipline! Run, don’t walk to NASBA’s site now. pic.twitter.com/Zn8LrdEVxr

— Jack Castonguay, PhD, CPA (@profjackc) September 25, 2023

If you are sitting for the exam in Arizona or Texas, sorry but your window to apply for BEC as a first-time taker is already closed.

Candidates sitting for BEC for the first time in the following jurisdictions have until Sunday, October 1 to apply for this section:

• Alaska
• Arkansas
• California
• Colorado
• Connecticut
• Delaware
• DC
• Georgia
• Guam
• Hawaii
• Illinois
• Indiana
• Iowa
• Kansas
• Louisiana
• Maine
• Maryland
• Massachusetts
• Michigan
• Minnesota
• Missouri
• Montana
• Nebraska
• New Hampshire
• New Jersey
• New Mexico
• New York
• North Dakota
• Ohio
• Oregon
• Pennsylvania
• Puerto Rico
• Rhode Island
• South Carolina
• Tennessee
• Utah
• Vermont
• Virgin Islands
• Virginia
• Washington
• Wisconsin

A few jurisdictions are allowing a bit more time, South Dakota being the most generous with a deadline of November 14. Check the chart if yours isn’t listed above. Check the chart anyway because like an idiot I typed all the states above by hand.

Candidates who want to sit for a retake of BEC before it disappears forever have until November 12 to apply except for those candidates sitting in Idaho (November 15), Kentucky (November 8), North Carolina (October 15 for both first-time and retake BEC sections), Virginia (November 14), and West Virginia (November 8).

Regardless of how much time you have left, we strongly advise getting that NTS in ASAP as the last quarter of the year is typically a very popular period for CPA exam testing and especially so with a big change coming at the start of the new year. There are also rumors about Prometric closing down the less popular testing centers so that’s another variable to keep in mind. Just get it done now if you can.

As the good professor said, you really don’t want to have to do a discipline in 2024. If you pass BEC before CPA Evolution drops in January, you can avoid the new CPA exam sections completely assuming you pass AUD, REG, and FAR before your scores start expiring.

Here, I’ll even save you a click. GO!

https://nasba.org/exams/cpaexam/

Also, and this has nothing to do with anything, October 1 is National Homemade Cookies Day so go ahead and make yourself a batch after you get that NTS in. You deserve it.

The post CPA Exam Candidates: You Better Hurry Up and Apply For BEC Before It’s Gone Forever appeared first on Going Concern.

I love accounting. Though an attorney and not a CPA, I’ve spent over 30 years in and around the CPA profession, retiring from PwC as a Principal. The profession provided me with a lifestyle I never believed possible. But not until being appointed to the Maryland State Board of Public Accountancy following my retirement did I truly understand how ‘white’ the profession had become – only 2 percent of CPAs are black – and how difficult it has been to change that. Shame on me for not taking notice sooner.

The CPA profession knows this is a problem and is struggling with its causes – and solutions. A high level Advisory Group was recently empaneled by the AICPA, in conjunction with NASBA, to seek ways to increase the numbers of students becoming CPAs. This follows the previous National Committee on Diversity and Inclusion, as well as the AICPA’s Pipeline Acceleration Plan. CPAs love to study things.

Many in the profession, especially at the state CPA society level, believe the 150-hour education requirement is a major cause for the lack of especially minority students entering the profession, if not the sole cause. Their argument makes sense when you consider the additional year of education was approved by the AICPA and NASBA in the late 1980s when colleges cost much, much less and few students graduated with crushing debt loads. No one could have foreseen that costs would increase an astounding 200 percent. If so, it’s likely the profession would have made a different choice. Given that college costs are unlikely to drop, and probably continue to rise, the issue needs to be addressed.

Many studies have shown that minority students are especially sensitive to the cost of college and wary of debt; as such, the lack of minority students becoming CPAs becomes a cost-benefit function. The juice isn’t worth the squeeze in the words of one politician. Becoming a CPA requires five years of college education including a baccalaureate degree, an additional year of work experience and passing the very difficult Uniform CPA Examination. For around the same amount of time and cost one can become a lawyer, whose bar passage rates in most states are much higher than for the CPA exam, as is starting pay.

To make becoming a CPA less expensive, I support allowing students to use on-the-job ‘experiential learning’ credits to meet their 150-hour requirement. Students work full-time and get paid while concurrently fulfilling their one-year experience requirement. The work they perform is their education, and is incorporated into on-line courses specifically designed by accredited institutions, and the credits go on a college transcript. This approach would satisfy state mobility and substantial equivalency requirements and, from a regulator’s perspective, it provides assurance the courses are as academically rigorous as any other course provided by the accredited institution, on-line or not. Being on-line significantly lowers the cost of providing the course for the institution, and doesn’t take up a physical ‘seat’ which can be taken and paid for by another student, so tuition should be less.

Just as important, since experiential learning credits are no different than any other credit on a student’s transcript, they should be accepted by every state board of accountancy without their having to change a statute or rule. The two state accountancy boards to consider the issue to date, New Jersey and Maryland, have come to this conclusion. This means that experiential learning can be quickly implemented. It can buy time for the profession to think about the 150-hour requirement yet help attract especially minority students to the profession in the interim. Plus, regardless of whether 150-hours is maintained or not, experiential learning still deserves to be utilized.

Accounting academics and especially accounting department chairs fret that experiential learning courses, and the AICPA’s Experience, Learn and Earn program which enables students to work their last year while learning on-line, may deter students from pursuing a Masters in Accounting. The concern is that students who leave the classroom may not return. But the fact is that students are already abandoning Masters in Accounting programs. Neither ELE or experiential learning can be blamed for that.

The good news is that college presidents typically view experiential learning programs positively, and a number of schools utilize them. Vanderbilt was recently honored for its experiential learning program, as was Pace University, Indiana University, Tufts, University of Alabama, the University of North Carolina at Chapel Hill, NYU, Columbia, Boston College, Rutgers University and a number of other nationally recognized schools. In my state, one of the University of Maryland’s schools has an extensive experiential learning program, though not for accountants – yet. What is needed for that to happen are employers who are willing to work with educational institutions to shape experiential learning programs for accounting students, and employ them in their firms and businesses.

If only two percent of the workforce of Starbucks were black, no amount of corporate explanation or detailed studies would keep their customers from boycotting and demanding change. Yet, individuals and businesses which otherwise support social change and racial equity are complacent to allow their CPA advisors to continue to be overwhelmingly white. It’s only a matter of time before their patience with the profession runs out. A CPA degree can lead to a multitude of highly rewarding career paths, including small business owner, corporate CFO and Comptroller as well as consulting and other advisory roles. Minority students should not continue to miss out on these opportunities. It is the obligation of the profession to make sure that does not happen.

Joe Petito currently serves on the Maryland State Board of Accountancy and on the board of directors of the NASBA center for the Public Trust. He has served on numerous AICPA and NASBA committees, including the AICPA-NASBA IQAB Committee, the AICPA-ABA National Conference of Lawyers and CPAs, the NASBA Legislative Support Committee as well as on the board of directors of the National Judicial Conference. He currently resides in Bethesda, Maryland.

The post Opinion: On-the-Job Experiential Learning Credit to Meet the 150-hour Requirement Makes Sense appeared first on Going Concern.

The AICPA announced the formation of a National Pipeline Advisory Group, published an article about its focus on the accounting talent shortage, and scheduled a webinar titled “Special Pipeline Series: Path to 150.” All of this happened after the Center for Audit Quality (CAQ) released its study titled “Increasing Diversity in the Accounting Profession Pipeline.” I previously wrote about this CAQ diversity study and I have been watching for the AICPA to acknowledge its existence. I have yet to see it.

Why is the AICPA ignoring a study that provides insight on an issue the AICPA has been trying to address since the mid-1960s? From 2008 to 2011, I served on the AICPA’s Minority Initiatives Committee and learned the history of various initiatives. Yet, the AICPA is ignoring a sound study that identifies root causes for the lack of diversity in the profession pipeline.

Maybe the study shows something the AICPA and NASBA do not want known. That is, the 150-hour rule has a disproportionate effect on underrepresented minorities. Those arguing to keep some version (any version – no matter how watered down) of the 150-hour rule will not consider other points of view.

The CAQ surveyed 1399 undergraduate business students with 35% identifying as Black/African American and 33% identifying as Hispanic. Black and Hispanic students change majors during college at a higher rate than other students. Overall, 40% of non-accounting majors considered majoring in accounting, and the percentage is higher among Black and Hispanic business students at 50% and 48%, respectively. Given such a high percentage considered majoring in accounting, it is important to understand why they ultimately decided against it. There are many reasons; please read the study.

Relevant to this commentary, is that 56% of White students who decided against accounting as a major identified not wanting to pursue 150 hours to become a CPA as a reason. This percentage jumps to 64% and 70% for Black and Hispanic students, respectively. Data show the 150-hour rule is a barrier and it is more of a barrier for Black and Hispanic students than for White students.

Rather than removing the barrier, some professional associations propose alternative paths to obtain the 150 hours. Those paths, however, may be a way to keep down those from humble beginnings.

Academic research finds no value in a 150-hour rule. Conversely, it demonstrates the value of a master’s degree. Dr. John Barrios found those with a master’s degree are more likely to be employed by a Big N firm, spend less time at each position, have more jobs, and are promoted more quickly. Dr. Alisa Brink and her coauthors found that individuals obtaining a 150-hour bachelor’s degree compare unfavorably to those who obtain a graduate degree in the likelihood of promotion from Senior Manager to Partner. The Experience, Learn and Earn (ELE) program created by the AICPA and promoted by NASBA falls in the 150-hour bachelor’s program category. ELE students do not earn a graduate degree.

A master’s degree is the most valuable way to meet the 150-hour rule. Students with the means to pursue this path will continue to do so. For those students without the means, less-valuable paths are available and ELE is yet another one. That less-valuable path may just “keep you in your place” – with more time in your position and a slower promotion track. Is that really what we want? The decision to keep a 150-hour rule where NO research demonstrates it has value is making our lack of diversity more pronounced.

If you believe that the CPA profession can be a life-changing choice for individuals, particularly those who come from humble beginnings and are willing to learn, work hard, and improve their communities, remove the 150-hour barrier.

The post Keeping the 150 Hour Rule Is Making the Profession’s Diversity Problem More Pronounced appeared first on Going Concern.

To summarize most of the article: barrier to entry, US workforce hemorrhaged 334,000 accountants and auditors in two years, pipeline pipeline pipeline, blah blah. Scrolling down we get to the important bit:

First-year audit associates can expect to earn $59,000 on average this year, up from previous years, while entry-level corporate accountants can bring in $65,500 on average, according to Robert Half salary data.

Wages rose quickly in the last two years, although growth has slowed this year, Britton said.

Companies, not just CPA firms, are struggling to fill senior accountant roles and jobs for accountants with three to five years of experience. The staffing shortage has driven up market rates, pushing typical salaries for senior accountants to $100,000, said Frances Moreno, managing partner of staffing firm Vaco’s Los Angeles office.

Despite recent pay increases, salaries haven’t kept up with the high cost of college tuition and wages for roles in competing fields such as finance, data analysis, or computer science.

Surgent’s Castonguay dismissed the recent raises, calling them a “temporary blip, not a correction.”

“How you improve the brand is by improving the work experience,” he said. “That’s getting rid of the 150 hours so people come into the profession, and paying them more.”

Professor Castonguay isn’t getting invited to any AICPA dinners any time soon.

Over at Financial Times, Stephen Foley delivered his own article on the pipeline topic, this one packed with juicy quotes from various Chicken Littles* warning that the sky is falling. Except it actually is and by the time the king does something about it, it will probably be too late.

Here’s Bob Cedergren, chair of the Minnesota Society of CPAs:

“The Deloittes and PwCs of the world have the masses, they have offices everywhere and the ability to draw on overseas talent,” he said. “We needed to take some action.”

And Julie Blaha, Minnesota state auditor:

“This is now a severe shortage, and it is causing a tsunami of problems. It’s a shallow pool, and we have to do something about the leak.”

And some Big 4 people who didn’t want to be named:

“The 150-hour rule has prevented many talented folks from joining the profession,” said one Big Four audit executive. “The cost of an extra year of school is prohibitive and isn’t necessary to succeed in public accounting, or business in general.”

At another Big Four firm, one executive pointed out that many states do not require that courses taken in the fifth year of education have anything to do with accounting. A senior partner involved in recruiting there asked: “Is there an alternative, such as learning on the job, which is as good as or better than learning in the classroom?”

Representing the king is longtime Going Concern favorite Sue Coffey (hey Sue, I know you are reading this ) of the AICPA:

[She] said having the equivalent of five years of higher education remains a good idea, and removing the requirement is no silver bullet for dealing with a talent shortage. It took about two decades of work to align all 50 US states around the current standards and get agreement to recognise each other’s licences, and trying to repeat the feat looks daunting.

“What exists is a very delicate system of agreement and trust,” she said. “This has been my challenge with Minnesota. It just takes one to upset the applecart and that could upend mobility across the country.”

Alright so if the profession can’t agree on 150 that leaves salaries as the next problem in need of solving. That one should be easy.

*I did not intend to imply any of the people quoted in this article are “yo-yo wielding simpletons“

The post 150 Hour Rule: Let’s Keep Arguing About What Color the Drapes Should Be While the House is Burning Down appeared first on Going Concern.

Here’s all that information plus some extra details in graphic form for those who prefer visuals:

And even more info! This is copy pasted directly from the PDF linked above.

The Public Accountancy Act (effective September 1, 2023) and Board Rules require that you meet the new education requirements to take the CPA Exam. After you have passed all sections of the CPA Exam you are required to submit transcripts showing that you completed at least 150 semester credit hours and completed a three-semester hour, Board-approved ethics course that meet Board Rules to apply for the CPA certificate and license.

1. Hold a baccalaureate or graduate degree, or its equivalent as determined by Board Rule, conferred by a Board recognized institution of higher education;
2. Complete at least 120 semester hours or quarter-hour equivalents in Board-recognized courses including at least 24 semester hours of accounting or equivalent courses as determined by Board Rule, and within the 24 semester hours of accounting at least 21 semester hours of upper-level accounting courses as determined by Board Rule, including two semester hours of accounting/tax research and analysis;
3. Complete at least 24 semester hours of upper level business coursework including two semester hours of accounting/business communications coursework.

The Board states it “is committed to process all Applications of Intent as quickly as possible because we understand your intent to take the CPA Exam prior to January 2024.” p.s. that’s 124 days from today, there are approximately 110 days remaining until CPA exam testing closes prior to the launch of the revamped CPA Evolution in January.

The bills that allowed the rule change — SB 159 and HB 797 — were sponsored in the state legislature by Sen. Charles Perry, a practicing CPA from Lubbock, and Rep. Angie Button, also a CPA. This change was assisted greatly by the efforts of the Texas Society of CPAs in an effort to ease a barrier that may have discouraged potential CPAs from sitting for the exam in their state. TXCPA “has been working for many years to address the CPA pipeline, encourage more students to enter the accounting education path, and ultimately to get more individual licensed as CPAs,” they said in a brief legislative update last year [PDF]. “One way to get there is to have more candidates/students enter the testing and licensure pathway before they move to other professions or occupations.”

Lastly, while we have you, here are some important upcoming dates Texas CPA exam candidates should put on their calendars:

August 31, 2023 – Last day to accept the Application of Intent (AOI) under the education requirements of the Public Accountancy Act of 2019.
September 1, 2023 – Effective date of the Public Accountancy Act of 2023 that includes the new education requirements. First day to accept AOIs under the new education requirements.
September 17, 2023 – Eligibility applications received on this day will have 90 days of eligibility to test.
September 18 through November 13, 2023 – Eligibility Applications received will have less than 90 days to test.
November 13, 2023 –Last day for Board approval of Eligibility Applications for BEC.
November 22, 2023 – First day to apply for the new Discipline sections BAR, ISC, TCP.
December 15, 2023 – Last day to take a section of the current CPA Exam AUD, BEC, FAR, REG.

Here’s hoping Texas gets a few more CPAs out of all this.

The post Effective September 1, You Can Sit For the CPA Exam in Texas With 120 Units appeared first on Going Concern.

A friend asked why I believe the 150-hour requirement is more of a barrier of entry to the accounting profession than a 120-hour requirement with added experience.

That is a great question. Although, it does not matter what I think. What have we learned through research? And, how good is the research?

The AICPA and several state societies have cited a study by the Illinois Society of CPAs to say the 150-hour rule is not one of the top 5 reasons students do not pursue a CPA. A leader in the profession told me privately that the Illinois study is “bunk.”

So why is the Illinois Society study questionable? First – the survey went to accounting students, graduates, and young professionals. It did not go to those who chose to study something other than accounting. Those who decide NOT to study accounting are not in the sample. Additionally, 89% of students who responded were already on a CPA track. We need to know whether the 150-hour rule prevents students from entering the pipeline. This study does not give us that information.

Second – I question the results. The participants selected three challenges or barriers associated with becoming a CPA. Workload time commitments and personal time commitments are the top two reasons. These variables sound like they might be capturing the same thing. We do not know how the results would change if these two highly correlated variables were collapsed into one called “time commitment.” An independent reviewer likely would have asked for this analysis, if the study was submitted for publication in a peer reviewed academic journal. The next three variables are similarly highly correlated: difficulty of the exam content, difficulty of applying for the exam, and fear of failure. With multiple highly correlated variables, the ability to pick only three, and the fact that the respondents were already in the pipeline and therefore had already sunk time and cost towards obtaining 150 credit hours, it is no wonder that the 150-hour rule is not in the top 5 barriers listed. Additionally, the impact of the 150-hour rule might already be captured with the time commitment variables.

The Center for Audit Quality (CAQ) recently released a more credible study. The AICPA should be reading and reacting to this study. The CAQ surveyed all business majors and asked those who did not study accounting, why not? Some interesting results from this study are that more than 40% of non-accounting majors considered majoring in accounting. Of those who considered majoring in accounting but decided against it, 60% cited not wanting to pursue 150 hours as either the major reason or part of the reason they did not study accounting. Of those who did not consider studying accounting, 54% cite not wanting to pursue 150 hours as part of the reason. For those who considered but decided against accounting, starting salary was the primary reason. That is a topic for another day.

Even more credible than the CAQ’s study is one by Dr. John Barrios, based on his dissertation, and published in what is unarguably one of the top three academic journals for accounting research. I encourage you to read it. You will gain an appreciation for the peer review process and an understanding of why it can take a long time to do a thorough academic study. Although I have read it a few times, I was fortunate to see Barrios present his findings. It was much easier to understand that way.

Barrios’s study tells us a great deal. But, relevant to this commentary, it tells us that implementation of the 150-hour rule resulted in about a 40% decline in the number of first-time candidates taking the CPA exam. The loss of pipeline was all through the distribution; both high-performing and low-performing students decided against pursuing the CPA after implementation of the 150-hour rule. And, through collected LinkedIn data, he shows that there is no difference in the career outcomes for those who became CPAs under a 150-hour regime and those who became CPAs under a 120-hour regime.

Satisfyingly, Barrios found value in earning a master’s degree. He did not find value in a hollow extra 30 credit hours. Those with a master’s degree are promoted faster. As the academic director of the MACC and STEM-Qualified Master of Science in Accounting, Technology, and Analytics at the University of Denver, I enjoy reading research that supports my personal observations. Our graduate degree holders are promoted quickly, given big raises, and constantly recruited by placement professionals.

Based on the research, I suggest states reduce the barrier to becoming a CPA and recognize the value of graduate education by requiring two years of experience for baccalaureate degree holders and one year of experience for graduate degree holders. Notice I did NOT say, 150 or 120 hours. The education requirement should be based on earning a degree, not random hours.

The post 150 Hours is a Barrier – Really! appeared first on Going Concern.

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.

The post CPA Exam Changes and Pipeline Woes Are a Perfect Storm of Problems For the Profession appeared first on Going Concern.

From Withum’s news release:

Students will be full-time apprentice-level team members at Withum, with an opportunity to work in all service lines and industries while earning credits for their curriculum-driven experience alongside university coursework to fulfill the remaining credits needed to reach the credits hour requirement to hold a CPA license. The students may also sit for the CPA exam during the program, affording them the opportunity to become licensed CPAs by the time they start their accounting career as full-time, entry-level Staff I team members at the Firm.

Five Seton Hall students will start at the firm in September and the pilot program lasts for a year. The news release includes a quote from one of them who said:

“Everyone knows how hard it is to obtain the CPA certification, and with this program, I am substantially closer to obtaining the certification. With the help of Seton Hall University and Withum, I can now continue my academic career with the people who helped me get here.”

They don’t say how much these five folks will be paid, only that they will “receive compensation during their final year of school.”

“We truly value Withum’s partnership and investment in this innovative apprenticeship model and the Seton Hall accounting talent pipeline,” said Mary Kate Naatus, Ph.D., Assistant Provost and Dean of Continuing Education and Professional Studies at Seton Hall University. “The combination of a strong curriculum with excellent faculty members with the real world ‘work for credit’ experience on-site at Withum is an exemplary model that mutually benefits the students, industry partner and the broader accounting field.”

Wow they’re really laying it on thick aren’t they.

“The war on talent remains at an all-time high in the accounting industry, the CPA Pathway Apprenticeship is a solution to expose emerging talent to the day-to-day life of an accounting professional at Withum,” reads the release. A similar collaboration between PwC and New Jersey’s St. Peter’s University was launched last year.

If you’re going to be forced to work in order to meet some arbitrary requirement that is proven not to have any positive impact on the quality of CPAs entering the profession, there are worse places than Withum to do it.

Seton Hall University and Withum Launch CPA Pathway Apprenticeship for Aspiring Accounting Students [Withum]

The post Withum’s Solution to the War on Talent Is to Throw Students Onto the Battlefield appeared first on Going Concern.

This deep dive was inspired by earlier research on student perceptions and attitudes toward accounting, especially attitudes among Black and Hispanic high school and college students [PDF of those findings here]. This quote included in that report is so important to the research it appears twice in the PDF so I’m including it here too:

The earlier research better defined the profession’s image problem and inspired the CAQ to take a deep dive into “students’ perceptions of and experiences with accounting to develop a clearer understanding of what can be done to further diversify the accounting talent pool.” So here we are at round two and this is what the CAQ found.

The research demonstrated a missed opportunity amongst a sizeable number of students, with four in ten non-accounting business undergraduate students reporting they considered accounting. Broken out by demographics, even higher rates of Black and Hispanic students say they considered accounting before choosing a different field of study. Asked about their experiences with introductory accounting courses, only 1 in 3 non-accounting majors who considered accounting said the content was interesting or engaging. Consistent with our prior research, the lukewarm reception indicates a need for increased classroom engagement on accounting across a sizeable number of students who are still in the process of deciding their major.

Other themes emerged among students who ultimately chose not to pursue accounting. Chief amongst their reasons was a lack of passion, followed by higher starting salaries for other majors and not wanting to pursue the additional academic hours necessary to become a CPA (i.e., the 150 credit hour requirement).

Let’s break down a few points by topic.

Reasons for Not Choosing Accounting as a Major

When discussing the profession’s diversity problem, the old white guys at the top almost always get some blame but as you can see below “Don’t see people like me represented in profession” is actually way down on the list of reasons why students don’t choose accounting as a major.  At the top of the list: lack of interest/passion in accounting, other majors pay better, the 150 hour rule sucks, lack of math skills (wtf), and being unable to afford 150 hours.

Shout-out to the peers who pursued accounting making sure everyone knows how miserable and full of regret they are. Keep preaching the good news, kids.

A breakout quote from a recent graduate who identifies as Black/Hispanic explains a well-known problem with accounting education:

“…it wasn’t taught to make it more engaging or make you more interested….it’s almost like they were trying to do it to see who they could eliminate…the classrooms were so big, and it was just going slide by slide almost and it was not engaging.”

Another Blow to the 150 Hour Rule

As literally everyone knows but only some are willing to compromise on, the intentional barrier to entry that is the 150 hour rule is doing too good a job of keeping people out of the profession. Too good a job.

While the research showed the 150 credit hour requirement is a barrier across the board, it is more conspicuous for Black and Hispanic nonaccounting students, and in particular those students who considered accounting but opted out, meaning that these students looked into accounting as a major but ultimately went elsewhere due to the additional credit hour requirement. These students perceive the rule as an expensive, time-consuming requirement to advance their future career. To be sure, these students see the CPA license as a valuable certification, but they don’t view it as worthwhile to pursue.

Only a quarter of those students who considered accounting said they don’t want to take the CPA exam but half said they don’t want to pursue 150 hours which suggests that allowing for a second pathway requiring just 120 hours of education like the proposal in Minnesota might successfully bolster dwindling CPA candidate numbers. In fact, the research showed that most students favorably view the CPA credential; 82 percent of accounting majors report the CPA license would be extremely valuable or very valuable for their career goals, 77 percent of accounting majors who are not planning to, or are unsure about pursuing the CPA license, also reported they see value in the credential.

Major Obstacles to Becoming a CPA

All demographics report the time required to study for the CPA exam as a top obstacle but costs of additional education and CPA exam prep rank highest among Black and Hispanic accounting majors.

Chief barriers cited by those not pursuing the CPA were the beliefs they do not need the credential, and that CPAs have a poor work/life balance. The time/cost of the 150 credit hours and low starting salaries also were noted. In the qualitative research phase amongst recent accounting graduates, the top obstacles to pursuing CPA licensure were the time required to study for the exam as well as the rigor of the exam content. Of those recent accounting graduates who reported having already attained their CPA or are planning to pursue licensure, these factors were confirmed in the quantitative phase.

However, for those recent graduates who have yet to complete the 150 credit hour requirement, the cost and time associated with obtaining the 150 hours are the biggest factors. While employers offer numerous supports to recent accounting graduates to help with attaining CPA licensure – such as structured study groups, study materials, flexible work hours, and covering exam costs – fewer respondents reported taking advantage of these benefits.

This under-utilization of resources continues, despite accounting graduates perceiving these programs and support as useful. Early career professionals reported coverage of exam costs, flexible or reduced hours to study, and structured study groups as resources most useful. For Black graduates, an employer-sponsored mentorship program is at the top of the list as the most helpful support in pursuing CPA licensure.

