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One of the reasons the CPA credential is highly valued is because of the rigor it takes to become licensed. But when does that high bar become counterproductive? This feature discusses the ongoing national effort to come to an agreement on alternate pathways to licensure that do not degrade the credential nor sacrifice the profession’s ability to protect the public.
by Jennifer Cryder, CPA
Dec 3, 2024, 00:00 AM
Changes to CPA licensure laws across the United States are coming, and they will have a major impact on the profession in the coming years. This includes Pennsylvania and our CPA law.
The number of new CPAs entering the profession remains a hot topic and is a challenge for firms large and small. Although pressures have eased slightly over the past three years, talent and human capital issues are going to continue due to changing demographics: in short, the profession will not be able to replace retiring CPAs at a rate of 1-to-1. Tackling the pipeline issue is complex and includes many variables, and making a CPA license more accessible is a critical facet of ensuring the future strength of the profession.
Core to PICPA’s mission is ensuring that the CPA law, which governs the licensing of CPA professionals and protects the public, is responsive to the marketplace and facilitates a business climate where CPAs can grow and thrive. The financial environment is growing more complex for everyone, and CPAs hold an essential role in bolstering public trust in the financial system. Our work ranges from assisting individuals all the way up to measuring institutional financial integrity. The responsibilities of CPAs extend from Fortune 500 boardrooms to small family business tax returns. We are increasingly involved in safeguarding against cyber and data security risks, and we can be key players in combatting fraud and financial crimes. It is more important than ever that well-qualified, well-trained CPAs are not only able to access the profession to fill these vital roles, but that they enter the profession with relevant experience and are ready to lead.
In Pennsylvania, getting a CPA license requires passing the CPA Exam, completing 150 credits of post-secondary education – including at least 24 credits in accounting and auditing, business law, economics, technology, finance, or tax subjects of a content satisfactory to the State Board of Accountancy, as well as additional 12 credits in accounting, auditing, and tax subjects – and one year of work experience verified by a Pennsylvania CPA.
Nationally, the profession largely agrees on the need for additional licensure pathways, though any new option must still include passage of the CPA Exam and completing a bachelor’s degree in accounting or equivalent coursework. Any proposed pathway would require a change to the CPA law in Pennsylvania and would represent a significant effort.
State societies across the country are working together to address licensure in a wholistic fashion that recognizes this is a global profession operating nationally while being state regulated. Ensuring that CPAs continue the 100-plus year tradition of driving trust, growth, and opportunity is always top of mind. It’s important to note that the discussions and efforts to modernize CPA licensure are moving very quickly in the profession, sometimes changing on a daily basis. What I’ve included in this feature is the latest information as we went to press.
The AICPA and National Association of State Boards of Accountancy (NASBA) issued two exposure drafts in September 2024 with proposals on how to modernize the CPA licensure process.
One, issued Sept. 30, offers amendments to the model language in the Uniform Accountancy Act (UAA) for an alternate pathway to licensure, including a competency framework in place of the extra 30 credit hours of education (the 150-credit-hour requirement).1 The UAA is a set of model laws published jointly by the AICPA and NASBA. No state has adopted the UAA in its entirety, but the adoption of vital aspects of the UAA has been key to efforts to achieve substantial equivalency across the country, allowing for license mobility across state lines. Pennsylvania has adopted most of the UAA.
The AICPA’s and NASBA’s model language amendments describe a new pathway to licensure that includes the following changes from the previous UAA:
The last two changes are critical topics our profession is discussing. While the profession is in general agreement that an additional pathway is necessary, there are different opinions on how to best protect mobility.
While the PICPA is advocating for an additional licensure pathway, we will be stressing the importance of leaving in place the current steps in Pennsylvania of obtaining 150 credit hours and one year of general experience verified by a Pennsylvania CPA.
The CPA Competency-Based Experience Pathway, AICPA’s and NASBA’s other exposure draft, was issued Sept. 12 and outlines how CPA candidates might meet initial licensing requirements by exhibiting their competency in specific professional and technical areas.2 The proposed competency framework would fit into full- or part-time work experience after a candidate graduates.
