As the profession grapples with lower numbers of people becoming accountants and CPAs, discussions about what it should take to become a CPA have proliferated; in this episode, Pennsylvania Institute of CPAs CEO Jennifer Cryder dives into why and how new paths to getting licensed are opening up.
Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Dan Hood (00:04):
Welcome to On the Air With Accounting. Today I’m editor-in-chief Dan Hood. Getting a CPA license isn’t supposed to be easy, but a lot of people have been asking whether it’s prohibitively hard, particularly given the accounting profession’s current difficulty attracting staff. That’s led to a national discussion on the current path to CPA licensure and potential future paths, and it’s being explored at all levels of the profession. Here to talk about all that, it’s Jennifer Cryder, she’s the CEO of the Pennsylvania Institute of CPAs. Jen, thanks for joining us,
Jennifer Cryder (00:29):
Jen. Thanks for having me.
Dan Hood (00:31):
It is a fascinating discussion. As I said, it’s going on at all levels. It’s in states at the national level in colleges and universities and so on, and we’re seeing a lot more interest than we’ve had for a long time in changing the requirements to become A CPA, again, both nationally and at the state level. What’s driving all that?
Jennifer Cryder (00:51):
Well, I think it started a couple of years ago when the profession was experiencing this really critical crunch for talent, and I think that crunch was the result of a lot of factors accelerating that had been in place for a long time and really built very quickly when the pandemic hit so demographic factors and firm business model and starting salaries and college and university supply chain issues. All of them converged into this perfect storm where I think we found ourselves with this really acute need to rethink talent and we looked at licensure among many other things. As I watch how that has changed over the last two years, though, I think the profession has taken that starting point and really shifted the conversation to this bigger almost existential question of why are we CPAs, what does that mean and what does it mean to be a CPA in the future? And so I’m somebody that believes really good outcomes come from great debate, and I have been so interested to watch that happen over the last couple of years in the profession because I think it has caused all of us, not just people in associations like mine, but for leaders, students evaluating our profession, the average CPA in an accounting department. I’m seeing everybody stop and ask that question, what’s it mean to be a CPA going forward? Which I think is a great outcome.
Dan Hood (02:16):
Right. No, well, it’s a great discussion. It’s well worth having. It’s interesting because there’ve been changes to the CPA exam mood for a long time in there. They’re coming into play about adding a technology element to it and sort of the hub and spoke model, and that had been the discussion that’s been in place for quite some time, but it hadn’t really led to, as you said, the sort of broader existential question that’s really arisen over the last few years. And one of the things I was fascinated by is the National Pipeline Advisory Group report. One of the things hearing people from that talk about what spurred their thinking and some of their ideas around the licensure was they were talking to people at colleges and discovering that colleges are looking ahead to maybe only a three year degree as opposed to a four year and changing all their models enormously, which would obviously have repercussions for accounting. So there were all these factors outside of the profession that made it really important to have the conversation. So as you say, it’s fascinating and interesting and useful to be opening up these issues that hadn’t been for a while.
Jennifer Cryder (03:17):
Exactly. I don’t know that anybody put that on their agenda if we were making our goals two or three years ago. I don’t know that anybody put that on the agenda, but I think it’s been a great outcome of all the work and time and energy, many, many, many leaders of the profession have contributed.
Dan Hood (03:34):
It’s, it’s a fascinating discussion. I want to talk, we talked about the need for talent and the broader pipeline issue, and as you mentioned, there’s a lot of things going into the pipeline problem of not enough people entering accounting, and then on top of that, not enough people becoming CPAs. For a long time, a lot of people had sort of fixated on the 150 hour rule and specifically that part of getting CPA licensure. There are some other things that people pointed to, but that was really one of the big ones. But as you say, there’s a lot of other factors that have gone into that. Demographics have gone into that competition from other industries, et cetera, et cetera. It’s certainly not just the 150 hour rule by any stretch of the imagination, but there are, it is obviously it’s a difficult license to get. It’s a difficult thing to become a CPA and as I said, we want to keep it that way. But is there a sense, do you have any sense of how much the difficulty of becoming a CPA might’ve contributed to the overall pipeline issue?
Jennifer Cryder (04:30):
I have some sense because within PICPA, we did some research earlier this year. I guess it’s because I am a CPA and have that mindset where anytime I encounter a problem, I think let’s go back to the data and figure out what’s driving that problem so we can get the right solution to it. And so we did some research on pipeline and also retention in firms, and we found among business school students including accounting majors, but not just accounting majors, so those that have already chosen our profession and those that maybe aren’t, we asked them what was the big determining factor in choosing to pursue the CPA license in both of those categories, business school students, accounting students, they had the same top answer. They told us that the return on time invested was not worth it. So it was so interesting to see that same answer among both groups because oftentimes we’re asking people that have a selection bias, people that are already in the profession, but when you ask the people that are saying, no, thanks, I’m good.