What is the takeaway? The profession has ample evidence that the 150 hour rule is a hindrance to all students but especially those from diverse backgrounds. The question is what is it going to do with that information? That’s less a question and more of an accusation.

Full report below:

Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities [CAQ and Edge Research, July 2023]

The post Research: Why Students — Particularly Diverse Ones — Aren’t Pursuing Accounting appeared first on Going Concern.

As of today (July 21, 2023), you have 117 days until NASBA stops processing NTSs for BEC. If you get yours in before that, you have 147 days from today to sit for BEC before it disappears forever and December 15 is the tentative final day of testing for all sections before the new exam debuts in 2024.

Remember these dates:

Note an exception to the above: if you are a candidate in a CPA Examination Services (CPAES) jurisdiction and a FIRST TIME candidate taking BEC you must apply before October 1, 2023 and re-exam candidates in these jurisdictions must apply before November 12, 2023. Boards of Accountancy that do not use CPAES may have slightly different final application deadlines for first-time and re-exam BEC sections, check with yours if needed. More on that from NASBA here.

These are your important 2023 and 2024 CPA exam testing dates directly from NASBA, keep in mind these dates could change:

First, candidates should note that the last day of testing for all current CPA Exam sections (AUD, BEC, FAR and REG) is anticipated to be December 15, 2023. No CPA Exam sections may be scheduled from December 16, 2023, through January 9, 2024, to allow for conversion of IT systems to the 2024 CPA Exam sections. Candidates are encouraged to plan their testing schedules accordingly.

In addition, candidates wishing to take BEC in the latter part of 2023 need to know that the NASBA Gateway system will stop processing Authorizations to Test and Notices to Schedule for BEC on November 15, 2023. This will necessitate that Boards of Accountancy require final application deadlines (first-time and reexam) for BEC sections. These deadlines are yet to be determined and will be published on NASBA’s website once they become available, and shared by each Board of Accountancy.

Conversely, Boards of Accountancy will also need to establish initial application acceptance dates for discipline sections: Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), and Tax Compliance and Planning (TCP). Authorizations to Test and Notices to Schedule for BAR, ISC and TCP will not be processed by NASBA’s Gateway system until November 22, 2023. These initial acceptance dates are also yet to be determined and will be published on NASBA’s website once they become available, and shared by each Board of Accountancy.

AUD, FAR and REG applications can be continually submitted and processed as the same codes will be used for the core sections that will start in 2024, however the scheduling blackouts do apply.

It is anticipated that testing will commence on January 10, 2024, for all sections. While the core sections (AUD, FAR and REG) will first be available for scheduling through March 26, 2024, in the first quarter of 2024, the discipline sections (BAR, ISC and TCP) will be available through February 6, 2024. Scores are anticipated to only be released once per test section per quarter due to necessary standard-setting analyses and activities.

TLDR:

• NASBA stops processing Authorizations to Test and Notices to Schedule for BEC: November 15, 2023
• First day NASBA starts processing Authorizations to Test and Notices to Schedule for BAR, ISC and TCP: November 22, 2023
• Last day to test for all current CPA exam sections: December 15, 2023
• Tentative first day of CPA Evolution testing: January 10, 2024

Regarding scores, brace yourselves. First the good news: because the initial score releases of 2024 hearken back to the ancient time before NASBA discovered computers, CBT Administration and Executive Directors Committees of NASBA have recommended that Boards of Accountancy allow an extension of valid passing credit when the clock strikes 12:01 on January 1, 2024 that would extend those credits to June 30, 2025. Meaning regardless of how much time you had left on a passing score, if it’s valid on January 1 then it would be extended to June 30, 2025. This is merely a recommendation, it’s up to each state Board to adopt it. A map on NASBA’s site shows which state Boards have adopted the rule as of February 10, 2023. So, most of them.

And the bad news: they’re doing this because scores will not be released as quickly as some candidates might be used to (cue booing and angry emails to NASBA). As much as candidates might want to believe this is intended to further torture them for shits and gigs (an assumption we can’t say with certainty isn’t true), The Powers That Be have to do some tweaking of new material starting out and it’s unlikely score releases will be this bad forever. All the more reason to knock out what you can before December 15.

Remember all of this can and probably will change so be prepared. There will be hiccups, exacerbated by continued Prometric cost-saving measures (i.e. testing center closures), and it will take some time for the benevolent overlords of the CPA exam to smooth out all the kinks. Be prepared, be patient, and most importantly, be flexible. AND TAKE BEC THIS YEAR IF YOU CAN.

The post CPA Exam Candidates: Save These Dates appeared first on Going Concern.

Back to the reason why we’re here, the AICPA has posted a call to all CPAs to help set passing scores for the 2024 CPA exam.

If you answered yes to all the above, you can volunteer and participate in determining the passing score for the 2024 CPA Exam. Nominate yourself or others online! https://t.co/Kc5gE3XyUa pic.twitter.com/Oqt2LdO5ZZ

— American Institute of CPAs (@AICPA) June 29, 2023

Participants will be selected to review one of the six Exam sections (Auditing and Attestation (AUD); Financial Accounting and Reporting (FAR); Taxation and Regulation (REG); Business Analysis and Reporting (BAR); Information Systems and Controls (ISC); or Tax Compliance and Planning (TCP)) based upon their professional experience. There will be one panel per exam section, and each panel will meet for up to two days. Input from these panel meetings will be provided to the AICPA Board of Examiners (BOE), the ultimate authority charged with establishing passing scores for the exam. Selected participants will convene in December 2023 or early January 2024 at the AICPA’s office in Ewing, New Jersey.

Requirements are as follows (sorry, new passers):

• Be a licensed CPA with at least two years of experience (including the past 12 months) supervising the work of newly licensed CPAs. A newly licensed CPA is an individual who has fulfilled the applicable jurisdictions educational and experience requirements and has the knowledge and skills typically possessed by a person with one to two years of experience.
• NOT be affiliated with CPA Exam preparation and review programs.

You can nominate yourself or someone else here, any questions about the program should be directed to this special AICPA inbox. Candidates, please do not blow that inbox up with your CPA exam gripes.

The post The AICPA Needs Some Help From CPAs to Determine the Passing Score For the 2024 CPA Exam appeared first on Going Concern.

In a LinkedIn post on Friday, Becker superinstructor and the man single-handedly propping up the coffee shop industry Peter Olinto announced that he is leaving Becker. “I am NOT RETIRING!!” he said in a follow-up comment.

He writes:

Hello LinkedIn connections and current/former students.

Today is my last day at Becker!!

Its been an amazing 25 year run and I am so grateful for the opportunity Becker has given me all these years to do what I love. I’ve been so blessed to work with so many talented and wonderful people over the years. I’m going to miss my partner in crime Tim Gearty. He’s been such a gracious and wonderful mentor. Not once did he ever get mad at me for making jokes at his expense!! I’m also going to miss all of the wonderful sales people around the country who always treated me so well when I ventured into their hometown’s! I also can’t thank the Becker editorial team and tech team enough for trying to make me look good and sound intelligent all of these years… I know what a difficult job that has been

I want to also give special thanks to Tom Vucinic, Dennis Green, Paul Snider, and Ramin Nadaf, who believed in me 25 years ago and ignored those who said that they would be nuts for putting a New Yorker like me on the Becker videos.

Last but not least, I have to thank Ed Clark and Jim Fox for being so kind to me since the wonderful people at Colibri acquired Becker more than a year ago.

Farewell and thank you #becker! It’s been an amazing ride

P.S. Anybody need a DJ

It looks like he’s headed to UWorld per the obvious “Global Lead Instructor at UWorld” underneath his name on LinkedIn and this post that I had to find on Reddit because I don’t have a LinkedIn and it makes you log in for every goddamn thing. UWorld with the ROBBERY wow.

That’s a big score for UWorld and a huge loss to Becker. Can they ever recover? Judging by the “oh god now we’re stuck with Tim Gearty” comments I’ve seen scattered everywhere maybe not.

Semper Fi, Sugar Bear.

The post Original Hype Man and Coffee Enthusiast Peter “Sugar Bear” Olinto is Leaving Becker appeared first on Going Concern.

At its spring meeting in Washington this week, the AICPA’s governing body (“Council”) approved this plan. Yay. Cue measured fanfare.

From Journal of Accountancy:

The resolution acknowledges the challenges facing the talent pipeline and the need for a “thoughtful strategic process” in the search for solutions while reiterating the Council’s commitment to preserving the mobility of CPA licensees. [AICPA CEO—Public Accounting Susan] Coffey said the state CPA societies’ role in helping address the pipeline is essential.

The resolution reads in part: “This collaborative process, convened by and through the AICPA, should result in a continuous research-driven national pipeline strategy that, among other things, addresses the image of the profession in the eyes of students as well as educational and experience requirements, and outlines short and long-term initiatives and actions that result in measurable outcomes to address the profession’s ongoing and evolving human capital needs and priorities.”

As you can see from the above graphic, this plan includes many things that would be wholly unnecessary were starting salaries at public accounting firms able to compete with the industries currently jacking talent from the profession at the college level. Going into high schools to talk about the opportunities in accounting is great, people should be doing that. Extending the time a person has to pass all four parts of the CPA exam is great, too. As are alternate pathways to licensure but not everyone agrees on that one. All of this is pointless if the money isn’t there.

The original pipeline acceleration plan released earlier this year was just eight items, seen here in this AICPA Town Hall Series video and believe it or not, it was somehow more useless than the 50% larger 12-point plan.

On the Integrated Education and Experience Program, the South Carolina Association of CPAs Board of Directors said they “have no confidence in this proposed solution” in this January 24 letter to the AICPA and NASBA:

While this initiative could ultimately lower the candidate cost for the remaining 30 hours, we feel strongly that it will not adequately address pipeline compression. We do not believe this approach removes barriers to entry, but instead places additional strain on those seeking to join the profession. As such, we have no confidence in this proposed solution.

Alright, what else do they have?

The revised plan has the Experience, Learn & Earn program which Director of the School of Accountancy at University of Denver Sharon Lassar, PhD, CPA has written about here and here. Here’s an excerpt from her guest post “Is It Ethical to Endorse an Educational Path That Is Susceptible to Cheating?”:

The AICPA should disclose exactly what will be taught in the ELE program. If it moves forward, it should disclose the characteristics of the students enrolled; the courses selected, attempted, and completed with grade earned; the parts of the CPA exam attempted and those passed by the candidates before they started the ELE program; the parts scheduled, attempted, and passed while enrolled; and, the time to complete this pathway to licensure. If this model is one that the profession uses to justify the continuation of the 150-hour rule, it should also then show the progression of these candidates through their careers. Each year’s annual salary and rank should be disclosed. Let’s get some real data that is open for academics to analyze.

I’ll leave those high level discussions to people smarter than anyone here but I do happen to be an expert in getting paid diddly squat so believe me when I say if you pay them, they will come.

Supposedly salaries fall under item 2 of the revised plan: “Addressing firm culture and business model challenges.” In AICPA language:

In collaboration with stakeholders, the AICPA has identified initiatives that address the following key areas:

• Awareness: Increasing awareness about the accounting profession and promoting the benefits of a career in accounting
• Improved perceptions: Dispelling outdated perceptions and leveraging updated, positive messaging that can help the profession resonate with today’s students
• Training and education: Providing high-quality accounting education and training opportunities
• Firm culture and business models: Equipping firms with the tools to offer competitive salaries and benefits, as well as career advancement opportunities and compelling work

Firms have the tools. They just don’t want to use them.

Why not save everyone a lot of time and address THE #1 cause? They could send a bunch of AICPA goons to shake down firm leaders and tell them it’s time to pay up. Please record it and put it on YouTube.

Pay better salaries, attract more students, hire more graduates, then we can get to work on the second biggest issue scaring young people away from the profession: the hours.  It won’t totally fix the problem but it’ll at least push the needle and get us through this rough spot before automation saves the day and puts everyone out of a job like they’ve been threatening it will for a decade now. Maybe that’s why firms are putting so much money into technology investments and AI? Whatever, just don’t complain that you can’t find talent in the meantime.

I’m aware there are problems other than pay plaguing the profession but all of this crap is like a municipality focusing on patching potholes while half the city is in flames. PUT OUT THE FIRE FIRST.

Tangentially related:

Want to Do Your Part to Help the Accountant Shortage? Here’s What You Can Do Right Now

The post AICPA Council Approves 12-Point Plan to Do F*ck All to Solve the Accountant Shortage appeared first on Going Concern.

If you assumed the plan would revolve around an aggressive effort to bully firms into paying people what they’re worth, you’d be wrong.

“The detailed plan features input from a significant set of stakeholders and calls for those stakeholders to work together to increase the number of accounting graduates and the number of graduates who obtain CPA licensure,” reads the Journal of Accountancy article touting this new and improved pipeline acceleration plan.

And here it is.

“Building the CPA pipeline requires a united effort from all stakeholders tied to the profession,” said Going Concern favorite Susan Coffey, CPA, CGMA, the AICPA’s CEO of public accounting in the news release. “We need to work together to raise awareness about the rewarding work we do, broaden the range of talent we draw from, and address stumbling blocks that derail too many prospective CPA candidates. As the largest national body for the accounting profession, the AICPA is uniquely positioned to channel ideas into action and mobilize efforts in a coordinated way to achieve success. Our plan offers a framework for moving forward but is by no means the last word – this is an evolving process that will require resolve, foresight and close collaboration with important partners.”

We find out from the AICPA’s blog post about the pipeline acceleration plan that improving salaries for accountants falls under item #2, Addressing firm culture and business model challenges:

In collaboration with stakeholders, the AICPA has identified initiatives that address the following key areas:

• Awareness: Increasing awareness about the accounting profession and promoting the benefits of a career in accounting
• Improved perceptions: Dispelling outdated perceptions and leveraging updated, positive messaging that can help the profession resonate with today’s students
• Training and education: Providing high-quality accounting education and training opportunities
• Firm culture and business models: Equipping firms with the tools to offer competitive salaries and benefits, as well as career advancement opportunities and compelling work
• Diversity, equity, and inclusion: Attracting and retaining a broader range of talent
• Partnering with educational institutions: Affiliating with colleges and universities to offer internships, scholarships, and other programs to attract individuals to the profession, help defray costs, and assist students in developing the skills needed to succeed as a CPA.

Good luck convincing firms to do the one thing they should have done 15 years ago that got us into this mess in the first place. If that one issue is not remedied, then the rest of this is pointless.

A synopsis and full version of the Pipeline Acceleration Plan are available directly from the AICPA. In the meantime, no one be shocked when the next AICPA Trends report comes out.

The post Here’s the AICPA’s Revised 12-Point Plan to Herd Students Into Accounting appeared first on Going Concern.

On February 14, the NASBA Board of Directors approved for re-exposure changes to the Uniform Accountancy Act Model Rules for the granting of credit requirement for sections passed on the Uniform CPA Examination, and the revised exposure draft was open for comment until April 17. The revised exposure draft would increase the number of months of conditional credit provided to a candidate from 18 months to 24 months but apparently response was so great — more than 850 respondents provided input to the exposure draft — NASBA decided to push that even further to 30 months. Some professional organizations engaged in grassroots campaigns to petition NASBA to increase it to 36 months, 30 is a decent compromise.

On April 21, 2023, the NASBA Board of Directors voted to adopt an amendment to UAA Model Rule 5-7. The amendment increases the length of conditional credit from 18 months to 30 months, bases the calculation of conditional credit for Exam sections passed on the date that scores are released, and adds descriptive language to provide greater clarity for when Boards of Accountancy may extend conditional credit. In other words, the rule change means that candidates will now have a 30 month window (pending state board adoption), and that the window doesn’t start until the first passing score is released, not from the date the candidate sat for that section as it has been since 2004.

Shout-out to CPA Evolution:

In addition, recent revisions to the Exam indicate that score delays may occur when significant updates are made to Exam content and structure. The approved rule seeks to provide uniformity among jurisdictions on the timing of granting Exam credits, which also has the benefit of providing relief to candidates when such delays happen.

“Providing an additional year of conditional credit to candidates for Exam sections passed provides more flexibility to those seeking licensure as a CPA. The additional time also provides greater latitude to firms and candidates as they negotiate the demands of today’s complex career environment,” said NASBA President and CEO Ken L. Bishop.

Here comes the bad news:

The UAA Model Rules have no immediate effect on state board rules. As the membership organization of the 55 U.S. Boards of Accountancy, NASBA, through its Uniform Accountancy Act Committee, provides the Model Rules as recommendations to boards for adoption whereby uniform adoption is encouraged. As such, each individual board may consider the amendment to the Model Rule 5-7 and, if so choose, commence a process to change the rules at the state level. Current Exam candidates remain under existing rules until, if and when, the board to which they applied makes changes.

At the same meeting, NASBA Board of Directors expressed continued support for the formation of a policy that would potentially give back passing credits lost during the pandemic due to conditions beyond their control. The Powers That Be believe that restoring lost credit would help address the CPA shortage. “A proposal like this could allow for the reinstatement of credit for more than 15,000 CPA candidates and re-open the door for those candidates to complete their journeys to becoming licensed CPAs. I applaud NASBA for raising this possibility and exploring it with state boards of accountancy, since a comprehensive reinstatement effort could help offset hurdles to advancement that many CPA candidates faced due to circumstances outside their control,” said AICPA CEO of Public Accounting Sue Coffey in March.

They also discussed developing an additional pathway to allow candidates to achieve 150 hours through an academically qualified experience that could allow up to 30 hours of college credit. NASBA is actively campaigning against any direct changes to the 150 hour rule as Minnesota moves toward introducing a second pathway that would allow licensure at 120 units and two years of experience.

NASBA Announces Historic Rule Amendment Following Record Exposure Draft Response [NASBA]

The post NASBA Decides to Give CPA Exam Candidates an Extra Year to Pass the Exam BUT… appeared first on Going Concern.

There has been much discussion about the 150-hour rule recently. Going Concern previously reported the AICPA and NASBA are trying to strong-arm Minnesota into maintaining the 150-hour rule. I wrote that NASBA can be a bully because many state licensing laws give them that power. Like many bullies, could NASBA be delivering a hollow threat? Would NASBA truly exercise its power to take away mobility of CPAs licensed in states that drop the 150-hour rule?

That question led to another. When and where did the concept of mobility originate? It probably happened earlier than the first reference I found. In 1991, the subtitle of a Journal of Accountancy article read, “As business operations become global and client operations expand, CPAs in forms of all sizes must be free to practice outside their licensing jurisdictions.”¹ Discussions seem to have progressed in earnest during the 1990s.

In 1997, the AICPA and NASBA jointly identified mobility as an important goal and established the concept of “substantial equivalency.”² States were so slow to adopt the substantial equivalency provisions of the Uniform Accountancy Act (UAA) that the AICPA created a Special Committee on Mobility in April 2006. The committee ultimately recommended a federally mandated state-based mobility provision that would allow any CPA with a valid state license to obtain practice privileges in any other state. The AICPA Board of Directors delayed implementation of the recommendation to allow more time for states to adopt modified substantial equivalency provision of the UAA.³

Let me repeat that. The AICPA’s conviction was so strong that it was ready to go to Congress and seek federal mobility legislation if the states did not adopt mobility provisions in the UAA.

So, just how important is the 150-hour rule? Does it trump mobility? I doubt it. What evidence can we glean from NASBA’s actions?

Interestingly, NASBA has entered into Mutual Recognition Agreements (MRA) that allow professional accountants from other countries to practice in the United States without having to re-credential. For example, a Chartered Accountant (CA) who is a member of the South African Institute of Chartered Accountants (SAICA) may sit for the International Qualification Exam (IQEX) if she meets the eligibility criteria set forth in the 2019 MRA. The educational requirement under the MRA is a baccalaureate degree and completion of the SAICA post graduate qualification. The post graduate qualification is completion of a “training contract.” So, if you are a South African CA, an extra 30 hours of university course credit is not required.

Wait, what is the IQEX? This is an exam that allows CPA-like designation holders from countries with whom NASBA has executed an MRA to practice in a US jurisdiction, providing other eligibility requirements are met. In other words, the IQEX provides a path to reciprocity for certified/chartered accountants from around the world. There are currently eight MRAs, the most recent of which was executed with CPA Ireland less than a year ago.

International candidates are offered a path to licensure as a US CPA without meeting a 150-hour rule. The MRAs might require international candidates to complete certain training in addition to holding a baccalaureate, but they need not earn an extra 30 credit hours.

What about that exam? Is the IQEX what protects the public interest? Well, it turns out that the IQEX is the REG section of the CPA exam.

International candidates covered by MRAs take only one section of the CPA exam and do not have to meet the 150-hour rule to be able to practice in the US. I’m not kidding. Yet, NASBA insists that all US CPAs meet a 150-hour rule and pass all four parts of the CPA exam! That doesn’t seem fair.

How can the AICPA and NASBA justify entering such MRAs? They might be responding to some international pressure. International agreements such as the United States-Mexico-Canada Agreement (USMCA) and the General Agreement on Trade in Services (GATS) impose an obligation by signatory countries to work toward professional licensure international reciprocity. In fact, NASBA refers to GATS signatory countries on its MRA website.

Or, perhaps NASBA likes the $895 fee they charge for candidates to sit for the IQEX. I am just speculating. If you know the reasoning and purpose for executing MRAs, please let me know or post a citation in the comment area.

The point is, NASBA does not require equivalent university education and, in fact, seems to substitute additional training (experience) for additional education when executing MRAs. If this approach is acceptable across international borders, why not across state borders? And, if NASBA is bowing to political pressure to allow international mobility, shouldn’t they bow to pressure by the AICPA and its members to promote interstate mobility?

¹ Rimerman, T. W., & Solomon, J. P. (1991). Uniformity of regulation – the time is now. Journal of Accountancy, 171(4), 69. Retrieved from https://du.idm.oclc.org/login?url=https://www.proquest.com/trade-journals/uniformity-regulation-time-is-now/docview/206775220/se-2
² Hock, S. (1997). Erasing the barriers: Interstate mobility for CPAs draws near. Ohio CPA Journal, 56(2), 5-8. Retrieved from https://du.idm.oclc.org/login?url=https://www.proquest.com/trade-journals/erasing-barriers-interstate-mobility-cpas-draws/docview/214814973/se-2
³ Voynich, S. (2007). Barriers to mobility: A crisis for many CPAs. Journal of Accountancy, 203(4), 46-48. Retrieved from https://du.idm.oclc.org/login?url=https://www.proquest.com/trade-journals/barriers-mobility-crisis-many-cpas/docview/206759463/se-2

The post Would Mobility Go Away Without the 150-Hour Rule? appeared first on Going Concern.

If you’re scheduled to test with Prometric, may the odds be ever in your favor.

Soon to be ex-proctor here. Just a heads up on the chaos and hell going on behind the scenes. Prometric got a new CEO a couple of months ago and he has gone scorched earth with cost cutting. “Low revenue” test sites (like mine) are being closed. And they have eliminated over 75 center manager positions effective April 19th.

What does this mean for you as a test taker? Well, be prepared for sporadic center closures. It has already happened in a few centers ( Wilkes Barre, PA and Sarasota, FL I know of for sure). Also, less than motivated staff taking care of your exam. I’m doing my best personally to hold it together. But it is quite stressful not knowing what the next day brings.

It stinks because it was a nice job to pick up during the pandemic. If you’re a manager whose position is being eliminated, your choices are to stay on as a proctor with a pay cut or take a severance. I was offered a position at either one of 2 centers almost an hour from my home. I instead chose to take the severance. Thankfully I have gig work to fall back on.

I hope CPA has other companies to test with. It’s going to get worse before it gets worse at Prometric.

“It’s going to get worse before it gets worse” is my new favorite saying.

Prometric did get a new CEO in February, Stuart Udell. Udell is “a 30-year education industry veteran,” most recently serving as CEO of Achieve3000, “a leading software and services provider of reading and math intervention and acceleration solutions.” Before that, he served as CEO of “other prominent EdTech organizations” including virtual school operator K12, Inc.; intervention and specialized services provider Catapult Learning; and online career education provider Penn Foster. He specializes in assessment, career education, test preparation, curriculum, and other areas of educational technology and service delivery, says the news release about his new gig.

Let’s talk about his gig at K12. He resigned from K12 — now called Stride — in March 2018. Here’s a story about that:

The CEO of the major for-profit online education provider K12 Inc., Stuart J. Udell, has resigned his post after the company said that its board decided to “redefine his responsibilities.”

The publicly traded Herndon, Va.-based company announced the shakeup Tuesday. It said that the company’s chairman of the board, Nathaniel Davis, who served as CEO from 2014 to 2016, will take over the post again with Udell’s departure.

Udell’s resignation will take effect on March 2, the company said in a statement.

The company’s board had sought from Udell a “narrowing of his responsibilities” that would have been a departure from the “original scope of his work,” said Michael Kraft, K12’s vice-president of finance, public relations, and corporate communications, in an interview.

Davis will assume the CEO role on a permanent, not an interim basis, holding that position “for the foreseeable future,” Kraft said.

K12 Inc. is one of the most polarizing companies operating in the school space. It is the largest commercial operator of online schools in the United States, but the lackluster academic record of its schools has come under fire in many states. (See Education Week’s reporting on the scrutiny of K12-operated online schools in Indiana, and the company’s political influence, in our in-depth series on shortcomings in the cyber charter world, as one example.)

Around the time that Stuart dipped out, K12 pivoted away from education into career training. Here’s a U.S. News article on that if you care, this backstory is already running too long.

We haven’t heard of widespread Prometric closures, though shuttering low volume centers sounds more than plausible especially if there’s a new CEO who wants to hit the ground running on profitability. This could also have something to do with Prometric’s remote testing service ProProctor. Though a remote CPA exam from the comfort of home is just a pipe dream for now, plenty of other professional licensing bodies allow candidates to test remotely using this service which means fewer bodies at testing centers.

You can see temporary Prometric site closures on their site here, always a good idea to check ahead of test day so you don’t get hit with an unexpected note telling you to go away.

If you have more information on happenings behind the scenes at Prometric, get in touch.

The post An Alleged Insider Warns About ‘Chaos and Hell’ Behind the Scenes at Prometric appeared first on Going Concern.

