Dive Brief:
Big Four accounting firm Deloitte added its voice to the growing industry call for an alternative pathway to become a certified public accountant, which would replace 30 of the 150 college credit hours typically required for licensure with work experience according to a statement emailed to CFO Dive by a firm spokesperson.
“Attracting more CPAs is good for our profession and serves the public interest, so as an alternative to the current fifth year education requirement for CPA licensing, Deloitte is supportive of experience-based pathways to licensure,” Deloitte stated in the email Thursday.
Deloitte made clear its position late last week, after another Big Four accounting firm — KPMG — offered its full-throated support for the proposal that is gaining momentum in the industry. KPMG U.S. Chair and CEO Paul Knopp on Wednesday said that the accounting talent shortage was a “brewing crisis” that needs to be addressed in the “near term,” CFO Dive previously reported.
Dive Insight:
Two Big Four firms have gone public with their support about a month after the American Institute of CPAs shifted its stance on the issue and, in about-turn, officially moved ahead with adding more paths and flexibility to licensure in order to tackle the accounting talent shortage.
The accounting association had previously raised objections to cutting the hourly credit requirement, citing concerns that it could lead to a patchwork of varied state licensure rules that could prevent CPAs from being able to work in any state, a concept known as “mobility.” That concept is tied to the currently uniform approach to licensing that has prevailed in recent decades across states, CFO Dive previously reported.
Deloitte underscored the need for continued mobility in its statement. “As a national firm, we also believe that any changes should support automatic mobility to ensure that all CPAs are able to practice across all US jurisdictions regardless of the pathway pursued to licensure,” it said.
The support from the Big Four firms will be key to the initiative moving forward, according to Jack Castonguay, associate professor of accounting at Hofstra University. Legislation to set up an alternative path to licensure in Minnesota that stalled did not, to his knowledge, obtain Big Four support, he noted in an emailed response to questions from CFO Dive.
“This is significant,” Castonguay said. “Without support from the Big 4 firms I doubt the AICPA and NASBA would have even released the exposure draft. They need their support to enact meaningful changes to the [Uniform Accountancy Act].”
The 150-hour credit rule was costly to students, though studies showed that the extra 30 credit hours had no impact on the quality of audits or CPA candidates, he said, adding that it makes sense firms would back something that fixes a system that is shown to have no value, but has greatly reduced the pipeline.
“Plus, it’s largely costless to [the Big Four] — supporting the move incurs no incremental expenses to their training models. They have to train new hires regardless, whether they have 120 hours or 150 hours,” Castonguay said.
Separately, many in the industry are also pushing for higher starting accounting salaries, which is key to leveling the playing field with other finance majors, which often receive higher pay immediately after graduation, CFO Dive previously reported. Mean starting salaries for accounting and related services majors stood at $60,698 in 2022, the lowest of seven business-related majors, according to a report that cited information from the National Association of Colleges and Employers.
Deloitte was not immediately available to respond to requests for further comment to clarify the extent of its support. The Big Four accounting firms PwC and Ernst & Young also did not immediately respond to a request for comment.