(05:28):
They had the same answer, and that evaluation to me sounds like a really smart CPA, right? I’m going to look at the amount of time that I’ve got to invest to earn this, and then I’m going to look at the payoff and if I don’t judge that to be worth it, I’m not going to do it. So that’s where I think we get to some supply side factors and some demand side factors. Looking at the licensure model, like you said, is one of a couple of levers that we’ve got to work on pulling, but it’s not the only one because that return on time invested has to pay off afterward when they join the profession and go to work at the same time that our supply chain of talent colleges and universities are undergoing this massive shift.
Dan Hood (06:11):
Right. Well, I mean that’s an existential issue that’s beyond just, Hey, it’s kind of difficult and I want to try something out. It costs an extra year of college and I don’t afford it, blah, blah. That’s different from, yeah, it’s just not worth it. That’s a basic, there’s nothing you could do about that except look at what’s the value proposition you’re offering, and it’s so much beyond, like I said, an extra 30 credit hours or maybe I’ll be better off going into tech or something like that. It’s a fundamental thing to restate the value of the accounting profession and of CPA licensure.
Jennifer Cryder (06:44):
Absolutely. I talk to different stakeholder groups in the profession and in the role that I’m lucky enough to have, and when I’m talking to colleges and universities, you can imagine there’s some trepidation about changing, especially when we’re talking about the education requirement. Likewise, when I’m talking to firm partner groups or a firm like full team meeting and I’m talking about starting salaries and making the experience within a firm different and a place where somebody wants to stay and build a career, these are often unpopular messages, but I think it’s helpful to frame them all within. We are all in this ecosystem together and we all have a role to play in kind of a swim lane here, and so we’ve each got to do our part in solving for that. We can’t just point to a different stakeholder group and say, Hey, this is your problem to fix, but we’ve got to all do it together because if we don’t, the pendulum’s going to swing, even if the talent crunch is a little bit eased right now, and I’m hearing that from a lot of firms and hiring managers, not all, but many, certainly the population’s coming into the workforce are far smaller, so we are absolutely going to find ourselves back in that situation again, if we’re not careful, we’re talking about how do we think about this as a long-term human capital strategy for the profession so that we don’t end up back where we were before.
Dan Hood (08:03):
It is one of those, I think in a way that’s unusual compared to other industries, compared to any other industry or almost any other profession. There is a need for accountants, certainly public accountants if accounting firms, to really think long-term about their human capital because so much of the model is, you work for me now and then 20 years when I retire, you pay for my retirement. It’s really based on making sure people are around for a long time in a way that a lot of other industries or professions don’t really have that long-term need.
Jennifer Cryder (08:34):
Absolutely. That model we’re seeing this doesn’t really resonate with the generations coming into the workforce. Certainly they’re looking for stability and meaningful work. Our research was very clear that those were the top things that attracted a high school student to an accounting major, but that doesn’t come at the expense of, I’m going to wait around for 20 years until I get to that chair.
Dan Hood (09:00):
Right, right. Because a big part of the, the value of it is yes, there’s value. Maybe when you actually look at the full equation, you can say, yes, there’s value, but it’s value in 20 or 40 years. I’ve got student loans now and firms offering me inflated salaries now and jumping around makes sense for me now as opposed to sticking with your firm for a long time so that I can pay for your retirement. The answer, their answer to your question makes a lot more sense when you start thinking about things like that.
Jennifer Cryder (09:29):
It totally does. I will never forget, I was talking to a group of first year staff at a firm and I threw out a stat. It used to be that if you got the CPA license, you could expect to make a million dollars more over the course of your career. I’ve heard that number’s really ticked up to maybe closer to 3 million. And so I threw out that stat in early career professional, and this person looked me dead in the eye and said, I don’t care. It sort of took my breath away for a second because I grew up in a firm and I grew up always striving for that, and I thought, okay, wow, this change is real and it’s substantial and it’s not going away, so we’ve got to adapt to it.