She writes:

Over the past 12 months, I have met countless motivated, hardworking individuals that are interested in pursuing a career in accounting. However, many of those same candidates expressed their frustration as they struggle with the financial commitment of obtaining 150 credit hours to become a certified public accountant (CPA).

Many students are eager to enter the workforce full time and make a living. Some of the most inspiring students we meet with are working 30 to 40 hours a week on top of their academic courseload to make ends meet.

They continually share that any dollar invested in education needs to have a clear value proposition. The goal for many is to complete necessary coursework and start working at the earliest opportunity, nothing more.

The value proposition is something I wrote about last year, back before the Wall Street Journal gave a shit about the accountant shortage. Allow me to resurrect that paragraph:

The accounting profession has a critical value proposition problem — it has consistently failed year after year to demonstrate that it offers enough perks to make up for the downsides. The profession asks students to commit five years of their life plus however long it takes to study for a difficult professional licensing exam oh and also you’re going to be doing 70 hour weeks in a good week while living with four roommates for the first couple years but don’t worry, one day you’ll make some good scratch. You just have to get through a very unpleasant gauntlet first. If you express any discomfort about this process, you’re labeled a punk who can’t hack it in public by people who also can’t hack it because no one can but they do it anyway and say nothing because their university professor told them if they don’t shut up and take it they’ll be marked unemployable for the remainder of their career.

Back to Jen and her LinkedIn post. She says that the Minnesota initiative is “opens [a] much-needed pathway to licensure and that the “conversation and remedy is years in the making.”

Minnesota has argued, and Jen seems to agree, that whether a person has 120 or 150 units, it doesn’t matter as long as they can pass the CPA exam. In other words, the exam is perfectly sufficient as a barrier to entry to keep out the riff-raff. As anyone who has taken it knows (and though I never took it, I sat through hundreds upon hundreds of hours of CPA review class and served as therapist to many CPA exam candidates over the years so I can say with confidence I have a general idea), it requires you to know a little bit about a lot of things and just getting through the entire process is a test by itself. Licensing bodies oversee the application process and can purge “undesirables” before they get that far. So enough bouncers already exist without the profession needing 30 arbitrary college units to really really weed people out.

Critics of the legislation argue that adjustments to the credit requirement may impact the quality of accounting candidates entering the profession. However, there is no empirical evidence to suggest that the 150-hour requirement has elevated our profession. In reality, we’ve experienced a shortage of talent that continues to accelerate. Before the current rule was implemented, the industry welcomed top talent that currently comprises far-reaching leadership positions with crucial experience navigating the country’s biggest economic crises. I can see a clear plan where this legacy and standard of work can continue without the additional 30-hour course requirement.

In reality, the uniform CPA exam is our mechanism to provide talent with the technical acumen to serve in today’s world. Just as this exam has continuously evolved, so must our certification process.

She references the lack of empirical evidence to suggest that the 150 hour rule has elevated the profession. Not only is there little to no evidence, there is evidence that the 150 hour rule decreases CPA candidates, and we’ve known this for a while. See: “Occupational licensing and accounting quality: Evidence from the 150-hour rule” by John Barrios, a professor at the University of Chicago Booth School of Business. He found a 15% reduction in first-time CPA exam candidates after the 150-credit requirement was implemented, a decline that aggregates over multiple years. AND he found that the 150 rule did not actually improve the quality of talent. So not only did it function a little too well as a barrier to entry, it did not lead to better CPAs like it was supposed to. Which, duh. But boy do we have some expert basket weavers in the profession.

“I myself graduated from college when you needed only 120 credit hours plus work experience. As someone who could not afford another day of college after graduation, I can honestly say I wouldn’t be in my current role if the 150-hour requirement was enacted when I was working on my CPA certification,” writes Jen.

“Minnesota’s proposal marks tremendous progress in attempting to remove a barrier to entry by broadening the pathways and increasing accessibility to the accounting profession. To tackle declining numbers of new talent and be sustainable well into the future, we need to double or even triple the number of students who choose accounting as a major and stick with it through graduation and beyond. Broadening the pathway to become a CPA has the potential to increase the number of CPAs overall and encourage hard working, diverse talent to join the profession.”

“Our hope is that, with the exemplary action taken by Minnesota, this legislation can spur a national dialogue that challenges the current licensure requirements and empowers the accounting profession to look inward at how it welcomes and fosters prospective talent.”

I will say this. From where I am sitting and from feedback I have received from readers, lurkers, and other citizens of the CPA peanut gallery, the AICPA’s stance on Minnesota’s proposal does not vibe with the general consensus. All the comments I saw on Jen’s post are also in agreement that something must be done, and maybe offering an alternative to 150 units is a good start. It is my hope that more stakeholders, leaders, and educators will speak up and share their views publicly as Jen has. Even if they disagree.

If you have an opinion on alternative pathways to CPA licensure please feel free to reach out and weigh in, your viewpoints are important and better inform our coverage on this topic. Remember also to contact your state board of accountancy and let your voice be heard. They don’t read Going Concern comments. At least I hope not.

Earlier:
The Accountant Shortage Isn’t Bad Enough For NASBA to Entertain Dropping the 150 Hour Requirement
Minnesota Throws TPTB the Finger and Introduces Legislation to Offer an Alternate Pathway to CPA Licensure
The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up
MNCPA to Educators: “We Do Not Need New CPAs Who Have Additional College Credits; We Need More CPAs, Period.”

The post One of Minnesota’s Largest Accounting Firms Can Totally Get Behind the Alternative Pathway to CPA Licensure appeared first on Going Concern.

The AICPA’s website includes a statement titled Purpose in action that, in its 129 words, uses “trust” (twice), “integrity”, “ethics”, and “public interest”. Yet, its pipeline acceleration plan proposes an Experience, Learn & Earn (ELE) Program that, in my opinion, may perpetuate academic dishonesty. The initiative would enroll first-year staff in asynchronous courses to earn as much as 30 hours of academic credit while they work. What could possibly go wrong?

Is it ethical to promote a path to earn the extra 30 credit hours of college credit required for CPA licensing without addressing threats to academic integrity in online education? Cheating in college courses has gone on as long as college courses have existed. However, the Internet increased the ease and speed of obtaining and sharing coursework. There has been a proliferation of businesses built to “help” students succeed in college. Students have long been able to purchase term papers that are marketed as “research assistance” by providers who fully expect students to submit the work as their own. Anti-plagiarism tools moderate this behavior. In a fully asynchronous setting, like that proposed by ELE, students can hire someone to take their classes. Google “take my online class.”

The CPA Exam is not offered in a fully remote setting – for good reason. In July 2022, FINRA barred two individuals for cheating during online qualifications exams. Cheating has even happened on relatively low-stakes exams, like CPE exams to maintain a CPA license. The SEC charged its largest ever penalty to an accounting firm, $100 million to EY, for cheating by its audit professionals. The double irony is that EY cheating happened on ethics exams.

Ok, let’s say all available security measures are taken and that we can somehow gain comfort over the academic integrity of the courses. Is online education for young professionals a good idea? And, if it is, how is it any different from first year professionals completing online training modules provided by their employers, Linkedin Learning, Coursera, or any other number of providers? Oh, I know! Training by those other providers does not appear on a college transcript. And, the CPA profession has a licensing law written into the Uniform Accountancy Act that 150 hours have to appear on a college transcript. It sounds to me like it’s time to change the law. After all, isn’t the ELE simply a way around its intention?

But, I digress. What are some other factors about online education that should be addressed before continuing to promote ELE? There are too many to include in the word limit of this article. Online learning is fantastic for the highly-motivated, self-disciplined learner. I taught in the first fully online Master of Taxation program in the country around 2004 and was proud of the learning that took place. But, it was a highly-technical program where assignments were built on new tax law with no clear solutions. Hiring someone to take the class would have been possible. But, people with the technical knowledge needed to pass the course would have been too expensive to hire. This is not the kind of course the AICPA is proposing for ELE. In fact, we don’t know what the curriculum will be. My prediction: 9 hours of internship and 21 hours of content that could be found on Linkedin Learning or Cousera. Just what is the value proposition?

Again, I digress. Is providing the extra 30 hours online a good idea? Maybe. Overall, the empirical evidence is mixed on whether online students perform at the same level as their traditional student counterparts. I found one study that looked specifically at online versus face-to-face accounting education. Morgan (2015) found online accounting programs have much lower average CPA pass rates than their matched face-to-face counterparts. I won’t rely solely on one academic study, especially if it is published anywhere other than the most rigorously reviewed academic journals. But, if the goal of ELE is to produce more CPAs, it might fall short.

The AICPA justifies the 150 hour requirement with remarks about the complexity of business, the proliferation of standards, and the increasing sophistication of audits. I agree. High level knowledge and skills are needed to assure the quality of services provided by CPAs. The AICPA states that “In most cases, the additional academic work needed to acquire the technical competence and develop the skills required by today’s CPA is best obtained at the graduate level.” Yet, ELE credit hours would not even be part of an undergraduate degree program. Are we supposed to trust the quality of this plan?

The AICPA should disclose exactly what will be taught in the ELE program. If it moves forward, it should disclose the characteristics of the students enrolled; the courses selected, attempted, and completed with grade earned; the parts of the CPA exam attempted and those passed by the candidates before they started the ELE program; the parts scheduled, attempted, and passed while enrolled; and, the time to complete this pathway to licensure. If this model is one that the profession uses to justify the continuation of the 150-hour rule, it should also then show the progression of these candidates through their careers. Each year’s annual salary and rank should be disclosed. Let’s get some real data that is open for academics to analyze.

The post Is It Ethical to Endorse an Educational Path That Is Susceptible to Cheating? appeared first on Going Concern.

To address the accountant shortage, many ideas have been floated by The Powers That Be (excluding paying people more), like reducing the number of educational credits needed to be licensed and even restoring exam credits that expired during the pandemic. As these crazy ideas get flung around like so much shit in a monkey cage, there’s at least one that you have some influence on.

Last year I argued the CPA exam window should be permanently extended to 24 months and for once it turns out that I wasn’t just screaming into the void like a crazy bag person. In fact, it turns out I wasn’t extreme enough in my view which almost never happens. The Ohio Society of CPAs wants to see the window expanded to 36 months like it used to be back in the day before the exam was computerized.

OSCPA and many other state CPA organizations feel this is a step in the right direction but is not a meaningful change. OSCPA supports increasing the amount of time to pass all four parts of the Exam to at least 36 months.

So how do you get your message out of the void and into the hands of the people who will make the final decision? You can send any comments or recommendations to the UAA Committee by email via uaacomments@nasba.org OR, if you agree the window should be three years wide, you can use this handy tool from OSCPA to weigh in on this big change to the Uniform Accountancy Act’s Model Rules. And no, you don’t have to be Ohioan to use it.

BTW the full exposure draft text is in Scribd down below, please don’t be That Guy who spouts off your opinion without knowing what you’re opining about. It’s a quick read I promise.

The grassroots tool from OSCPA will open up a pre-written email addressed to the UAA Committee that you can customize as much or as little as you like, you are encouraged to spice it up with your own thoughts and experiences if so compelled. It comes in current CPA and future CPA flavors, use the one that applies to you. Here’s what it populates with if you are a current CPA:

As a currently licensed CPA, I’m writing to express my concern about the proposed UAA CPA Exam Window Exposure draft expanding the amount of time candidates have to pass all four parts of the CPA Exam. While I agree that the current 18-month window is too short, adding just six months is not enough.

Hundreds of thousands of currently practicing CPAs had 36 months to pass all four parts of the CPA Exam and are providing services today. There is no risk to the public interest for at least doubling the current window, and doing so will help mitigate an unnecessary barrier that, per existing data, is causing between 1,000 and 2,000 CPA candidates each year to discontinue pursuit of the CPA certificate.

The letter then takes a break to give you a chance to talk about how you got screwed over by consecutive 71s back in 2010 or lost FAR credit because the firm was working you like a dog or how you haven’t been able to hire a CPA since 2019, WHATEVER. Be graphic. OSCPA doesn’t say you should be, that’s just me enjoying the drama of all this and fully supporting oversharing.

Once you’ve trauma dumped on NASBA, the letter picks back up and finishes with a standard “Sincerely.”

Employers are facing major hiring challenges as fewer students are entering college, fewer are majoring in accounting, and even fewer of that shrinking group are choosing to pursue the CPA designation. While this is far from the only barrier to entry for current and future CPA candidates, it’s a commonsense solution that will in no way put the public at risk or impact interstate mobility. I urge the UAA Committee to quickly revise the CPA Exam Window Exposure Draft to be not less than 36 months.

Ohio Society of CPAs provided us with the following statement:

It is important for all CPAs and exam candidates to be aware of these proposed amendments to the UAA model rules for several reasons. Two specifically have led The Ohio Society of CPAs to offer this platform:

1. Whether by design or unintentionally, these proposed amendments were exposed for a sixty-day comment period that coincided with tax season. As a result, many may be unaware and will miss the ability to share their views.
2. In recent months, it has been stated in print and public forums that efforts to advocate for the profession on issues like the CPA exam window and the pathway to licensure by state CPA organizations are not representative of the profession’s views or were motivated solely by “members and money.” That is false and a weak attempt to distract from the very real concern many CPAs have about the future of the profession. This forum will allow those who agree with our support for a CPA exam window of not less than 36 months to voice their support. For those who disagree, they too should be encouraged to comment.

CPAs assess risk every day. They have been trained to do so. Actions or suggestions that infer CPAs cannot be trusted to assess the risk of decisions that affect their license or profession are dangerous when they come from people or organizations who have a role in regulating their license or establishing the standards that guide their work.

Go forth and comment.

NASBA UAA exposure draft: e… by Adrienne Gonzalez

The post Now’s Your Chance to Tell NASBA How You Really Feel (About Extending the CPA Exam Window) appeared first on Going Concern.

As you should well be aware, MNCPA wants to add another lane to the CPA highway that would offer candidates an option of 120 units of education and two years of experience as an alternative to, but not a substitute for, the state’s existing 150 units and one year of experience rule. In a January blog post, MNPCA clarified its position:

The MNCPA does not believe that legislation to broaden the licensing requirements is a magic solution and candidates will flock to the CPA exam. It is one part of a multi-layered campaign to promote the accounting profession and make it an attractive career choice to students.

The MNCPA initiative does not eliminate 150-college credit hours with one year of work experience as a path to licensure. That should remain an option for candidates who have the means and time to take the additional credits.

Alas, this is a contentious issue and much more clarifying must be done going forward. The educator email you’ll read in a moment contains some interesting factoids:

• • Of MNCPA members working in public accounting polled, 85% of respondents supported additional pathways to CPA licensure
  • New hires with 120 college credits are unlikely or very unlikely to take the CPA exam
  • CPA exam first-time applicants dropped by 15–25% once the 150-hour rule was applied
  • The 150 hour rule has not improved quality, though it has done a great job at serving as a barrier to entry, particularly to diverse candidates

Now for the email:

A poll of MNCPA members working in public accounting found 85% of respondents supported additional pathways to CPA licensure. When evaluating the decision to pursue legislation, the MNCPA board focused on attracting students to the accounting degree and, ultimately, CPA certification. The additional tuition expense and delay of entering the workforce are deterrents to earning an accounting degree when other degrees offer similar or higher salaries with a four-year degree with 120 college credits.

A decline in CPAs is affecting smaller cities, counties and school districts that are unable to find a CPA to perform their audits. A meeting with Julie Blaha, the Minnesota state auditor, confirmed this issue in Minnesota.

The member poll also showed the number of firms hiring accountants with 120 college credits is increasing. More than 50 percent of the respondents also shared that those new hires with 120 college credits are unlikely or very unlikely to take the CPA exam. There is a significant pool of potential candidates who have an accounting degree and multiple years of experience but do not see enough value in paying for additional college credits for licensure.

The time for action is now

The CPA profession is at an inflection point where the declining number of CPAs in our communities is eroding financial stability and creating a public protection issue. Academic studies published in 2020 and 2022 show that the education requirement has not improved quality, it has reduced the number of first-time candidates and it has created a barrier to entry that is affecting the profession’s effort to improve DEI. We know offering alternative pathways is not a silver bullet to fix the pipeline problem, but the academic studies find that CPA exam first-time applicants dropped by 15–25% once the 150-hour rule was applied.

With the aforementioned in mind, the MNCPA is increasing our outreach to high schools and colleges to communicate the benefits of an accounting degree and the many career paths that are available. Both college accounting programs and the profession will benefit with more students enrolling in accounting programs.

The AICPA has also proposed a new program called Experience, Earn, and Learn (ELE). The AICPA proposal is to partner with one private college starting September 2023 to offer up to 30 college credits. In time, the number of schools would be increased to four or five institutions. Students who enroll are hired by a firm, work reduced hours and take online college credits. This is not an internship or an apprenticeship. The goal is to have a tuition rate equivalent to community college. Candidates enrolled in the program would be considered first-year staff. We do not believe this is an effective solution because the barrier to 150 credits is not the lack of options for college credits, especially with students more comfortable in pursuing online options from a variety of colleges due to COVID-19. This program would not eliminate the additional tuition expenses, and the reduced work hours would also mean a reduced salary and benefits. This program would drive students from Minnesota schools where students already have a relationship. The MNCPA sent a comment letter to the AICPA to share we don’t believe the program will have the impact the AICPA is suggesting.

This is not a short road

As the MNCPA licensure initiative moves forward, we expect the legislation to evolve. It is rare that legislation is passed as originally introduced. We are working with MNCPA members, the AICPA, NASBA, other states and the Minnesota Board of Accountancy as this initiative moves forward.

We know that those of you who offer MAcc programs may be especially concerned. However, our members have made their message loud and clear: We do not need new CPAs who have additional college credits; we need more CPAs, period.

We welcome your feedback and questions. We expect more dialogue among the many stakeholders as we seek to broaden licensure and attract more students to accounting programs.

FWIW in our informal survey of @s, random people on Reddit, and anonymous commenters, the consensus seems to be that the unwashed masses are not particularly interested in fighting for 150 hours, something the AICPA should be mindful of when sending scaremongering letters to membership on the subject.

You are welcome to use the comment section to share your feelings. You are also encouraged to let your state board of accountancy know how you feel because they are not hanging out in our comments, or around here at all for that matter (lucky them).

Earlier:
The Accountant Shortage Isn’t Bad Enough For NASBA to Entertain Dropping the 150 Hour Requirement
Minnesota Throws TPTB the Finger and Introduces Legislation to Offer an Alternate Pathway to CPA Licensure
The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up

The post MNCPA to Educators: “We Do Not Need New CPAs Who Have Additional College Credits; We Need More CPAs, Period.” appeared first on Going Concern.

With the accountant shortage in full swing and the profession’s talking heads, peanut galleries, unwashed masses, and unelected old white guys in charge discussing ways to ease it, it’s inevitable that we’ll start throwing out some WILD ideas. Like this one:

Want more CPAs?

Make the exam easier… that test is hard

120 vs 150-hour rule doesn’t make a difference because you still have to conquer the beast

There are many with 150 hours that never become CPAs because they give up on trying to pass

Expanding the pass credit window… https://t.co/L57RWaVqav

— Tax TeleGraf (@LoganGrafTax) March 10, 2023

Logan meant to open the floor on a discussion about this crazy idea, a noble intention that was immediately met with rage. The kind of rage that only Twitter can stir up.

I’m trying to redirect attention away from the 120 vs 150-hour rule debate

You can make it easier to sit for the test, but that doesn’t mean more people will become CPAs

Lowering hour requirements will increase the pool of who is eligible

But as I said, the difficulty of the test will weed out a lot of candidates

Observations about the reactions towards this tweet…

Seeing a trend with anon accounts being very against increasing the ability to become a CPA

People are so passionate about this topic at a level that doesn’t make sense

— Tax TeleGraf (@LoganGrafTax) March 10, 2023

In fairness to Twitter, some folks understood the assignment. Like David here:

How many of those CPAs saying “You can’t make the exam easier, it’ll diminish the profession” could score higher than a 40 on AUD or FAR today? It’s 2023, we don’t need to memorize every arcane rule anymore. Ease the exam up before there are only like 12 CPAs left.

— David Troyer (@DavidTroyer4) March 10, 2023

There’s some more reasoned discussion to be had here should you be interested.

SO. Let’s place a moratorium on discussing this particular item, perhaps permanently. What else we got? Have we considered giving CPA exam candidates free toasters upon passing all four parts?

The post PSA: Do Not Suggest That We Make the CPA Exam Easier in Order to Solve the Accountant Shortage appeared first on Going Concern.

Going Concern previously reported on bits of an interview with Ken Bishop, President and CEO of NASBA, published in Journal of Accountancy. A cut out in the article includes this quote, “Should any state or jurisdiction lower the licensure requirement to 120 hours, their CPAs would no longer be automatically substantially equivalent and would no longer enjoy the mobility and reciprocal practice privileges they currently are afforded.”

A follow up article let us know how the AICPA and NASBA have locked arms to dissuade any further talk by states regarding the 150 hour requirement.

How can NASBA be such a bully? Doesn’t it work for the Boards of Accountancy of the states who pay NASBA membership dues and fees for services? That’s what you might think.

Written into the mobility legislation that NASBA, AICPA, and state societies pushed to enact over about a 20 year period is a substantial equivalency clause. For example, Section 5.2 of the Illinois Public Accountancy Act provides practice privilege to licensed CPAs from states that NASBA has verified “to be in substantial equivalence with the CPA licensure requirements of the Uniform Accountancy Act…” Thus, Illinois, like many states, has given NASBA authority that would otherwise rest with the Board of Examiners.

Changing the Illinois Public Accountancy Act will not be easy. Legislative language needs to be drafted, a member of the state legislature needs to introduce a bill, and the bill will have to pass and be signed by the governor. Changes to bills are often spearheaded by professional associations like state societies, AICPA, or NASBA who employ their lobbyists. I wonder how NASBA as the arbiter of substantial equivalency was written into Illinois statute in the first place.

Other states retain some authority over the determination of substantial equivalency or allow for an easier path to change. For example, Colorado’s Accountants Practice Act provides practice privilege to CPAs licensed in other states according to rules promulgated by the Board of Accountancy. The Board rules then give NASBA the power to determine substantial equivalency. NASBA’s power can be stripped by a change to Board rules; no legislation seems to be necessary.

If you believe that Minnesota’s CPAs should be able to continue to practice in your state should Minnesota enact the alternative pathway to CPA licensure that is under consideration, let your state board members know.

If your state board does not hear from you, the members assume everything is fine. Most state board members serve limited terms and may not realize that a previous board gave power to NASBA that should reside with the board. Write a letter, send it to each board member, and share it with your colleagues.

The post Why NASBA Can Be a Bully and What CPAs Can Do About It appeared first on Going Concern.

In New Jersey, they are piloting a program that grants credit for work. A partnership between PwC and Saint Peter’s University in Jersey City, the program essentially trades that 5th year of education for experience in the field, a win-win for both students and firms. The university oversees the work for credit program the same they would any other internship for credit, making sure that students are actually learning and not just working for free. No reasonable person can argue that 30 arbitrary units in any subject (the current requirement) is better than actual experience and exposure to accounting practice where you learn more about accounting than you would in underwater basket weaving. One CPA I spoke to who was instrumental in arranging this pilot program told me that he hopes to see this program expanded to firms of all sizes, and accounting employers beyond large public accounting firms, even non-profit, government, and industry. We’ll have to wait to see how that shakes out.

On this topic, I came across a recent article in the Journal of Accountancy that describes another firm/education partnership also integrating experience and education, albeit in a different way to what they’re doing in New Jersey. Read:

Though it wasn’t common among [2022–2023 chair of the AICPA board of directors Anoop Natwar] Mehta’s peers when he was in school, he got work experience in accounting while still a student. He believes that gave him a leg up, and he believes today’s company leaders can benefit from offering the same opportunities.

“These students are getting recruited before even they finish their degrees, which is new and which is exciting,” Mehta said. “If I relate back to my own career, I started working after a couple of years in college, and I do know that I felt that I came out ahead because of it.”

Mehta made mention of an AICPA program in development to help firms and students alike. Students finishing their undergraduate degree who haven’t yet reached the 150 hours required for CPA licensure would be hired by firms and work as first-year associates while taking up to 30 hours of cost-effective classes catered to the skills the firms need.

“I’m all for figuring out a way to formalize one year of work experience tied in with their education,” Mehta said. “If we can figure out a way to make that affordable, I think we’re really going to start to move toward solving pipeline issues.”

Watch this January 19 AICPA Town Hall for more on this topic, pipeline discussion timestamped here.

A couple years ago, EY announced EY Career Path Accelerator, a partnership with Hult International Business School to offer a free online MBA to 312,000 employees. As of February 2022, only 55 EYers had graduated from the program. So that concept has already been tried out to some success.

Desperate times call for desperate measures and the traditionally uncreative profession is going to have to start hitting the blunt to come up with some wild ideas to get students into accounting. We imagine it won’t be too difficult to convince firms to let people work for free. The rest might take some evangelizing.

The post Integrating Experience and Education is One Way to Ease the Accountant Shortage at Least a Little appeared first on Going Concern.

Last week we told you about HF 1749 and SF 1660, bills introduced to the Minnesota legislature that would allow for a second pathway to CPA licensure of 120 units and two years of experience. Let’s just say the AICPA is not happy. And we can demonstrate just how not happy they are based on this letter they sent out to membership on February 15:

Burdensome MNCPA Legislative Proposal Needs Your Attention – Please Act Now

Dear member,

The Minnesota Society of CPAs (MNCPA) is advancing a bill that would result in cross-border restrictions for licensed CPAs and public accounting firms in Minnesota.

The proposal would make it harder for Minnesota CPAs to practice across state lines, physically and virtually. The AICPA has expressed directly to the MNCPA leadership our concerns about any effort that would undermine the profession and the CPA license. We write to you now to alert you to this issue and urge you to share your concerns about the legislation.

What’s at risk: A legal review of the proposed changes has been conducted by the National Association of State Boards of Accountancy (NASBA). As the member organization for all state boards of accountancy in the United States, NASBA spelled out key consequences for Minnesota licensees and firms.

