5 principles for evolving CPA licensure
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5 principles for evolving CPA licensure

3 years ago · 5 min read · AICPA Insights Blog

What does the CPA of the future look like? Does that person need the same skills and competencies CPA licensure requires today—or should changes be made to expand the pipeline of talent the profession needs for the future?

As technology continues to change the services we perform and the way we deliver them, the National Association of State Boards of Accountancy (NASBA) and the AICPA are exploring whether initial CPA licensure requirements need to change to be more inclusive of those who have expertise in technology and analytics. You may have read about our CPA Evolution initiative in a blog post I wrote in January or a follow-up post I wrote in May sharing what CPAs had to say about evolving licensure.

NASBA and the AICPA developed five guiding principles to help inform a new CPA licensure model. Our two organizations believe these principles will put the profession in a continued position of strength and relevance while enhancing public protection—and we want to hear if you agree or have suggestions for how to improve them. Keep reading to learn why each principle was developed. You can also learn more about the principles, read specific concepts supporting them and share your thoughts at EvolutionOfCPA.org.

Principle #1: The CPA profession must adapt quickly due to the technological disruptions in areas such as data analytics, robotics, artificial intelligence and more. As such, the competencies, services and attitudes of CPAs need to continually evolve in order to protect the public interest.

As organizations demand more services and insights that require skills in technology and analytics, we have to rethink the competencies our profession needs to continue to support our clients and employers and protect the public.

The key words in this principle are “adapt quickly.” The market won’t wait for us to adapt to technological disruption—these changes are already impacting our practices.

Increasingly, CPA firms are hiring non-CPA technologists and analysts who don’t have our business and financial background and aren’t subject to our same Code of Ethics and regulatory oversight. These professionals have a significant role in financial statement audits and attestation engagements such as System and Organization Controls (SOC) engagements, including SOC 1, SOC 2 and SOC for Cybersecurity. Since 2011, the number of CPAs being hired in the top 100 firms has grown by about five percent per year, while the number of non-CPA client service professionals in those firms has grown over 10 percent per year.

If we don’t adapt our licensure approach to produce a pipeline of talent with these needed skills, will the CPA’s value lose relevance? Does this serve the public interest?

Principle #2: The CPA profession and state boards of accountancy recognize that technological and analytical expertise are essential to performing assurance work, as well as the other services that are currently, or will be in the future, core to professional accounting.

We can’t minimize the impact technology is having on our work. Clients are demanding deeper insights that require techniques we haven’t historically used and are asking for assurance on non-financial subject matters that are critical to their businesses, like cybersecurity risk management programs. It’s essential that we understand IT risks and controls as well as how to provide assurance on them.

CPAs working in business and industry are also being expected to provide more meaningful insights, which requires an understanding of analytics. Technologies and business intelligence tools can help us decrease the risk of error and analyze large data sets to add value to our organizations. Half of finance leaders believe the competencies of their teams will need to “change significantly” over the next three years as technology takes over routine tasks, but only 10 percent of finance teams have the skills to support the organization’s digital ambitions.

Principle #3: The CPA profession and state boards of accountancy acknowledge that sustaining the profession and continued public protection require rethinking initial licensure requirements.

One question NASBA and the AICPA have heard is, “Why change initial licensure? Why not just reskill existing CPAs through continuing professional education?”

Reskilling existing CPAs is a top goal of the AICPA, but it’s not enough on its own. We need to work on this from both ends.

The AICPA, state CPA societies and others have developed (and will continue to develop) resources that support the profession post-licensure, including certificate and credentialing programs, continuing professional education and toolkits to help existing CPAs reskill on emerging technologies and services. But we also need a pipeline of talent coming into the profession that has the skills and competencies necessary to perform core services now and in the future. If these future CPAs have outdated skills and competencies, we aren’t setting them—or the profession—up for success.

We also need to uphold our mandate to protect the public interest. CPAs have an important role as the guardians of the capital markets. NASBA and the AICPA believe core CPA services should be performed by licensed CPAs, but CPAs need the skills and competencies necessary to perform them effectively.

Principle #4: The profession, and therefore entry into the profession, must be redesigned to attract individuals with technological and analytical expertise. This includes non-CPA professionals whose technology and analytics skills are critical to the performance of assurance and other core services, as well as non-accounting major students. All must demonstrate minimum required competencies necessary to perform professional accounting services as a CPA.

This has been by far the most controversial principle. Some CPAs I’ve spoken with have expressed discomfort with a licensure model that includes a way for non-accounting majors and those with expertise in business intelligence, IT audit and other emerging areas to obtain a CPA license, even if they are required to demonstrate certain competencies in business, accounting and auditing.

I asked these questions in my last blog post: Who are the CPA candidates of the future? What skills and competencies will they need to be successful in tomorrow’s business environment and fulfill their public protection mandate?

I see the CPA candidates of the future needing a different skillset than the one I needed to become licensed. They may be different types of people with completely different mindsets and interests, focused more (but not exclusively) on technology and analytics. They could be candidates who major in Management Information Systems or other technology-related fields who are also interested—but maybe not primarily—in business and finance. Given the direction in which our profession is already heading, these types of candidates may be exactly what our profession needs to thrive, effectively serve our clients or employers and continue to protect the public.

I want to emphasize that every CPA candidate has to have core knowledge and skills in accounting. We all agree on that. We are not proposing that we license CPAs who don’t understand GAAP and GAAS at some defined level. But as we’re expanding our view of CPAs’ roles and the value the profession provides, we should expand our view of who a CPA candidate is as well. And we shouldn’t discount what we need to eliminate as well as add.

Principle #5: The changes must be rapid, transformational and substantive without negatively impacting candidates currently in the pipeline.

Technological innovation and new client demands are already impacting the profession, so we need to evolve quickly. But we also don’t want to lose a generation of talent that’s already in the pipeline. Although the timeline for evolving initial CPA licensure hasn’t been determined yet, no matter how we move forward, we will work to avoid disrupting candidates currently in the pipeline.

I should also point out that rapid change can still be deliberate change. As NASBA and the AICPA explore evolving initial CPA licensure, we’re considering and including many different perspectives from across the profession. We’ve gathered feedback from stakeholders such as state CPA societies, state boards of accountancy, academia, firms of all sizes and CPAs in all areas of practice from across the country. Their insights have been crucial as we consider possible licensure changes and determine a path forward. You can learn more about this collaboration and the steps NASBA and the AICPA have taken thus far at EvolutionOfCPA.org.

Tell us what you think

I value and welcome diverse opinions and would love to hear your perspective! Now that you’ve read the principles, tell me what you think of them. Are they directionally correct? Will they help put the profession in a continued position of strength and relevance while protecting the public interest? Are they completely off base?

Please visit EvolutionOfCPA.org to share your thoughts on the principles, read specific concepts supporting the principles and learn more about CPA Evolution. Your insights (requested by August 9) are so important to us as we move forward to uphold the strength and relevance of our profession.

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