You've likely heard about the 150-hour education requirement for CPA licensure and heard talk of potential changes in some states. And most of that has centered around public accounting. As someone who has spent much of my career on the business and industry side of the accounting profession, I will address how changing licensure requirements could affect businesses.
Leaders in business and industry are acutely aware of the accounting profession’s talent shortage. They experience it, too, in terms of CPA staff they need to hire and firms they want to engage for services. Many finance executives, like others, think changing the education requirement would deliver a quick fix. It just isn’t that simple.
Some background
After obtaining their license, CPAs have the flexibility to practice outside their home state — both in-person and online — without having to get additional state-by-state licenses. This is thanks to the concept of “substantial equivalency,” which underpins CPA mobility. However, some states are exploring altering education requirements for CPA licensure, which could disrupt mobility.
So, what would it mean to revert to pre-mobility regulations, with each state having its own licensure requirements, which might — or might not be — the same or similar to others?
First, you'll have to make sure you meet the other state’s licensure requirements. That could mean you’d have to dig up your college transcripts to ensure you've taken all the right courses. And if you didn't quite hit the mark? You might have to sign up for extra classes to meet those state-specific licensure requirements.
Then you’d have to submit the licensure application, which may include a permit to practice, and pay applicable fees. This process isn’t fast or easy. With CPA mobility, though, you can just do your job or serve clients without this paperwork burden or extra expense.
Effects on hiring and operational costs
Now let's explore how changes to mobility could affect hiring and operating expenses.
For businesses engaging accounting or auditing firms across different states, changes in CPA licensure could result in increased costs. Moreover, compliance that right now is relatively simple would get infinitely more complex. For example, as an employer, you’d have to manage each remote worker’s various licenses and CPE state by state.
You can’t sidestep this complexity by hiring non-CPA staff. A CPA license is a key qualification for global controller or compliance positions that manage regulatory issues with the U.S. Securities and Exchange Commission or banks, among others.
Considering the effects of changing CPA licensure requirements on hiring and operational costs, let's look at some examples.
Imagine a company that has embraced remote work and is seeking to hire a controller who lives out of state. Under current CPA mobility regulations, this would typically pose minimal barriers as the controller could practice without additional state licenses. However, if licensure requirements revert to pre-mobility regulations, the organization would face the hurdles of ensuring the controller meets the licensure requirements of the state where the company is based. And the chosen candidate likely would want the company to pay any necessary fees and expenses.
The potential employee might need to take additional coursework or examinations. Additionally, the business would need to manage the complexities of getting and maintaining licensure for a remote worker across different states, increasing administrative burdens and costs associated with compliance.
Now let’s consider another scenario: A company wants to hire a particular CPA firm because of its expertise in a niche service area and needs the firm for tax, accounting, assurance, and auditing services, but the CPA firm is licensed in a different state.
Today, under existing CPA mobility regulations, the company can easily engage the out-of-state CPA firm without additional administrative barriers or expenses. If licensure requirements change, the company will face challenges as it has to navigate varying licensure requirements across different states, potentially leading to delays in securing the services of the CPA firm they want to hire.
The business could also incur additional costs and burdens associated with ensuring compliance with differing state regulations, like getting temporary licenses or engaging local CPA firms to supplement the services provided by the out-of-state firm.
My examples talked about one hire by one company. Imagine having to go through these hoops for many staff positions on an ongoing basis? And who wouldn’t want the ability to choose the firm they want to hire to perform the quality services they need? Location shouldn’t matter, especially nowadays.
Finance executives agree with CPA mobility
After I discussed the history of mobility and the 150-hour credit requirement at a Global Pharma Controllers Conference in May 2023, which was attended by more than 80 controllers representing pharmaceutical companies, the audience was surveyed. The 150-hour credit requirement came in fourth place among the top issues affecting the talent pipeline. What ranked at the top? The highest priorities were making the profession more attractive through increased salaries, improved career growth opportunities and better work-life balance.
At the Financial Executives International Committee on Corporate Reporting online event in June 2023, the 150-hour education requirement was consistently ranked fifth or sixth among the issues that limit candidates from entering the CPA profession. Again, the 150-hour education requirement wasn’t among the top three.
I’ve met with several other groups of finance executives and have gotten the same result. Once they understand the effects on the business of changing state CPA licensure requirements, they prefer to keep CPA mobility and focus instead on more efficient and effective ways to attract CPAs.
How you can learn more
Many initiatives are underway to help boost the CPA talent pool. They are delivering results and show promise. We just need to stay the course. Bookmark the Pipeline Acceleration Plan webpage to see how the AICPA is working to grow the pipeline.
Achieving CPA mobility took 10 years of significant legislative efforts, and letting it unravel would be a consequential mistake for our profession. To learn more about CPA mobility and why it’s critical to the profession, visit the Protecting CPA mobility resource page.