CPA Evolution

The CPA Evolution initiative is transforming the CPA licensure model in recognition of the rapidly changing skills and competencies practice requires today and will require in the future. It is a joint effort of the National Association of State Boards of Accountancy (NASBA) and the American Institute of Certified Public Accountants (AICPA).

A: NASBA and the AICPA believe the following approach is responsive to stakeholder input while still moving the profession forward for the future.

The leadership of NASBA and the AICPA are moving forward with a core + discipline licensure model. The model starts with a robust core in accounting, auditing, tax and technology that all candidates will have to complete. Then, each candidate will choose a discipline in which to demonstrate deeper skills and knowledge. Regardless of a candidate’s chosen discipline, this model leads to a full CPA license, with rights and privileges consistent with any other CPA. A discipline selected for testing does not mean the CPA is limited to that practice area.

The anticipated disciplines reflect three pillars of the CPA profession:

• Business analysis and reporting
• Information systems and controls
• Tax compliance and planning

A: This model provides numerous benefits for positioning the profession for the future amidst an ever-changing business environment:

• It enhances public protection by producing candidates who have the deep knowledge necessary to perform high-quality work, meeting the needs of organizations, firms and the public
• It is responsive to feedback, as it builds accounting, auditing, tax and technology knowledge requirements into a robust common core
• It reflects the realities of practice, requiring deeper proven knowledge in one of three disciplines that are pillars of the profession
• It is adaptive and flexible, helping to future-proof the CPA as the profession continues to evolve
• It results in one CPA license

A: The environment in which CPAs operate is changing at a rapid pace.

As complexity in the marketplace has increased, the body of knowledge required for newly licensed CPAs has expanded. For example, today there are three times as many pages in the Internal Revenue Code, four times as many accounting standards and five times as many auditing standards as there were in 1980.

Procedures historically performed by newly licensed CPAs are being automated, offshored or performed by paraprofessionals. Now, entry-level CPAs are performing more procedures that require deeper critical thinking, problem-solving and professional judgment, and responsibilities traditionally assigned to more experienced personnel are being pushed down to the staff level.

While technological innovations are creating new opportunities for CPAs, they are also serving to expand the requisite skillset for new licensees, who need a deeper understanding of systems, controls and data analysis to execute their responsibilities.

As a result, newly licensed CPAs need to know more than ever before to meet the needs of practice. However, the Uniform CPA Examination® (“Exam”) and education requirements can only cover so much information in our current model for CPA licensure.

All of these changes have led NASBA and the AICPA to consider if the CPA licensure model should be updated to continue to equip newly licensed CPAs with the skills and competencies needed as practice evolves. NASBA and the AICPA believe the profession must embrace these changes to maintain its relevance and support evolving business and firm needs while continuing to serve the public interest.

That’s why NASBA and the AICPA are working to evolve licensure requirements for new CPAs: so the profession can continue to effectively meet the needs of organizations, employers and the public.

A: CPA Evolution is a profession-wide effort. Along with NASBA and the AICPA, state CPA societies, state boards of accountancy, academia, firms of all sizes and CPAs in all areas of practice from across the country are vital partners in preparing the profession for the future. Their collaboration and support in implementing the new CPA licensure model will help the profession remain strong and relevant while protecting the public interest in a constantly changing business environment.

A: In 2018, NASBA and the AICPA sought feedback on an initial licensure concept from stakeholders across the profession. The two organizations also formed a working group of stakeholder representatives to provide further perspective.

After reviewing this feedback, NASBA and AICPA leadership drafted five guiding principles to inform the creation of a new licensure model. Throughout spring and summer 2019, NASBA and the AICPA sought input on the principles from stakeholders throughout the profession, academia and the regulatory community. NASBA and the AICPA held discussions with a wide variety of stakeholder groups, met with NASBA and AICPA committees, spoke with state boards of accountancy and state CPA societies and asked for input from AICPA members and state board licensees.

In June 2019, NASBA and the AICPA launched a joint website, EvolutionOfCPA.org, where they shared the guiding principles with the broader profession. The two organizations launched a communications campaign asking stakeholders to share their feedback by August 9, 2019.

Throughout Fall 2019 and Spring 2020, NASBA and the AICPA held over 20 more discussion groups with stakeholders from across the profession.

NASBA and the AICPA continue to engage with stakeholders as the implementation process progresses by holding discussion groups, requesting feedback on resources and sharing updates.

