The Minnesota Society of CPAs has introduced a bill into the state legislature that would allow young accountants to become CPAs without having to earn 150 hours of college credit.
The proposed legislation would create three paths to licensure, all of which would require passing the CPA exam, plus:
- 150 credit hours and one year of work experience (the current model);
- 120 credits and two years of work experience; or,
- 120 credits and both one year of work experience and 120 CPE credits, earned concurrently.
The move comes amid mounting concern over the slackening of the "pipeline" of young people entering the accounting profession and becoming CPAs, which is making it harder for firms to staff engagements and develop their next generation of partners.
"For the last several years, we've heard concerns from our members about the CPA pipeline," explained MNCPA chair-elect Bob Cedergren. "What we're hearing in Minnesota is particularly from the smaller firms — those rural firms or those small firms in the metro area that have difficulty attracting students and hiring CPAs to their firms. So, we've said, 'What can we do? How can we respond to our members? How can we respond to the profession that knows there's fewer and fewer students?' Even those that do graduate with a bachelor's of accounting or a BS in accounting don't always sit for the CPA exam. So what we've decided to do in Minnesota is look for alternate pathways to licensure."
The bill, which has bipartisan support, is currently in the state government finance committee in both the House and the Senate. "That is the committee that has jurisdiction over many state agencies, including the state board of accountancy," explained Geno Fragnito, director of government relations at the MNCPA.
Minnesota's legislative session closes May 22, and while Fragnito notes that there is legislative interest, there is no guarantee that the bill will be taken up this year.
"We're fully aware that the legislative process is not a quick one," said Cedergren. "It takes a long time."
Opposition to the proposal
Both the American Institute of CPAs and the National Association of State Boards of Accountancy — which spent more than two decades working to promote uniform CPA credentialing regimes across the country that include the 150-hour rule — have expressed serious reservations about the legislation.
"The AICPA has a plan to address the pipeline problem — we're asking for a thoughtful and nuanced approach," said Marta Zaniewski, vice president for state regulatory and legislative affairs at the AICPA. "It's really looking at how we can keep the 150-hour requirement — education is an important aspect of licensure — and how do we open up the opportunity for candidates to gain those credit hours while working at a firm and learning about the practice. We're exploring that."
Zaniewski particularly highlighted the mobility issues that Minnesota having a different credentialing regime might create, and the hurdles it would raise for local CPAs who want to practice out of state — an issue that's even more important in an age when accountants can do work virtually for clients anywhere in the world.
"If I was a firm in Minnesota right now, I'd be asking a lot of questions," she said. "I'd be asking how I can practice across state lines, and how would I better serve my clients while now having to pass through a different model to the surrounding states. To me this bill creates an island in Minnesota."
"We are commingling two different issues — mobility and the pipeline," she continued. "The patient on the table is the CPA profession, and I'm afraid we're taking a hatchet to the patient, instead of a scalpel."
The current mobility model works seamlessly in 55 jurisdictions, and she warned that it shouldn't be tampered with lightly: "We take for granted the mobility provisions of the profession and we think this is how it's always worked, but it hasn't, and I worry that we'll take several steps backward and chaos will ensue."
Cedergren, who is a partner at Top 100 Firm Wipfli, calls mobility a real issue, but said the profession has worked with differing licensing regimes at the state level in past. "I would hope through discussions with the AICPA and NASBA that this would not become an issue and that we'd be able to work through the process," he said.
He was less interested in the criticism that allowing a path to a CPA license that doesn't involve 150 hours would be seen as lowering the qualifications for the credentials. "This one I struggle with, because many, many CPAs in the state of Minnesota and nationwide are practicing under the old 120-hour rule with multiple years of experience" — including himself, he said, since he was grandfathered in when the 150-hour rule was brought in in Minnesota.
"The one uniform thing that CPAs have to all accomplish is passing the CPA exam, right? That's the standard," he continued. "That's the given that every CPA across the country has to pass; the other two — experience and college education — vary among the states today and yet we've been able to get past that and work uniformly as a profession and recognize each other's credentials. I don't see it as lowering the bar at all."
He believes that the work experience and CPE requirements make up for the 30 credit hours — which don't necessarily contribute to professional expertise anyway, he contends.
"In the state of Minnesota, there is no prescriptive requirement of the types of classes. You could take literally 30 credits on anything you want," he said. "CPAs have such a trusted relationship with their clients that I'm not convinced that the 30 credits will make any difference as long as they uphold everything else that a CPA is known for — being that trusted business advisor, being that call for the client to walk through a challenge or an issue that they have. That's where we gain our reputation from. It's not the additional 30 credits that a student takes."
If the rules were changed to include a prescribed set of accounting-related classwork for the extra 30 hours, "I might change my opinion," he said.
Starting a conversation
Just as there is no guarantee that the bill will get taken up in the current legislative session, there's also no guarantee that it wouldn't get changed in the process — and that's all right with Cedergren.
"We do not anticipate that the final bill that gets voted on or signed into legislation will look like what was introduced just because of the legislative process," he said. "There's a lot of interest out there. We also believe that we may not necessarily have the right answer. We introduced it to create dialogue with the AICPA and NASBA and with other state societies. We're hoping that, if this isn't the right path, somebody else comes up with an idea or an opportunity that we can listen to."
Members of the MNCPA's Executive Committee have already met in person with representatives from the AICPA and NASBA to discuss the proposed legislation.
"Both were excellent dialogues and we believe there's an opportunity to continue the dialogue and discussions," Cedergren said. "Because I think in the end we all have the same goal, and that is to create a pathway for more students to become CPAs."
Added Fragnito, "We obviously have some disagreement with the AICPA and NASBA on this issue, but I think that where their focus is, is not on the issue; it's on a hurdle that can be overcome, and we should all be focusing on the underlying issue, which is the shortage of CPAs in the pipeline."
Regardless of their position on the worth of the Minnesota bill, all sides agree that unblocking the pipeline and increasing the number of people entering the profession is critical.
"There's a member of our society who says that he thinks the world's a better place because of CPAs, and I firmly believe that as well," said Cedergren. "We add that confidence to the business world. We are those trusted business advisors. So the more CPAs we have, the better this world will be as a result, and he believes that, and I believe that, and I believe our whole board believes that, and I think the AICPA believes that as well."
