[US] EY, PwC voice cautious support for 120-credit hour CPA licensure
Oct. 18, 2024
The Big Four accounting firms are now all signalling varied degrees of support for a CPA licensure option that would require 30 fewer college credit hours.
Big Four accounting and consulting firms Ernst & Young and PricewaterhouseCoopers are lending cautious support for an alternative route to licensure for certified public accountants that would allow CPA candidates to substitute professional experience for 30 of the 150 college credit hours that are typically required, according to separate statements from the two firms.
“PwC has always focused on helping to create new avenues for entry and offering greater access to the profession for aspiring talent. Our firm is supportive of alternative pathways into accounting that preserve mobility and help increase the number of aspiring professionals attain their CPA,” the company said in the statement emailed Friday to CFO Dive.
Asked if that included the route that would require fewer academic credits, a spokesperson said PwC is “supportive of 120-hour credit alternatives” but declined to comment further.
Meanwhile, a spokesperson for EY on Thursday also expressed careful support for alternative pathways, although they declined to answer whether it was actively engaged in lobbying for the alternative 120-hour pathway.
“We continue to be encouraged by efforts to address the additional 30 hours of education by other pathways and support taking a profession-based approach that does not disrupt or dismantle the system of mobility for practice,” the EY spokesperson said. EY US is also seeking to build the talent pipeline with its recent pledge to invest $1 billion over the next three years to enhance early career experiences with higher starting salaries and various technology initiatives, the spokesperson said.
Asked whether EY was actively lobbying for the 120-credit hour option, the spokesperson said EY was “carefully vetting the Exposure Drafts and other potential changes and [continues] to be actively engaged in the dialogue,” referring to a proposal for the alternative paths put forward by the American Institute of Certified Public Accountants.
With PwC and EY’s latest statements, all the Big Four accounting firms appear to be coalescing around alternative CPA track options, with varied support for the proposed amendment which could cut the amount of schooling needed for licensure in order to tackle the accounting shortage and the shrinking pipeline of students majoring in accounting. KPMG appeared to offer the strongest support for the 120-hour credit option last week.
KPMG U.S. Chair and CEO Paul Knopp gave a full-throated endorsement for the 120-credit hour initiative that would allow CPAs to become licensed by replacing work experience for what is effectively a fifth year of college, CFO Dive previously reported. In a statement, Knopp called the accounting talent shortage a “brewing crisis” that will affect both accounting firms and corporations that depend on them for their audits and financial reports.
“The cost of becoming a CPA has become too high, including both the cost of the extra education and the opportunity cost of spending an extra year in school,” Knopp said in a statement shared with CFO Dive.
The Big Four firms’ support comes about a month after the AICPA 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 the changes 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.”
When Deloitte expressed its views on the matter last week, the firm also emphasized 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 carefully worded support coming from most of the firms, barring KPMG, may stem from the nature of the proposal that was detailed in the AICPA’s exposure draft that is now out for comment, according to Jack Castonguay, an associate professor of accounting at New York’s Hofstra University. As the final draft may evolve, the firms may not want to have to retract support later on, he said.
In addition, he speculated that Big Four firms may not need to support a proposal aimed at reducing credit hours because they are already actively getting much or their entry-level tax and audit work done by tapping automation, AI and offshoring.
“All of the Big-Four have had layoffs in the last couple of years despite broader industry pipeline and staffing concerns, which would indicate that they don’t think they need higher headcount now or in the near future,” Castonguay said in an emailed response to questions. “I think it’s very possible the support is soft because they already believed they have found a solution at their firms.”
[CFO Dive]
