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CPA Exam Changes and Pipeline Woes Are a Perfect Storm of Problems For the Profession

storm clouds on a field with a bare tree

Ed. note: The following is a guest post by Liz Kolar, EVP at Surgent. It is of particular interest to professors, accounting department chairs, other assorted academics, and any accounting profession meteorologists who are tracking the perfect storm of pipeline problems and a completely revamped CPA exam debuting in just a few months. Comments from all perspectives are welcome.

Unless you’ve been living under a rock, you’re likely aware that the accounting profession is experiencing two simultaneous massive shocks.

These shocks (of our own making) are the collapse of the CPA candidate pipeline and launch of the CPA Evolution, the largest change to the CPA exam since the exam went digital nearly 20 years ago. Of course, exam computerization came after current partners had to walk uphill in the snow both ways to make it to and from the client site. Cue the violins.

Many of the discussions about these shocks have come in a vacuum, mentioning either the pipeline collapse or CPA Evolution, but the two are as connected as they’ve ever been. I’ve seen several major changes to the CPA exam throughout my career as a practicing accountant, university professor and exam prep instructor: 1994 – the exam was shortened from 19.5 hours to 15.5 hours; 2004 – the exam went from a paper and pencil exam to a computerized exam; 2011 – the first Computer-Based Testing Evolution (CBT-e) was enacted and the task-based simulation format was introduced; 2017 – higher order skill testing was introduced; and 2018 – Excel was added as a tool, along with a new user experience. Now, we’re facing the CPA Evolution’s arrival in 2024. Typically, each major change is accompanied by a tsunami of candidates rushing to test before the change takes effect and is followed by a drought of candidates signing up to test immediately after the new exam changes go live. We’re seeing more of a ripple than a tsunami this year and could be in for a massive drought in 2024 and 2025.

It doesn’t look like our profession or university accounting programs should expect the calvary to be coming anytime soon. It’s likely the well-documented pipeline shortage is going to get worse initially because of the CPA Evolution, not better. Fewer candidates are racing to test before the changes despite Business Environments and Concepts (BEC), having the highest pass rate and being a known evil, being eliminated as a section in 2024. This is why Surgent, along with the editors at Going Concern, are encouraging any candidates to sit for BEC (and AUD!) before 2024.

Exam review providers like Surgent know what BEC questions and writing prompts look like. We know how to prepare candidates. And so do professors in accounting programs. The discipline sections replacing BEC are all new: Business Analysis and Reporting (BAR), Tax Compliance and Planning (TCP), and Information Systems and Controls (ISC). Exam candidates must pass one of the three to be licensed. We don’t know how these disciplines will be scored. And the AICPA will need time to collect data and assess performance; it’s why they are bringing back testing blackout periods in 2024.

The change to a discipline-focused CPA exam brings us to the most pressing pipeline issue – the impact that the CPA Evolution will have on enrollments in accounting programs at colleges and universities. Sure, we need more CPA exam candidates to have more CPAs, but given licensure requirements, we need even more collegiate accounting students to have more CPA exam candidates. Exam candidates are in the middle of the funnel. Because the current licensure model requires 150 hours of collegiate credit and a set number of hours in accounting specific courses, accounting students are the top of the funnel and the most important piece. If we don’t get more students to major in accounting, there is no pipeline.

The CPA Evolution may squeeze the funnel even more for colleges and universities by further focusing the exam on more analytical and information systems topics such as digital acumen, data literacy, data analytics, and internal control structures. Do these sound like subjects many accounting students learn in their typical accounting courses? They aren’t in most traditional curricula.

And most universities outside of elite schools and large state schools don’t have the resources or ability to integrate them into the curriculum before 2024. Many universities typically need four to five years, at a minimum, to implement large scale curricula changes. That’s just the nature of the academic beast. There’s already only one semester remaining between now and the CPA Evolution. So, students will be left to rely on exam review providers, YouTube, and other self-study programs to fill the gaps.

At least students knew the old exam matched their coursework. The new one will in time, but that will take four to five years, not the 18 months’ notice the industry was given.

Many accounting degree programs have gone largely unchanged this millennia apart from some added Excel assignments and data analytics courses sprinkled in. And getting those changes took years! The CPA Evolution ignores the pace of play in higher ed. Universities were given less than three semesters to adapt their curricula and prepare their students – the future CPA candidates – and single biggest pipeline fillers. Many have not adapted and are questioning if they even can. Others are wondering which courses they need to change – implying they’ve not responded at all. I believe all the schools want to give their students the best education to match the needs of the profession. But, higher ed is more bureaucratic than the federal government. It does move. It just doesn’t move in three semesters. It rarely moves in three years.