NASBA and the AICPA have heard input from over 4,000 stakeholders thus far.

A: The number one comment received was support for the need to change licensure. Most respondents also supported a greater emphasis on technology skills and knowledge as a prerequisite for licensure. Respondents said CPA licensure should emphasize and be built around a strong core of accounting, auditing, tax and technology.

NASBA and the AICPA also heard that evolving licensure would bring needed skills to the profession, position the CPA for the future and protect the public interest.

The feedback included questions about the specifics of implementing a new licensure model, such as how core CPA knowledge would be defined, how education requirements might be modified and how licensure changes would be affected in the current legislative environment.

The original driver behind CPA Evolution was the impact of technology on the profession. In the feedback they received, NASBA and the AICPA also heard an underlying theme that, while greater technological expertise should be required for licensure, there are other factors disrupting the profession as well. The effort to evolve the licensure model should focus more broadly than just attracting those with technological and analytical skills to become CPAs; it should be about ensuring the CPA license remains fit for purpose to assure continued public protection. NASBA and the AICPA needed to think bigger.

NASBA and AICPA leadership carefully reviewed all of the feedback received, studied other professions’ licensure models and considered multiple options for an updated licensure model. NASBA and AICPA leadership then used this feedback and research to develop a new approach to licensure that is responsive to stakeholder input while still propelling the profession into the future.

A: Some of the possibilities NASBA and the AICPA considered were:

Stretching CPA Exam and curriculum requirements to cover more material with less depth
Since the body of knowledge required of newly licensed CPAs continues to grow—but, given the current licensure model, Exam and education requirements can only cover so much information—some stakeholders suggested revising the Exam and curriculum to cover a greater range of material with less depth. However, this could water down licensure requirements, and candidates could know less about what matters most.

Increasing Exam and curriculum hours
Some stakeholders suggested increasing the content covered by licensure through methods such as adding a fifth section to the Exam or adding additional educational requirements. However, this approach could increase barriers to entry for the profession and would not be sustainable over time as increases in complexity cause the body of knowledge to continue to grow.

Discrete paths to licensure based on specialties (CPA—Audit, CPA—Tax, etc.)
Another suggestion was a licensure model with distinct paths to licensure for different types of CPAs, resulting in different designations such as CPA-Audit and CPA-Tax. However, in their feedback, the profession’s stakeholders emphasized that maintaining one unified CPA license was a priority, and that all CPAs should share a robust common core.

Two-tier licensure model
NASBA and the AICPA discussed a licensure model used by some international accountancy bodies in which CPAs are split between certificate holders and licensees who meet different requirements. However, past experience with this model in the United States showed that it can create market confusion and make certificate holders feel like second-class citizens.

Medical and legal licensure models
NASBA and the AICPA discussed licensure models similar to those of the medical and legal professions, in which greater experience or education is required before licensure. However, international accounting licensure models with a similar approach have seen higher dropout rates and lower enrollment due to the barriers to entry.

Professional Engineer (PE) licensure model
NASBA and the AICPA then considered the Professional Engineers’ (PEs) licensure model. Before licensure, engineers take two exams:

• One to demonstrate their fundamental knowledge of math, physics and other core concepts
• One to demonstrate their knowledge in their chosen discipline (e.g., chemical engineering, industrial engineering)

Given the stakeholder feedback NASBA and the AICPA received, the research conducted and the other options considered, this approach showed the most promise for evolving CPA licensure.

A: Our research has indicated that candidates are comfortable selecting an area in which to focus as early as their junior year of college. In March 2020, we conducted a survey of more than 600 university students and recent graduates. Ninety percent (90%) of respondents told us they have either selected a focus area or would feel comfortable choosing a focus area.

It’s important to note that while disciplines allow candidates to demonstrate a deeper level of knowledge in one area, CPAs who achieve licensure under this model will not be restricted to practice in their selected discipline. These new CPAs will have all the rights and privileges that all CPAs have today and can practice in any area so long as they possess the required professional competence.

A: NASBA and the AICPA have heard from stakeholders across the profession that new CPAs increasingly need deeper skills and knowledge in areas such as, but not limited to:

• Critical thinking
• Professional judgment/skepticism
• Problem-solving
• Understanding of the business (including systems, controls and risk)
• Data management and analysis
• Performance of System and Organization Controls (SOC) engagements

A: The AICPA Governing Council and the NASBA Board of Directors voted to support the CPA Evolution initiative. We are now moving forward with implementing the core + discipline licensure model. We expect to launch a new Uniform CPA Exam in January 2024.