Some of the risks that were highlighted:

For Minnesota CPAs: Any change to Minnesota’s education requirement for licensure means Minnesota CPAs would no longer be able to practice in another US state or jurisdiction without first having a re-assessment of their license qualifications, and in most cases, if not all, apply for a license in that jurisdiction.

CPAs would need to hold multiple licenses and incur additional expenses. They would risk being unable to serve clients in a timely manner, would face administrative burdens, and risk noncompliance of various state laws. These requirements would affect current and prospective Minnesota CPA licensees.

For public accounting firms in Minnesota: Minnesota public accounting firms, no longer being able to practice freely across state lines, would need to provide advance notice and gain a practice permit before signing any client engagement agreement or providing any public accounting service.

Real world impact: What do these consequences mean in the real world? If a CPA in Minnesota serves clients in Illinois, they will need to do the following:

• Submit all college transcripts, experience verification documentation, and exam scores to NASBA to determine if the licensee’s initial licensure qualifications meet the requirements to practice in Illinois.
• At the discretion of the Illinois Board of Examiners, the Minnesota CPA may need to additionally apply for an initial license in Illinois.
• The Minnesota CPA’s continuing professional credits may not transfer to Illinois, and the CPA will need to meet any additional continuing professional education requirements in Illinois.
• The Minnesota CPA may need to meet all relevant or additional ethics requirements in Illinois.
• The Minnesota CPA may incur additional fees in Illinois to practice public accounting.

What you can do: Carefully consider how this proposal would impact you. Some questions to consider include:

• What would the new requirements mean for you, your partners, and employees?
• How would your business suffer, given the loss of mobility to serve clients outside of Minnesota?
• Would the stipulations diminish the value you provide to clients?
• Would you be able to set up or continue a virtual and physical practice with these limitations?

If you have concerns about the consequences to you as a CPA, or to your firm, we ask that you share your concerns with the AICPA by filling out this quick survey. As AICPA members in Minnesota, we value your feedback and will defend the importance of mobility for the profession and the public.

The letter is signed by Going Concern favorite Susan S. Coffey, CPA, CGMA and Anoop Natwar Mehta, CPA, CGMA who is also cool af.

Well the Minnesota Society of CPAs was not content to sit around and let the AICPA take shots at them so they penned a response that went out to their membership on February 23. H/t the tipster keeping us abreast of this developing conflict.

The profession is at critical point. In change management, it is called an inflection point — a time of significant change in a situation, a turning point.

Declining high school graduation sizes, increasing demand for CPAs, increasing retirements and declining number of candidates sitting for the CPA exam are converging to severely restrict the number of CPAs who provide critical financial services and advice to communities, businesses and individuals.

Facts to consider:

1. A survey of MNCPA members shows an increase in the number of new hires who hold accounting degrees with 120 credit hours. Fifty percent of respondents say it is unlikely or highly unlikely staff with 120 hours will sit for the CPA exam.
2. A 2019 study titled, “Occupational licensing and accounting quality: Evidence from the 150-hour rule,” by John Barrios, a professor at the University of Chicago Booth School of Business, found a 15% reduction in first-time CPA exam candidates after the 150-credit requirement was implemented. This decline aggregates over multiple years. The study also found there wasn’t an increase in work quality after the 150-hour rule was adopted. [Ed. note: we’ve written about that study before, see: The 150-Hour Rule is Kinda Bullsh*t, Says Guy]
3. A working paper published in 2020 by Brian Meehan and E. Frank Stephenson from Utah State University found the 150-hour education requirement acts as a barrier to entry, and their analysis suggests that that the additional educational requirement does not enhance candidate quality.
4. We see the impacts across Minnesota with a disproportionate effect on Greater Minnesota as businesses, governmental entities, nonprofits and individuals report they are unable to find CPAs. This is also happening in other states.

The profession is under a great deal of pressure. A system under pressure seeks equilibrium. To increase staff, more firms are moving work to an overseas labor force. Not all workers in other countries are subject to the 150-credit requirement. When entities can’t find qualified auditors, will audit thresholds be raised, which increases the risk to communities? Will regulators allow other options for audit and attest requirements because the CPA profession is unable to meet the market needs?

Legislation introduced last week to make a reasonable modification to broaden licensure requirements is being positioned as destroying mobility and isolating Minnesota CPAs. It feels like the David versus Goliath story. To quote a message sent to MNCPA members by the AICPA: “Any change to Minnesota’s education requirement for licensure means Minnesota CPAs would no longer be able to practice in another U.S. state or jurisdiction without first having a reassessment of their license qualifications, and in most cases, if not all, apply for a license in that jurisdiction.”

Three items to consider about this statement:

1. It is the individual state boards of accountancy that determine who can practice in their respective states. The AICPA and NASBA have significant influence, but they are not the regulators.
2. Is it reasonable that CPAs who currently practice across state lines will have mobility revoked if Minnesota makes a licensing change for future licensees? Some individuals would consider that a significant overreach when a large number of those CPAs have 150 credit hours or were grandfathered in and have practiced across state lines for nearly 15 years.
3. The AICPA and NASBA messaging is focused on mobility as it currently exists, when it should focus on the critical problem: More CPAs are needed and the lack of CPAs is a public protection problem.

The MNCPA introduced legislation because attempts over many years by various AICPA and NASBA constituents to have meaningful discussions about licensure were rebuffed. As the largest national association for CPAs, it is the role of the AICPA to bring stakeholders together. It took legislation to open up the conversation. Mobility is a hurdle to solve, but it is not the problem.

The CPA exam is the common requirement that is the same across all jurisdictions for all CPA candidates. Variations exist in the ethics, experience and educational requirements among states. There are examples and precedents that demonstrate mobility and variations in licensing requirements can and do coexist.

The profession has adapted through many technological and cultural changes. Its long tenure is evidence of this adaptability. For the profession to be adaptable, the requirements for licensure must also be adaptable. If there are no substantial equivalents to the additional 30-college credit hours because it would destroy mobility, the profession is missing a critical element of adaptability.

Introducing legislation is the beginning of a necessary robust and public conversation about CPA licensure. Proposed legislation rarely, if ever, passes as originally introduced. We expect more conversation, new ideas to emerge and the legislation to evolve. Legislation is a tool to challenge regulatory rules when the voices of stakeholders are ignored.

Now is the time for the AICPA and NASBA to focus on the core problem and demonstrate leadership and adaptability in lieu of threats and protecting the status quo. It is important for MNCPA and AICPA members to share their opinions about licensure requirements and about the CPA pipeline. Together, the profession will remain resilient, adaptable and continue to provide the financial stability our communities need to thrive.

The letter is signed by MNCPA president and CEO Linda Wedul who is a certified badass for writing it.

There’s no doubt any changes to the 150 hour rule come with some complications and that conversations need to be had around mobility, and that these changes will not happen overnight much in the same way 150 did not become the rule overnight when Florida became the first state to roll it out in the 80s. The question I have is why are we only just talking about it now? Decisions out of desperation tend not to turn out well except by accident.

FWIW from where I’m standing the people we’ve talked to are in support of a change because clearly what we’re doing is not working, whether or not that means lowering the requirement for licensure is a bit more sticky a subject though most people we talk to are certainly open to it if not in full support. As I was writing this we got a comment saying the 150 hour rule is pointless because students can take physical education — or everyone’s favorite, underwater basket weaving — to meet this arbitrary requirement. The AICPA would have a big more leg to stand on if the additional 30 units were guaranteed to develop young accountants into better educated, more well-rounded candidates. As it stands, they’re just really, really good at weaving baskets underwater.

Anyway, that’s where we’re at with that. Your move, Biggie.

The post The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up appeared first on Going Concern.

The question:

Ignoring the talent shortage what’s the most pressing issue in the profession right now?

— Going Concern (@going_concern) February 20, 2023

Let’s begin with my favorite response of the bunch:

Ignoring the talent shortage

— Kendall Collier (@KendallCollier) February 20, 2023

Really though.

And here’s one from the Illinois CPA Society based on what they’ve heard from their members:

What we hear among our members: retaining existing staff, lack of support for pursuing the CPA credential, and DEI challenges. During busy season, retaining staff will likely be #1.

— Illinois CPA Society (@IllinoisCPA) February 21, 2023

ICPAS has also done some research into why accounting graduates are choosing not to take the CPA exam if you’re interested in that. For the uninitiated, CPA exam candidate numbers have been on the decline since the second half of the ’10s, with a gap between accounting graduate numbers and anticipated CPA exam candidate numbers first appearing around 2014. The number of CPA exam candidates decreased 17 percent between 2019 and 2020 and it saw a 6 percent increase from 2020 and 2021 according to the AICPA Trends report which is basically a thorough physical examination (including blood work and squat and cough) for the profession. A modest increase in examination candidates is expected for 2023 due to the launch of CPA Evolution in 2024, just as we saw in 2010 prior to the significant exam changes ushered in with CBT-e in 2011.

Back to the question of pressing issues. In no particular order, here are the rest of the responses:

• Lack of succession planning of local firms.
• How to leverage tech to make busy season more manageable for professionals
• Pricing. There are still too many firms undervaluing themselves especially for D level clients. Appropriate pricing helps with compression and capacity issues.
• Pricing, deadline work compression, and outdated mindsets.
• Deadline compression forcing more work into q1/q2 is a pain for me.
• I think everything is at least indirectly related to the talent shortage, but I would go with (1) work life balance and (2) credibility/audit failures #ftx and wirecard, which I think are driven in part by the talent shortage

Work-life balance or rather the lack thereof is an issue that has long served as the boil on accounting’s ass and is believed by anyone who has been paying attention to be one of the main factors that has led to a shortage of accounting graduates and public accounting talent from entry level up to senior, second only to offensively low starting salaries. The two are intrinsically tied together as there is a direct correlation between the amount of shit one is willing to take and how much one is getting paid to do it. We suspect that were accounting firms to raise salaries in a significant way, talent would follow. Because salaries did not budge much over the past 15 years and because workloads became heavier and heavier as the years wore on, the perceived value of an accounting career eroded more and more with each passing year. And now we’re where we are.

The problem now is that firms can’t just hire more people to reduce the workload. There are no people. That leaves raising salaries as the big draw, and there has been some positive movement in that area, it may not be enough.

So we’re pretty much screwed there. Anyone want to talk about succession planning?

The post We Asked Twitter What’s the Second Most Important Issue in the Accounting Profession Right Now, Here’s What They Said appeared first on Going Concern.

Quick thread to provide some additional info regarding changing the 150 credit hour rule.

Professional licensing is managed by each individual state. Dept of Labor and Licensing, State Board of Accounting is responsible for enforcing the licensing laws in that state

— Byron Patrick, CPA (@byron_cpa) February 20, 2023

To change the requirements to get licensed as a CPA, each State Govt must pass a law to make the change. This is not 1 person/department’s decision.

As a result, in order to make a change, a Bill must be sponsored and submitted to the state legislature.

At that point, the state legislature will prioritize the bills they will vote on in that session. They never get through all Bills.

Let’s be optimistic and say that the Bill is brought to the floor. We now must make a big lobbying push

State legislators won’t bother to show up to vote unless their constituents are advocating for or against the matter.

Keep in mind there will be arguments w/in the State against making the change. Specifically, higher education will be negatively impacted by the lost revenue.

Public colleges are State Employees. Let’s assume advocacy can overcome this resistance.

You get the votes to pass both sides of the govt, we now need a governor to sign the bill. Again the Gov needs to know there is support to prioritize signing the bill to make it a law.

Congratulations, requirements have been changed in 1 state. 51 additional jurisdictions to go.

If I recall it took nearly 10 years to get a critical mass of states to change to 150, due to the need to gain support in each state government to even care about making a change.

A country with different req for the CPA is a nightmare. A couple states might benefit because people from out of state get licensed in their state. However, holding yourself out as a CPA in other states will be an issue. How many CPAs work with clients only in 1 state?

There is a lot of frustration with the @AICPA that they aren’t listening to the members and supporting a change. Their purpose is to support, advocate and protect CPAs and the License. They have a vested interest in ensuring there are as many CPAs as possible.

They also have first-hand knowledge of how hard it is to make changes to the requirements to become a licensed CPA. They are not going to intentionally not take action on the pipeline challenges putting their membership, dues, and purpose at risk. We all have the same goal.

Finally, do not read this thread and assume I’m an advocate of 150 >120. I refuse to have that debate as you may as well argue that gravity is bad for earth. The reqs that are in place are not going to change. I am an advocate of influencing the things that we can change.

Such as:

• Creative approaches to achieving the ed reqs
• Financial support to help people achieve their ed reqs
• Advocating for firms to compete for talent w/ compensation & benefits
• Elevating firms and their practices that create environments that people want to be a part of
  

The passion and interest in easing the pipeline challenge is awesome. It is in our best interest that we continue to fight and advocate for people to choose a career in Accounting. There is no silver bullet and certainly, there is no simple answer.

People are going to be willing to do the work & check all the boxes if the outcome is worth the effort. Let’s find ways to make sure that outcome is worth it… because by today’s standards of overwork and underpaid for new/young accountants, even 120 won’t be worth the effort.

/end

Go debate or praise him on Twitter if you want or duke it out in the comments, up to you.

The post What You Should Know About Changing the 150 Hour Rule Before You Debate For or Against It appeared first on Going Concern.

“Should any state or jurisdiction lower the licensure requirement to 120 hours, their CPAs would no longer be automatically substantially equivalent and would no longer enjoy the mobility and reciprocal practice privileges they currently are afforded,” NASBA President and CEO Ken Bishop said in an interview with the JofA. “Lowering the bar to 120 hours is only one of the alternatives we have heard that has been discussed and considered. Others, including lowering the cut score for passing the CPA Exam, have the potential and risk of creating the perception of dumbing down the profession. No one is talking about, for example, lowering the bar to become an attorney, and they’re also suffering from lack of entry.”

Bishop said the NASBA board vote was prompted by “a few state society staff members but not the profession in general” considering action that would create different pathways to CPA licensure. Bishop understands the sentiment behind the consideration but stressed that any changes on the state level that don’t align with the UAA would be counterproductive for the profession.

“If I was a society CEO and I had some members who were having trouble hiring CPAs knocking on my door, I would be trying to react. We’re not saying don’t react; we’re saying let’s do it in a uniform way,” Bishop said. “What really gets our attention is something that has an opportunity to disturb or completely adulterate the substantial equivalency, mobility, reciprocal licensure — things that we’re working to protect and maintain.

Given this, it is our pleasure to inform you that bills have been introduced to the Minnesota legislature — HF 1749 and SF 1660 — that would add an alternative pathway of 120 units and two years experience, while leaving the option to go down the state’s existing 150 hour path as well.

MNCPA calls it “broadening the path to licensure” and from their perspective, it’s not a dumbing down at all. And if those opposed to the change think it is, then those people are saying that 30 arbitrary units of education do more to prepare the entry level CPA than two years of experience in the field under the supervision of a CPA.

Some points provided by MNCPA to clarify concerns about the change:

• The MNCPA does not believe that legislation to broaden the licensing requirements is a magic solution and candidates will flock to the CPA exam. It is one part of a multi-layered campaign to promote the accounting profession and make it an attractive career choice to students. [Ed. note: We agree. The 150 hour rule is not a dam holding back a flood of people who would become CPAs if only 150 weren’t blocking the way. Tweaking the rule does, however, remove a barrier thereby letting in a few more people who are deterred by 150.]
• The MNCPA initiative does not eliminate 150-college credit hours with one year of work experience as a path to licensure. That should remain an option for candidates who have the means and time to take the additional credits.
• The MNCPA initiative does not lower the bar to become a CPA. More than 40 states allow candidates to sit the for the CPA exam with 120 college credits. The CPA exam, which all candidates must pass, is the unifying qualification to become a CPA. Additionally, all states have education, ethics and work experience with varying requirements.
• Each state determines their rules to become a CPA, maintain a CPA certificate and regulate the activities of CPAs. While there is a set of model rules, no state has fully adopted them and there currently exists a variety of differences between states. For example, some states require a candidate to have 150 college credits before sitting for the exam. Most allow sitting with only 120 college credits. Even with this difference, states are considered substantially equivalent.

Understand that this is a big deal. Also understand that TPTB are not happy about this (TPTB being the AICPA, NASBA, and especially Ken Bishop who just got clowned after that big passionate, suspiciously timed speech for JofA). There are many conversations to be had about mobility of course, we’ll keep an eye out for those. For now, this is only just now coming up in the legislature, it’s not a guarantee the rules will change. It certainly opens the floor for further discussion.

Anyway, here’s the bill in full, you already got the TL;DR. Old language has been struck, new language is underlined. It’s so nice to be able to use strikethrough for something other than snide comments for once.

A bill for an act
relating to certified public accountants; amending standards for required education
and experience; amending Minnesota Statutes 2022, section 326A.03, subdivisions
3a, 6.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. Minnesota Statutes 2022, section 326A.03, subdivision 3a, is amended to read:
     Subd. 3a. Early examination. Notwithstanding any contrary provision in this section,
the board may adopt rules to permit a person under certain circumstances:
          (1) to apply for the examination within 180 days prior to the person’s anticipated
completion of the education requirements as defined in subdivision 6; and

          (2) to take all or a part of the examination within 90 days of the anticipated completion
of the education requirements. No credit shall be given for any part of the examination taken
before completion of the education requirements in subdivision 3 unless:

          (i) the education requirements in subdivision 3 and adopted rule requirements are met
within 120 days after taking any part of the examination; and

          (ii) documentation of completion of education requirements is received by the board
within 150 days of the person taking any part of the examination.

EFFECTIVE DATE. This section is effective July 1, 2023.
Sec. 2. Minnesota Statutes 2022, section 326A.03, subdivision 6, is amended to read:
     Subd. 6. Certificate; required education and experience. (a) On or after July 1, 2006
2023, a person who has passed the examination required in this section must be granted a
certificate as a certified public accountant provided the person provides one of the following
certifications; the board verifies the certification; and the person complies with requirements
for initial issuance of the certificate as a certified public accountant as prescribed by the
board by rule:
          (1) the person certifies to the board that the person has completed at least 150 semester
or 225 quarter hours at a college or university that is fully accredited by a recognized
accrediting agency listed with the United States Department of Education, or an equivalent
accrediting association, and has completed at least one year of experience of the type
specified in paragraph (b);
          (2) the board verifies the certifications; and (3) the person complies with requirements
for initial issuance of the certificate as a certified public accountant as prescribed by the
board by rule. the person certifies to the board that the person has completed at least 120
semester or 180 quarter hours at a college or university that is fully accredited by a recognized
accrediting agency listed with the United States Department of Education, or an equivalent
accrediting association, and has completed at least two years of experience of the type
specified in paragraph (b); or

          (3) the person certifies to the board that the person has completed 120 semester or 180
quarter hours at a college or university that is fully accredited by a recognized accrediting
agency listed with the United States Department of Education, or an equivalent accrediting
association, and has completed at least one year of experience of the type specified in
paragraph (b), and completed 120 hours of professional education within one year of applying
for licensure as provided for in 326A.04, subdivision 4. Professional education hours
completed under this clause must be taken by a provider accredited by the National
Association of State Boards of Accountancy or as defined in board rules for professional
education and shall not qualify to meet professional education hours required after initial
licensure.
          (b) An applicant for initial issuance of a certificate under this subdivision shall show
that the applicant has had one year of meet the experience requirements as defined in
paragraph (a), clause (1), (2), or (3). Acceptable experience includes providing any type of
service or advice involving the use of accounting, attest, compilation, management advisory,
financial advisory, tax, or consulting skills, as verified by a licensee and meeting requirements
prescribed by the board by rule. Acceptable experience may be gained through employment
in government, industry, academia, or public practice. Experience as an auditor in the Office
of the Legislative Auditor or State Auditor, as verified by a licensee, shall be acceptable
experience.

EFFECTIVE DATE. This section is effective July 1, 2023.

The post Minnesota Throws TPTB the Finger and Introduces Legislation to Offer an Alternate Pathway to CPA Licensure appeared first on Going Concern.

1. Salaries — starting salaries in particular — that do not compete with other white collar and professional services fields;
2. Poor work-life balance that has only gotten worse as staff shortages worsen, “busy season” is less of a season and more of a relentless purgatory for many;
3. The 150-hour/5th year requirement for CPA licensure. CPA candidate numbers have been on the decline for years, even before anyone was talking about critical talent shortages, the 150-hour rule is considered by many to be an unnecessary barrier to entry in which case it is certainly doing its job by keeping out both the riff-raff and the quality talent. Academic research suggests that restrictive licensing laws reduced the supply of new CPAs without drastically improving quality in the labor market.

A distant fourth factor is “the cool factor” missing from accounting, at least from an outsider perspective. And an even more distant fifth factor: the profession demands talent in possession a large number of non-accounting skills — like data analytics — that can be applied elsewhere for more money, so that’s exactly what young people are doing. Alright, our extraterrestrial friend is caught up.

For the purposes of this article, we are going to focus on #3: the 150 hour rule. Journal of Accountancy has published bits of a recent interview with longtime NASBA President and CEO Ken Bishop, who told them in no uncertain terms that lowering the 150-hour requirement is not on the table.

“Should any state or jurisdiction lower the licensure requirement to 120 hours, their CPAs would no longer be automatically substantially equivalent and would no longer enjoy the mobility and reciprocal practice privileges they currently are afforded,” NASBA President and CEO Ken Bishop said in an interview with the JofA. “Lowering the bar to 120 hours is only one of the alternatives we have heard that has been discussed and considered. Others, including lowering the cut score for passing the CPA Exam, have the potential and risk of creating the perception of dumbing down the profession. No one is talking about, for example, lowering the bar to become an attorney, and they’re also suffering from lack of entry.”

Bishop said the NASBA board vote was prompted by “a few state society staff members but not the profession in general” considering action that would create different pathways to CPA licensure. Bishop understands the sentiment behind the consideration but stressed that any changes on the state level that don’t align with the UAA would be counterproductive for the profession.

“If I was a society CEO and I had some members who were having trouble hiring CPAs knocking on my door, I would be trying to react. We’re not saying don’t react; we’re saying let’s do it in a uniform way,” Bishop said. “What really gets our attention is something that has an opportunity to disturb or completely adulterate the substantial equivalency, mobility, reciprocal licensure — things that we’re working to protect and maintain.

“That doesn’t mean that things won’t change in the future. We’re open to change, but it can’t be state-specific or state-unilateral change, or we’re in real trouble. We are reaching out to persuade states to not take any unilateral action that could damage both the public and the profession.”

In other words, he is telling state societies to try literally anything else except petitioning to lower the 150-hour rule. Some states have amended their CPA regulations to allow candidates to sit at 120 units (150 still required for licensure), like Illinois. Texas has a similar rule change working its way through state legislature as we speak. But nixing 150 altogether? Not on his watch.

It is important to note here that the 150-hour rule is a relatively new concept introduced in the last several decades (I’m using “several” liberally here). Let’s check out “150 Hours: A Look Back” published April 1, 1999 in Journal of Accountancy:

The ship has sailed on the question of whether the 150-hour requirement is a good or a bad idea. Like it or not, the stipulation is the law of the land in 45 states, and the remaining holdouts will probably join eventually. The adoption of this change to qualify to take the CPA exam has raised other questions: How will it affect the supply of accounting graduates, especially during the years immediately before and after implementation? Should firms continue to hire accounting graduates with four-year degrees and help them meet the additional education requirement, or should firms hire five-year graduates who have already met it? What can firms do to prepare for the changes implementing the rules will bring? Finally, what models are there to look to for answers? Florida was the first state to fully implement the 150-hour education requirement on August 1, 1983, so it provides an excellent opportunity to examine how public accounting firms and accounting students responded to the implementation. The details of Florida’s experience may contain some lessons.

SURPLUS AND SHORTAGE
Under Florida law, candidates were required to apply for the CPA examination before August 1, 1983, to qualify to take the examination under pre-150-hour rules. Accounting students who otherwise would have graduated in 1984 accelerated completion of their program requirements to apply for and take the CPA examination in 1983. This created a surplus of four-year accounting graduates in 1983 followed by a dearth in 1984. William D. Pruitt, Jr., 198990 Florida Institute of CPAs president and managing partner of Arthur Andersen’s Miami office, recalled a particularly nasty insight: “I remember waking up in the middle of the night in 1983 and saying to myself, We’re not going to have anybody to hire in 1984.’ And that’s exactly what happened.”

Three major factors contributed to this shortage:

• First, the acceleration already cited.
• Second, many four-year accounting students who graduated in 1984 enrolled in graduate programs to earn the 30 additional hours required before starting their careers in 1985 or later.
• Finally, in 1984 some four-year accounting graduates relocated from Florida to states that did not have the additional education requirement.

Hold up. uWu what’s this?

Firms will have to pay more to get more. On the basis of its survey of 1,009 Florida CPA examination candidates, MGT said that public accounting firms paid new hires with five-year degrees about $2,000 (8.3%) more per year than those with four-year degrees. Other firms cited higher salary differentials for five- and four-year graduates. In 1990 Snowball said the average starting salaries in the preceding two years “were 16.5% higher for five-year graduates than for four-year graduates.”

To obtain the firms’ perspectives on the impact of the 150-hour law, MGT surveyed Florida public accounting firms. A total of 156 firms, mostly local firms with one office, responded. MGT’s results suggested that costs “may be offset by a more productive entry-level accountant.” MGT also reported that “initially the $2,000 additional salary plus associated overhead costs to a firm are usually distributed through a relatively high percentage of billable time for entry level staff. This would tend to minimize increased charges to clients.”

LOL. And here we are 24 years later, having learned nothing.

If we can’t tinker with the 150-hour rule then all that leaves is increasing salaries and…well…we know how firms feel about that.

The post The Accountant Shortage Isn’t Bad Enough For NASBA to Entertain Dropping the 150 Hour Requirement appeared first on Going Concern.

The post Here’s How People Did on the CPA Exam in 2022 appeared first on Going Concern.

So if you are still hurting from the January 10th score release just remember, the only way to fail forever is to stop trying. Or something.

The post If This Person Can Pass the CPA Exam, So Can You appeared first on Going Concern.

Ranked #259 on the INSIDE Public Accounting Top 500 with revenue of $16,392,083, Clayton & McKervey has partnered with U.S. News & World Report “Most Innovative School” in the Midwest Adrian College to offer matching scholarships that cut the cost of a master’s by half.

