Every year brings changes, and 2024 has been no different. For the tax and accounting profession, we continue to see the impact of advancements in technology, from cloud computing and cybersecurity solutions to tools for AI, automation, workflow and data analytics. But another big change for the profession moving into 2024 was a major transformation to the CPA exam. In fact, it’s the most significant change to the CPA exam we’ve seen since it was computerized 20 years ago.
So here we are, halfway through another calendar year. And what better time than now to pause and catch our breath amidst all the change? Before it’s time to dig back into fall filing deadlines. You made it through another tax season! And, ideally, you and your team have had a chance to sit down and have a post-tax season debrief meeting to identify and address your busy season challenges—one of which probably involved a staffing shortage. It’s also the time of year when a lot of tax and accounting professionals attend conferences and trade shows to stay informed about what’s going on in the profession. Hopefully, you and your staff have also taken some time off to focus on the important things outside of work.
Assuming you’ve taken the time needed after busy season, let’s consider some of those changes that arrived with the new year. What does the CPA Evolution initiative mean for the future of the profession? And what impact will the new CPA exam have on the accounting firm staffing challenge, if any? Let’s look at the initiative, and then we’ll dive into what it could all mean for the profession.
AICPA and NASBA introduce the CPA Evolution Transition Policy
By now, you’ve likely heard about the CPA Evolution initiative, but let’s do a quick review. The initiative is a joint effort between NASBA (National Association of State Boards of Accountancy) and the AICPA (American Institute of Certified Public Accountants). It was introduced to recognize and address the rapidly evolving skills and competencies required by the accounting profession today and into the future.
The profession is witnessing accelerated advancements in technology, data analysis and security, along with evolving rules, concepts and standards. That means today’s CPAs are expected—and required—to take on more responsibilities than ever before. And they’re expected to take on these responsibilities much earlier in their careers, if not immediately. This includes newly licensed CPAs who are just entering the profession.
The changes outlined in the initiative affect those working through the CPA exam as of January 2024 and beyond. The joint effort introduced a CPA Evolution Transition Policy, which outlines how sections passed under the previous exam map to the new exam. For anyone who passed and retained credit for all four sections of the CPA exam by December 31, 2023, the changes will have no impact.
What are the changes to the CPA exam?
The new Uniform CPA Examination (CPA exam) introduces the Core + Discipline model. The exam remains in four sections, with the same core competencies. Candidates sitting for the exam will still see core competencies built around accounting, audit and tax. But they will also see an increased emphasis on technology throughout the exam. This is an important step forward for the profession. Technology plays an increased role in firms today, and technology-mature firms earn 39% more revenue per employee. This part of the exam is a requirement for all candidates and continues to establish a strong foundation for the core competencies all new CPAs need to know.
Beyond this part of the exam, under the new model, each candidate must choose one of the following disciplines to demonstrate greater skills and knowledge:
- Business analysis and reporting
- Information systems and controls
- Tax compliance and planning
This new approach allows candidates to focus on an area that better aligns with their interests without restricting their practice area. Regardless of the discipline selected, this new model leads to a full CPA license and allows the CPA to practice in any area if they have the required competence. Just because a candidate chooses one discipline does not mean the CPA is limited to that practice area alone.
Another noteworthy change is the increased focus on financial planning within the tax compliance and planning core discipline, with 30%-40% of the questions in that section now dedicated to the subject. This further solidifies the growing need and demand for CPAs to offer higher-value advisory services outside of seasonal compliance work, with a greater role in the year-round financial and tax planning process for clients.
As outlined by NASBA and the AICPA, the new Core + Discipline model:
- Enhances and strengthens the state board public protection mandate by producing candidates with the knowledge required to perform high-quality work.
- Is responsive to stakeholder feedback and builds a robust common core of competencies.
- Better reflects the reality of how CPAs practice today by requiring deeper knowledge in a specific discipline that is a pillar of the profession.
- Can be adapted over time as the CPA role and profession continue to evolve.
- Preserves one CPA license.
Why are the changes significant?
We’ve heard for years that the accounting profession is facing a staffing crisis. From the huge number of Baby Boomers approaching and reaching retirement age to the 150-hour rule, the declining number of accounting majors and the perceived stereotype of accountants, there’s a lot to overcome. Today’s younger professionals don’t want extensive periods of long hours that have historically come with tax season and filing deadlines. They demand a greater balance between their personal and work lives. And they’re no longer willing to work in firms or businesses that don’t meet that expectation.
The talent shortage is real, and changing the CPA exam is one step toward redirecting the current trajectory. Just last year, the National Pipeline Advisory Group (NPAG) was formed to help develop a strategy to address the profession’s attrition. In their recently released draft strategy report, they offer proposed solutions organized into six key themes:
- Tell a more compelling story about accounting careers.
- Create a more engaging college experience for accounting majors.
- Reduce the time and cost of education.
- Grow support for CPA exam candidates.
- Expand access for underrepresented groups.
- Transform firm cultures and business models.
As we all know, sometimes things tend to get worse before they improve. And the significant changes to the CPA exam are likely no exception. With new discipline sections come new questions and new scoring. And this also means there’s a need for curriculum changes in colleges and universities. Changes to adequately prepare accounting students for the exam and a future in the profession.
All of this…well, it will take a little time. And unfortunately, it will probably look worse before it looks better.
CPA profession still ripe with opportunity
Are there concerns and unknowns about how the CPA Evolution initiative will affect the profession? Yes. But it’s still an exciting time to be—or become—a CPA. Just in recent years, the profession has seen the evolution of cloud technology and an explosion of artificial intelligence and automation tools. All of this on the heels of a pandemic that forced firms into more remote and hybrid work environments. (By the way, these younger graduates entering the profession also expect this flexibility in work location.)
The CPA profession is a secure and rewarding career with many growth opportunities. Newly licensed CPAs want to be mentored and supported along their journeys. Firms that figure out how to create an environment that meets the needs and desires of these young professionals will have an advantage. Ultimately, these firms will help set a precedent for a profession that desperately needs to attract and usher in the next generation.
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