NASBA and the AICPA will continue to work collaboratively with stakeholders from across the profession to implement this new licensure model. We are excited to move forward with this licensure model to meet the needs of the profession and the public.

A: NASBA and the AICPA are fully committed to the CPA Evolution initiative and the projected timeline. Although the COVID-19 situation is fluid; we believe this initiative is too important to delay.

A: We are developing the resources educators need in order to position their students for success. We have been actively working with the academic community to identify the resources that will aid them in this transition.

Our free Academic Resource Hub is available to help you prepare your students for the rapidly evolving demands of the profession. Signing up for the ARH will give faculty access to resources on data analytics, blockchain and much more to use in classroom instruction, research or guidance. Our resources cover a wide range of class levels and will help faculty easily incorporate new ideas into their syllabi. Accessing the ARH requires educator registration on ThisWaytoCPA.com.

Our free monthly Faculty Hour webinar series covers updates on CPA Evolution and deep dives into emerging topics with accounting faculty and expert practitioners.

The AICPA and NASBA also developed a curriculum resource to assist faculty who want to prepare their students to become CPAs. It aligns with the CPA Evolution initiative and comprises two main components: modules, topics, and learning objectives, and examples of course offerings.

A: We do not expect that educational hours requirements will change under the new model. However, as part of the CPA Evolution initiative, the leadership of NASBA, in collaboration with the AICPA, determined that the Uniform Accountancy Act Model Rules around educational requirements for licensure needed to be updated to incorporate additional subjects and skills reflective of the evolving profession and create more consistency. Those changes, which were endorsed by AICPA’s Board of Directors, were exposed for public comment from May 26 through August 31, 2020. NASBA issued final model rules in Fall 2020. You can find the final rules here.

A: The AICPA expects to publish an exposure draft of the new Exam blueprint in mid- 2022.

A: Share information about CPA Evolution with your department heads, advisory boards and all your accounting faculty. You can access our CPA Evolution flyer here. Use the resources on the Academic Resource Hub to begin integrating new topics in your courses now. We have over 300 resources available from the AICPA, firms and accounting faculty in topics like data analytics and cybersecurity, and we will continue to add more. Check out the curriculum resource as you work to review and update your curricula.

A: Faculty can sign up for the Extra Credit Newsletter and join the AICPA’s Academics LinkedIn Group. You can continue to find updates here on EvolutionofCPA.org as well as on the Academic Resource Hub on This Way to CPA.

A: In June 2021, the AICPA and NASBA released the CPA Evolution Model Curriculum (the curriculum resource). Our goal was to aid faculty as they seek to transition their programs to reflect the new Core + Disciplines CPA licensure model promoted through the CPA Evolution initiative. More than 40 volunteer subject-matter experts worked to develop this resource, which was designed to prepare students pursuing CPA licensure. We launched the curriculum resource during a free, virtual event with over 1,500 attendees. Since the launch, the curriculum resource has been downloaded over 3,500 times.

You can download the curriculum resource in both PDF and Excel here as well as view more FAQs.

A: The AICPA and NASBA conducted a survey of accounting students to answer this question, and the responses we received were very promising.

Forty-seven percent of accounting students said the CPA Evolution licensure model would increase their interest in becoming a CPA. Another 33% said they are already very interested in becoming licensed, and CPA Evolution would do nothing to dissuade them. Four percent of respondents told us they are not very interested in CPA licensure under the current model and that CPA Evolution did not impact their interest, and 16% said they would be less interested in licensure under the Evolution model.

We asked the “less interested” group to explain their thinking, and themes in responses indicated a lack of understanding the new CPA licensure model. For example, some respondents believed they would only be acquiring and demonstrating competence in their chosen discipline. This represents an opportunity for AICPA and NASBA to provide further clarity.

We saw a similar result when considering the interest of non-accounting majors, including MIS, finance and business analytics majors. Fifty percent indicated CPA Evolution would increase their interest in CPA, with only 11% indicating their interest would decrease.

The AICPA and NASBA recently conducted a student pulse survey that asked respondents to rank which discipline they would be most likely to pursue. The survey indicated that about 50% of students would select Business Analysis and Reporting, 25% would select Information Systems and Controls and 25% would select Tax Compliance and Planning.

