AICPA President and CEO Barry Melancon recently talked about a growing concern around the number of people that are sitting the CPA exam every year. Barry stated “We have had six consecutive years of record numbers of people majoring in accounting. That’s a great thing. For the last three years, however, we’ve basically had a level number of people taking the CPA exam. So there’s a gap that’s building.”
I recently wrote about Blake Oliver, the owner of Cloudsourced and his fast-growing bookkeeping firm that’s grown to over 175 clients in less than two years. When I read about the leveling number of individuals taking the CPA exam, it got me to thinking about the designation and why Blake doesn’t have one.
Blake has toyed with getting his CPA but decided not to for mainly two reasons. First: The long list of rules from AICPA that dictates what you can and can’t do is limiting. If you want to serve clients across the US, then you need to be across the regulations for every single state. Second: There is a lengthy process to become a CPA. From education to exams, to the fact that some states require a Masters degree and two years of relevant work experience – it creates barriers for many aspiring accountants. The other issue that Blake suggests is that the training to acquire a CPA designation is highly theoretical. There is no technology component to the designation. With so much of accounting and bookkeeping linked to an accounting system and software workflow, there’s a real gap in training.
Blake estimates that roughly 90 percent of his small business clients don’t require a higher-paid CPA throughout the year. And typically, a small business that has relatively simple compliance requirements is not that interesting to a CPA. Blake’s firm does the payroll, monthly reporting, bank reconciliations, and provides ongoing advice throughout the month using cloud accounting software at the core. None of Blake’s staff are CPAs, however, they have strong accounting skills and have a thirst for helping small businesses. They want to be part of the small business’ success and do much more throughout the year than the typical accountant would do for their clients. He says this is exactly what his clients want and the main reason his business is thriving.
There is no question that the CPA designation is highly relevant and carries considerable cache. After all, a CPA is who you turn to for taxes and a CPA is one of the most trustworthy designations on the planet. On top of that, the American public opinion of a the CPA brand is at an all time high as Barry alludes to in his blog.
So why is there a leveling off? Is some of it because of the challenges that Blake discusses? Will we see more firms like Blake’s emerge?
Jamie Sutherland is the President of Xero US.