Under the proposed model, the candidate must exhibit professional competencies, including the following:
The candidate must also demonstrate competency in one technical competency, which could include accounting and auditing, tax, or business and financial reporting.
As the profession evaluates the competency framework, stakeholders will need to consider if a competency-based framework is needed to serve public protection and to prepare professionals for future careers. We must analyze whether or not a framework such as this one will both future-proof the licensure requirements and also maintain high standards of professional competence. It’s also worth considering the increased operational complexity for candidates and employers when it comes to actual implementation in the field.
Some stakeholders in the profession (including several state boards and state societies) suggest that instead of the specific competencies proposed in the exposure draft, two years of generally relevant experience is preferred. This concept seems simpler and clearer for candidates navigating the complexity of licensure. A reduction in the time and cost of licensure will, in the end, have the greatest impact on pipeline issues, PICPA data shows.3
As the states weigh their options for modernizing CPA license requirements, interstate mobility – which we only achieved two decades ago – could be put at risk if states start enacting differing licensure laws. Mobility ensures that qualified licensees can practice public accounting across state lines in accordance with established professional standards. Any mobility disruption will have significant impacts on firms engaged in public accounting. If mobility breaks, CPAs will have to take additional actions if they want to practice across state lines, increasing the burden and complexity on individuals and firms.
Individuals who hold a valid CPA license from a state where the board of accountancy or the NASBA National Qualification Appraisal Service (NQAS) has not verified that state’s licensure requirements to be substantially equivalent will be allowed to practice in Pennsylvania if they obtain verification from the State Board of Accountancy or NQAS that their license is substantially equivalent. The license must be equivalent to the UAA, including having met work experience and CPA Exam requirements, as well as having:
The foundational concept of license mobility is based on the premise that all participating states have a substantially equivalent licensing model. Out-of-state CPAs with state-level substantial equivalency are currently permitted to practice in Pennsylvania without giving notice to the State Board of Accountancy. Similar to a driver’s license, an individual CPA does not need to take any action to practice across state lines. This is seen as the mobility gold standard.
Currently, Pennsylvania defers to NASBA’s NQAS for the determination of substantial equivalency with respect to both states and individuals. In other states, their state boards of accountancy make such determinations.
A CPA licensed to practice in another state and who does not qualify under state-level mobility currently has four options to practice in Pennsylvania:
Instead of subjecting CPAs to the complexities described above, the PICPA intends to advocate for automatic mobility with the inclusion of a certain set of guardrails.
Under automatic mobility, a CPA with a license in good standing will automatically have the privilege to practice in another state without notice or fee, regardless of state- or individual-level substantial equivalency. This concept is currently embraced by four states: Alabama, Nebraska, Nevada, and North Carolina. Automatic mobility was not included in the UAA language exposed for comment, so it is unlikely that Pennsylvania’s deferral to NQAS will allow this to become effective in Pennsylvania. A statute change will likely need to be enacted to make this happen.
Certain guardrails would need to be put into place around automatic mobility to ensure the public is protected. Those guardrails should include provisions such as having a bachelor’s degree in accounting, having passed the CPA Exam, and having two years of experience. If a state were to put in licensure requirements that fall short of generally accepted competence measures, having these guards in place would keep out-of-state CPAs who do not meet the baseline requirements from practicing in Pennsylvania. This would be a critical check for the profession to ensure public protection and trust.
The automatic mobility solution would be relatively seamless for the profession and could be a highly effective long-term fix. It also has the least amount of transaction costs for individual CPAs. However, this solution only works when trust is upheld across a licensure system with reasonable safeguards in place, such as ensuring that underqualified CPAs cannot practice in Pennsylvania. It is important to note that none of these concepts are intended to disrupt the Pennsylvania State Board of Accountancy’s jurisdiction and disciplinary authority over out-of-state licensees, retaining the board’s ability to protect the public.
The PICPA is committed to actively supporting its members amid any anticipated changes in CPA licensure requirements, and that includes securing a safe harbor provision or grandfather clause that protects the mobility rights of currently licensed CPAs. We would insist on a safe harbor that allows CPAs licensed prior to the enactment date of new licensure rules to retain their interstate practice privileges without needing additional documentation or verification. This would ensure current practitioners maintain mobility across state lines without additional administrative burdens.