Dan Hood (10:09):
Yeah, that’s saying you are not going to change the rising generations to get them to think differently. They have a, and for better or worse, there’s nothing. In many ways I understand their thinking, particularly when they look and say, yeah, I’m not sure we’re going to be here. We may be climate change may destroy everything or the singularity or artificial intelligence, and there’s really no point in thinking that long term. And also, but just personally, some of them think, I may not want to do this in 10 years. I may want to go work for a nonprofit, or I may want to go try something different. And I think in some ways it’s a very healthy attitude, but in some ways it’s playing havoc with the current accounting firm model.
Jennifer Cryder (10:43):
Absolutely, and I see a real range in outcomes depending on the way the leaders of the team or the department or the firm or the company react and respond to that.
Dan Hood (10:54):
Right. That’s the thing, right? It doesn’t require this thing, particularly in the last few years as you note, since the pandemic require response in a way that for a long time I think firms will bumble along and get along without solving this problem, but now they really have to. We’ve started gone a little bit broader on this. It is everything you touch and any of these issues ends up touching something else and pulling some string. I want to come back to talk a little bit more about, specifically about CPA licensure, though again, all these things are interconnected and fascinating to think about because I know that the PICPA has been looking into not just the research you’ve done about what keeps people, gets people into and keeps them in the profession, but also you’ve been looking at some alternative ways for people to get into CPA licensure. But before we do that, I’m going to take a quick break.
(11:47):
Alright. And we’re back with Jen Cryder of the Pennsylvania Institute of CPAs and we’re talking about, well, we talking about the broad issues with the pipeline in the accounting profession and we’re also talking specifically about the issues around getting people to not just come into the profession but pursue their CPA license. And as I mentioned before the break, Pennsylvania has looked at alternatives to alternative ways for people to earn their CPA license. I mentioned the 150 hour rule, just it was a flashpoint. It’s certainly not the only issue, but for some people it was. What Can you tell me about some of the things you’ve looked at in Pennsylvania? Different ways for people to earn their license?
Jennifer Cryder (12:26):
Yes. We, beginning two or three years ago, started having a lot of focus on work and learn models. So before the profession really was ready to talk about changing the licensure requirements, I thought, alright, well what are some practical ways to solve for the time and cost of licensure? And I found colleges and universities across Pennsylvania doing some really fantastic stuff with work and learn models that fit within the licensure structure as it currently and previously has existed. So schools that are able to get really creative with giving credits for either internship or work experience, I found a number of schools that are really creatively building in CPA exam review courses to their programs. Oftentimes they run into issues with accreditation on that, but for the schools that are small, I found a couple community colleges and smaller schools where they’re maybe not accredited by sort of the leading A CSB, but they’re alternate accreditor gives them this incredible advantage to build the review courses in.
(13:30):
And so it’s been a real differentiator for them to attract students that need to be at the lower price point and get real tangible value out of their college education. So I still am a big believer in work and learn models and credit for work experience. I think the ELE program that AICPA and NASBA have built is fantastic. Interestingly though, seeing the profession once simple and so I have not seen work and learn models take off in the last two or three years in the way that I had been optimistic for or hopeful for. And I think that’s where the licensure discussion really came front and center in this past year because as we were all trying to build out work and learn models, it took a process that was already pretty complicated and added some extra complexity,
Dan Hood (14:19):
Added a layer and right as you say, that is not a process that needs any more complexity particularly this was a fascinating thing, not a CPA and I’ve never had to take the CPA exam nor would I be any good at it. So it’s a good thing I didn’t, but you hear some of people are preparing for it and studying for it, I’m working on it. Some of the process around that is kind of broken in terms of when you get your results and how you get your results and what things are when it comes finally going to actually get your license and bringing all your different requirements together that it’s difficult to do and it’s difficult to make sure they’re all in the right place and to know how to submit them and so on. And some of the time windows don’t match up within a single state, those sort of issues. So it is a very complicated thing. It doesn’t need to be any more complicated, but then to make it simple really would require changes maybe at a higher level than you can do with bringing in some of these experimental programs.
Jennifer Cryder (15:19):
I think that’s a fair assessment and I think that’s how the profession ended up moving on. Licensure, there’s a lot of momentum right now. So across the country, many states are starting to think about opening their statute to make changes for licensure. One of those goals is simplicity, because we’re hearing from students all the time about their confusion. I get tons of outreach from students saying, I’m not sure how the process works, who handles what? And so I think certainly simplifying licensure can help there. I also think there’s a technology solution as that is advancing. There’s got to be ways to leverage technology to make the experience more seamless for a candidate.
Dan Hood (16:02):
Yeah, well yeah, exactly. It should be. That should not be the hard part of CPA licensure. The knowledge and the exam should be the hard part, not the paperwork and the filing sort of thing. It’s interesting, as we said, I said, I know you all have been experimenting with it, looking at different things and as you say, other states are looking at that. When you talk about that kind of simplification, that changing the licensure, what are some of the things you’re seeing states consider for that?
