The CPA (Exam) Evolution

The Evolutionary Process

The AICPA and NASBA initiated the CPA Evolution project in 2017 to examine CPA licensure and determine whether there were opportunities to improve the certification process and better address the challenges facing the profession. In particular, there was a widely held perspective that technology needed to be better integrated into the CPA Exam. Consequently, the AICPA and NASBA wanted to explore the impact of technology on the profession and better incorporate these impacts in the CPA licensure process.

Exhibit 1 provides a timeline and summary of the overall process and the activities used to develop the CPA Evolution licensure model. At each step throughout the CPA Evolution process, the AICPA and NASBA have thoroughly researched, generated ideas for, and actively sought stakeholder engagement and feedback. As a result of these efforts, they have received feedback from more than 3,000 stakeholders, including representatives from state CPA societies, firms of all sizes, academia, federal regulators, and students. The research and feedback have been utilized to identify the transformation occurring in the profession and to address how the CPA exam could become a better tool moving forward.

Although the initial motivation for the CPA Evolution project was the increasing pervasiveness of technology, feedback received from stakeholders indicated that there were other areas of transformation and concern that need to be addressed. Ultimately, stakeholder feedback indicated widespread consensus emerged on several themes: 1) licen-sure needs to change; 2) while technology needs to be better integrated into the exam and curricula, CPAs should not lose sight of the core professional pillars of accounting, auditing, and taxation; and 3) while technology has taken on increased prominence, there are also other significant factors to be considered that are altering the landscape of the profession. For example, there has been a dramatic growth in the volume of accounting and auditing standards, as well as the Internal Revenue Code. Research by the AICPA and Wolters Kluwer noted that, since 1980, there are three times as many pages of the Internal Revenue Code, four times as many accounting standards, and five times as many auditing standards.

In addition to the growth in the body of knowledge required for accountants, the responsibilities of newly licensed CPAs have been transformed. Much of the work that was performed in the past by newly hired CPAs has now been automated, off-shored, or done by paraprofessionals. As a result, entry-level accountants are now performing tasks requiring strong critical thinking skills, advanced problem-solving skills, and sound professional judgment.

New Licensure Model

With the changing marketplace and growth in the body of knowledge required of CPA candidates, there have been concerns that the current approach to licensure is not sustainable. To identify other potential options, the CPA Evolution Working Group examined a variety of licensure models used in the United States as well as around the world. The models evaluated ranged from the certification approaches used in the United States by legal, medical, and engineering fields to the certification approaches used for accountants internationally.

Ultimately, the Working Group chose a “Core + Discipline” approach similar to the model used for professional engineers. The certification for Professional Engineers prescribes that all candidates take an exam on core concepts or the core body of knowledge that is required to be known by all engineers (i.e., the Fundamentals of Engineering exam). After passing the exam on the core material, candidates then take an additional exam requiring more depth; this Principles and Practices of Engineering exam tests the candidate for a minimum level of competency in a specific engineering discipline (e.g., chemical, civil, nuclear, structural). In the case of engineers, each exam is eight hours long. Once both exams are passed, regardless of the specialty, all engineers receive the same Professional Engineer certification. This is a significant point because a Professional Engineer is not limited to signing documents related only to the area of specialty that they passed, but are allowed to sign, seal, and submit engineering plans in any area in which they are competent.

For CPA licensure, the AICPA and NASBA have recommended that the accounting profession transition to an approach similar to engineers. Although the demands of the accounting profession have evolved and the body of knowledge required of candidates has expanded dramatically, the format of the exam has remained virtually unchanged. Essentially, there is a perception that the exam has merely stretched to cover more material in less depth. The current approach to the CPA exam provides little flexibility and fails to incorporate technology. As a result, the CPA Evolution Working Group decided that the exam needs to be re-envisioned.

Under the “Core + Discipline” model now recommended by the AICPA and NASBA (see Exhibit 2), all CPA candidates will be tested on a common core comprising knowledge in accounting, auditing, taxation, and technology; accounting, auditing, and taxation thus will remain central to the exam and licensure. Because technology is one of the primary disrupters of the accounting profession, however, it will be added in an intentional and significant way to the CPA certification. Then, in addition to the core, each candidate will choose one area in which to specialize. Three planned choices of specialty currently include: 1) taxation compliance and planning, 2) business reporting and analysis, or 3) information systems and control. Regardless of which of the three disciplines a CPA candidate chooses, the result will be full CPA licensure; therefore, there will be no “splintering” of the credential, no CPA-Audit, CPA-Tax, or CPA-Information Systems.

