Accounting, the language of business, appears muted in its attempt to reconcile its pre-certification and a CPA’s lifelong continuing education requirements.We need to turn the volume up and encourage a dialogue. The future of accounting education is at stake. The profession is brimming with frustration over attempts by its practitioners to reconcile requirements from jurisdiction to jurisdiction.
Certified public accounting is a profession comprised of individuals regulated and licensed by 54 licensing jurisdictions. The CPA Exam, administered by the National Association of State Boards of Accountancy, is used by the regulatory bodies of all 54 jurisdictions. Boards of accountancy use the exam as a prerequisite for the CPA certificate because it is the primary way to measure the competency of CPA candidates. Candidates who take the 15-hour exam are tested on auditing and attestation, financial accounting and reporting, regulation, and business environment and concepts.
From as early as 1884, the profession has utilized examinations to test the professional competency of its practitioners. In the early 1880s, the Institute of Accounts and the American Association of Public Accounts were issuing certificates based on completion of an examination or years of experience as an accountant. Neither of the organizations was able to regulate the activities of non-members, thus spurring on legislation passed in 1896 in New York that required testing the qualifications of those who intended to practice as public accountants. Maryland followed four years later as the third state to pass a CPA law behind New York and Pennsylvania.
The exam we know today was adopted initially by nine states during its first year, 1917. By 1923, 40 states were using it. By the 1960s, all jurisdictions in the U.S. required CPA candidates to pass a Uniform CPA Examination that is prepared by the American Institute of CPAs and graded by its Advisory Grading Services (a service provided since the initial adoption of the exam in 1917). Today, all states use the exam and grading service.
It’s there where the uniformity stops.
Despite the consensus on the value of a Uniform CPA Examination, licensing qualifications and other professional requirements vary significantly among the states. For example, states differ widely in their minimum pre-certification education and experience requirements for licensure, standards for unprofessional conduct, interstate practice privileges, and disciplinary procedures and sanctions for violating professional standards.
The 54 jurisdictions also have varying requirements for continuing professional education and ethics requirements for maintaining the CPA license. The Uniform Accountancy Act, which requires 150 hours of college education in order to sit for the Uniform CPA Examination, has been adopted by only 40 states. Although requirements of states and other jurisdictions have similarities, substantial differences exist in the specific content of the requirements.
Complicating issues further, some jurisdictions require 40 hours each year of CPE, others require 80 hours each two-year period, and others require 120 hours each three-year period. Almost every jurisdiction requires an average of 40 hours of CPE per year for CPAs who perform attest functions.
Some jurisdictions, such as New York, reduce the number of required hours if all CPE is taken in the same specialization area. In New York State, practitioners can take 40 hours of general CPE, or a 24-hour concentration of CPE in audit, accounting or taxation over three years.
Accounting professionals are often frustrated when they attempt to satisfy CPE requirements in multiple states. In managing those multiple requirements, practitioners must be mindful of many factors. They include specific subject requirements, the number of hours required in specific periods and the reporting year.
Most jurisdictions have minimum requirements for the number of hours of technical subjects or for hours of accounting and auditing education; although one jurisdiction might classify a subject as technical, another jurisdiction might not. Some jurisdictions allow no credit for personal development or practice development courses, while most jurisdictions simply limit the number of hours granted for non-technical courses. Requirements for ethics education, where they exist, vary widely.
Turning the volume up on this discussion will help move us to CPE uniformity and make sure that all CPAs are singing from the same songbook.
The profession needs one set of professionally developed standards that can be the basis for regulation on a state, national and international level. The easiest way to reconcile the various jurisdictions is for every state to adopt identical requirements, possibly administered or monitored by an interstate compact, a solution I have pushed for years, but that is certainly not the only solution. A national CPA license can accomplish the same thing. However, a national license would require action by Congress.
If the purpose of CPE is to increase the professional competency of practitioners, the requirements should be the same for every jurisdiction. Rather than simply managing and reconciling varying standards across the country, CPAs could then focus on offering quality services, protecting the public they serve and enhancing the stature of their profession. The uniformity of continuing education coupled with the Uniform CPA Examination may bring us closer to true mobility of the profession.
What the profession does not need is the deafening silence of 54 jurisdictions setting separate education standards with no unified voice.
Lou Grumet is the executive director of the New York State Society of CPAs, with a membership of 29,000 CPAs.
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