As you’ll see from the press release below, both the school and the firm hope that this perk will entice new recruits in an increasingly strained talent market:

Adrian College’s Dean of Graduate Studies and Institutional Effectiveness, Christine Knaggs, Ph.D., said when Clayton & McKervey hires an accountant who has yet to pass their Certified Public Accountant Examination, and possibly needs additional credits, they will offer the employee a scholarship incentive to attend Adrian College and get the qualifications and knowledge needed to pass the exam through its MS program.

“This has been a model that we have wanted to implement for a while now,” Knaggs said. “What we essentially offer is matching scholarships. They offer a scholarship, we offer a scholarship, which significantly reduces overall the cost of the entire program for staff accountants who are hired by Clayton & McKervey.”

With the combined scholarships, students see a savings of approximately 50% of the total cost of the MS degree.

Knaggs believes this specific partnership program will add two to five new students a year to Adrian College’s overall enrollment, but expects those numbers will grow in the future with more accounting firms wanting to join in to help educate and advance their employees to CPA status.

“It’s small numbers right now because this is a relatively small firm, but this is a great model we hope to bring to other accounting firms to say, ‘look, we do this, it works, would you like to do something similar?’” Knaggs said, adding that accountants are in high demand right now.

“Some of our students are getting offers before they get their undergraduate degree,” she said. “So, small firms like this are looking for any opportunity to incentivize. If they can say, ‘come to us, you can get your master’s degree, we’re going to discount it a great amount, and we’re also going to prepare you for your CPA exam,’ it’s a package they can use to recruit staff accountants potentially from a larger firm.”

“To me, when you’re coming into public accounting, what you should do is look for how well you’re being trained, how well you’re being coached,” Jim Biehl, Clayton & McKervey CPA, MST, Shareholder said in a web presentation. “That’s the currency that you need to look for when you’re looking for a job. It’s not how much money you make. [Ed. note: LOL] It’s how much you’re learning, because five years in, if you’ve learned what you should have learned, you’re very marketable and you can go anywhere you want to go.”

Knaggs explained that Adrian College’s MS program is a fully online degree designed for students working full-time in a firm, and wanting CPA credentials. Most of the program’s students are self-paced, but a majority complete the degree in one year. All of the classes are led by Adrian College professors.

“Because it’s fully online, we can partner with firms all over the state, all over the country, potentially,” Knaggs said.

“The classes are completely taught by our faculty, Donna Baker and Laura Bearden, the two who essentially created the program, and a wonderful collection of adjunct instructors as well that supplement and teach some of the other courses,” Knaggs said. “We have some of the best CPA passage rates in the state.” [Fact check: 64.7% of Adrian College MS Accountancy students pass the CPA exam (self-reported figure). This rate is 11% higher than the MI average and 14% higher than the national average]

Accounting firm partners with Adrian College to offer employees major discount in MSA program [Adrian College]
Adrian College [U.S. News & World Report]

The post The 259th Largest Accounting Firm Is Paying For Unlicensed Staff to Pursue a Master’s at the 87th Best Online Business School appeared first on Going Concern.

According to the AICPA, a traditional four-year undergraduate program is not adequate for obtaining the requisite knowledge and skills to become a CPA. The reasons offered for this center around the increasing complexity of public accounting practice; there are more rules and regulations, the knowledge base has greatly expanded, the CPA’s toolkit is expected to be more varied than it ever has been.

No one is really arguing these points. On paper it makes sense. Practice is infinitely more complex than it was back when the 150 hour rule was widely adopted. The issue at hand is how exactly does an arbitrary requirement of 30 extra units make for better CPAs when a good chunk of those people take completely unrelated courses in basket weaving and gardening to meet it? Just how good at basket weaving do we need our public accountants to be?

For a fun read, check out this paper on accountant quality that demonstrates increases in licensing requirements restrict the supply of entrants and do little to improve quality in the labor market. More on that here.

With the accountant shortage in full swing and a desperate AICPA reaching down to preschools to expose young people to the joys of accounting (OK, not quite preschool yet), the 150 hour rule is inevitably getting some attention. Long considered a barrier to entry (which is good or bad depending on who you ask), it makes sense that we consider the barriers put in place to prevent access to the profession when asking ourselves why interest in the profession is waning. Referring back to the paper I linked above, the 150 hour rule doesn’t just keep out the riff-raff as intended, it seems to be doing a great job of keeping out high quality individuals who would make awesome CPAs as well [see PDF]. Expect this unintended consequence to be up for much debate in the coming years should the pipeline problem worsen which is why I’m even bringing it up.

One state that has been fully aware of the 150 hour rule’s unintended scaring away of quality candidates is Illinois. There’s some good news on that front though. As of this past Sunday, you can sit for the CPA exam in the state of Illinois with 120 units (you still need 150 to sit be licensed, cue The Price Is Right losing horn sound here). Here’s the press release we received earlier today:

Effective Jan. 1, 2023, prospective certified public accountants in Illinois will only need to present proof of having 120 eligible semester credit hours, versus 150, and a baccalaureate degree to apply to sit for the Uniform CPA Exam, the universal exam all certified public accountant (CPA) candidates must pass to earn the distinguished CPA credential. Individuals passing the exam will still need 150 semester credit hours to become licensed.

The Illinois CPA Society (ICPAS)—one of the largest state CPA societies in the nation—advocated alongside the Illinois Board of Examiners (ILBOE) to reduce the credit-hour requirement for testing eligibility from 150 semester credit hours to 120. In 2021, the Illinois House and Senate unanimously passed ICPAS-sponsored legislation to amend the Illinois Public Accounting Act to allow this change. While earning 150 semester credit hours remains a key education requirement to become a licensed CPA in the state, ICPAS hopes that requiring fewer credit hours to initially sit for the CPA exam will help make becoming a CPA both more appealing and accessible to a broader candidate pool, particularly among accounting students, graduates, and young professionals.

“Earning the CPA credential is one of the most notable ways to establish your professional identity and exhibit a high level of competence in the accounting and finance profession,” says Todd Shapiro, ICPAS president and CEO. “Yet, despite strong market demand for the specialized services CPAs are entrusted to provide, we’ve been witnessing a nationwide decline in new CPAs. It’s our hope that this rule change will help alleviate some of the time and financial barriers associated with becoming a CPA and, ultimately, strengthen the CPA pipeline.”

Speaking of the pipeline, the Illinois CPA Society has been hard at work analyzing — therefore hopefully addressing — the problem. Their report Decoding the Decline is worth a read for anyone who might want to better understand the various factors at play. Might as well stick this video here while I’m at it:

CEO Video Series: Putting Destination CPA Back on Accounting Students’ Radar from Illinois CPA Society on Vimeo.

Reducing the sit requirement to 120 units isn’t quite as powerful as killing the 150 hour rule completely but it’s a good step in the right direction. Keep in mind that changes like these are legislative. Just as the 150 hour rule became law jurisdiction by jurisdiction all those years ago, so does a softening of requirements take time, effort, and good old fashioned government paper-pushing.

The post It’s Official: 120 Units is All You Need to Sit For the CPA Exam in Illinois appeared first on Going Concern.

Someone told me the other day that only 24 people took the CPA exam in 2022 in. Delaware. That’s a crazy low number

— Michael Sicuranza (@MSicuranza) November 16, 2022

That can’t possibly be true? Is this that “sarcasm” I’ve heard so much about? Delaware doesn’t have a residency requirement, lets you sit for the exam at 120 units, and used to be a popular option for international candidates, surely more than 24 people sat for the exam there in the last 11 months.

In the interest of the hard-hitting investigative journalism Going Concern is known for^/s, I contacted the Delaware Board of Accountancy to see if they’d tell me how many people sat for the exam this year. Actually, I sat on hold for about 45 minutes until the corny hold Muzak finally drove me insane and then I hallucinated that someone picked up. The apparition I spoke to said they would go find a benevolent entity who could answer my question, the music came back on for approximately twelve torturous minutes, and then I was disconnected. I tried again and this time, having been sufficiently conditioned to tolerate the Muzak through intensive exposure therapy, I endured a brief thirty minute hold before the person I spoke to told me they do not have that information and I should contact NASBA. So…back at square one I guess.

Anyway, keep you posted.

The post Unsubstantiated Rumor of the Day: Only Two Dozen People Sat For the CPA Exam in Delaware? appeared first on Going Concern.

Much research has been done on the 150-hour rule since it became the norm for CPA exam jurisdictions and the consensus is that it’s bullshit. One recent study found that reducing the education requirement from 150 hours to 120 hours is associated with a roughly 25 percent increase in the number of first-time candidates attempting the exam. Numerous papers outline how the 150-hour rule does not lead to better CPAs and in a time when CPAs are in short supply, the last thing we need are extra hurdles to licensure. Will making it easier to sit buff those low exam numbers up? Time will tell.

Is there anyone out there who adamantly supports 150 hours? Give us a holler and CMV.

The post ICYMI: Indiana Joins Other States Softening Their Requirements to Sit For the CPA Exam appeared first on Going Concern.

If you don’t know, there was a bit of a mix-up last month and by “mix-up” I mean the AICPA screwed October 1 test takers by changing the dates on the day before which meant instead of getting their scores on the 11th like they thought, they would now have to wait until the next score release which is — today! Well, yesterday technically. The target score release date was today and if this experience has taught future CPAs anything it’s to hope for the worst and plan for the…wait, that’s not it. The point is things can change at any moment and even the benevolent overlords of the CPA exam sometimes make mistakes so be prepared for curve balls. Had today’s score release been delayed I think we would have had full scale rioting at Prometric centers across the country so let’s just be glad that didn’t happen.

#CPAExam candidates! Waiting for your score(s)? They will be released tonight at 7 p.m. CDT. Good luck!

— NASBA (@NASBA) November 7, 2022

Some October 1 test takers did not get good news. Imagine, they could have scheduled a retake three weeks ago had they gotten their score on October 11 like they thought they were going to. And it’s a 74 on top of it? Ouch. Condolences, friend.

To everyone who passed, congrats! And to those who didn’t: that’s alright, it happens. Get back on the horse and pass that exam  if for no other reason than to rub it in the AICPA’s face. Nothing says “I hate you” like being eternally beholden to an organization’s code of ethics.

P.S. there are two CPA exam score releases left for the year. No idea where 2022 went but it appears it is gone. Might want to squeeze in one last exam before 2023 if you can.

The post CPA Exam Candidates Who Tested on October 1 Have Finally Gotten Their Scores appeared first on Going Concern.

#ThursdayThoughts Take your exam anytime, anywhere with Prometric’s secure remote-assessment platform, ProProctor https://t.co/9RkiTg0bM5 pic.twitter.com/fjUh7cE8R3

— NASBA (@NASBA) November 3, 2022

Here’s my Thursday Thought:

Why this tweet doesn’t have 50 comments from people asking how to schedule remote CPA exam testing is beyond me, the candidates must be busy studying today now that there are only two months left in 2022.

Remote CPA exam testing was first discussed at NASBA in 2020 as a sort of worst case scenario backup plan if the Rona never went away or, God forbid, if some other, equally horrible plague were to find its way to the human population. As recently as February of this year NASBA did say on its FAQ that “NASBA, the AICPA, and Prometric are looking at the possibilities of offering the CPA Exam remotely in the future,” which says to me this could be something that actually happens eventually. That FAQ adds: “However, there are security and software issues that must be addressed in order to protect the Exam.” *cue Price Is Right horn sound* We did hear a bit about a remote testing pilot program last year however a NASBA blog page about it returns a 404 (archive) and that program would have been on a limited basis. Anyone know what happened with that?

The IMA started allowing CMA candidates to test remotely using ProProctor earlier this year and assuming you have a decent internet connection, a computer made in the last decade, and don’t have people banging down your door all hours of the day it seems like a nifty way to test. Although you can find a bunch of CFPs bitching about it here if you’re looking for some downsides. So it’s possible to offer remote professional exam testing, just not something currently offered by the benevolent overlords of the CPA credential as far as we know.

TL;DR NASBA tweeted about remote exams, remote CPA exam testing is not a thing, much disappoint. Sorry.

The post This NASBA Tweet Is Going to Disappoint A LOT of People Today appeared first on Going Concern.

AND IT ISN’T EVEN AN 8×10! Larry Hogan will want to hear about this.

The post Newly-Minted CPA Outraged That Their State is Too Cheap to Send a Paper License Certificate appeared first on Going Concern.

Up until yesterday many of the October 1 test takers held out hope that maybe, just maybe, the benevolent overlords of the CPA exam would find a way to fast track their exam data and get their results out under the original timeline. It appears that did not happen.

It’s got to be demoralizing scrolling r/CPA today seeing everyone celebrating their passing scores if you are one of the unlucky few affected by The Great Date-Changing of 2022. My condolences everyone and best of luck to you on November 8.

The post 10/1 CPA Exam Test Takers Are Still Salty About Missing Out on Today’s Score Release (As They Should Be) appeared first on Going Concern.

Oh my.

Apparently up until this weekend the official AICPA score release website said that if your scores were received by October 1 your target score release date would be October 11 which means a bunch of people scheduled exams for Saturday the 1st thinking they’d make the cutoff for the release on the 11th. And then in the dead of night (I’m being dramatic, it probably wasn’t really in the dead of night) the AICPA up and changed the date for no discernible reason. Presumably because they are hollow, scornful souls whose only joy comes from messing with the future CPAs of America.

I’m not entirely sure why someone plugged the score release page into the Wayback Machine on September 18 but they did and it clearly says the cutoff is (was) October 1.

At some point over the weekend the October 11 score release disappeared completely which led to even more freaking out. I feel bad for whichever AICPA IT person was on call for this.

Not to mention this was all happening as a Category 4 hurricane was pounding the southeast.

From what I can gather, the AICPA told candidates that the original date of October 1 was an error per discussion in this thread and it was always supposed to be September 30. Oceania has always been at war with Eastasia.

Lawsuit anyone?

With CPA candidate numbers down hopefully this didn’t lead to too many emails in ole Barry’s inbox.

NGL “I hope Barry Melancon’s C suite AC/Heater is broken until November 8th” made me laugh.

Anyhoo, now you’re caught up. If you are an affected candidate you are welcome to email us with all the expletives you need to share your story. We’ll keep you posted if any of these poor people get their scores on October 11 like they were expecting to.

The post Angry CPA Exam Candidates Blew Up Barry Melancon’s Email All Weekend, Here’s Why appeared first on Going Concern.

In 2014, AICPA President, CEO, and Steely Dan fan club treasurer Barry Melancon gave his state of the profession address and in it he mentioned the gap and how they planned to put some brain power into figuring out how to fix it:

We have had about six consecutive years of record numbers of people majoring in accounting. That’s a great thing. For the last three years, however, we’ve basically had a level number of people taking the CPA exam. So there is a gap that’s building.

A major research project under way will help us to better understand that development. We want to find out what’s causing people to sit or not sit for the exam and then design tactics to deal with it strategically. The results will help us design and implement tactics to reverse the trend. That will involve the AICPA as well as state societies, firms themselves and management accounting functions or finance functions in business.

It seems that effort did not bear much fruit and now here we are all these years later facing not just a slight disinterest in the CPA exam but rather a critical disinterest in the profession as a whole referred to as the accounting pipeline problem.

Because we know the AICPA is tied up with all manner of initiatives to attract people to the profession and thus very busy, I’m going to propose a suggestion that might attract at least a couple accounting students to the CPA who might have otherwise given it the snub. Old-timers, y’all might want to hit the “back” button on your browser now because you aren’t going to like this. Extend the CPA exam window to 24 months.

That’s it. Just six little months. Give people just a little bit more cushion to sit for and pass all four parts. I mean, if you really want to be generous you could add another six months to that but let’s be reasonable in our demands here and say two years would be great.

“The 18-month period is set in board rules, regulations and statue. There are no plans to change this period,” reads a NASBA FAQ published in 2021. We get it, rules are rules. So change them. They’ve done it before. They’ve done it recently even.

In the not-so-distant past, you couldn’t take the CPA exam in March, June, September, and December. Like at all. Over time, these “blackout months” turned into shorter blackout dates and then they threw the idea out altogether and launched continuous testing in 2020, eliminating regular blackout dates completely.  So change is not only possible, it’s necessary. If it wasn’t, you’d still be taking the exam on paper.

When the Illinois CPA Society did a little research into why accounting graduates are less interested in the CPA than they used to be, the feedback ICPAS received shed light on the mystery of lower candidate numbers. Why aren’t people choosing to pursue the CPA exam?

• They feel they can take off in their anticipated or chosen careers without it.
• They believe that any value the CPA credential holds is outweighed by its lack of relevance to their personal endeavors and the time commitment necessary to obtain it.
• They don’t see the personal or financial return on investment.
• Their employers or prospective employers aren’t supporting or requiring it.
• They see other experiences as being more valuable.

TL;DR: “It’s hard, it’s costly, and I don’t need it to succeed in my career path.” You can’t make the actual exam any easier but perhaps making the process a bit easier — as has already been done with computerization and continuous testing — would have a positive impact on candidate numbers. Busy seasons are getting longer, staff shortages are causing associates to work harder, and let’s be real, firms aren’t aggressively pushing the CPA like they used to. These factors can’t really be changed, the time allowed to complete the exam could be. Can it not?

Look, at this point it’s either that or drop the requirement to sit down to a GED and a pulse, you want candidates then you gotta start thinking about what’s standing in the way.

Anyone who wants to argue why the CPA exam window absolutely must be 18 months and not a day more is welcome to do so in the comments. We also welcome any comments that start with “back in my day.”

The post Hear Me Out, Extend the CPA Exam Window to 24 Months appeared first on Going Concern.

I didn’t realize Barry Melancon moved from the AICPA to higher education.

While the topic of foregoing the CPA exam and potentially ruining your entire career is a worthy subject on its own, we’re just going to skip right past that and get to these comments.

SHOTS FIRED. You hear that, oldies? You kids had it so easy back in the day. You push the CPA exam as the only option because back in your day it was a breeze (or something).

Actually, it is fact that the content of the exam has grown over the years as the breadth of knowledge an entry level CPA is expected to possess has expanded (source: just trust me bro). That isn’t to say the modern CPA exam is harder, just more. Moving on…

Here’s some ancient data I unearthed from a treasure chest beneath NASBA headquarters on candidate numbers over the years, “the years” being 1950-1990:

Wow that’s a real relic, isn’t it? Actually it has no relevance to this conversation I just thought it was cool. Really, when was the last time you saw a 31-year-old, hand-scanned PDF? This is a real piece of history here.

What were we talking about? Oh right, whether or not the CPA exam is harder now or was harder back in the day. No discussion of CPA exam difficulty would be complete without the obligatory mention of the 150-hour rule. Fact: requiring a fifth year of education adds difficulty. Unless you really, really like school and student loans.

Did you know: 40 years ago there was no 150-rule? In 1983, Florida became the first state to require 150 units for licensure. As talk of a critical accountant shortage increases, expect to see states seriously consider softening the requirement. Illinois has already done this; effective January 1, 2023, you can sit for the CPA exam in the state of Illinois with 120 units (it’s still 150 for licensure, sorry).

This old timer reminds us that while yes, the “old” exam was difficult, so too is the current one and both for different reasons.

Adding to the above comment, they didn’t even have calculators back in the day. Calculators were added to the CPA exam in 1994, ten years before the exam was computerized.

A 1998 Journal of Accountancy article touches on some of the changes that happened to the CPA exam in the 90s:

During 1996, 122,000 candidates sat for the Uniform CPA Examination, but it was markedly different from the exam CPAs have been taking for 80 years. Because the exam is the gateway all CPAs must pass through, modifications in its content and administration affect the entire profession. Since 1990, the exam has undergone major changes: Candidates can now use calculators in some sections, certain essay questions are graded on writing skills, the time allotted to take the exam has decreased, new objective answer formats have been added and the exam has become nondisclosed.

Note: “nondisclosed” in this context means they stopped releasing exam questions so the questions could be reused. The practice questions released by the AICPA now do not appear on the exam.

Harder? Not harder? One OG from back in the day argues their case:

Can we all just agree the exam is hard? It was hard then and it’s hard now. /thread.

The post Reddit is Bickering Over the CPA Exam Getting Harder (or Not) Over the Years appeared first on Going Concern.

Why aren’t people willing to pursue the CPA despite the numerous hurdles placed in their way as has been tradition since the dawn of time? Well there’s a Reddit thread today on the shortage and the future of the profession that gives us a little insight. Here are a few choice comments:

You need another year of college and then have to study for another 6-12 months for the CPA exam. That’s a lot of investment time to start out at like $60K (not sure what starting wages are but it was $50K for me 6 1/2 years ago).

Working on the CPA in public is hell. Even working in industry job 40 hours a week and then trying to study 12 a week is a lot. I couldn’t do 50+ hour weeks and study and not lose my mind all for a little more pay.

The hours and pay are the biggest factors. Also throw in 150 hour cpa requirements. Lot of barriers to entry for low pay, just the promise you might land a decent job later down the road.

As you can see, these comments highlight the three biggest issues getting in the way of more CPAs in the pipe: low starting pay, too many hours making it too difficult to study for the exam while working in public, and the fifth year of education. The 150-hour rule has been discussed here regularly (see: The 150-Hour Rule is Kinda Bullsh*t, Says Guy and 4 Reasons Why the Profession Is Struggling to Convince Students to Become CPAs, #4 Will Not Shock You) and it’s no secret that the pay sucks, not a single one of these factors should be a surprise to anyone.

In Illinois, they’re taking a unique step to mitigate at least one of those factors: bumping the requirement to sit for the exam down to 120 units. Effective January 1, 2023, you only need 120 to sit. You still need 150 for licensure but it lets you get the exam out of the way before you have to worry about it.

The so-called two-tier requirement — 120 units to sit, 150 for licensure — is fairly common across the 55 CPA exam jurisdictions and nearly all of them require 150 units for licensure. Illinois isn’t doing anything revolutionary here, just delaying the fifth year requirement which isn’t actually a fifth year requirement at all but rather a strong suggestion that one should pursue a graduate degree or at least a handful of relevant units beyond those required to graduate with a B.A. You’ll notice AICPA guidance doesn’t even mention underwater basket weaving:

To obtain 150 semester hours of education, students do not necessarily have to get a master’s degree. They can meet the requirement at the undergraduate level or get a bachelor’s degree and take some courses at the graduate level. Students can also choose any of the following:

• Combine an undergraduate accounting degree with a master’s degree at the same school or at a different one;

• Combine an undergraduate degree in some other discipline with a master’s in accounting or an MBA with a concentration in accounting;

• Enroll in an integrated five-year professional accounting school or program leading to a master’s degree in accounting.

The AICPA gives a list of reasons why the 150-hour rule is needed at all, among them are significant increases in official accounting and auditing pronouncements and the proliferation of new tax laws, increased complexity due to regulation and technology, and perhaps the most ironic of all given current shortages, the staffing needs of accounting firms and other employers of CPAs are changing rapidly and the demand for a large quantity of people to perform many routine auditing tasks is rapidly diminishing. Is the 150-hour rule accomplishing this? That’s a discussion for another day.

If the shortage gets any worse we’re going to have to start pulling crazy ideas out like getting rid of the 150 completely. Or making 70 a passing score. Or just don’t require anything at all and let anyone with a GED sit for the exam. Uh, yeah, softening some requirements without getting rid of them completely is probably a saner idea.

The post Illinois Will Soon Let You Sit for the CPA Exam With 120 Units, Should All States? appeared first on Going Concern.

If the @aicpa put you in charge of #cpa exam content today, what is one topic you would add? Remove?
I would add Excel functions & formulas to all sections.
I would make audit/REG specialty sections where a student only needs to take 1. CPAs don’t need both. It’s 1 or the other.

— Jack Castonguay, PhD, CPA (@profjackc) August 4, 2022

One thing is certain: future CPAs of today (or is it tomorrow?) are tested on a far greater breadth of knowledge than the generations that came before them; as the rules and topics in practice grow more complicated, so raises the bar of minimum knowledge tested by the exam. Is it too much? Is that why CPA exam numbers are down? Is it really necessary to test a little bit of everything? Should we throw out government accounting?? Am I the only one who was butthurt when they took written communication out of FAR, AUD, and REG??

The comment section is open, let ‘er rip. IMA representatives are welcome to argue the case for extensive cost accounting testing if they are so inclined. Oldtimers, please refrain from telling us how many hills you had to clamber over barefoot in the snow on your way to the gymnasium where you sat for all four parts at the same time in a repurposed chicken coop.

The post What Would You Like to See Tested on the CPA Exam? appeared first on Going Concern.

• Do the Core Exam Blueprints include the knowledge and skills required of all newly licensed CPAs to protect the public interest?
• Do each of the Discipline Exam Blueprints include the knowledge and skills required of a newly licensed CPA to protect the public interest?

Maintaining the Relevance of the Uniform CPA Examination® – Aligning the Exam with the CPA Evolution Licensure Model, presents an informed and thoughtful proposal for the 2024 CPA Exam. Interested parties may comment on the ED by sending responses to practiceanalysis@aicpa.org no later than September 30, 2022. You can find the Exposure Draft here.

After considering all comments, the final CPA Exam Blueprints should be approved in December 2022 and published in January 2023, with a planned Exam launch in January 2024. This will provide CPA exam candidates, colleges and universities, firms, review course providers, and other stakeholders about a year to plan for the launch of the new exam.

Exponential growth in new rules, concepts, and standards, along with changes in the roles and responsibilities of newly licensed CPAs (nlCPAs), have caused the body of knowledge required of nlCPAs to grow, reads the Exposure Draft. The CPA Evolution model establishes a foundation for the most important and relevant topics that all nlCPAs need to know to protect the public interest while providing an opportunity for candidates to choose one of three Disciplines to demonstrate knowledge and skills in that particular domain: Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), or Tax Compliance and Planning (TCP). The Disciplines will focus on topics that apply to nlCPAs engaged in those areas of practice and are less likely to be encountered by nlCPAs who are not focused in those areas of practice.

