The American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (NASBA) recently introduced a progressive proposal aimed at reshaping the CPA licensure process. This new competency-based experience model intends to offer an alternative pathway for CPA candidates, one that emphasizes the demonstration of professional and technical skills over traditional educational credit hour requirements. This move aims to enhance flexibility while retaining the profession’s rigorous standards for public protection.

Current Educational Requirements

As the pathway to CPA licensure currently stands, candidates are required to:

  1. Earn a Bachelor’s Degree: This typically involves completing 120 credit hours of college-level education.
  2. Pass the CPA Exam: The exam tests the breadth and depth of the candidate’s accounting knowledge and skills.
  3. Complete Professional Experience: Candidates must accumulate one year of professional general experience.
  4. Accumulate 150 Credit Hours: Beyond the undergraduate degree, candidates must either obtain a master’s degree or take additional college courses to reach the 150 total credit hours needed for licensure.

The Proposed Competency-Based Experience Pathway

In a significant departure from the traditional model, the proposed CPA Competency-Based Experience Pathway would still require candidates to earn a bachelor’s degree and meet their state’s requirements for accounting and business courses. However, it offers an alternative to the 150-credit hour mandate. Instead of pursuing additional credit hours, candidates can demonstrate their competencies through practical experience.

Key Features of the Competency-Based Pathway

  1. Competency Demonstration: The core of the proposed pathway is a competency framework encompassing seven professional and three technical competencies.
  2. Professional Competencies:
    • Ethical behavior
    • Critical thinking and professional skepticism
    • Communication
    • Collaboration, teamwork, and leadership
    • Self-management and continuous learning
    • Business acumen
    • Technology mindset
  3. Technical Competencies:
    • Audit and assurance
    • Tax
    • Business and financial reporting
  4. Workplace Verification: These competencies would be verified by licensed CPAs in the workplace, ensuring that candidates meet the high standards expected in the profession.
  5. Flexible Timing: While most candidates are expected to complete demonstrating these competencies within a year, the pathway allows for flexibility depending on individual circumstances.

What Changes and What Stays the Same

Remains the Same:

  • Bachelor’s Degree: Candidates must still earn a bachelor’s degree and satisfy state-specific requirements for accounting and business courses. (On that note, we highly recommend taking advantage of our free transcript evaluation service.)
  • CPA Exam: The rigorous CPA Exam continues to be a requisite component of the licensure process.
  • Professional Experience: A year of general professional experience remains essential.

Changes:

  • 150 Credit Hour Requirement: The new pathway provides an alternative, focusing on a competency-based model rather than strictly adhering to the 150-credit hour requirement. This is intended to offer more flexibility and responsiveness to market conditions and the evolving demands on the profession. There still would be per state requirements in terms of specific accounting and business courses.

Industry Input and Future Steps

The competency framework was developed with significant input from a diverse cross-section of the profession, including practitioners, regulators, academics, and state society leaders. The AICPA and NASBA have emphasized the necessity of feedback from the profession to refine the proposed model further. Stakeholders are encouraged to provide their input through December 6.

Sue Coffey, CEO of Public Accounting for the AICPA, highlighted the importance of building a workable pathway through professional feedback. NASBA President and CEO Daniel Dustin, CPA, underscored the expectation of input from the 55 U.S. boards of accountancy to help strengthen the CPA pipeline.

Potential Drawbacks

The proposed Competency-Based Experience Pathway by AICPA and NASBA offers an alternative route to CPA licensure that has the potential to be of great benefit to aspiring CPAs and could help alleviate the pipeline crisis. However, it also presents several potential drawbacks and does have some skeptics:

  1. Consistency and Standardization Concerns:
    • The new pathway may face challenges in ensuring consistency and uniformity across different workplaces and supervisors, which could lead to variations in the evaluation of competencies[1].
  2. Workplace Verification:
    • The requirement for competencies to be verified by licensed CPAs in the workplace might limit the opportunities for candidates who work in environments without enough licensed CPAs available to oversee their progress
  3. Potential Biases:
    • There might be room for subjective judgments in assessing competencies, leading to potential biases and inconsistencies in the evaluation process.
  4. Complexity in Implementation:
    • Implementing a competency-based framework could prove complex, requiring significant changes to existing systems and additional resources and training for those involved in the evaluation process.
  5. Public Perception and Acceptance:
    • There might be resistance from traditionalists within the profession and uncertainty about the acceptance of this new pathway among employers, which could affect the perceived value of the competency-based CPA licensure over the traditional pathways[4].
  6. Unclear Long-term Impact:
    • The long-term impact of the competency-based pathway on the quality and preparedness of CPAs remains uncertain, and there may be concerns about whether it maintains the profession’s rigorous standards.

Conclusion

The proposed Competency-Based Experience Pathway by AICPA and NASBA is a transformative approach to CPA licensure. By offering an alternative to the traditional 150-credit hour requirement, it provides candidates with increased flexibility while maintaining the high standards necessary for public protection. This proposed pathway could ultimately reshape the future of the accounting profession, making it more accessible and adaptive to the changing market landscape.

For further details or to offer feedback on the proposal, you can visit the Journal of Accountancy website.