Key Takeaways

  • The American Institute of Certified Public Accountants (AICPA) and the National Association of State Boards of Accountancy (NASBA) released a revised version on Tuesdayof a proposal for an alternative CPA licensure path, and opened it for public comment. The new proposal removes the previous requirement to assess candidates for "competencies," which covered professional areas such as ethics and critical thinking, as well as technical areas like audit, attestation, tax, and financial reporting.
  • The revised "third licensure path" would only require a bachelor's degree, passing the CPA exam, and two years of professional experience, effectively replacing the competency assessment with an additional year of work experience. The earlier proposal from last year required a competency assessment, a bachelor's degree meeting state accounting and business coursework requirements, one year of professional experience, and passing the CPA exam.
  • The removal of the competency framework stems from concerns raised during the first round of public comments that ended in December. In an email response, the AICPA stated: "Feedback on the competency path was mixed, with over 600 survey responses and more than 150 comment letters received. Themes included questions about the feasibility of implementing the competency framework, such as feasibility for small employers and the responsibility of competency assessors."

Deep Dive

The role of the Uniform Accountancy Act (UAA) language as a potential legislative template is especially important now, as more states are eliminating or offering alternatives to the CPA requirement of 150 college credit hours, typically equivalent to a fifth year of college or graduate study. Last month,Virginia became the second state to pass legislation creating a new CPA path, which offers an alternative licensure path that does not require 150 credit hours, as previously reported by CFO Dive.

The exposure draft released this week by the AICPAproposes amendmentsto the profession's Uniform Accountancy Act, a model law that often influences state legislation regulating CPA licensure. The deadline for submitting public comments is May 3.

Nicole Wright, an associate professor at James Madison University's School of Accounting, was not surprised by the change. In an interview, she said the original competency framework lacked clarity, and it was even unclear what role schools should play in ensuring competencies. She believes the new proposal, which removes the competency assessment, is more straightforward and easier for students to understand when planning their career paths.

"I think they made it clearer," she said. "It's like checking a box: 'I've met the education requirement, now do I decide to gain two years of experience?' It's much simpler."

The AICPA hinted in a statement that pursuing some form of competency measurement is not over. "While the competency-based experience path has been set aside, the AICPA is exploring long-term, data-driven approaches, working with stakeholders to understand how competencies can help shape the future of our profession," the statement said. "This aligns with the recommendations of the 2024 National Talent Pipeline Advisory Group and reinforces the profession's long-standing commitment to competency as a core principle, as reflected in our Code of Professional Conduct and the UAA."

Additionally, beyond the revised requirements, the proposal also seeks to move to a so-called "individual-based" mobility model, where a CPA would only need to hold one license to practice in other states, according to Tuesday's announcement. The revisions would also add "safe harbor provisions" to ensure CPAs meet existing practice requirements.