Chair’s Memo: CPA Evolution

SHARE:

During my inaugural address, I stated that the time is now to review the skill sets required to become a CPA and to make appropriate changes to the three Es – education, examination and experience requirements. Over the past two years, I have been involved with the CPA Evolution initiative. The NASBA/AICPA leadership group spent many hours reviewing alternative approaches to modernize the profession’s licensing model.

The leadership group originally presented a concept that the Exam should provide two pathways to obtain the CPA license, one for accountants and one for technologists who work side-by-side with accountants in public accounting firms. That solution, as you know, was rejected; however, leadership also received the message that we should continue to work toward solutions that would be effective, and those discussions have continued.

There were three important factors considered during the discussion: 1- Today there are really three pillars to the profession – business reporting, tax and technology (information systems and controls). 2- We must be proactive to ensure that the Exam keeps up with the rapid changes occurring in the business community and the profession due to technology. 3- The breadth of the Exam continues to widen with all of the changes in government regulations and a proliferation of new professional standards. The leadership group reevaluated whether every candidate truly needs an in-depth knowledge in all areas of professional practice. Most “newly licensed” CPAs are assigned subjects that are more complex only after first obtaining experience in practice.

During the Annual Meeting, there will be a presentation on a possible solution from NASBA Vice Chair Laurie Tish and AICPA Chair Bill Reeb.

As there had been significant discussion of the education requirement, in January I appointed a special NASBA task force to perform a deep dive to determine if the 150-hour requirement for education still made sense. The task force determined that Boards should continue to support the 150-hour education model. There were several recommendations that came out of this task force, one of which was to consider redefining course content. This topic was also included in discussions of the CPA Evolution Leadership Group and it was determined that the definition of “accounting concentration” might need to be revisited as well as the core curriculum definitions. Discussion also evolved around the subject of specificity. It was thought that a broader definition of curriculum provided more flexibility to candidates than one where increased specific course work is defined. This also provides candidates some choices in concentrations that they might find more interesting and suitable. This topic will be part of the continuing work on the evolution of the profession.

There are many thoughts about what the right amount of experience for licensure should be – whether it should be one year, two years or more. At the NASBA/AICPA Summit in February, it was decided that the time had come to give the Uniform Accountancy Act Committee the charge to begin determining if there should be an enhanced experience requirement for a CPA who signs reports. The UAA Committee has been exploring several options and should bring language to the NASBA and AICPA Boards for approval for exposure in the near future.

The fourth of the E’s for the CPA’s requirements is ethics. The preamble to the AICPA Professional Code of Conduct is: “Ethical professional conduct calls for an unswerving commitment to honorable behavior, even at the sacrifice of personal advantage.” The exposure draft issued by the AICPA Professional Ethics Executive Committee on the interpretation of “Staff Augmentation” (or the lending of staff to clients, including audit clients) has required careful consideration this year. At our Regional Meetings, it was a subject that Boards of Accountancy leadership overwhelmingly felt was not in the best interest of the public. PEEC is still reviewing the comments received and working on changes that it believes will resolve the issues that NASBA and others had with the interpretation as presented in the exposure draft.

I cannot report on any topic that is more important to me than Peer Review. NASBA exposed changes to Article 7 of the UAA Model Rules and the NASBA Board will be voting on the changes at their October Board meeting. This will modernize those rules. Having been involved with peer review for more than 35 years, I support this program. However, since all jurisdictions but Puerto Rico have implemented the requirement of peer review for licensure, State Boards must be able to obtain the information they need regarding a firm’s peer review from the administering entities of the program. Over the past year, the Compliance Assurance Committee of NASBA and the AICPA Peer Review Board have been working on being able to provide information to Boards through an authorization form approved and signed by the firm. Work continues on this process and NASBA is appreciative of the ongoing discussions to provide full transparency in order for Boards of Accountancy to fulfill their licensing requirements. I cannot stress enough how important this issue is to regulation.

There has been some positive momentum in the Peer Review Program administration that should assist Boards in performing their duties, but conversation needs to continue. I believe that open communication between the Compliance Assurance Committee of NASBA and the AICPA Peer Review Board will help resolve issues as they arise and avoid conflict.

As regulators, we must resolve to face change with rigorous standards, support the growth and enhancement of the profession we are statutorily obligated to regulate, and safeguard the public we serve. We are at a crossroads in our profession and it is the time to form new ideas and modernize and position our profession for the future because the risk of standing idly by and doing nothing could be disastrous.

It has been an honor to serve as your Chair. I have enjoyed meeting and working with many of you. I also want to thank the many individuals who mentored me along my journey. This has been a highlight of my career and I thank you for giving me the opportunity.

— Janice L. Gray, CPA, CVA
Chair 2018-2019