AICPA sees threat to CPA state mobility

The American Institute of CPAs provided information for U.S. accounting professionals on the potential impact on their out-of-state engagements if some of the pending legislation in some states on licensure requirements is enacted.

The document includes background information and a compliance checklist for CPAs to weigh the impact on them if a state unilaterally changes its requirements necessary for licensure. Two states in particular, Minnesota and South Carolina, are considering such changes.

For now, CPAs continue to benefit from a national licensing system, known as "CPA mobility," that allows nearly complete practice movement from a CPA's home state of licensure to other states without the need to obtain additional licenses, register with the other state or pay extra fees. That longstanding system, which the AICPA has worked hard over the years to establish, is based on the concept of "substantial equivalency," a foundation of common or similar educational, examination, and experience requirements for licensure across states. Such freedom of movement gives CPAs and their firms the ability to serve clients across state lines, either in person or virtually amid the ongoing pandemic, without the extra burden of obtaining separate licenses for each state in which they practice.

"We believe upending mobility would be a grave mistake," said AICPA & CIMA CEO of public accounting Susan Coffey in a statement Thursday. "But with some states pursuing legislation that impacts CPA mobility well beyond their own borders, it would be irresponsible for us not to have resources in place to reflect those potential outcomes and stakes. As with other matters, we are committed to providing CPAs and CPA firms the information they need to practice successfully and in compliance with regulatory requirements."

Susan Coffey

Earlier this year the AICPA organized a National Pipeline Advisory Group that aims to develop a national strategy to address the accounting profession's talent shortage. The group has developed a Pipeline Acceleration Plan that includes some short-term initiatives to address the accounting talent shortage. It's also evaluating the boundaries of substantial equivalency to understand if more flexibility exists, and a draft plan is expected in May 2024.

In calling for the formation of the National Pipeline Advisory Group this past May, the AICPA governing Council stressed the importance of preserving CPA mobility. The AICPA plans to defend the system in states where it is under threat — Minnesota and South Carolina for right now — and part of that defense involves raising awareness about the stakes involved for CPAs. For more information on the effort, visit the AICPA's resource page on protecting CPA mobility.

Dire shortage of accountants prompts calls for shake-up

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It could be a question in the “economic influences on business” section of the US exam to qualify as a certified public accountant: if it were cheaper and easier to become a CPA, would there be more of them?

Squeezed between a wave of retirements and a slump in the number of people taking exams to become a CPA, the profession in America will have to confront the obvious answer in 2024.

About three-quarters of CPAs are now at or near retirement age, and the pipeline looks threadbare. Fewer US university students are taking accounting courses, and under current rules they need the equivalent of a whole extra year of study before they can qualify as a CPA — a costly deterrent, especially for those from diverse backgrounds.

The talent shortage hasn’t yet reached the Big Four, who still have their pick of graduates, but even these firms are tiring of subsidising a fifth year of schooling of uncertain value and worry about the long term. Smaller accounting firms are feeling the pinch already and, forced to pick between business priorities, have pulled back in areas such as local government auditing or, in some cases, audits of public companies.

Membership of the American Institute of Certified Public Accountants, the US professional body, fell from 430,000 in 2017 to 415,000 last year and it has missed membership targets in four of the past five years. Yet it opposes dropping the fifth year, or final 30 hours of the current 150-hour requirement of university classes, which only became standard in the 1990s. Some states such as Minnesota are examining legislation that would once again allow licensure with 120 hours, with enhanced work experience requirements instead. The AICPA says that could lead to widespread problems, since other states may refuse to recognise Minnesotan CPAs.

Before Christmas, the organisation distributed “guidance” to firms about what to do if a state changed its laws, including a scary-looking “interstate practice compliance checklist”. Since no state has changed the law and it is not clear how others would react, it looked more like a way to pressure Minnesota into staying in line.

The AICPA thinks backers of the change are hopelessly naive. From the other side come accusations that the organisation is stuck in the past. Some accounting firm leaders are pinning their hopes on a forthcoming change at the top. The search is on for a replacement for Barry Melancon, who will be retiring after 29 years as AICPA chief executive. The organisation might come around and agree to work to ensure an orderly transition to 120 hours. It has a working group promising solutions for the talent shortage by May. 