The PICPA has hosted roundtables, professional issue updates, and listening sessions over the past year to collect feedback from its members. We have also discussed the matter with other stakeholders, including regional and national firms and the State Board of Accountancy – with whom we maintain a strong relationship. PICPA’s legislative team is also keeping state lawmakers abreast of the importance and timeliness of potential CPA law changes. Likewise, PICPA’s leadership is in constant contact with leaders of other state societies to align priorities and minimize any potential pain points for practitioners that might arise from any changes.
Comments on the UAA model language will be accepted until Dec. 30. Comments on the Competency Framework were due Dec. 6. The PICPA collected member feedback to help inform our advocacy efforts, and we thank all the members who took the time to answer our online survey.
The PICPA will likely offer amendments to Pennsylvania’s CPA law and introduce legislation in early 2025. PICPA’s advocacy team is currently drafting language for the proposed legislation, so member input now is crucial to ensuring the full spectrum of professional voices is represented. We aim to expedite the legislative process, and we will reach out to you for support in communicating with lawmakers about the importance of timely action on this initiative. However, even with the CPA community’s unified effort, the timeline for any new law’s effective date remains uncertain.
Licensure changes must serve firms of all sizes and all types while also maintaining public trust and protections. Changes to the CPA law will not happen overnight, but it is important that Pennsylvania is not left behind. As change and uncertainty infuse the licensure discussion over the next months and years, the PICPA will continue to vigorously advocate for Pennsylvania CPAs. Members can keep abreast of updates though PICPA events, email updates, and via our online Professional Issues Tracker.4
1 www.aicpa-cima.com/advocacy/download/exposure-draft-proposed-uniform-accountancy-act-changes
2 www.aicpa-cima.com/certifications/download/exposure-draft-proposed-cpa-competency-based-experience-pathway
3 www.picpa.org/professional-resources/research-publications/insights-research-whitepapers/the-cpa-pipeline
4 www.picpa.org/advocacy-pipeline/professional-issues-tracker
Jennifer Cryder, CPA, is the CEO of the PICPA. She can be reached at jcryder@picpa.org.
One of the reasons the CPA credential is highly valued is because of the rigor it takes to become licensed. But when does that high bar become counterproductive? This feature discusses the ongoing national effort to come to an agreement on alternate pathways to licensure that do not degrade the credential nor sacrifice the profession’s ability to protect the public.
by Jennifer Cryder, CPA
Dec 3, 2024, 00:00 AM
Changes to CPA licensure laws across the United States are coming, and they will have a major impact on the profession in the coming years. This includes Pennsylvania and our CPA law.
The number of new CPAs entering the profession remains a hot topic and is a challenge for firms large and small. Although pressures have eased slightly over the past three years, talent and human capital issues are going to continue due to changing demographics: in short, the profession will not be able to replace retiring CPAs at a rate of 1-to-1. Tackling the pipeline issue is complex and includes many variables, and making a CPA license more accessible is a critical facet of ensuring the future strength of the profession.
Core to PICPA’s mission is ensuring that the CPA law, which governs the licensing of CPA professionals and protects the public, is responsive to the marketplace and facilitates a business climate where CPAs can grow and thrive. The financial environment is growing more complex for everyone, and CPAs hold an essential role in bolstering public trust in the financial system. Our work ranges from assisting individuals all the way up to measuring institutional financial integrity. The responsibilities of CPAs extend from Fortune 500 boardrooms to small family business tax returns. We are increasingly involved in safeguarding against cyber and data security risks, and we can be key players in combatting fraud and financial crimes. It is more important than ever that well-qualified, well-trained CPAs are not only able to access the profession to fill these vital roles, but that they enter the profession with relevant experience and are ready to lead.
In Pennsylvania, getting a CPA license requires passing the CPA Exam, completing 150 credits of post-secondary education – including at least 24 credits in accounting and auditing, business law, economics, technology, finance, or tax subjects of a content satisfactory to the State Board of Accountancy, as well as additional 12 credits in accounting, auditing, and tax subjects – and one year of work experience verified by a Pennsylvania CPA.