I’ve been in the accounting industry my entire life. I want the profession to succeed. I want the pipeline to grow. Change is often good for industry. But too much change, too quickly, can make our already difficult problems even worse. I worry the CPA Evolution solves a future problem in preparing students for the needs of the firms but comes at the cost of fewer people available to the firms. We could have had both if we gave universities and students the time to prepare.

10 thoughts on “CPA Exam Changes and Pipeline Woes Are a Perfect Storm of Problems For the Profession

  1. People largely make rational decisions. Whenever an additional cost or uncertainty is introduced into a system like this, there will be a percentage who decide the costs are too high relative to the benefits and opt out. It might be a very small percentage, but it will almost certainly be greater than 0. In this environment, anything that costs us Accountants and Accounting Majors should be reconsidered. The CPA exam has always been more of a rite of passage than a measure of professional skill anyway. Its not so much “Do you have a practical working knowledge of these subjects?” as “Do you have the intelligence and the discipline to dedicate yourself to getting past this hurdle?” I don’t understand this change either. The timing is terrible and the objective is unclear.

  2. The major deal to me is the requirements just to sit the exam. As a non American I am considering doing the cpa to add to my current CA license as I’m now working in an audit environment with both ifrs and us gaap clients. The process to just sit the exams is painful. If the American collegiate pipeline is drying up they need to look to having more MRAs with international bodies.

  3. Please also consider how disgruntled almost every public accountant/CPA is. Most accountants I know say to run from the profession because of the stress levels involved. Big five are slave drivers and running a small tax firm will cause you to lose your hair. The IRS is in shambles and the industry in general jams more rules down accountants throats every year. Not to mention how used and abused accountants were during PPP loan time. The top top top accountants maybe push seven figures. The work is too difficult and is too stressful, for not that big of a payoff. It’s a solid line of work and you’ll pay your bills, especially if your prospective is coming from nothing, but it’s inglorious and far too stressful.

    1. I agree with you my friend. I worked as an auditor and in internal auditor for 10 years and it was always stressful and very busy non stop for the pay. Had i gone into technology such as a programmer i would had been making at least close to 200k. My highest pay as an auditor was 70k . Idk about accounting . I would not recommend.

  4. I work in at a nonprofit as the controller and I started to pursue my CPA this year. Getting the required materials for study (I use Becker) to paying for the testing is cost prohibitive for a large amount of people. Between my Becker materials and passing two of the four exams this year (BEC & AUD), that’s over $3K this year alone. Not to mention basically giving up your free time for the duration of doing this. It’s a tough ask for a lot of people, monetarily and patience wise.

    I can’t speak to the stress because I stay in my NFP lane. I do a consistent 40 a week and make 6 figures.

  5. To be honest with you, if you want more CPA folks, then things need to be simplified across the entire economy. We have been trending towards more complexity with information technologies, and that complexity is driving the change in specialization.

  6. Wow Liz, indeed this is true. The agony is so real. Some of us aspiring accountants are almost giving up. The changes are too many and too fast. I thought no one was paying attention. Thanks for shining light on this hard reality. Good read.

  7. “It doesn’t look like our profession or university accounting programs should expect the calvary to be coming anytime soon.”

    The “calvary?” If you’re expecting Jesus to show up to save your profession you may have awhile to wait.”

  8. The profession doesn’t get it…. And perhaps tit never will. The tax code is too complex and the time constraints are too short for folks to do the job well.

    The same is true for financial statement preparation.

    The only choice firms have is to drive the hours and burn out the best and most responsible staff.

    It’s never going to change until it becomes much easier for people to work, have a normal life, and be able to enjoy their families.

    CPA’s are miserable for most of the year due to the overwhelming stress involved with trying to perform their job well.

    It’s going to take Congress and the SEC to get involved because the people in charge only focus on numbers and analytics which completely ignores the human aspect of running a business.

    CPA’s are notorious for a lack of management and leadership skill.

    It’s sad. The profession needs a complete remodel….

  9. Although it is a lot more complex than it was 40 years ago, the Accounting Profession is still a very rewarding profession with many opportunities. A person can still earn a very good rate of pay and have a lot of enjoyment without the CPA designation.

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