Keep yourself updated with our free updates! Just subscribe to the Accountancy MyFT Digest and get it straight in your inbox.
A proposed overhaul of the criteria for becoming an accountant in the United States might open up firms to discrimination lawsuits and create additional obstacles for those entering the profession, warned an organization representing the nation’s largest audit firms.
In a confidential letter obtained by the Financial Times, the Center for Audit Quality (CAQ), which advocates for the Big Four and other notable firms, criticized the proposed changes as excessively complicated. The CAQ cautioned that these changes might introduce unintended biases into the certification process.
This stance by the CAQ places major audit firms in opposition to two governing bodies—the American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (Nasba)—which are responsible for setting the standards for becoming a certified public accountant (CPA). These bodies are trying to address a decline in new entrants to the field.
In September, AICPA and Nasba suggested removing the rule requiring accountants to obtain five years’ worth of university education, which includes a year beyond the typical undergraduate degree. This requirement has been criticized for deterring young aspirants from pursuing accounting careers.
Instead, the two organizations proposed an alternative—swapping the fifth year of education for a year of practical training under firms, which should confirm the acquisition of numerous specified technical and professional skills by the recruits.
Liz Barentzen, vice-president of the CAQ, voiced concerns in a comment letter last month, noting that “the framework’s extensive list of competencies, performance indicators, and evaluation requirements creates an unnecessarily complex system that could be difficult to implement consistently across jurisdictions.”
She further explained, “Qualitative assessment frameworks can introduce subjectivity and unconscious bias into evaluation processes, potentially leading to employment-related issues, like discrimination claims, that might otherwise not arise.”
The shortage of accountants has become such a pressing issue that some companies have started mentioning it as a risk factor in their financial statements. In response, some small accounting companies are stepping back from specialized services like local government audits. Industry leaders have sounded the alarm that if these trends continue unchecked, even larger firms might struggle with recruitment.
CPA exam participation has seen a sharp drop—from a high of over 100,000 candidates in 2016 to just above 67,000 in 2022, marking a 17-year low. Although there was a slight increase last year, the AICPA expects the numbers to fall again soon. Over the past few years, fewer young people have been pursuing accounting degrees, opting instead for more lucrative entry-level positions in finance or technology sectors.
The CAQ suggests that addressing the shortage requires making the accounting field more attractive to students from diverse backgrounds, for whom the cost of a fifth university year can be a significant hurdle.
AICPA and Nasba are set to publicly share feedback on their proposals starting in early 2025.
Sue Coffey, AICPA’s chief executive of public accounting, mentioned that the feedback has been beneficial and varied. She added, “It’s critical that licensure pathways are clear and compelling to students. Collaborating with Nasba and various stakeholders, we aim to have a clearer picture in the coming months.”