For many accounting firms, the problem is too pressing to wait. For all the disagreements on the 150-hour rule, no one could argue with what the AICPA’s Sue Coffey told me last month: namely that this single change “isn’t going to bring in thousands of people”. Demographic trends will continue to impose themselves.

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Hiking pay for junior staff can stick in the craw at partnerships, where it comes straight out of partners’ profits, but there is evidence that accounting firms have begun to reverse the long relative decline in starting salaries for new recruits. These have failed to keep pace with raises in investment banking or tech for a generation. Faster pay progression and earlier elevation to the partnership will also be needed.

But firms will still have to make do with fewer licensed professionals, so business models will need to be reimagined.

The Big Four already make extensive use of people based offshore, notably in India, to perform routine tasks. Midmarket firms are now rapidly scaling up. BDO USA expects to double its offshore workforce in five years. Brian Becker, chief executive of RSM US, tells me he is aiming to increase the amount of work done overseas from less than 10 per cent now to around 40 per cent. For smaller firms that cannot build their own overseas infrastructure, there are a burgeoning number of outsourcing options available.

At home as well as abroad, as much work as possible will have to be shifted from licensed professionals to other staff. Coffey says accounting has to transition “from being a CPA profession to a CPA-led profession”.

It will still need CPAs, though, and in numbers. The risk is that the profession enters a downward spiral where an increasing workload on those who remain drives even more away. It needs to be cheaper and easier to become an accountant.

stephen.foley@ft.com

Best Online Master’s in Accounting Programs in 2023

How long it takes to complete an online master’s in accounting (MAcc) degree will depend on your flexibility and scheduling. Part-time programs will require more time for completion, whereas full-time options may allow students to finish the program in as little as a year. Purdue University’s online program can be completed in 1.5 years at full-time status and Auburn University’s program can be finished in as few as three semesters. Most MAcc programs require at least 30 credit hours to fulfill the required 150 hours needed to sit for the CPA exam, which can take between 12 to 24 months to complete. 

Online master’s in accounting programs can vary in cost depending on the school, the total number of required credit hours, and a student’s residency status as in-state or out-of-state. For example, the MAcc program at Ohio University is $973 per credit, with a total estimated tuition cost of $29,190. Meanwhile, SUNY Polytechnic Institute’s cost per credit is $565. Among the schools on Fortune’s ranking, tuitions range from as low as $15,000 to as high as nearly $70,000.

The average annual salary for accountants and auditors is $77,250, according to the U.S. Bureau of Labor Statistics. A MAcc degree, often utilized to help obtain a CPA licensure, can expand job prospects and increase potential salaries. Those people who hold a MAcc degree are more likely to be promoted to senior manager and partner positions. People who hold a CPA, and who may have completed a master’s degree in accounting, are often able to enter C-suite roles, where salaries are well into the six figures.  

There are many factors to consider when deciding whether a master’s degree in accounting is worthwhile. Completing a MAcc degree can open to the door to more job opportunities at higher salaries, especially when coupled with a CPA licensure. Some individuals choose to pursue a master’s degree in accounting in order to complete the necessary CPA exam hour requirements, while others are looking to build out their skillset in both accounting and other business related capacities. 

The certified public accountant (CPA) licensure and a master’s degree in accounting are different—though often closely related. Master’s in accounting programs are often a means for graduates to obtain the necessary hours required to sit for the CPA exam.  CPA hours can still be obtained without a degree program, and it is possible to obtain a CPA license without a master’s degree in accounting, though many individuals with a CPA also have a MAcc. However, MAcc programs can provide helpful insight, skills, and knowledge that may benefit a CPA test taker, and programs often have much higher CPA exam pass rates. Individuals with a CPA or MAcc (or both) are more likely to obtain higher paying jobs an advanced to senior management or partner positions than those without either qualification. One is not necessarily “better” than the other, as they both can boost salaries and opportunities, and they are closely tied.