The “Core + Discipline” model provides several advantages. This model maintains the foundational importance of accounting, auditing, and taxation while also addressing the growing importance of technology, better reflecting the reality of the profession. This approach will also provide a mechanism to test for deeper knowledge and higher-order skills within a candidate’s chosen discipline. Because the profession expects new hires to possess these skills and abilities, they will take on an increased prominence in academic curricula as well as the CPA Exam.

The process of building these skills into the CPA Exam began in an intentional way with the introduction of the Uniform CPA Blueprints. The AICPA Board of Examiners initially published the first Uniform CPA Blueprints on February 11, 2016, which became effective on April 1, 2017. These Blueprints were developed based on the revised Bloom’s Taxonomy of Educational Objectives (see Exhibit 3). Bloom’s Taxonomy, initially published in 1956, is widely used by educational institutions in developing curriculum and pedagogy. [For the original taxonomy, see Bloom, B.S. (ed.), Engelhart, M.D., Furst, E.J., Hill, W.H., and Krathwohl, D.R., Taxonomy of Educational Objectives: The Classification of Educational Goals. Handbook 1: Cognitive Domain, David McKay (1956); for revised taxonomy, see Anderson, L.W. and Krathwohl, D.R. (eds.), Airasian, P.W., Cruikshank, K.A., Mayer, R.E., Pintrich, P.R., Raths, J., and Wittrock, M.C., A Taxonomy for Learning, Teaching, and Assessing: A Revision of Bloom’s Taxonomy of Educational Objectives (Complete Edition), Longman (2001).] Bloom’s Taxonomy provides a continuum of categories of educational goals, from simple to complex and concrete to abstract. This framework is used in examining approaches to instruction and assessment. Given the increased need for new accountants to have strong critical thinking skills, advanced problem-solving skills, and sound professional judgment, the Taxonomy and Blueprints should prove even more useful in the design of the new CPA Exam. While the current approach allows candidates to demonstrate that they know a little about a lot of things, the new “Disciplines” section will allow candidates to exhibit deeper skills in a specific area. In other words, Disciplines will provide increased opportunities for candidates to exhibit more abstract critical thinking skills with a deeper grasp of the complexities in one area.

The “Core + Disciplines” model also provides significant flexibility to the credential and the profession in the future. As the profession and marketplace continue to evolve, Disciplines will provide a mechanism to add new specialties (or potentially take them away). Consequently, it should provide a model for licensure that will remain relevant for years to come, while also enhancing the protection of the public interest.

Moving Forward

The recommended changes are substantive and substantial, and will require thoughtful deliberation to move this new model forward. The AICPA and NASBA have proposed a multiyear effort to prepare for the change and have recommended a January 2024 launch for the new exam. A transition plan will be developed for candidates who are in the process of completing all sections of the CPA Exam at the time of the launch. The changes to licensure will not impact individuals who are already certified.

The redesign of the CPA Exam will require extensive effort and coordination both in terms of: 1) the changes in the exam itself and 2) the required changes to educational programs and curricula. With regard to the changes in the exam, there will need to give thoughtful, thorough consideration to the design and content of the core—and to the design and content—of each discipline. This process will involve formal practice analysis, research, and extensive testing of the exam subject matter and potential questions to be used. Designing any exam is a demanding, purposeful process, made all the more difficult with the breadth and complexities of the CPA Exam.

Educational programs and curricula will need to be responsive to the new content and coverage of the CPA Exam. While many colleges and universities currently have the necessary courses or specialty tracks in place, many smaller and midsize colleges will need time to adapt. Thus, the content changes will need to be adequately communicated on a timely basis so that academic programs and pedagogies have time to adapt to the new requirements. The lead time required to design new courses and programs, and secure their approval, can be extensive.

As the profession prepares for the evolution of the CPA Exam over the next three years, the effort will continue to require thoughtful deliberation, planning, and communication. Although the time and effort required to successfully accomplish this transition will be extensive, it will result in a professional credential that better reflects current accounting practice and should keep the CPA credential relevant for years to come.