Jennifer Cryder (16:30):
So I’ve been really surprised to see the profession has very much conversed around the addition of a second licensure pathway. So by that I mean not only state society, state boards of accountancy, NASBA, AICPA, all of us have done a lot of listening to the profession I think over the last year or two. And so everybody really has come to this place of saying, we need a second pathway to licensure. In broad strokes, I think most states are in the same spot. There will continue to be some small differences state to state, but in broad strip because everybody’s saying, okay, that second pathway can be a bachelor’s degree in accounting, or at least enough accounting concentration that it would be equivalent to that passing the exam. Everybody wants to keep the exam exactly where it is in this equation, no changes there. And if you’re doing a bachelor’s degree in accounting, then do a corresponding increase in the experience requirement back up to two years. So it was the result of a lot of debate, challenging thinking, challenging discussions, but by and large, the profession is there on that. There is a question right now on the table is a competency framework built into that work experience requirement? And I think different stakeholders have different opinions there, but when you look at the big picture of licensure, honestly, I think that’s kind of a small piece, looking at how far we’ve all come together to say, okay, yeah, we need two pathways and here’s what they should look like.
Dan Hood (18:00):
Yeah, I mean, as we said, for a long time that was outside the Overton window. That was not a subject. You could bring up it and if you did, everyone would say, Nope, that’s not going to happen. And to be perfectly fair, there were some good reasons to say we should only do this if we’re really serious. If it’s a really serious problem, it really does change some of the face of the profession to the rest of the world. If you say, yeah, you don’t have to have a master’s degree. Some people will look and say, what does that mean? You’re lesser, you’re less informed, you’re less knowledge, et cetera, et cetera. It doesn’t if the second path has some value to it, but that there was a long, long time where you just couldn’t have that discussion. So it’s fascinating that as you say, it’s opened up pretty rapidly.
Jennifer Cryder (18:50):
That’s right. That’s right. And I think that we will see states change their laws in some cases very rapidly. I can tell you Pennsylvania is not going to be a state that changes rapidly because our legislature does nothing quickly. But I’m seeing many of my colleagues in other states sort of begin that process with their legislative session in 25. A few may even accomplish it as we’re closing out 24 here, we’ll see. But because the profession has converged, states are moving very quickly are and hope to start enacting things if not in 25 and 26, I really do think we’ll see this change come to life and make a difference for candidates as they’re choosing their pathway.
Dan Hood (19:34):
And that is lightning fast by happening standards. That’s right. That is, wow. Holy cow.
Jennifer Cryder (19:41):
That’s right.
Dan Hood (19:41):
Was zipping right past, but exciting and interesting and hopefully we’ll play a part as you say, in making it easy for some and hopefully a lot of candidates. I want to take a step back though, as we think about that, if we think about two different pathways to licensure, as I said, one of the things for me that was fascinating about the NPAG report was they talked about having talked to universities and said, wow, they’re sort of all converging on the possibility of four years is not necessarily what it takes to get a bachelor’s. Maybe it’s three years, maybe it’s something else. And that was an idea that I would’ve thought was even more difficult to achieve than a second pathway to licensure. But when you look sort of long term, do you see other similar changes like that where suddenly we discover, yeah, no, a bachelor’s program is three years, but within the world of accounting where people really look at a very different set of what CPA licensure is all about,
Jennifer Cryder (20:35):
Who knows? As you could probably tell, I’m so encouraged by this kind of evaluation of the process. I think as a profession, we should continue to do a practice analysis of the whole process. We’ve always done that for the exam, but I think things are moving so quickly that we’ve got to look at all three elements regularly, if not every year, every couple of years to say what do we need and how do we need to change it? That’s not a framework that exists in our profession, but exists in other professions. So I think we’d be wise to adopt that because the process was not always simple and kind of took a lot of work this time, but we could build a process so where the CPA license is more responsive and adaptive to the profession and more flexible going forward, first of all, second of all, I could see competency-based licensure gaining interest in popularity.