The CPA exam provides reasonable assurance to Boards of Accountancy that individuals who pass the CPA exam possess the minimum level of knowledge and skills necessary for initial licensure as a CPA. To remain relevant to a dynamic profession and current with the real-world demands on nlCPAs, the CPA Exam must continually evolve. (“Dynamic” is their word, not ours)

The periodic execution of a Practice Analysis (PA) is necessary to ensure that the CPA Exam:

• Supports the profession’s commitment to protecting the public interest;
• Remains current, relevant, reliable, psychometrically valid, and legally defensible; and
• Fulfills the needs of the Boards of Accountancy in carrying out their licensing responsibilities.

In fewer words, the goal of CPA Evolution “is protection of the public interest, or more specifically, providing the public with assurance that those individuals who are licensed possess a minimum level of knowledge and skills necessary for safe and effective practice.” [JofA]

We’ll be doing a deep dive of these proposed Blueprints in a later article as they thoroughly outline proposed content and examination areas that CPA exam candidates will likely encounter in the new exam. Anyone who has comments about the new exam that are not useful to the AICPA such as “this is stupid” or “wtf is this back in my day we had to walk uphill both ways to Prometric and write essays in FAR these kids have it too easy now” are welcome to use our comment section below to sound off.

Exposure Draft: Proposed 2024 CPA Exam changes [AICPA]

The post Benevolent Overlords of the CPA Exam Seeking Comment on Proposed 2024 CPA Exam Blueprints appeared first on Going Concern.

Not many CPAs get stopped by fans for selfies, but Timothy Gearty is one of them. As editor-in-chief and national lead instructor for Becker, a global CPA exam-prep leader, Gearty — who’s also the managing partner of Florham Park’s Gearty & McIntyre — has an important role in preparing a significant number of the tens of thousands of people who sit for the CPA examination.

In addition to his responsibilities at Gearty & McIntyre, Gearty is mobilizing Becker for exam changes that are scheduled to be implemented in January 2024. “Under the planned new rules, which reflect the increased real-world responsibilities of CPAs, candidates will still sit for the three mandated core components — accounting, auditing and taxation,” said Gearty, a previous Power 50 honoree. “But the fourth will be an elective. They can select from business analysis and reporting, information systems and controls, or tax compliance and planning.”

Gearty noted that the scheduling of the changeover means that Becker and other CPA exam-prep firms will have enough time to make program changes. “We’re incrementally updating our course materials to account for the new format,” he said. “I’ve always believed that the best way to predict the future is to create it yourself, and CPAs are in the best position to be at the forefront of this evolution.”

The post Tim Gearty Makes a List, Talks About 2024 CPA Exam Changes appeared first on Going Concern.

As I’m sure you’ve heard by now the profession is having trouble recruiting future CPAs. Accounting student numbers aren’t critically low yet but fewer and fewer graduates are taking the CPA exam, an issue that keeps AICPA President, CEO, and 1982 Hank Marino Invitational Winner Barry Melancon’s psychiatrist up at night Googling “effective treatments for insomnia.” This issue is called “the accounting pipeline problem” and expect to hear about relentlessly in the years ahead as it worsens. While The Powers That Be engage in countless conference calls and seminars to try and figure out what to do about it, there are small steps that can be taken to at least mitigate it a little for the time being.

KPMG US announced one such step last week. Let’s see the press release:

KPMG CPA Kickstart is a two-month, 40 hours a week program that provides new hires the time, along with compensation and full benefits, to focus on two of the most difficult sections of the CPA exam, enabling them to transition to full time work seamlessly. The program will be facilitated by KPMG in conjunction with a third party review course. Those enrolled in the program will receive additional support for completion of the final parts of the CPA exam once they begin client work.

WHICH TWO PARTS? It doesn’t say. We can safely assume FAR and…whatever. Oh wait here, Accounting Today says it’s FAR and REG. See, I was half right.

“Auditors are constrained without their CPA, and studying nights and weekends, can be a difficult, frustrating experience,” said Becky Sproul, Talent and Culture Leader – Audit. “Our program will provide extensive support in passing the CPA exam while adding top talent to our engagement teams.”

So they’re paying new hires to study for two months prior to their start date. You know what’s funny? I suggested exactly that last year:

Perhaps — and bear with me here, I’ve been accused of throwing out batshit insane ideas before — more early career accountants would be interested in sitting for the CPA exam if they were given the TIME to study. And no, I don’t mean the couple months between offer and start date. Nor do I mean the slight underutilization you might get at a firm that can afford to keep you half-sidelined every now and then so you can fill your time with studying. I mean give people real time to study and sit for the exam. Throw some money at them too while you’re at it. But the main issue here is time, or rather the lack thereof.

You’re welcome for the free ideas, KPMG.

KPMG CPA Kickstart launches this summer in 35 offices and so far 225 new hires are enrolled. We have no snark to interject here, this sounds like a great way to encourage new hires down the CPA path with a nice little financial incentive to boot. Why only Audit? Well it’s not because the firm is being cheap that’s for sure. Audit makes up a huge chunk of new hires at all firms due to a critical shortage made worse by everyone quitting. Perhaps it’s to sweeten the pot for future auditors with multiple offers to choose from?

Update: Soooo just hours after we posted this a kind Twitter user sent over this screenshot informing us that perhaps we should reconsider saying nice things about Big 4 initiatives which is true regardless:

According to this screenshot, the payment for this program is sort of an advance on the bonus you’d get for passing all four parts within your first or second year which is an important detail if true. We’ve reached out to KPMG for clarification and will update accordingly. In the meantime, I’ll be in the corner berating myself for not being a dickhead to a Big 4 firm for once in my miserable life. You’d think after doing this for 13 years I’d know better.

Update #2:
This is what we got from a KPMG spokesperson, make of it what you will:
“Participants are paid a program-specific salary to study for the CPA exam during the two month KPMG CPA Kickstart program, and are not performing client work during that time. In addition, they will receive a CPA exam completion bonus if they pass all four parts of the exam within a year of joining KPMG.”

The post [UPDATED] KPMG Will Pay Audit New Hires to Study for the CPA Exam appeared first on Going Concern.

From the full list of 57 winners our totals are:

• PwC: 11
• EY: 10
• KPMG: 6
• Deloitte: 3

You’ll note Deloitte got so few winners that they were actually tied for 4th place with RSM, with Grant Thornton right behind them with two wins. This is quite a change from 2020 when Deloitte turned their 2019 last place rank into the top spot. Temporarily, I guess.

• Deloitte – 14
• EY – 14
• PwC – 13
• KPMG – 11

You’ll also note there were fewer winners this time around compared to 2020, 57 versus 89. The 57 winners obtained a cumulative average score above 95.50 across all four sections of the CPA exam, passed all four sections on their first attempt, and completed testing in 2021. Congrats to each and every one of you! If you’re reading this, that is. Which you’re probably not because I didn’t copy paste your name here.

Want to score a win for your firm and gain lifetime bragging rights by getting on this illustrious list? Here are our tips for getting the Elijah Watt Sells Award given by award winners themselves.

The post Which Big 4 Firm Had the Most Elijah Watt Sells Award Winners in 2021? appeared first on Going Concern.

Today we’re going to talk about some research that I was unaware of until last Friday when I came across a detailed article about the gender gap in The CPA Journal. I’ll keep this short, I know you all are busy:

Research that analyzes data from the National Association of State Boards of Accountancy (NASBA) has found that candidates are more likely to successfully pass the CPA exam if they are: male, young, graduated from an Association to Advance Collegiate Schools of Business International (AACSB) accredited business school, graduated from an AACSB accredited accounting program, or graduated from a private college or university (Trinkle, Brad S., James Scheiner, Amelia Annette Baldwin, and George Krull, “Gender and Other Determinants of CPA Exam Success: A Survival Analysis,” The Accounting Educators’ Journal, vol. 26, 2016, pp. 101–117). This line of research also finds that the more times candidates sit for the exam, the less likely they are to pass, and that there appears to be no difference in pass rates between candidates from states with the 150–credit hour requirement to become licensed and candidates from states without the requirement.

The above research included results of all exam candidates sitting for any section of the exam from 2005-2013. A 2019 article from MNCPA rightfully calls the gender gap significant, confirming a measurable difference in pass rates for men and women:

The pass rate for women CPA exam candidates is significantly lower than that of their male colleagues. The pass rate is defined as the number of sections on which women received a passing score (e.g., one candidate attempting four parts in a calendar year and passing two parts would generate a passing rate of 50%).

On a national level, the gap (i.e., gap meaning that men are scoring higher than women, expressed as points) in pass rates between men and women is around 7 percentage points. This is more than a random or transitory phenomenon. In the past four years, women candidates’ pass rates have been nearly 17 points lower than their male colleagues when measured nationally, regionally and at the state level. This difference is material, significant and meaningful.

There are some nifty charts at that MNCPA link above that explore the CPA exam gender gap over a period of several years if you want to head there and marvel at the symmetrical tableness of it all.

Obviously my headline was bait and there are a million factors contributing to CPA exam success, not just a chromosomal one, but it’s interesting research nonetheless when we consider declining interest in the CPA exam from both sexes over the years. Could the secret to getting more people to take the exam be as simple as ensuring all candidates are better prepared and figuring out A) why men do better than women on the CPA exam, and B) how to better support women so they can close the gap? After all, no one wants to take on a time-consuming, soul-crushing challenge like the CPA exam if the odds are stacked against you.

If you’re interested in the full study, grab a PDF of Gender and Other Determinants of CPA Exam Success: A Survival Analysis here.

Exploring the Gender Gap [The CPA Journal]

The post If You Are Young, Male, and Taking the CPA Exam We Have Some Good News For You appeared first on Going Concern.

Anyway, that article got me thinking about prohibited items at the CPA exam so I did a little digging. The full — but not exhaustive — list of prohibited items at Prometric is contained in the candidate bulletin which anyone taking the CPA exam should read thoroughly, so go give it a look if you haven’t already (linked PDF current as of April 2022; if you’re reading this in the future, first of all hi, and second you may want to check for a more current one). While hunting down the list I came across a 2017 PDF hosted by NASBA. Don’t Be That Exam Candidate, the PDF warns, which could be taken a multitude of ways: that candidate who forgets their NTS? That candidate who tries to use an expired Costco card as a valid form of ID? That candidate who sneaks in a bandanna as a Kleenex, both of which are not allowed? It could be anything! I demand to know more!

Turns out it’s about misconduct, which incidentally is just about my favorite thing in the world. This should be good.

Over the years I’ve heard plenty of stories about CPA exam candidate misconduct. One of my hobbies back in the day was combing through state board of accountancy publications about all the naughty things CPAs had done (look, I live a boring life, OK?). The one that immediately comes to mind is the guy in California who cheated on the open book ethics exam. Like, why? He wasn’t barred from the profession forever though, he had to retake the ethics exam in the presence of a licensed CPA approved by the California Board of Accountancy (so not just any CPA off the street), and once he passed he would be issued a CPA license only for it to be revoked so the CBA could put him on probation for five years. You know, the same thing happened to me when I was 14 and got caught driving my friend’s moped, the driver’s license I didn’t even have got taken away. There was also an issue with this guy getting drunk, locking himself in his room, and telling the cops he wired the door with explosives that he failed to report to the CBA, but it didn’t happen at Prometric so let’s just put that aside and focus on the topic at hand.

The list I found details a few specific incidents of candidate misconduct and you’ll note a good number of them fall under “abusive conduct.” So those of you who have anger problems and probably scream the gamer word at 12-year-olds in MMOs might want to take note: being a jackass to Prometric staff is a big no-no. Here are just a few examples that were reported to boards of accountancy by test center staff:

• Candidate arrived 45 minutes late for the exam and was told he could not test. Candidate became belligerent and exhibited rude and unprofessional behavior (Disruptive and Rude Conduct).
• Candidate was checking in and was told his ID was expired. Because he was unable to provide another acceptable form of identification, he was told he could not test. Candidate became verbally abusive and used vulgar language with the test center staff (Disruptive and Abusive Conduct).
• During the routine search conducted during check-in, notes were found taped to the candidate’s leg inside his socks (Prohibited Item and Conduct).
• Candidate took a break, went to her locker, retrieved her cellphone, and made/received a call (Prohibited Conduct).
• Candidate decided to take a break, and when he was asked to sign his correct name on the sign-out sheet, he used vulgar language and was verbally abusive to the test center staff (Disruptive and Abusive Conduct).
• Candidate took a break, went to his locker, removed review course notes, and began reading them (Prohibited Conduct).
• Candidate concealed exam review notes in the waistband of her pants. She pulled them out and starting reading them (Prohibited Item and Conduct).
• When a candidate returned from break, the test center staff noticed a black object under her shirt collar; it was a Bluetooth device (Prohibited Item).
• Candidate began waving his scratch paper in the testing room and complaining that an item was missing on his exam. Test center staff attempted to speak with him, but he continued to speak loudly, disrupting the testing room (Disruptive and Abusive Conduct).

Man I’d pay good money to see the test center surveillance footage of some of these. Especially that last one.

Misconduct can get you anything from a warning to invalidation of exam scores and even civil or criminal charges. So just don’t do it, OK? Take your anger out on strangers on the internet and your Overwatch teammates like the civilized professional you are.

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The post PSA: Telling Prometric Proctors To Go F*ck Themselves Will Probably Get You Kicked Out of the CPA Exam appeared first on Going Concern.

Prometric has long since opened to everyone — though site closures do still occur from time-to-time as they always have — and now after much consideration they are ditching the mask mandate that has been in place since the 2020 reopening.

From Prometric’s coronavirus update page:

As of May 1, 2022, Prometric will no longer require candidates or test center personnel to wear masks unless required to do so by building management or local government mandates. In light of recent trends and mask mandate changes around the world, along with updated guidance from leading world health organizations, Prometric will not require masks to be worn in test centers, however we will continue to allow and encourage the wearing of masks regardless of mandate or vaccination status. Thus, any candidate or staff member that prefers to wear a mask will feel comfortable doing so. We will also always follow the guidance of local government and health officials, so when masks are mandated in a market, Prometric will continue to follow that guidance in test centers as well. [emphasis Prometric]

Since September 1, 2021 masks have not been required for fully-vaccinated test takers — unless mandated by local government — however as with the upcoming rule change, candidates are allowed to wear one if they prefer. The May 1 rule change opens this choice up to everyone including Prometric staff regardless of vaccination status.

No matter how you may feel about masks and mask mandates, it’s important to acknowledge that Prometric’s rule change leaves quite a bit of room for personal choice. Any CPA who has tested there in the last 18 years knows that Prometric has historically been pretty uptight when it comes to security and would make you do a squat-and-cough to check for contraband in your prison purse if they could, so letting people continue to wear masks if they want to is an unusually thoughtful gesture from them. After all, this is the same company that confiscated someone’s comfort rock.

Weapons, cigarettes, Fitbits, and umbrellas will continue to be banned at Prometric testing centers.

Photo by Anna Shvets

The post As of May 1 You Are No Longer Required to Wear a Mask at Prometric But You Still Can If You Want To appeared first on Going Concern.

“In my view, the future of the CPA profession is at risk,” writes Yigal Rechtman, CPA, CFE, CITP, CISM in a letter to the editor published by The CPA Journal. Time to whip out an ancient Game of Thrones meme here:

The 2021 AICPA Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report released a couple weeks ago tells us that the number of accounting graduates trended downward in the 2019–2020 academic year (most recent data available), with decreases of 2.8% and 8.4% at the bachelor’s and master’s levels, respectively; accounting grad numbers have been trending downward since 2015-16 with the 2019-20 number showing the most significant drop-off of recent years (3,391). Can we blame the pandemic for some of that? Maybe. We’d be wise to wait for the 2023 AICPA Trends report to see if the trend continues before getting too worked up about it.

The issue of the accounting pipeline problem has been discussed here ad nauseam but this is accounting so we really have so few things to talk about, why not throw a few more ideas into the flaming dumpster fire? Here are the reasons Rechtman gives for why the future of the CPA profession is at risk, an issue that could potentially cripple capital markets and therefore our capitalist system entirely:

• Lack of mission or purpose To counter this perception, the accounting profession could be rebranded as a foundational force of social stability and progress, and not just as “a job” with long hours and low return on investment (ROI) on education.
• A narrow focus on numbers Accounting provides a golden toolkit of critical thinking and information brokering that can work in both traditional and innovative ways. For example, every startup would benefit immensely from having a CPA among its founders.
• An exclusive brand. There is another way of putting this: Accounting is a profession whose brand has not been diluted. For example, the AICPA’s idea of expanding its membership by opening the certified in financial forensics (CFF) certification to non-CPAs runs counter to the exclusivity of the CPA brand.
• The pay isn’t worth the educational investment Here we need to make changes to the ROI calculus of education costs. The “fifth-year” experiment has had the unintended consequence of costing prospective entrants a 20% premium just for the chance of passing the CPA exam. With a 40% pass rate, this is a tough sell. It’s time to drop the fifth-year requirement.

Let’s talk about that last point. While it may be a tough sell, the AICPA has tried to sell it anyway. Here’s a list of reasons why a traditional four-year undergraduate program is no longer adequate for obtaining the requisite knowledge and skills to become a CPA (in their words):

• Significant increases in official accounting and auditing pronouncements and the proliferation of new tax laws have expanded the knowledge base that professional practice in accounting requires.
• Business methods have become increasingly complex. The proliferation of regulations from federal, state, and local governments requires well-educated individuals to ensure compliance. Also, improvements in technology have had a major effect on information systems design, internal control procedures, and auditing methods.
• The staffing needs of accounting firms and other employers of CPAs are changing rapidly. With more sophisticated approaches to auditing now in use, and with the increase in business demands for a variety of highly technical accounting services and greater audit efficiency, the requirements for effective professional practice have increased sharply. The demand for a large quantity of people to perform many routine auditing tasks is rapidly diminishing.

These bullet points may be true — the expansion of the entry-level CPA’s knowledge base certainly is, and will only be larger when the redesigned CPA exam launches in 2024 — but none of them make any mention of the value to the student who may be wondering if a master’s is literally and figuratively worth it (spoiler: it is literally not).

OK so the AICPA sucks at selling the fifth year requirement, whatever. Problem is the fifth year requirement sucks at selling itself, too.

A 2018 paper by John M. Barrios at University of Chicago Booth School of Business shows us that the 150-hour rule reduces the supply of accountants (you know, that whole pipeline thing everyone is worried about) AND doesn’t do much to improve the quality of the supply who are required to meet said rule:

Although the Rule reduces the number of entrants into the profession, an analysis of labor market outcomes shows that accountants subject to the Rule are more likely to be employed at a Big 4 public accounting firm and specialize in taxation. However, accountants subject to the Rule have the same likelihood of promotion, the same duration until promotion, and exit public accounting at faster rates than their non-Rule counterparts. Moreover, Rule accountants earn a wage premium relative to non-Rule accountants. These findings suggest that restrictive licensing laws reduced the supply of new CPAs and increased rents to the profession without drastically improving quality in the labor market.

Many years back when not all states required 150 hours, the state — sorry, Commonwealth — of Virginia realized that its then-extraordinary 150 hour requirement was causing the state to lose CPA candidates to other, less restrictive states, a side effect that was costing them money. “The Commonwealth doesn’t want to lose its valuable CPA candidates and wants to retain those Exam takers. In addition, reducing the requirement would have a positive impact on Virginia’s budget,” said the Virginia Society of CPAs. The issue was so urgent that then-governor Tim Kaine signed emergency legislation in May of 2009 allowing Virginia CPA exam candidates to sit for the exam with just 120 hours. So that’s a consideration too, the time and financial investment necessary to meet the 150 hour requirement could be partially contributing to the gap between high numbers of accounting graduates and mostly steady or even declining CPA exam candidate numbers. That decline means fewer application and exam fees collected by The Powers That Be (a.k.a The Dark Triad of the AICPA, NASBA, and Prometric along with individual state boards of accountancy), an issue that should certainly get their attention.

“Filling” the CPA pipeline is one of the AICPA’s primary strategic initiatives in 2022 and when we look at the list of things they’re doing toward this goal we see the bulk of it is marketing and PR. From the Trends report:

To address the US CPA pipeline’s downward trend, we collectively need to promote:

• K-12 and high school students interest in accounting
• University students majoring in accounting and other related majors
• University students deciding to sit for the CPA Exam
• CPA candidates securing the CPA license
• Young professionals further exploring sitting for the CPA Exam
• The promotion of the accounting profession and the CPA license globally

If the profession is that worried about the future (it ought to be), it’s time to have the difficult conversation about self-imposed barriers to the profession. Pushing for accounting to be classified as a STEM field and initiatives to plant the seed in kindergartners’ minds of accounting as a career may not be enough.

If things get really dire we could just abolish the CPA exam altogether but let’s maybe try some less extreme measures first, maybe starting with getting better at demonstrating the value of a career in accounting (firms, this is where you start paying people better) and justifying the burden of a fifth year of education for licensure. Yeah, that should do for a start.

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The post 4 Reasons Why the Profession Is Struggling to Convince Students to Become CPAs, #4 Will Not Shock You appeared first on Going Concern.

This latest iteration of the report covers university data reported to the Integrated Postsecondary Education Data System (IPEDS) for the 2019–20 academic year in addition to abbreviated university responses regarding enrollment expectations for both the 2019-20 and 2020-21 academic years. Firms data presented in this report are a mix of statistical projections and descriptive statistics calculated from firm survey responses. I borrow the previous two sentences from AICPA Academic in Residence Jan Taylor, CPA, CGMA, Ph.D who penned the report’s introduction. As we consider this data, let’s all remember that 2020 was an extraordinary year and we are still feeling the effects today. I guess I didn’t need to remind you of that. Whatever, the pandemic screwed a lot of things up.

Ready to find out how things shook out the last couple years? Let’s go.

Accounting enrollments

The late aughts and early ’10s were kind to accounting programs, strong in part due to the 2008 financial crisis and the resulting rise in accounting enrollments that came about when unemployed people on the brink of foreclosure found out that accounting was one of the few industries with a relatively low unemployment rate. By 2014 however, the benevolent overlords at the AICPA noticed a troubling statistic: despite record enrollments, this abundance of accounting students did not appear to be pursuing the CPA exam as expected. In other words, more people than ever were graduating with accounting degrees but CPA exam candidate numbers stayed the same. Said AICPA President, CEO, and cross-stitch enthusiast Barry Melancon in 2014:

We have had about six consecutive years of record numbers of people majoring in accounting. That’s a great thing. For the last three years, however, we’ve basically had a level number of people taking the CPA exam. So there is a gap that’s building.

This concern has since been added to the laundry list of complications collectively called “the pipeline problem,” a maelstrom of issues that alone wouldn’t have much impact on the profession but in the aggregate and occurring all at once are quickly leading to an accountant shortage. Some of the larger of these issues are:

• Low CPA exam candidate numbers
• A worsening accounting professor shortage
• Baby Boomers — who make up 47% of AICPA membership — are retiring en masse, accelerated by the pandemic
• Ongoing difficulty recruiting diverse candidates to the profession, thereby missing out on an entire pool of potential accountants

Additionally, the profession has been struggling with a value proposition as students weigh the demands of a career in accounting — mainly at Big 4 firms — with salary and benefits not fairly compensating for said demands. There are a few other minor pipeline issues that fall within the purview of perception problems but we’ll save the graphic details of those reputation issues for another day.

So how are we doing on filling that pipeline?

Accounting graduates trended downward in the 2019–2020 academic year, with decreases of 2.8% and 8.4% at the bachelor’s and master’s levels, respectively. Accounting programs are optimistic about enrollments for the 2021–2022 academic year — 58% of both bachelor’s and master’s programs respondents reported that they expected enrollment for that academic year to be the same or higher than the 2020–2021 academic year. (Note: IPEDS data for 2020–2021 has not yet been released at the time of this publication).

According to the chart on page 17, total accounting degree completions from 1994-2020 peaked in 2015-16:

The breakdown of the total supply of new accounting grads for 2019-20 is as follows:

• Associate’s: 11,625
• Bachelor’s: 52,481
• Master’s: 20,442
• Doctorate: 39
• Certificate: 18,298
• Total: 102,885

Hiring trends

The 2019 Trends report revealed an interesting shift in accounting industry hiring trends: 31% of new hires at accounting firms were non-accounting graduates. Increased demand for technology skills, particularly in the audit function, was credited as the reason behind this shift. Two years later, the number of non-accounting new hires is up by more than 10%. In the 2021 report, 42.7% of new hires are non-accounting grads. It is this writer’s humble opinion that this number will only continue to rise going forward as traditionally tech-averse accounting firms continue to embrace technology, especially as firms struggle to recruit and retain talent where technology solutions exist to replace tasks and processes previously performed exclusively or predominantly by humans.

Total hiring of new accounting graduates in 2020 has decreased by 10%, however there was a 2% increase in master’s graduate new hires. New non-accounting graduates hired into accounting and finance functions have increased by 10 percentage points. The hiring mix continues to shift, with 57.3% of new graduate new hires being accounting graduates and 42.7% being non-accounting graduates. New accounting graduate new hires are increasingly being assigned to audit — a shift of 11.5 percentage points from 2018. Of firms that hired one or more accounting graduates in 2020, 74% expect to hire the same number or more in 2022 as compared with 2021. Eighty-nine percent of all U.S. CPA firms expect to have the same number or more CPAs on staff in 2022 in comparison with 2021.

We continue to hear about a worsening auditor shortage at large firms which could perhaps be part of the reason why Audit made up such a large chunk of new accounting graduate hires by service line:

Diversity, Equity, and Inclusion

While the profession continues to struggle with diversity — less than 1% of the 658,267 actively licensed CPAs in 53 of the 55 licensing jurisdictions are Black, a percentage that has remained mostly unchanged in 40 years — some progress has been made.

In 2020, diverse hiring of new bachelor’s and master’s of accounting graduates into accounting/finance functions of U.S. CPA firms increased by almost five percentage points (includes multiethnic hires). Asian or Pacific Islander, Black or African American, and Hispanic or Latino new graduate new hires in accounting have all increased by near one or more percentage points (1.9, 0.6, 1.6 percentage points, respectively). These three groups comprise their highest (or very near their highest) percentage of the whole of new graduate new hires in the history of Trends’ data collection.

We will cover the details of the AICPA’s ongoing diversity initiatives and the impact they have in a later article.