Nationally, the profession largely agrees on the need for additional licensure pathways, though any new option must still include passage of the CPA Exam and completing a bachelor’s degree in accounting or equivalent coursework. Any proposed pathway would require a change to the CPA law in Pennsylvania and would represent a significant effort.
State societies across the country are working together to address licensure in a wholistic fashion that recognizes this is a global profession operating nationally while being state regulated. Ensuring that CPAs continue the 100-plus year tradition of driving trust, growth, and opportunity is always top of mind. It’s important to note that the discussions and efforts to modernize CPA licensure are moving very quickly in the profession, sometimes changing on a daily basis. What I’ve included in this feature is the latest information as we went to press.
The AICPA and National Association of State Boards of Accountancy (NASBA) issued two exposure drafts in September 2024 with proposals on how to modernize the CPA licensure process.
One, issued Sept. 30, offers amendments to the model language in the Uniform Accountancy Act (UAA) for an alternate pathway to licensure, including a competency framework in place of the extra 30 credit hours of education (the 150-credit-hour requirement).1 The UAA is a set of model laws published jointly by the AICPA and NASBA. No state has adopted the UAA in its entirety, but the adoption of vital aspects of the UAA has been key to efforts to achieve substantial equivalency across the country, allowing for license mobility across state lines. Pennsylvania has adopted most of the UAA.
The AICPA’s and NASBA’s model language amendments describe a new pathway to licensure that includes the following changes from the previous UAA:
The last two changes are critical topics our profession is discussing. While the profession is in general agreement that an additional pathway is necessary, there are different opinions on how to best protect mobility.
While the PICPA is advocating for an additional licensure pathway, we will be stressing the importance of leaving in place the current steps in Pennsylvania of obtaining 150 credit hours and one year of general experience verified by a Pennsylvania CPA.
The CPA Competency-Based Experience Pathway, AICPA’s and NASBA’s other exposure draft, was issued Sept. 12 and outlines how CPA candidates might meet initial licensing requirements by exhibiting their competency in specific professional and technical areas.2 The proposed competency framework would fit into full- or part-time work experience after a candidate graduates.
Under the proposed model, the candidate must exhibit professional competencies, including the following:
The candidate must also demonstrate competency in one technical competency, which could include accounting and auditing, tax, or business and financial reporting.
As the profession evaluates the competency framework, stakeholders will need to consider if a competency-based framework is needed to serve public protection and to prepare professionals for future careers. We must analyze whether or not a framework such as this one will both future-proof the licensure requirements and also maintain high standards of professional competence. It’s also worth considering the increased operational complexity for candidates and employers when it comes to actual implementation in the field.
Some stakeholders in the profession (including several state boards and state societies) suggest that instead of the specific competencies proposed in the exposure draft, two years of generally relevant experience is preferred. This concept seems simpler and clearer for candidates navigating the complexity of licensure. A reduction in the time and cost of licensure will, in the end, have the greatest impact on pipeline issues, PICPA data shows.3
As the states weigh their options for modernizing CPA license requirements, interstate mobility – which we only achieved two decades ago – could be put at risk if states start enacting differing licensure laws. Mobility ensures that qualified licensees can practice public accounting across state lines in accordance with established professional standards. Any mobility disruption will have significant impacts on firms engaged in public accounting. If mobility breaks, CPAs will have to take additional actions if they want to practice across state lines, increasing the burden and complexity on individuals and firms.
Individuals who hold a valid CPA license from a state where the board of accountancy or the NASBA National Qualification Appraisal Service (NQAS) has not verified that state’s licensure requirements to be substantially equivalent will be allowed to practice in Pennsylvania if they obtain verification from the State Board of Accountancy or NQAS that their license is substantially equivalent. The license must be equivalent to the UAA, including having met work experience and CPA Exam requirements, as well as having:
The foundational concept of license mobility is based on the premise that all participating states have a substantially equivalent licensing model. Out-of-state CPAs with state-level substantial equivalency are currently permitted to practice in Pennsylvania without giving notice to the State Board of Accountancy. Similar to a driver’s license, an individual CPA does not need to take any action to practice across state lines. This is seen as the mobility gold standard.
Currently, Pennsylvania defers to NASBA’s NQAS for the determination of substantial equivalency with respect to both states and individuals. In other states, their state boards of accountancy make such determinations.