All three disciplines will be rigorous. However, based on a student’s interests, skillset and preparation, a student may find one discipline easier than another. Students should be encouraged to pursue the discipline that best aligns with their initial intended area of practice.

Direct your students to the “For Students and Candidates” tab on EvolutionofCPA.org. Students can view a recorded webinar explaining CPA Evolution, FAQs and more. Encourage your students to sign up on This Way to CPA to get regular communications about CPA Evolution.

The AICPA and NASBA will hold additional webinars for students and will share the information with educators so that you can encourage your students to register.

To study this question, the AICPA and NASBA surveyed hiring directors and Chief Operating Officers at accounting firms with eleven or more CPAs. Survey participants were asked to imagine that every accounting program had instituted revisions to their curricula to align with the CPA Evolution initiative. We described the CPA Evolution Model Curriculum, including the high-level topics addressed in the Core and each elective Discipline track, and asked how such an approach to accounting education might affect the firms’ decision making.

Eighty-three percent of respondents indicated their hiring of new graduates from accounting programs would likely increase, accounting program graduates would be considered more valuable than they are today, or both.

A: We’ve had ongoing dialogue with several of the major textbook providers and we are happy to report that they and their authors are committed to updating their offerings to meet the needs of faculty and prepare students for the practice environment.

A: We expect to launch the new Exam in January 2024.

A: Current CPA candidates will still be able to sit for the current CPA Exam until the launch of the Evolution-aligned CPA Exam in 2024. NASBA has announced a transition policy for candidates who have started, but not completed, the CPA Exam process by January 2024

A: NASBA and the AICPA anticipate that not all of the content covered by the current CPA Exam and curricula will be considered “core” under the new licensure model. Instead, certain advanced content in the current core could be incorporated into the disciplines.

The specific content of the core and disciplines will be determined by state board education requirements and a CPA Exam practice analysis. As a part of its ongoing efforts to maintain the validity and reliability of the Exam, the AICPA conducts periodic practice analyses to gather information about the current state of the profession and the work of newly licensed CPAs. These research initiatives inform potential changes and updates to the CPA Exam and maintain its alignment with professional practice. An upcoming practice analysis will determine the specific content and skills tested in the Exam for the core and the disciplines.

A: Under the new licensure model, the Uniform CPA Examination will consist of three core sections and the candidate’s choice of one of three discipline sections. A candidate will be required to pass three core sections and one discipline section to meet the Exam requirements for licensure.

The discipline sections provide an opportunity for candidates to demonstrate a deeper level of knowledge in one pillar of the profession but will not prevent candidates from practicing outside that discipline once licensed. The three disciplines are Business Analysis and Reporting (BAR), Tax Compliance and Planning (TCP), and Information Systems and Controls (ISC).

A: The names of the disciplines and the Exam sections in the core have been established. The core sections are Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR) and Taxation and Regulation (REG). The disciplines are Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), and Tax Compliance and Planning (TCP). That said, in the future, this model would allow for the flexibility to add or remove core and discipline sections to reflect the reality of practice and protect the public interest.

A: Ultimately, the allocation of content of the core and disciplines will be determined through a CPA Exam practice analysis. As a part of its ongoing efforts to maintain the validity and reliability of the Exam, the AICPA conducts periodic practice analyses to gather information about the current state of the profession and the work of newly licensed CPAs. These research initiatives inform potential changes and updates to the CPA Exam and maintain its alignment with professional practice.

A: Completing a discipline is not optional. All candidates will be required to pass the three sections of the core AND one discipline section to meet the Exam requirements for licensure.

A: We expect the Exam will still be no more than 16 hours and candidates will still be required to pass four sections in total (including their chosen discipline). The length of each section of the Exam will be determined through a CPA Exam practice analysis. The AICPA Examinations team maintains the professional currency of the CPA Exam through periodic practice analyses that review changes happening in the profession today and into the future, and essential knowledge andskills testing for the protection of the public interest.

A: Yes, given they have the required competence.

Regardless of chosen discipline, this model leads to a full CPA license, with rights and privileges consistent with any other CPA. This includes rights to sign audit and attest reports, as the core will give every candidate a strong base in accounting, auditing, tax and technology.

However, ethical requirements dictate that CPAs only undertake those professional services that they can reasonably expect to complete with professional competence. Competence means the CPA or their staff possess the appropriate technical qualifications to perform the professional service and that, as required, the CPA supervises and evaluates the quality of work performed.