CPA Exam Numbers and The Pandemic

More than any other data point in the 2021 Trends report, CPA exam candidate numbers were most affected by the pandemic due to test center closures, government lockdown restrictions preventing in-person testing, and candidates quarantining after exposure to coronavirus or avoiding in-person testing entirely due to virus concerns. The CPA Evolution project will see the launch of a fully transformed and refined CPA exam in 2024, no doubt “artificially” inflating new candidate numbers in the next few years as we saw happen ahead of the launch of CBT-e in 2010/2011. The sweeping change will mean a flood of candidates who might otherwise have waited to take the exam if taking it at all, a thought that should be comforting to Barry Melancon as he lies awake at night trying to figure out why no one is taking the CPA exam. Should candidate numbers remain where they are or dip even lower in the next Trends report despite the massive CPA exam change in 2024 ahead we have a big, big problem. Let’s not think about that for now.

The number of new CPA Exam candidates entering the CPA pipeline decreased anomalously in 2020 due to short-term closings and the various restrictions at Prometric® test centers, with overall COVID concerns carrying forward into 2021. As such, while new CPA Examination candidates decreased less than 0.5% between 2018 and 2019, there was a 17% decrease between 2019 and 2020. A 6% increase occurred between 2020 and 2021. The number of CPA Exam candidates who passed their fourth section of the exam decreased 11% between 2019 and 2020 after a 2% decline between 2018 and 2019. The number of successful candidates decreased 5.5% between 2020 and 2021.

So that’s the gist of where we’re at. There is so much more in the report worth reading if you’re into this stuff, and we’ll be putting together some more detailed snapshots of this data in the weeks ahead. To view the full 2021 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report, just head to this link to download it from the AICPA.

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The post State of the Accounting Profession 2022 Via the AICPA Trends Report appeared first on Going Concern.

The Ohio State Fair is recognized as one of the most celebrated state fairs in the country. Many people remember visiting the fair to see acts such as Bob Hope and famous rock bands. However, many may not know that aspiring Ohio CPAs took the CPA Exam at the Ohio state fairgrounds, specifically on tables in the buildings used for showing prize-winning chickens. When I took the exam in November 1981, we were issued cardboard to place under our exam materials so our No. 2 pencils wouldn’t go through the paper into grooves in the table created by chicken and rooster claws.

Suddenly a windowless room at Prometric doesn’t sound so bad, eh?

We first discussed the possibility of remote CPA exam testing in September 2020, at which time online testing was being considered as a sort of just-in-case should that pesky Rona thing get any worse. Man, if only we’d known then … . When Prometric shut down completely due to coronavirus in early 2020, suddenly the benevolent overlords of the CPA exam had to ask themselves for the first time in history, “What happens if no one can take the exam?” After all, there wasn’t much anyone could do about site closures. It’s not like Prometric was going to go against government guidelines and open its doors just because Barry Melancon wrote a strongly-worded letter about the CPA shortage.

This was the initial discussion about remote testing as a backup plan in the Summer 2020 NASBA State Board report:

The significance of disaster planning has been underscored by the COVID-19 restrictions. Testing options are one of the elements NASBA has been studying as it considers worst-case scenarios, NASBA Executive Vice President and COO Colleen Conrad told the Regional Meetings. Remote proctoring, which would open the possibility of candidates testing from home, is now being studied by NASBA’s Computer-Based Testing Committee and the Executive Directors Committee as a backup plan should testing centers be unable to reopen at some future time.

While Ms. Conrad praised Prometric for their handling of closings and openings of test centers during the pandemic this spring, the question remains: What would happen if the virus comes back in the fall and the centers need to stay closed? “We need a backup,” she said. NASBA and the AICPA are discussing what would be necessary to have a remote proctoring alternative, which is not covered in the current contract with Prometric. “We would want to be sure the Boards are comfortable with it,” Ms. Conrad stated.

In February 2021, NASBA President and CEO Ken Bishop gave remote testing a nod in his President’s Memo, floating the idea while also acknowledging that some stakeholders are — rightfully — worried about the risks that come with letting people take a professional licensing exam at home that has, up until now, been administered under the watchful eye of Prometric proctors in secure rooms:

We realized in late February 2020 that we had to consider an alternative emergency delivery method for the Uniform CPA Examination. History has shown us that candidates must be provided an opportunity to test when they are best prepared. Failure to do so results in lower pass rates and dropouts from the pipeline. NASBA, AICPA and Prometric began exploring a remote testing alternative for the Uniform CPA Examination, and progress on potential implementation has been made.

In the year since that memo, we sort of forgot about it. Remote testing seemed like a worst-case Plan Z, not something they might actually deploy if and when things got back to normal. Prometric has (mostly) worked through the backlog caused by shuttering testing centers early in the pandemic, automatically granted NTS extensions have long since ended, and once vaccines started rolling out, the world at large took a giant step toward returning to normal. Or whatever passes as normal these days, anyway. It started to look like remote testing wouldn’t be needed so why waste any time wringing hands over it?

Well in this list of FAQ solicited from NASBA social media followers and published February 24, 2022, we see remote testing has gotten a small little shout-out which, to me, signals this as a serious possibility. Not just a “what if a virus shuts the entire world down again” backup plan but an actual possibility.

What are the chances that NASBA would consider online testing? NASBA, the AICPA, and Prometric are looking at the possibilities of offering the CPA Exam remotely in the future. However, there are security and software issues that must be addressed in order to protect the Exam.

Now I realize that just a few paragraphs ago I copy-pasted a passage that says basically the same thing. But there’s a big difference between “emergency disaster planning” and a fairly dry sentence about looking at the possibilities. There are 13 questions on the above-linked FAQ, and I doubt NASBA would waste precious bandwidth on including a question like that if it wasn’t something they were seriously considering. We know that Prometric already has the capability to offer remote exams, it’s just a matter of working out the specifics and signing new contracts with them and getting the approval of all interested parties (namely state boards). Easier said than done, I know.

I wouldn’t expect any movement on this anytime soon. After all, we’ve been talking about them talking about it for two years now. NASBA has made it abundantly clear that their focus right now is on “bringing CPA Evolution to fruition” so they’ll be tied up well into 2024. That said, I think it’s something worth watching; they sound a bit serious about actually doing this. So see you a year from now to talk about an update on them talking about it should they bring it up again.

Photo by Andrew Neel from Pexels

The post NASBA Is (Still) Considering Remote CPA Exam Testing Even With Virus Concerns Waning appeared first on Going Concern.

I sincerely hope you didn’t read that last sentence and ask “what change?” because you should know by now that the CPA Evolution launch is going to be the most significant change to the CPA exam since it was computerized in 2004 (early happy birthday to the computerized CPA exam btw, it turns 18 in April). Bigger, even. If you need to catch up, you can find a wealth of information on it that will keep you busy well into 2024 at the official CPA Evolution site.

Alright we get it, it’s a big change. Today we’re here to talk about what’s going to happen to your passed sections if you’re still in the middle of your CPA exam journey when this fancy new redesigned exam hits.

Thankfully the benevolent overlords of CPA licensure do not want you going into this blind and have revealed the transition policy for any current candidate who has not passed all four parts of the exam by December 31, 2023. You’ll note that as long as you are done by that date, none of this applies to you so if there was ever a time NOT to procrastinate, the next 21 months would be it. I’m going to mention something scary here. Don’t get freaked out but 18 months from January 1, 2024 is only four months away. Meaning it’s not only possible but very likely that at least some of you starting your CPA exam journey this year will be affected by this transition as you could potentially have parts nearing expiration at the beginning of 2024. So pay attention.

From NASBA:

The transition policy is quite simple. Candidates who have credit for AUD, FAR or REG on the current CPA Exam will not need to take the corresponding new core section of AUD, FAR or REG on the 2024 CPA Exam. Candidates who have credit for BEC on the current CPA Exam will not need to take any of the three discipline sections.

If, however, a candidate loses credit for AUD, FAR or REG after December 31, 2023, they then must take the corresponding new Core section of AUD, FAR or REG. A candidate who loses credit for BEC after December 31, 2023, must select one of the three Discipline sections to be tested. It is important to note that none of the sections of the current CPA Exam will be available for testing after December 31, 2023. There is a hard cutover from the current CPA Exam sections to the 2024 CPA Exam sections on the January 2024 launch.

You know, usually when people say things are “quite simple” it ends up being some overly complicated side quest complete with algebra problems, hypotheticals, and enchanted cats gifting you magical items with rare buffs, but in this case it really is quite simple. BEC is the biggest wrench in the works as the three disciplines are new, and instead of BEC, candidates will choose one of these disciplines to be tested on. They are:

• Business analysis and reporting (BAR)
• Information systems and controls (ISC)
• Tax compliance and planning (TCP)

As mentioned above, if you have pre-2024 passing credit for BEC then you don’t have to worry about disciplines as long as you pass the other sections before that credit expires. I’m repeating this so you get in your head that it would be a very, very good idea to pass BEC by the end of 2023 if you can.

In case blocks of text are confusing, here’s a nice visual representation:

Makes sense right?

The biggest takeaway here is that if you can, then you should do everything in your power to be done by December 31, 2023. Why? It’s just easier. We like easy. Easy is good. While the core exam sections of 2024 may have the same names as current ones, new blueprints are expected this summer and content could be significantly different from what’s tested today. We’ll keep you updated on that when we hear more, but for now you can browse the transition FAQ for a bit more info. But if you can’t pass all four parts by the end of 2023 I wouldn’t sweat it too much either; the exam will be redesigned, yes, but at the end of the day debits will always be on the left, so even with a new format and updated blueprints, the basic stuff that’s been tested since the dawn of time will still be around.

And now you’re officially caught up on the CPA Evolution transition policy, so plan accordingly. With time being what it is, it’ll be 2024 before we know it.

Photo by Tima Miroshnichenko from Pexels

The post Taking the CPA Exam In 2023? Here’s What You Need to Know About Rolling Your Scores Over In 2024 appeared first on Going Concern.

In my case, passing the Uniform CPA Exam helped me advance from audit associate to assurance senior in a shorter time frame and earn about $25,000 a year more than I could have without a CPA. The prospect of preparing for (and passing) all four parts of the CPA exam in the mandated 18-month period can be daunting. Based on my experience, here are some tips for balancing work, life, and studying for the CPA exam.

Time-management strategies

If you’re like I was and are a working professional seeking a CPA accreditation, the first thing I did before diving into my studies was set up a realistic study plan. I would balance my work schedule with my study plan and I figured out the time of day I studied most productively. Whether you study in the morning or at night, it really helps to study every day at the same time.

I next needed to determine how long each study session should be. I found that studying for two hours in a row was a little too much, but I needed a minimum of one hour to really get going, so I opted for an hour and a half. My schedule was to study at 8 or 9 p.m. Monday through Thursday. I would take Friday off, then study on Saturday and Sunday mornings. Once you’ve found an effective time and duration for your study sessions, it’s all about sticking to the plan.

Maintaining consistency

Once you pass the first part of the exam, it might be tempting to take a break from studying. From my experience, though, it’s tougher to get back into your exam prep once you take a break, and you only have a limited time to complete the four parts of the exam. For me, it was crucial to study a bit almost every day and continue preparing for the next session as soon as possible.

This can be especially challenging during peak season from January to April, when accounting professionals may work 60 or more hours a week. In my case, however, I continued to study daily, beginning later in the evening, and cutting the amount of time I spent each day. If family events or other activities got in the way, I would spend additional time studying the next night or on weekends.

Studying tools and tactics

Everyone has to take the exam alone, but you don’t have to prepare alone. Accounting firms often provide CPA exam preparation to their workers to encourage them to pursue certification and further their careers. While I worked at CliftonLarsonAllen, they gave us a few tools to choose from. I picked UWorld Roger CPA Review because it’s based on its engaging video lessons and its active learning approach, a learning method centered on the principle that we learn better by doing. For me, I’ve found this to be true.

The majority of the CPA exam is multiple-choice questions. So while I did watch lectures to learn and review concepts, what I focused on was answering hundreds and hundreds of multiple-choice questions before I took each part of the exam. Whether I got the answers right or wrong, each question came with a detailed explanation that helped me not just prepare for the exam, but retain the information that I would eventually need to do my job better. Working through the many questions also meant that, when it came time for the actual exam, answering multiple-choice questions felt routine rather than intimidating.

Staying motivated

One of the most challenging parts of passing the CPA exam while working is avoiding burnout. After I had passed the first three parts and only had the notoriously difficult FAR left, I had a period of feeling helpless. The material was really difficult, and it felt like no matter how much time I spent on it, it wasn’t making sense. It was the last test and I knew I should be motivated, but at that point I was burnt out.

Passing FAR was my No. 1 priority and my 18-month period was almost up, so I decided to take some time off from work in order to finish it. The timing worked out well: the firm where I was working got acquired, so there were a lot of changes going on. Everything was going to be brand new, so I felt like it was a good time to leave and focus on passing FAR. This way, I didn’t have to worry about working and also fitting in time to study.

In the end, the whole process was worth it. I passed FAR with a few weeks to spare, and found a new job where I now use the skills I learned along the way. My final bit of advice for those considering the CPA exam is this: The process of getting officially licensed is a long one, so being patient throughout is key.

About the author:

Nishil Akbari earned his accounting degree from Cal State Fullerton. While working with CliftonLarsonAllen, he passed his CPA exam in January 2021 and is a licensed CPA in California. He is currently an assurance senior working for Moss Adams. He can be reached at nishilakbari@live.com.

The post Believe It or Not, You Can Master Work-Life Balance While Studying For the CPA Exam appeared first on Going Concern.

Published in Applied Cognitive Psychology late last year, Learning in double time: The effect of lecture video speed on immediate and delayed comprehension explains a formula you can apply to help you better retain concepts, especially right before exam time. Here’s the abstract:

We presented participants with lecture videos at different speeds and tested immediate and delayed (1 week) comprehension. Results revealed minimal costs incurred by increasing video speed from 1x to 1.5x, or 2x speed, but performance declined beyond 2x speed. We also compared learning outcomes after watching videos once at 1x or twice at 2x speed. There was not an advantage to watching twice at 2x speed but if participants watched the video again at 2x speed immediately before the test, compared with watching once at 1x a week before the test, comprehension improved. Thus, increasing the speed of videos (up to 2x) may be an efficient strategy, especially if students use the time saved for additional studying or rewatching the videos, but learners should do this additional studying shortly before an exam. However, these trends may differ for videos with different speech rates, complexity or difficulty, and audiovisual overlap

What’s interesting about this is that when the researchers tested their 231 participants who were sorted into normal speed, 1.5x speed, 2x speed, and 2.5x speed groups, they found the 1.5x and 2x groups performed as well as the normal speed group when given comprehension tests a week later, but the 2.5x group did poorer. So the takeaway is that performance drops off higher than 2x speed but watching videos up to 2x speed leading up to an exam is a smart strategy as long as you watch it again prior to test time.

From The British Psychological Society’s Research Digest:

When the team surveyed a separate group of UCLA students, they found that a massive 85% usually watched pre-recorded lectures at faster than normal speed. However, 91% said they thought that normal speed or slightly faster (1.5x) would be better for learning than 2x or 2.5x. These new results certainly suggest that this isn’t right: double-time viewing was just as good as normal viewing. It seems, then, that as long as the material can still be accurately perceived and comprehended, it’s okay to speed up playback.

So, a student could just watch videos at 2x speed and halve their time spent on lectures….Or, according to the results of other studies reported in the paper, they could watch a video at 2x normal speed twice, and do better on a test than if they’d watched it once at normal speed [emphasis ours]. The timing mattered, though: only those who’d watched the 2x video for a second time immediately before a test, rather than right after the first viewing, got this advantage.

The team also explored whether watching the videos at different speeds on separate occasions — initially at normal speed but then at double time, or vice versa — might make a difference to test performance immediately afterwards or a week later. Though 76% of the participants in this study said they thought watching first at normal speed then rewatching at double time would be best for learning, the order actually made no difference to test results. “Thus, although students may prefer certain study schedules or techniques, there are instances where their beliefs about self-regulated learning do not enhance learning outcomes,” the team writes.

Many CPA exam candidates whose apartments are calmer than mine have already been doing this for years, but now we have a paper that thoroughly explains why it’s a good idea.

Those of you who already do this can now gloat that science backs up your seemingly reckless study strategy, while those of you who don’t should be inspired to give it a try. Next time you sit down to study, try watching a video at 2x speed, watching it at 2x speed again a week or so later, and then jump into a practice test to see what happens. Of course this advice only applies to the courses that offer this option; as I understand it most do.

Watching A Lecture Twice At Double Speed Can Benefit Learning Better Than Watching It Once At Normal Speed [Research Digest]

Photo by Petr Ganaj from Pexels

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First, let’s talk about a concept called time blocking. You may already be using this method and not even know it. Here’s an exceptionally detailed breakdown on what exactly it is from Todoist but the gist is — as the name suggests — organizing your day into blocks of time. So let’s say you make 9 a.m. to 10 a.m. a block you set aside to answer emails instead of dealing with them throughout the day as they come in. During that block, you do nothing but answer emails. You might need several blocks for whatever it is you’re blocking time for, but the point is accounting for (heh) your day and corralling your tasks into blocks rather than doing ALL of them as you feel like doing them. This method is highly dependent on actually being able to set aside time; of course, some of you might be stuck with micromanagers who think you should respond to every email immediately as if each one is a critical life or death situation. If that’s you, I’m sorry.

Anyway. Here’s time blocking in action:

Make sense? OK good.

What does this have to do with studying for the CPA exam you’re asking? Yeesh, y’all are so impatient sometimes. Welllllll — and those of you who are constantly saying you can’t possibly find the time to study for the exam should pay particular attention to this next part — by taking an inventory of your entire day you can squeeze in some time to study that might otherwise be spent fighting with strangers on the internet, watching bad reality TV, or sitting on the toilet at the office crying into your iPhone. You know, the important stuff. The key to time blocking is sectioning off your day to make time for things.

Alright, so how do we put this into action? Check this out:

 

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A post shared by cindy (@cqlettering)

This is a college schedule @cqlettering made to help her study for midterms that you can adapt for your own purposes in a weekly spread — just block out time for work and study. For those really struggling to make the time to study, I suggest you take a more detailed inventory of your time and account for every waking hour. I mean, you don’t have to block out time to take a dump or anything, but if, say, playing a few rounds of Apex Legends after work is important to you (no judgments), then go ahead and account for it!

Here’s a similar spread that shows time blocking in action:

 

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A post shared by Kalon「stationery & bujo」 (@nohnoh.studies)

This is another nice one with a little less flair than the first two that allows for a bit more precision with your time tracking. Its creator has a bazillion bujo ideas on her Insta if you are interested.

At this point in the article, I can hear all of you groaning “But Adrienne, I’m not creative! Mine won’t look like this!” I already know this, if you were creative you wouldn’t have majored in accounting. Look man, I am creative and mine don’t look like this. My handwriting looks like a doctor with Parkinson’s riding a rickety bus through the Peruvian Andes. No one’s saying you have to do exactly this. The people who make these spreads for public consumption have practiced hours upon hours to get their journals to look this pretty, many of them do lettering as a side gig hawking pretty place cards to brides on Etsy and whatnot. Ain’t nobody got time for that. So let’s not worry about them, it’s the concept we’re talking about here and this is about making something that works for you not something that will gain you Pinterest street cred. To make my point, I threw together this quick sample schedule in my sketchbook in just a few minutes using a single pen and a couple highlighters.

In the above example, you can either write directly on your highlighted blocks or make a little key at the bottom that tells you yellow highlighter = wasting your life on the internet. Or in your case, studying for the exam. You get it.

Alright so let’s say you’re pretty good at time management already and you just want to track study time to make sure you’re getting those hours in. If you don’t want or need advanced daily time tracking, you could try a monthly study spread instead. Like this:

 

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A post shared by jeanne ashley yoon (@signedjeanne)

Now here’s another idea. You could take the semester log below, change “semester” to whatever exam section you’re studying for, and track your CPA review course videos, practice questions, and practice tests over several months. This would work for more than one section at a time too if that’s what you’re doing just as she did with her multiple classes — just grab a second highlighter. For example, let’s say you have FAR scheduled for March something-or-other. Today’s the 13th of January so you’d quickly throw down grids for January, February, and March and either list out your review lessons as you complete them or you could get extra organized and plot them out ahead of time and check them off as you go. The benefit to this kind of spread is seeing your entire study plan at a glance rather than in pieces distributed throughout monthly and weekly spreads.

 

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A post shared by @bujo.diaries

Lastly I wanted to share this page from Sweet Planit with a ton of suggestions for study spreads, including some nifty YouTube tutorials. There’s way too much there to summarize here so just go over there if you are craving more.

I realize this post may seem abhorrent to those of you who despise the Pinteresting of basic activities and that bullet journaling isn’t for everyone, and no doubt there are some of you out there who much prefer letting iCal manage your study time for you, and that’s great. Still others of you think this is a complete waste of time, and I get that. But studies show that physically putting pen to paper helps with memory ,and I know for me bujo has really helped me to get organized and stay on top of the tedious unfun stuff that I’d rather forget to do. If this helps just a single one of you better prepare for the CPA exam then it was entirely worth the server space to store this article.

For those of you who do find all of this helpful, next time I’ll show you a step-by-step guide to take everything you learned in these last two bullet journal posts and get yours up and running in no time. Happy studying!

The post Study Plan Ideas to Organize Your 2022 CPA Exam Goals appeared first on Going Concern.

I started bullet journaling last year and let me tell you it is a-mazing. This coming from someone who has been reprimanded for being an organizational disaster at every job I’ve ever had. I’m talking need a Post-it note on the fridge to remind me to eat disorganized. Now that I’m ancient, I’ve accepted that I’ll always have to deal with some level of this character flaw, though I’ve certainly tried to learn how to make it slightly less annoying to my colleagues over the years. But I haven’t totally given up hope on someday being able to find my keys in under 15 minutes.

When I got sober in 2020 (after locking down way too hard at the beginning of the pandemic ifyoufeelme), I realized I had all this free time that used to be spent blacked out and yelling at 12-year-olds in competitive Overwatch, so I took on some home improvement projects like painting my condo and organizing my junk drawer(s) and other such uncharacteristic life-sorting activities. The problem became my chipmunk-level attention span; it was hard to stick to one project at a time and see it through until it was finished. If I wanted to find a way out of the chaos I needed a solution. I tried various apps that purport to help you get organized only to quickly realize that these apps only work if you have some kind of foundational organization gene to begin with. That ain’t me.

Enter bullet journaling. I was attracted to the creative aspect of it but moreso how you can customize it to meet your needs. There are thousands upon thousands of bullet journal resources out there to straight up copy or draw inspiration from, and if you’re not the creative type you can even just print out templates.

Before we get to the fun part, perhaps a little backstory is in order. Bullet journaling — or the BuJo method — is the brainchild of fellow chaotic mind Ryder Carroll (here is a good New Yorker article on how and why he came up with it). His method has a few main components, though Pinterest warriors who swear by BuJo have adapted this method to include everything from trackers to inspirational quotes to entire pages upon which you can dump whatever’s on your mind in full graphic detail:

• Index
• Rapid logging
• Future log
• Bullets

This page from Carroll’s website explains the basics. I would suggest using his resources to learn what it’s all about before you start making colorful spreads (which is 100% what I did because rules are for suckers). Using rapid logging, you can organize tasks, notes, and events, and carry these items over to a new month if you couldn’t get to them in the current one. As the website tagline says, it’s mindfulness disguised as a productivity system.

This Oprah Daily article sums it up nicely and has a good checklist toward the bottom to help you get started:

Whether you need to get a better handle on your to-do list or want an outlet to help you relax, a bullet journal can help. But what exactly is a bullet journal? Think of it as a next-level diary for not only writing but also drawing. Instead of blank, lined pages, a bullet journal (or BuJo, for short) contains sections to log daily to-dos, keep a monthly or weekly calendar, jot down notes, track both physiological and mental health, and record both short- and long-term goals.

Start with an index page, that’s where you will keep track of your pages. At this stage, you might prefer to number your journal pages if your notebook isn’t pre-numbered like some bullet journal-specific notebooks are, though you can also do this as you go (or not at all like I do but I can’t suggest that). Then set up your future log over two to four pages with a dedicated space for each month — this is where you put the important bits in the months ahead, like exam dates you have scheduled. You’ll repeat this format somewhat for your monthly log, which is a snapshot for your month. Then do weekly and even daily logs to break things down further. This site has a good guide for setting up your BuJo in a matter of minutes and explains it far better than I can.

You with me? OK good.

Unsurprisingly my own bullet journal can get a bit chaotic. When I’m setting up my spreads for the month — spreads are related pages, so you might have a mental health spread with a mood tracker, a place to log if you took your meds that day, and a voodoo doll drawing of your least favorite partner that you draw pins on for example — I think about the main things I want to track, organize, and do for that month. So for January I have a work spread with a page for article ideas and a page to put notes from our weekly editorial meeting, a fitness spread to track workouts, a mood page because I’m bipolar af, a cleaning spread where I track what needs to be done around the house beyond throwing the dishes in the dishwasher, a bedtime checklist where I track the couple things I need to do before I crash out (empty the sink, scoop the cat shit, and bedtime skincare), and a free-form page to write down my wins for that month (like a rare nice comment from a reader, that’s a massive win since you people are usually so mean). Here, I’ll show you:

I’d like the record to reflect that I did in fact wash my face (“f” stamp) prior to January 3, I just didn’t get around to making that page until yesterday. Just so we’re clear.

Now, if you search “bullet journal” on Pinterest you will likely immediately close the window and run the other way thinking these people are insane because who has time to create these elaborate pages full of vibrant colors and perfect script. And you would be entirely justified in that reaction. Remember though that this is about making it your own, and if you want a simple journal then DO THAT. You don’t need a hoard of supplies to get started either, just a notebook and a pen. I use a cheap A5 dotted grid notebook, but literally any notebook will do. If you really want to be extra, do a search for recommended bullet journal notebooks. The Leuchtturm1917 is probably the most popular. Mildliner markers are great if you want to add some color and don’t bleed through pages. A ruler is good to have; I use a metal stencil that doubles as a bookmark. And if you want to get EXTRA extra like I did, you can use Sharpies, alcohol markers, POSCA markers (these are my favorite for outlines) gel pens, highlighters, colored pencils, stamps, stickers, and stencils to add flair to your journal. Hell, raid your kid’s backpack for crayons if you want. Anything goes, it’s yours to customize.