A CPA licensed to practice in another state and who does not qualify under state-level mobility currently has four options to practice in Pennsylvania:
Instead of subjecting CPAs to the complexities described above, the PICPA intends to advocate for automatic mobility with the inclusion of a certain set of guardrails.
Under automatic mobility, a CPA with a license in good standing will automatically have the privilege to practice in another state without notice or fee, regardless of state- or individual-level substantial equivalency. This concept is currently embraced by four states: Alabama, Nebraska, Nevada, and North Carolina. Automatic mobility was not included in the UAA language exposed for comment, so it is unlikely that Pennsylvania’s deferral to NQAS will allow this to become effective in Pennsylvania. A statute change will likely need to be enacted to make this happen.
Certain guardrails would need to be put into place around automatic mobility to ensure the public is protected. Those guardrails should include provisions such as having a bachelor’s degree in accounting, having passed the CPA Exam, and having two years of experience. If a state were to put in licensure requirements that fall short of generally accepted competence measures, having these guards in place would keep out-of-state CPAs who do not meet the baseline requirements from practicing in Pennsylvania. This would be a critical check for the profession to ensure public protection and trust.
The automatic mobility solution would be relatively seamless for the profession and could be a highly effective long-term fix. It also has the least amount of transaction costs for individual CPAs. However, this solution only works when trust is upheld across a licensure system with reasonable safeguards in place, such as ensuring that underqualified CPAs cannot practice in Pennsylvania. It is important to note that none of these concepts are intended to disrupt the Pennsylvania State Board of Accountancy’s jurisdiction and disciplinary authority over out-of-state licensees, retaining the board’s ability to protect the public.
The PICPA is committed to actively supporting its members amid any anticipated changes in CPA licensure requirements, and that includes securing a safe harbor provision or grandfather clause that protects the mobility rights of currently licensed CPAs. We would insist on a safe harbor that allows CPAs licensed prior to the enactment date of new licensure rules to retain their interstate practice privileges without needing additional documentation or verification. This would ensure current practitioners maintain mobility across state lines without additional administrative burdens.
The PICPA has hosted roundtables, professional issue updates, and listening sessions over the past year to collect feedback from its members. We have also discussed the matter with other stakeholders, including regional and national firms and the State Board of Accountancy – with whom we maintain a strong relationship. PICPA’s legislative team is also keeping state lawmakers abreast of the importance and timeliness of potential CPA law changes. Likewise, PICPA’s leadership is in constant contact with leaders of other state societies to align priorities and minimize any potential pain points for practitioners that might arise from any changes.
Comments on the UAA model language will be accepted until Dec. 30. Comments on the Competency Framework were due Dec. 6. The PICPA collected member feedback to help inform our advocacy efforts, and we thank all the members who took the time to answer our online survey.
The PICPA will likely offer amendments to Pennsylvania’s CPA law and introduce legislation in early 2025. PICPA’s advocacy team is currently drafting language for the proposed legislation, so member input now is crucial to ensuring the full spectrum of professional voices is represented. We aim to expedite the legislative process, and we will reach out to you for support in communicating with lawmakers about the importance of timely action on this initiative. However, even with the CPA community’s unified effort, the timeline for any new law’s effective date remains uncertain.
Licensure changes must serve firms of all sizes and all types while also maintaining public trust and protections. Changes to the CPA law will not happen overnight, but it is important that Pennsylvania is not left behind. As change and uncertainty infuse the licensure discussion over the next months and years, the PICPA will continue to vigorously advocate for Pennsylvania CPAs. Members can keep abreast of updates though PICPA events, email updates, and via our online Professional Issues Tracker.4
1 www.aicpa-cima.com/advocacy/download/exposure-draft-proposed-uniform-accountancy-act-changes
2 www.aicpa-cima.com/certifications/download/exposure-draft-proposed-cpa-competency-based-experience-pathway
3 www.picpa.org/professional-resources/research-publications/insights-research-whitepapers/the-cpa-pipeline
4 www.picpa.org/advocacy-pipeline/professional-issues-tracker
Jennifer Cryder, CPA, is the CEO of the PICPA. She can be reached at jcryder@picpa.org.
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