(21:27):
That was an idea that was in the National Pipeline Advisory Group’s report. I don’t think we really got all the way there this time because the profession was committed to acting quickly and responsibly to the pipeline challenges, but there was a lot of support for that idea. And so I think we shouldn’t lose that as a profession. I think we should keep that front and center and think about is there a pathway that is just as rigorous to licensure where you’re just demonstrating competency. There’s not a number of hours of education. There’s not a certain number of years experience. I think ours is a profession of apprenticeship just like the trades, honestly. So I could see that figuring out how to make that happen and how to regulate it is a different question. But I don’t think we should stop having this conversation when we get the law changed,
Dan Hood (22:20):
Right? Well, nothing’s going to stop changing. This is one of those things that everyone has this problem, not just in accounting, but around the world. You say, well, if I can just change to adapt to this particular set of circumstances, I’ll be fine. Not realizing that there’s going to be a whole new set of circumstances in six months, in a year and two years, and you’re going to have to change all over again. This is just where we live now. It’s in a world of sort of constant change and that Nate, as you say, to keep having those conversations on a regular basis to say, what do we need to change now? If anything, to keep up with how things the rest of the world is changing around us? It’s terrifying, frankly. I’m going to go ahead and say it’s terrifying. Well,
Jennifer Cryder (22:57):
Perhaps and a little bit exhausting. I’m not going to lie. I think we’re all feeling that too, but there’s so much opportunity in it because when we look at how are we redefining what a CPA is by the license, it could be a lot of different things. There’s a lot of markets we can win. There’s more opportunity than ever. And I think we’ve got a really strong and compelling story for students evaluating our profession of why it’s better than ever to join the profession right now.
Dan Hood (23:24):
Yeah, no question. Yeah, it is a great time to be an accountant. It’s not necessarily a great time to want to hire accounts, but it’s a fantastic time to be an accountant. On that note, I want to just take a quick step back just to wrap things up. We’ve talked a lot about the fact that there are a lot of different things that need to be changed or need to be done to bring more people into the profession, to get more people to become CPAs, but maybe as we said, you said it’s everybody’s responsibility. Everybody has a role here. Maybe you could talk about it in addition to telling that story to as many people as you can, that it’s a great time to be an accountant. It’s a hugely rewarding career, et cetera, et cetera. What else can either individual firms or people do to, and let’s say specifically to get people to become CPAs, right? Let’s say they’ve already made the choice that, yeah, accounting looks okay. I could see myself there. How do we get ’em to become CPAs?
Jennifer Cryder (24:08):
Well, the data’s really clear. There’s a couple of talking points that resonate strongly when somebody’s considering that. So the first thing we have to do is change the image of the profession, because if as soon as a friend, a parent, a neighbor, or relative says, oh CPA, I don’t know if that’s for you. That sounds really boring. The door’s closed and we’re done. So first we’ve got to change the image. Second, we have to tell the story about how this profession provides incredibly meaningful work, a lot of stability throughout your career, and the ability to really grow your skillset no matter what you want to do, right? This is the perfect place whether you want to support families around the kitchen table making financial decisions or help Main Street small businesses in your community, or whether you want to serve a multinational company in the global capital markets.
(24:59):
All of those need CPAs. And so if we can explain that to students making that choice, the data is so clear that it makes a really big difference. The other thing we’re doing within PICPA is getting CPAs into classrooms at the high school level, because the data shows us that more than half of high school students have chosen their major before they start college. And so if we don’t get into high school classrooms, we’re missing the opportunity to get those messages at the time that matters. So we’ve gotten dozens and dozens of CPAs this fall into classrooms talking to thousands of high school students and are continuing that work. Many of the other state societies are doing the same thing around the country. So that’s like a force multiplier example of
Dan Hood (25:42):
Where
Jennifer Cryder (25:43):
We as a profession can really change the dynamic.
Dan Hood (25:47):
And it’s something that everybody, any county CPA can do, right? As you say, a lot of state societies have programs that’ll get you into adopt colleges and high schools, and in some cases even lower levels of schooling to get you in there and to spread the message that you’re talking about. So, makes a lot of sense. Someone everybody can do. So we’ll expect you all to go out and sometime between now and the holiday talk to a school. So that’s your assignment coming out of this webinar. If you’re listening, that’s your assignment. Go talk to a bunch of preferably under college aged people to get a drawing into the profession. Fantastic advice. Jen, thank you so much for joining us. It’s a big topic and it’s fascinating as you say, a conversation that’s ongoing, but it was fun talking about it today.
Jennifer Cryder (26:28):
Dan, thanks so much for the opportunity. I enjoyed our conversation.
Dan Hood (26:31):
Yeah. Alright, Jen Cryder of the Pennsylvania Institute of CPAs, thank you so much and thank you all for listening. This episode of Omni Air was produced by Accounting Today with audio production by Wenwyst Jeanmary ready to review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guest and thank you for listening.
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