Once you’re all set up (sharing a second time in case you missed it, this is a good place to start), you can use your journal to track study sessions by week or by module, to remind yourself to keep up with your self care, to better organize other aspects of your life that you may be neglecting, and/or to track time. For example, you could adapt my cleaning tracker to track study time, just change “clean” to “study” and “20 minutes” to “1 hour” and boom, you’re tracking study time one hour at a time. For this page, one dot = 20 minutes, so if I’m feeling extra clean-y I set another timer and do another 20 minutes (big fan of The Pomodoro Technique over here).

I’ve found pages like this benefit me in several ways: first, it helps me remember TO do something and remember IF I did it, and second, it keeps me motivated because I like seeing checks in the boxes. It’s another way to gamify your life, basically. ADHD squad will know how important it is to motivate yourself to do unfun things any way you can, but all of us can relate to needing an extra push to get through the yuck stuff.

So those are the basics on bullet journaling and a few quick notes on how you can use it to organize your CPA exam study plan. Next week, I’ll share some study and time-tracking spreads to inspire you and help you meet your 2022 exam goals. In the meantime, what are you waiting for? Jump in!

Photo by Jess Bailey Designs from Pexels

The post Take Charge of Your 2022 CPA Exam Study Plan With Bullet Journaling (No, This Is Not Sponsored) appeared first on Going Concern.

IMPORTANT UPDATE:
Due to the necessary and important focus on bringing CPA Evolution to fruition, including significant changes that must be made to NASBA’s technology and platforms to reflect the new exam and licensure structure, NASBA has ceased publishing the Candidate Performance on the Uniform CPA Examination publication until this important transition is completed.

NASBA began gathering data on CPA exam candidates in 1982 and started publishing these reports three years later. It says in a description on its website this publication demonstrates “NASBA’s role as a trusted resource to Boards of Accountancy, the academic community and accounting profession.” The most recent physical report sells for $200 and along with jurisdiction and demographic data, contains the following:

• • State Performance
  • University Rankings
  • Program Accreditation Statistics
  • Country Rankings and Performance Breakdowns for the Top Five (5) countries
  • Trending Data
    • Number of Unique Candidates
    • Average Age
    • Percent Pass

In an FAQ, NASBA said it might publish reformatted candidate data in 2025 at the earliest. In the meantime, it will not publish detailed pass rates and statistics for universities, nor will it provide any university-specific data to institutions requesting this information for their own purposes. It will consider requests for data used for research purposes, however this data will be “severely restricted” and considered on an ad hoc basis.

Photo by Ирина Демьяновских from Pexels

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With Thanksgiving tomorrow and with all of us still stuck in this weird time vortex that we were unceremoniously flung into like particles at CERN back in early 2020, I figured now would be a good time to talk about the subject of studying for the CPA exam during the holidays.

We’ve addressed the topic plenty of time before; for example, this 2010 post in which I suggested you take your CPA review books with you while traveling to see family because I’m a sadist who enjoys watching people suffer. Here were my five tips to stick with your CPA exam plan during the holidays:

• Turn people down.
• Take your CPA review materials with you.
• Stick to your schedule.
• Turn your social aversion into a study tool.
• Use days off to study … MORE!

Here we are 11 years later and all of those still apply. Go figure! The phones may have gotten better and the jeans less skinny since then but the fundamental rules of sticking to a study plan remain. Only now you also have a bonus out: the Rona! Feel free to completely blow off your family to study instead of hanging out with them because ol’ Uncle Roy has been posting QAnon memes on Facebook all year and you simply don’t feel comfortable taking the risk due to the immunocompromised hamster living with you at home. Or whatever.

Historically — and this has been the case at least since I started in CPA review way back in 2007 and probably since the advent of computerized CPA exam testing in 2004 when testing windows were invented — the last quarter of the year is the most difficult to schedule because you aren’t the only one who looked at the calendar and realized “holy shit, how is it November already?!” and scrambled to sit for an exam part before the year is over.

Continuous testing — which was launched in July 2020 and somehow succeeded in a year full of failures and disappointments — should alleviate some of this year-end clogging, but let’s remember some Prometric locations may still be operating at limited occupancy depending on local conditions and mandates which means fewer open slots. You can see the status of these locations on Prometric’s website here and we suggest checking regularly when making study plans to make sure your preferred location is available. Additionally, winter is soon upon us and Prometric snow days are not unheard of. So there you have two specific wrenches in your year-end CPA exam plan to be aware of, on top of the handful of other unforeseen issues like lack of motivation, distractions, and the laziness that comes from gorging on sugar cookies and eggnog. Let’s not even get into the ongoing pandemic day-drinking and mental breakdowns.

Here’s my slightly less sadistic advice specific to 2021: either decide on a game plan and resolve to stick to it OR give yourself permission to take it easy for the rest of the year and pick things up again come January. No one is saying you have to study (unless you’re this guy and are for some odd reason constitutionally obligated to pass a professional licensing exam by a certain date) and you shouldn’t feel guilty if you don’t. It’s been another rough year and it’s a miracle if you even get through it. If you would rather finish the year strong and knock out a part or two before the Auld Lang Syne kicks in, then do yourself a favor and make a schedule, commit to actually following through with it, and don’t get distracted by the usual year-end lollygagging that leads to most of us phoning in our efforts for the last five weeks of any given year (I’m phoning this in right now, for example). Those of you in the latter camp are at an advantage this year what with everyone still acting like human contact is fatal, that might mean fewer invites to holiday parties and a distinct lack of other holiday season distractions. Not that it’s likely you as a CPA exam candidate had much of a social life anyway, but let’s assume you could, then we can assume the Rona could continue to put a damper on said theoretical social life and therefore open up lots of safe, socially-distanced study time.

Happy Thanksgiving to all of you, and no matter what you decide, I trust you’ll do whatever is right for you and your goals. Having guided CPA exam candidates and observed them scramble to sit during the holidays for more than a quarter of my depressingly long life, I will tell you this: you’re exponentially more likely to succeed if your heart’s in it. If not, well, take a holiday. Lord knows you’ve earned it.

Photo by cottonbro from Pexels

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Imagine the original article where “CFA” is replaced with “CPA”

The article’s title? Wall Street’s CFA Program Is a Colossal Waste of Time

It starts off by informing us that the “notoriously difficult” Chartered Financial Analyst exam pass rate is currently at a record low of 25% for the Level 1 exam. In an editor’s note at the top, we find out that The CFA Institute reached out to Bloomberg to let them know that the Level 3 exam is only slightly better at 39%, also a new low. Historical pass rates going back to 1963 are here, and should you investigate further, you’ll see they dipped below 50% in 1994 and have been on a downward trajectory ever since.

The CFA is not a license to practice so comparing it to the CPA exam isn’t exactly an apples-to-apples situation; however, like the CPA, having passed it signals to the rest of the world that you know at least a bit about certain things. And also like the CPA, there is a bit of professional street cred awarded to those who endure the process; it isn’t so much about what you know but rather are you determined enough to prove it?

Old-timers love to brag about how hard they had it walking uphill both ways in the snow to the giant stadium where hundreds of aspiring CPAs were crammed in like hurricane victims for a grueling days-long exam process and they didn’t even get calculators. THE HORROR.

In case you think I’m exaggerating, here’s a 2004 letter to the editor published in the Journal of Accountancy that proves my point:

Exam Shouldn’t Be Too Easy
The number of JofA articles lately concerning the new format for the CPA exam has been overwhelming. Who are you trying to convert? The remaining big four CPA firms may need cheap labor for the daily tasks of auditing, but what about us, the self-employed CPAs, trusted by our clients, good business advisers and the backbone of our profession—what is our opinion?

Here is mine—becoming a CPA is not easy and never should be easy. I sat for the exam on a hard chair in a cattle barn on the Indiana State Fair Grounds in 1984 for 2 1/2 days without a calculator. I wanted very much to be a CPA. I knew there would be long hours in public accounting and that I would be required to spend my own time continuing to educate myself on various issues.

I do not agree with the easy way out for the exam. Our profession needs to get harder on our members to uphold our standards, not make the exam “a piece of cake” (in pieces, by the way) to pass.

“A cattle barn” is a new one to me. Usually it’s a darkened warehouse or a football field or a shed on Guantanomo Bay or something. But the sentiment is the same: “kids these days have it too easy and because I had it hard then everyone else should, too.” In other words, old-timers tend to calculate the credential’s value based on how difficult it was for them to obtain it and not the knowledge they had to possess to do so.

Mind you the above screed was around the time they computerized the CPA exam, back in the dark ages when we barely had internet much less the entire internet in our pockets like we do nowadays. The last paper-and-pencil exam was administered in November 2003 and people who crammed into cattle barns any time prior to that have been complaining about how easy kids these days have it ever since.

OK, back to the CFA. That similar mentality of the exam not as a test of knowledge but rather a test of your dedication to proving said knowledge is alive and well in that little corner of the world just as it is in ours.

Tell me if this bit sounds familiar:

Many CFAs say the value in the designation is a product of the time and effort that went into it, and that it shows they are committed to the profession. That sounds a bit like the labor theory of value to me. I never got the impression that non-CFAs were any less committed than CFAs. I took and passed the Level 1 exam in 2002, having just graduated from an MBA program. I then took Level 2 in 2003, but I was going through a great deal of personal turmoil and failed. At that point I decided that as a trader, I didn’t need it and it wasn’t worth the effort. I don’t regret the decision.

I realized when I was studying for the exams that I wasn’t really learning the material; I was just learning how to pass a test. I honestly don’t remember a single thing I learned from the CFA program. On the other hand, I got a great deal out of my MBA program, which was an immersive experience, with in-person classes, guest lectures and study groups. My MBA is still paying dividends. The CFA Institute has, whether intentionally or not, euthanized the MBA. On Wall Street, the CFA is held in much higher regard, which is too bad because the MBA degree (or other graduate programs) produce more well-rounded and thoughtful employees.

Why does this sound more like a gang and less like a career choice? When you join a gang you have to get your ass beat, not to prove you can take a beating but to prove you are so committed to the gang that you’re willing to get your ass beat to show it. Man, that analogy is a little too close to comfort when it comes to public accounting.

All this to say … why isn’t raw knowledge enough? Why is it so important to run people through a gauntlet worthy of American Gladiators (remember them?) so they can prove their worthiness of a career that, by all accounts, is in desperate need of fresh blood? Why is “ability to get your ass kicked” a valuable trait we look for in our future capital markets servants?

You know what, don’t answer that last question. I know why.

The post Do Professional Examinations Have to Be Hard to Be Valuable? appeared first on Going Concern.

Featured Photo by Monstera from Pexels

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Fewer people taking the CPA exam on its own isn’t a huge problem (well, the AICPA might say it is but they’re slightly biased), especially when you consider the trend toward accounting firms hiring more non-accounting graduates than they used to. We fully expect that trend to continue and it’s not the worst thing in the world since the future is upon us and said future consists of piles and piles of data in need of analyzing. But the raw CPA exam numbers aren’t the only problem. There are multiple issues hitting the profession at once from multiple fronts, like the fact that the AICPA estimates 75% of CPAs will retire in the next 15 years and that there is a serious shortage of accounting professors. Interest in accounting programs is still there, but this September 2019 CPA Journal article suggests that while accounting program enrollment data looks good on its face, there may be trouble ahead — a “current disenchantment” they called it. All of these taken together could mean a critical shortage of CPAs in the near future.

So we’ve established what pressures exist and why they should be concerning, but the profession continues to wonder out loud why people aren’t drawn to the CPA credential like they used to be. The following short video just put out by the Illinois CPA Society has some ideas:

CEO Video Series: Putting Destination CPA Back on Accounting Students’ Radar from Illinois CPA Society on Vimeo.

I know you all are very busy so in case two minutes and 26 seconds is more time than you have to spare, here are the reasons ICPAS President and CEO Todd Shapiro gives for why people might choose not to pursue the CPA credential these days based on feedback they’ve received researching this problem:

• They feel they can take off in their anticipated or chosen careers without it.
• They believe that any value the CPA credential holds is outweighed by its lack of relevance to their personal endeavors and the time commitment necessary to obtain it.
• They don’t see the personal or financial return on investment.
• Their employers or prospective employers aren’t supporting or requiring it.
• They see other experiences as being more valuable.

A few of these fall under the “no time” category which is something we’ve addressed before; however, as anyone who has ever camped out in line overnight on new iPhone release day will tell you, most people can make time to do something when they’re sufficiently motivated to do so. And in the case of the CPA, it seems like more and more accounting graduates are deciding that the personal investment required for licensure is too great a trade to make in exchange for the potential benefits.

This is not an argument about “is the CPA worth it” because we know it is. And we should not extrapolate any information about its value from the fact that fewer accounting graduates are taking it these days. But the profession needs to do some serious reflection on the why of this issue and what it can do to address it. What will it take to convince tomorrow’s accounting graduates that their personal and financial investment is worth it? In other words, how can the profession fully convey the credential’s value? You’d think that would be an easy question for a bunch of accountants to answer but alas, here we are.

Further reading:
A CPA Pipeline Report: Decoding the Decline [Illinois CPA Society]

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While worldwide mental health issues brought on by a global pandemic might be new, proposals to ditch the bar exam are not. A March 2021 Wall Street Journal op-ed directly attacked the same barrier to entry that some have complained keeps diverse candidates from the accounting profession.

Congress may soon strengthen the antitrust enforcement powers of the Biden administration’s Justice Department. The department should use those powers to eliminate the American Bar Association’s monopoly in determining what constitutes an acceptable legal education and state licensing requirements, which restrict the supply of lawyers.

Here’s Above the Law’s Joe Patrice with a hot take on that issue, should you be interested.

Our side of the professional services pool has no shortage of scary headlines suggesting your credential is under attack by misguided small-L libertarians who think professional licensing is dumb, so the discussion happening on the law side isn’t all that different from the one happening in accounting. The AICPA is watching this legislative threat closely, and rest assured they will do everything in their power to ensure those pesky libertarians don’t ruin their monopoly on CPA licensure destroy the value of your hard-earned CPA credential.

Anyway, let’s get back to the subject at hand. This is from “Bar scores, always low, drop even more due to pandemic. Does test still make sense?” via WVNews:

After spending tens or even hundreds of thousands of dollars for a law degree, the reality is that a surprising number of prospective attorneys won’t make the grade when it counts most: Passing the bar exam.

According to statistics provided by the West Virginia Supreme Court, the total pass rate for the July bar exam in West Virginia ranged from a low of 57.5% in the middle of the pandemic this July, to a high of 76.8% in July 2020. During the February exam — which often is taken by out-of-state residents or those who failed the first time around — the total pass rate ranged from 45.9% in February 2019 to 72.3% in February 2011 [did they mean 2021? We assume so]. The WVU pass rate for July’s exam ranged from 58.8% in 2021 to 74.2% in 2013, while the February WVU pass rate ranged from 25% in 2020 to 60% in 2018.

The aggregate national bar pass rates are in the same range: 60,784 people took a U.S. bar exam in 2020, and the overall pass rate was 61%; the February rate was 41% for 19,409 participants, while July of 2020’s was 71% for 41,375 participants.

This has caused calls from some to eliminate the bar exam, notes Steptoe & Johnson PLLC Office Managing Member-Bridgeport Shawn A. Morgan. Bar exam detractors have pointed to the pandemic with 18 months of remote coursework and especially low bar passage rates as a result.

“The opponents of the exam favor allowing new lawyers a period of apprenticeship instead of a test for licensure. California, for example, allows this option,” Morgan said.

They also got a hilarious quote from a lawyer married to another lawyer who roasted the morons who can’t pass a simple test:

“My wife and I worked our butts off and passed — we earned it. The people I know who failed the test, I believe they deserved to fail it. They weren’t prepared, they weren’t bright enough, they couldn’t grasp the concepts. There are a multitude of reasons why these people fail, but its usually because they didn’t put in the work necessary to pass. And as [longtime Charleston attorney Tony O’Dell] said, being a lawyer is hard work and you have to learn that from the beginning. Put in the work or you won’t make it.”

Dyer added that “we only want individuals in the field who can pass that exam. Just like a doctor with boards or an accountant with the CPA exam, it’s important to have a standardized gatekeeper test to make sure only the brightest are getting in because they will be handling such serious and important matters. I don’t think the low passage rate affects the system. The test protects our legal system,” Dyer said.

Is he … suggesting there is no such thing as a dumb lawyer? Not gonna touch that one.

Anyway, this got me wondering how future CPAs have performed during these unprecedented times (are we still using that phrase?). The last time we checked in on CPA exam scores, 2021 CPA exam pass rates were up from the year prior, with the year prior being up from the year before that. So already we know CPAs are doing better than lawyers (suck it, Dyer).

Take a look at 2020 CPA exam pass rates:

And 2021 CPA exam pass rates as they stand today:

Pass rates via the AICPA.

Q2 exam performance brought the cumulative pass rate down a bit for each section but we’ll just chalk that up to April 15 or something. The main thing is CPA exam pass rates have stayed pretty consistent throughout the most stressful two years that most of us will ever endure, which is saying quite a bit about future number-crunchers and their ability to get the job done even under tremendous pressure. A tenacity upon which the entire foundation of the Big 4 meat grinder is precariously built, no doubt.

So what’s our takeaway? You guys are killing it. And since we’re all going through the same stress thanks to the same annoying virus, the lawyers might have to come up with a better culprit if they’re trying to ditch their licensing exam because of it. Might I suggest global warming? That one’s pretty annoying.

Further reading:

Bar exam scores keep rolling in, nearly all lower than last year [Reuters]
Bar Exam Scores Dip… Time For Everyone To Freak Out! [Above the Law]
Bar scores, always low, drop even more due to pandemic. Does test still make sense? [WVNews]

Photo by Daniel Reche from Pexels

The post Lawyers Complain the Pandemic Made the Bar Exam Too Hard, Should CPAs Complain Too? appeared first on Going Concern.

Dear Adrienne

I read with great interest the “Opinion” article you recently published in response to your Sept 14th column on the potential dearth of CPAs in the future.

I must make a strong objection to the anonymous writer’s take on this important matter.

He, wrongly in my opinion, equates seeking a CPA credential with being a partner in a CPA firm. The fact that other talented professionals can also become equity owners of such firms has nothing to do with the decreasing trends in accounting majors.

I also question whether the writer is currently involved in the auditing profession as this constantly evolving area of practice is what is driving a lot of the non-accounting major hires by the big firms. These firms need employees who are skilled in data analytics, artificial intelligence, IT security, and many other areas of study in order to carry out a quality audit, particularly in today’s age of remote auditing. The hiring explosion that is seen in the larger firms is also in response to their need to build teams of young college graduates to staff their ever-growing consulting services practices.

By tying partner ownership to potentially dwindling interest in the CPA as a profession is also meaningless when, if you ask entry-level accountants whether they even desire to become a partner when they begin their career, based on many surveys over the years the potential golden ring of partnership has minimal appeal to them.

I also fail to see the connection between the “CPA who worked so very hard to pass the CPA exam” and the apparent lack of interest in future students wanting to become CPAs. In fact, all the learned professionals will tell you that the CPA exam is the beacon that other professionals could only hope for. Through the years, the high standards (and low passing rates) bring great acknowledgment to those who have successfully achieved a passing grade. Further, I think that you will find that one of the major issues in the dwindling number of CPA candidates is that once they have taken an initial part of the exam, they feel that the standards to pass are so high that they no longer wish to commit the time and energy to further pursue a CPA and simply take their accounting skills elsewhere.

The writer should have looked at the economy as a whole. Where are the best and brightest students going: high tech, private equity, and Wall Street. These institutions promise significant financial rewards, but only to a certain few, and after all entry-level employees invest outlandish hours and relentless pressure to succeed.

Tell me where the profession has been diluted. Your initial attempt to slam the profession as a whole and the AICPA has fallen far short of the mark.

Photo by Dhyamis Kleber from Pexels

Related article:

Opinion: It’s the AICPA’s Own Fault No One Wants to Be a CPA Anymore

The post Opinion: The Profession Is Not ‘Diluted,’ It Is Evolving appeared first on Going Concern.

Going Concern:

Some 20 years ago in the dead of night the AICPA’s Professional Ethics Enforcement Program (PEEC) changed the historical requirement that only CPAs can be partners in CPA firms to a mere majority. They then lobbied NASBA to get all the State Boards of Accountancy to include the “watering professionalism down” provision in their individual state laws.

Surprise, surprise the Big 4 firms are now primarily interested in attracting non-accounting majors as new employees. The foreseeable result is a significant reduction of student interest in our profession and the death of the 150 hour programs in our colleges and universities. Notwithstanding the stellar efforts of the CPA Exam Division the number of CPA candidates has significantly dropped and frankly this self-inflicted decline will continue.

This also puts at risk the “professionalism” of the whole CPA calling. No other profession – law, medicine, architecture, nursing, engineering etc. etc. – has knowingly diluted the professionalism of their own calling.

It also is a slap-in-the-face to any CPA who worked so very hard to pass the CPA exam.

– Professional Contributor

Further reading:
Time to Panic? New CPA Exam Candidate Numbers Are Lower Than They’ve Been in More Than a Decade [GC, August 2019]
NASBA Sees Significant Decline in CPA Exam-Related Revenue [INSIDE Public Accounting, November 2020]
Trends Show CPA Gap Widens [NASBA, November 2019]

The post Opinion: It’s the AICPA’s Own Fault No One Wants to Be a CPA Anymore appeared first on Going Concern.

Of the 226 public accounting firms that participated in the publication’s human resources survey (excluding the Big 4), 84% of them pay a bonus when a staff passes the CPA exam, with the amount of the bonus averaging $2,626.

IPA also found that 36% of firms surveyed said staff have a defined time frame to complete the exam.

However it’s worth noting that one in five professional staff at public accounting firms has no intention of ever taking the CPA exam, according to IPA’s 2021 National Practice Management Report. But one in four professionals say they intend to eventually become a CPA but haven’t sat or passed the exam yet.

The post Number of the Day: $2,626 appeared first on Going Concern.

CPA Exam Candidates: The Gateway System, CPA Central and other NASBA system will be down for a scheduled outage on Saturday September 11th, 8:00 a.m. to 1:00 p.m. (Central). You WILL NOT have access to your NASBA CPA Candidate account during this time. If you are scheduled to take the CPA Exam during this time, please print or download your Notice to Schedule (NTS) form before the scheduled outage. If you do not have a NTS form, you will not be able to test.

The next CPA exam score release isn’t expected until next Wednesday (September 15) so this outage shouldn’t affect anyone other than those people testing on Saturday, and only if those people ignore all common sense and decide not to print their NTS by Friday.

One other thing to take note of: as of September 1 if your government ID has expired more than 90 days from the date of your exam you will not be allowed to test, IDs that expired within 90 days of exam day are still OK for now. If this is the first exam you’ve taken since Prometric eased some of the policies instituted at the beginning of the pandemic, familiarize yourself with current Prometric rules and prepare accordingly. Current Prometric test center guidelines as of September 1, 2021 can be found on their website here. Last we heard they were going to let fully vaccinated candidates ditch the mask however current policy states that masks are required unless you are testing at a state university site where an executive order prohibits the mandating of face coverings or restricting activities. If you do not bring a mask, you’ll be turned away from the testing center, marked a “no show,” and will forfeit your exam fee. So bring one.

We don’t expect any issues with this weekend’s outage and it appears to be a short one however those of you testing this weekend might want to print your NTS just in case even if your exam does not fall within the planned window. You know, to be safe. One less thing to worry about on test day.

The post NASBA Systems Will Be Down This Weekend So Print Those NTSs, Folks appeared first on Going Concern.

There was no mention of a planned outage on NASBA’s Twitter, nor has there been any acknowledgment of the outage there since, unless you count some salt in the comments.

Apparently there have been some spectacular solar flares lately, and if fringe conspiracy websites have taught me anything it’s that solar flares can fry technology and plunge us into the dark ages (actually this is kinda true). So maybe that’s what happened. Or maybe some angry would-be CPA who studied way more technology than government accounting attacked the NASBA site after getting a 74 on REG. Or Russians did it. Who knows.

What we do know is that this is a wonderful time to remind everyone (again) to print your NTS in advance. WAY in advance. Go nuts and print 10 of those bad boys and stick them on your bathroom mirror and in your car and fold one up in your wallet next to the expired condom you’ve had in there since 2013. OK perhaps that’s extreme. At least print one and perhaps save a PDF on your phone. We hear that some testing centers will even accept a screenshot or photo but YMMV.

Unfortunately, some candidates learned the hard way that no NTS means no test. Prometric doesn’t care that NASBA’s website got attacked by Russian hackers from the sun and that’s why you don’t have it per the very strong language on their website:

On the day of your scheduled exam, you must bring your Notice To Schedule (NTS) with you to the test center. You will not be allowed, under any circumstances, to sit for your examination without your NTS.

According to the Candidate Bulletin you are SOL and out your exam fee if you show up to the testing center without an NTS:

You must bring your NTS with you to the examination, and will not be allowed to enter the testing center if the name on the identification that you present does not exactly match the name on the NTS. Be sure to take the correct NTS with you. You will not be admitted into the test center without the correct NTS and you will forfeit all examination fees for that section.

So for future reference, do yourself a favor and print it out ahead of time. That said, given the circumstances it’s worth contacting NASBA anyway if you were one of the unlucky few who couldn’t access your NTS over the weekend. Politely explain that you were unable to print your NTS due to 403 Forbidden errors on their website and request a refund so you can reschedule your exam without paying for it twice. If you’re still angry and need someone to yell at, use your burner Twitter account to lob expletives at them if you absolutely must; honestly who could blame you. But let’s try to be adults about this. Plus you catch more flies with honey than vinegar, or so I’ve heard.

Thankfully this doesn’t happen often but it can and does happen as we saw this past weekend. Print that NTS right away and keep it somewhere safe. Future you will thank you.

The post The NASBA Candidate Portal Went Down Last Week and All Hell Broke Loose For People Who Don’t Print Their NTS In Advance appeared first on Going Concern.