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Taking action on CPA licensure

November 22, 2024
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  2. Taking action on CPA licensure

The world is changing fast. Should the qualifications to become a CPA change too? The VSCPA is introducing legislation in 2025 to add an additional pathway to become a CPA.

From national organizations and massive accounting firms down to sole proprietor CPAs, there are a lot of opinions about how future CPAs should be assessed. After years of discussion, various state boards of accountancy, state societies, and even state legislators are moving forward — including the VSCPA.

Here’s where the discussion on the 150-hour requirement and various solutions stands today.

Revised position on substantial equivalency

At its Nov. 8, 2024, meeting, the VSCPA Board of Directors approved revisions to its standing position statement on practice mobility and licensure:

The Society endorses automatic practice mobility for out-of-state CPAs with licenses in good standing and substantial equivalency and practice mobility for reciprocal licensure as established under the Uniform Accountancy Act (UAA) defined in Virginia law. This includes maintaining the UAA minimum requirements for examination, education and experience for licensure and as established by the Virginia Board of Accountancy. The Society further endorses redefining the education requirement and advocating for a combination of traditional course work and/or other approved programs and experience relevant to the newly licensed CPA. In addition, CPAs from other states should be permitted to practice in Virginia under the substantial equivalency doctrine.    

With these changes, the VSCPA supports that practice privileges are automatic for out-of-state CPAs who wish to practice in Virginia, as long as they have a license in good standing from another jurisdiction and have passed the CPA Exam as a condition of licensure.

NPAG recommendations

In May 2023, we ran an article, “Is 150 Too Many?,” detailing the history behind the 150-hour education requirement to become a CPA and the ways it could be negatively affecting the pipeline of students coming into the accounting profession.

Upon the recommendation of a special Board 150-Hour Task Force, the VSCPA released a position advocating for redefining the CPA education requirement and exploring a combination of traditional coursework with experience. 

Across the country, CPAs were having similar conversations. In July 2023, the AICPA created the National Pipeline Advisory Group, tasked with reviewing the data on accounting talent, listening to conversations from a variety of stakeholders about the issue, and developing real recommendations on how to move forward with keeping the profession strong. VSCPA Vice President, Advocacy & Pipeline Emily Walker, CAE, was an NPAG member, allowing Virginia CPAs to have a voice in the process.

In July 2024, the NPAG issued its final report with six recommendations based on various themes that emerged during its year-long tenure:

  1. Make the academic experience more engaging.
  2. Address the time and cost of education.
  3. Grow support for CPA Exam candidates.
  4. Expand access for underrepresented groups.
  5. Enhance the employee experience.
  6. Tell a more compelling story.

The full report dives into each area, which require their own plans of action. While the NPAG did not come out and recommend a sweeping change to the 150-hour requirement, it did say that addressing the time and cost of education “entails creating a nimble process to keep the CPA license and its requirements evolving, transparent and accessible.” The NPAG clearly advocated for a shift in direction to measure CPA candidates’ competency and not just academic experience. Options could include experiential learning models or a competency-based licensure model (denoted as a longer-term option).

Regulatory exposure drafts

This fall, the AICPA and NASBA released two exposure draft; one outlining a new pathway to CPA licensure and the other with corresponding updates to the Uniform Accountancy Act (UAA), including changes related to substantial equivalency, which is currently the backbone of interstate practice mobility for CPAs.

Competency pathway

On Sept. 12, 2024, the AICPA and National Association of State Boards of Accountancy (NASBA) released an exposure draft, CPA Competency-Based Experience Pathway. Comments are due by Dec. 6, 2024, and at press time the VSCPA was crafting its response. Members are also encouraged to offer their own comments here.

In a nutshell, this draft proposes a new, alternative pathway prospective CPAs could take to licensure. In lieu of a master’s degree or 30 additional higher education credits, candidates could complete a one-year competency-based experience pathway in addition to having a baccalaureate degree, coursework satisfying accounting concentration requirements, one year of general accounting experience and taking the CPA Exam. The draft details what would be considered competency-based experience, and at the end of their one-year experience term, candidates’ competencies would be evaluated by a “CPA Evaluator” on a form or via a national tracking system. 

In its comments, the VSCPA identified several problems with this model, such as a lack of an objective and standardized process for competency assessment, new regulatory burdens put on state boards of accountancy, and others. 

Members of the Virginia Board of Accountancy (VBOA) briefly discussed the draft at their Oct. 22, 2024, meeting, and plan to finalize comments at its Dec. 5 meeting. Several Board members voiced similar concerns to the VSCPA.

Proposed UAA changes

After the pathway exposure draft was released, the AICPA and NASBA issued another draft to propose changes to the Uniform Accountancy Act (UAA). The UAA is model law used by states and their accountancy boards to develop legislation and regulation for the CPA profession in that jurisdiction. Comments are due by Dec. 30, 2024.

Changes in the draft include adoptions of the competency-based experience pathway (detailed above), protecting interstate practice for CPA, specifying the requirement to sit for the CPA Exam, and updating substantial equivalency language as it relates to practice mobility. It’s important to note that the draft does not eliminate the 150-hour pathway but instead adds the competency-based experience pathway as an alternative. 

In its comments, the VSCPA raised significant concerns about the substantial equivalency section and we advocate that automatic mobility for anyone with a CPA license in good standing (in which the CPA license is treated similar to a driver’s license) would provide better protection to the public.

Virginia legislation

This fall, VSCPA President & CEO Stephanie Peters, CAE, announced the Society’s intention to work with lawmakers and the VBOA on legislation that would address the profession’s pipeline challenges. At press time, VSCPA leaders, members, staff and legislative counsel were crafting legislation to be introduced in the 2025 Virginia General Assembly session.

States around the country are not waiting to act, and neither are we. Our bill will include language that adds an additional pathway to CPA licensure: a baccalaureate degree with an accounting concentration, two years of experience, and passage of the CPA Exam. Additionally, it will ensure continued practice mobility for out-of-state CPAs to practice in the Commonwealth.

“We currently have patrons secured for the bill, as well as the support of VSCPA member Rep.  Joe McNamara, CPA,” Walker said. “We’re excited to move forward in Virginia with providing a new alternative to attract students to the CPA profession.”

We’ll need the support and advocacy of VSCPA members to communicate with legislators about the importance of the bill; stay tuned to our newsletters and emails for how you can easily get involved.