In 2019, the American Institute of CPAs released a research report whose findings were alarming for the accounting profession.
According to the report, hiring of new accounting graduates declined 11% since the previous trends report in 2016, with the number having fallen a whopping 30% across the previous two reports. But this didn’t reflect less hiring among CPA firms; non-accounting hires in public accounting firms increased by 11 percentage points to nearly a third of total staff. This trend reflects the evolution of the accounting profession, which requires accounting firms to rely heavily on technology and data analysis. The narrative gleaned from these findings was that accounting curricula — and the CPA exam itself — were behind the times and the needs of the industry itself.
The AICPA and the National Association of State Boards of Accountancy responded with a “gap analysis” to determine specifically the areas that are becoming increasingly important to the profession, finding these areas include data analytics and IT audit, but even more so cybersecurity, IT governance and systems and organization control engagements. This culminated with the release last month of the AICPA’s long-awaited exposure draft detailing its proposal for the structure and content of the new CPA exam, which will launch in 2024. This means that current accounting students graduating after 2023 will be taking the new exam, as will any other students who may graduate before then but take it after 2023.
The process by which the proposed new exam was devised is called CPA Evolution, an initiative by the AICPA and NASBA to identify the most important trends and skills gaps in the accounting profession. The proposed CPA Exam Blueprint tells us not just what the future CPA exam will look like, but the direction in which the profession itself is going and what the public accountant of the coming decade will be doing. Before we explore the bigger picture, though, let’s look at the details of the exposure draft.
Accounting faculty and employers, as well as students who will take the CPA exam in 2024 and beyond, should be closely reviewing the exposure draft, especially as the AICPA’s public comment period ends on Sept. 30.
The proposed changes to the exam structure merit attention, with a shift from the current four exam sections to three “Core” sections: Financial Auditing and Reporting (FAR), Auditing and Attestation (AUD), and Taxation and Regulation (REG) plus three “Discipline” tracks, of which a CPA candidate needs to pass one. These tracks are as follows: Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), and Tax Compliance and Planning (TCP).
This change might appear to be adding more to the CPA exam, but at the Core level these changes represent a streamlining of the content currently covered on the exam, which will make it easier to study for the Core exams and allow candidates to focus on more difficult and career-specific content on their chosen Discipline exam.
The proposed changes to the exam content are also notable. One is that technology and data are more thoroughly integrated into the blueprint than ever before — both in the mandatory Core sections and in the Discipline tracks. This will be accomplished by testing the candidates’ understanding of the role of data in IT systems, using that data to make key decisions, verifying the accuracy of data and using the outputs of automated tools, visualizations and data analytic techniques.
In addition, there is an increased focus on IT audits, especially SOC engagements. Data-derived decision making is also emphasized, and so is decision making more broadly. Additionally, there is now a Personal Financial Advisory Services module in the TCP Discipline, which is indicative of increased demand for tax planning around personal wealth related to estate, gift, trust and retirement issues.
So, what do all these changes say about the accounting profession as we go into the mid-2020s and beyond? How is our field changing, what are the weaknesses and opportunities, and what competencies will CPAs need in the future?
First, the future accountant will be more specialized. This is reflected in the plan to replace the four mandatory sections with three mandatory Core sections and then one of three Discipline sections. Students contemplating a career in accounting but concerned about the breadth of the CPA exam should welcome this change; it will allow them to better focus on the career track and/or the type of organization in which they want to work, as well as pursue a track that matches their skills and interests. This can be a game-changer for students concerned about their ability to master all four current sections; it means they will be able to better tailor their studies to what they are good at, meaning less stress over courses and the exam itself. And firms wary of hiring CPAs they may see as generalists will be able to select more specialized and focused new hires based on what Discipline track they pursued.
Secondly, passing the CPA exam will show the newly licensed CPA has the tech skills expected today. The heavy emphasis on technology, data and IT audit in the AICPA blueprint is aimed squarely at overcoming the current gap that makes accounting firms look beyond the CPA pool for employees. In line with the exam changes, the AICPA introduced the CPA Evolution Model Curriculum, which outlines the topics accounting programs should include in their curriculum to better acquaint students with the latest topics and technology used in the field, allowing CPAs to do more in the tech space than ever before, or at least to better understand how technology and data can be used to glean insights for decision making.
Students and instructors alike may be wary of these changes, but they have been crafted with the direction of the profession in mind and embody the future of accounting. They will also in many ways make things simpler for aspiring CPAs, as they streamline the preparation for the exam in addition to introducing new competencies. And for the profession as a whole, it represents moving with the times to continuously evolve in line with the needs of a changing world.
