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Enriching the CPA Candidate Pool: Skills and Tips for Future CPAs

The future of the accounting profession is changing.

Enriching the CPA Candidate Pool: Skills and Tips for Future CPAs

By Anton Hill and Jeff Howe

In the world of accounting, obtaining a Certified Public Accountant (CPA) license is synonymous with the excitement of passing the bar exam for law school graduates. CPA candidates spend countless late nights and weekends at kitchen tables and local libraries memorizing tax laws, learning auditing standards, and trying to retain how to calculate the coupon rate for debentures. CPA exams are difficult and frustrating to complete because they include information from seemingly every facet of accounting, finance, and business, and they have pass rates as low as 44%.(1) By comparison, only six (6) out of 56 jurisdictions reported lower overall pass rates for the bar exam in February 2021, and no jurisdictions reported a lower rate in July 2021.(2) The exams are designed to challenge even the most skilled and experienced Accountants. However, as most licensed CPAs will attest, the payoff is worth the sleep deprivation and cost of expensive study materials. The letters “CPA” following a person’s name indicate that they are an expert in their field, authorized to perform certain tasks that non-CPAs cannot complete, and potentially opens doors to career growth and new opportunities.

While CPA exams are challenging, candidates have the added hurdle of ensuring that they have completed 150 college credits before they can be licensed. This began in 1983 when Florida became the first state to adopt the requirement to complete 150 credits minimum. Nearly 40 years later, states are still required to follow these standards today. While each state has its own specific requirements, all states and jurisdictions require at least 150 credits, with a mix of accounting and business courses to obtain a CPA license. For example, to sit for the exams and eventually become licensed in Virginia, candidates must have, at a minimum, 24 semester hours of accounting and 24 semester hours of business courses, which must include courses in audit, financial accounting, taxation, and more.(3) While the 150 credits can appear to be a barrier, this requirement holds an opportunity for candidates to develop individualized learning plans, based on career interests and goals, to obtain the credits that best suit their work and life rhythms before embarking on the journey to 150. Understanding the additional state-level requirements to obtaining a CPA license and that the industries in which CPAs perform are evolving can help candidates today find numerous routes to meet credit requirements while focusing on individual strengths and priorities.

In our experience, the most common paths to obtaining the 150 credits include some combination of a bachelor’s degree in Business Administration or Accounting and a master’s degree in a related field. While this certainly encourages CPAs to become savvy in general business and accounting, it also creates the potential for a limited range of knowledge, background, and expertise. The world is changing, and big data, technology, and robotic process automation (RPA) are critical components in nearly every industry. Being trained and educated in other fields and technologies is highly desired by both employers and their customers, and this is also a great way to stand out from peers. Having advanced degrees and/or certifications will create marketability and drive conversations with peers regarding new and unique solutions to business and accounting challenges. The days of the stereotypical “number-crunching” CPA are ending. In our experience, the expectations of today’s CPAs go far beyond filing taxes or knowing debits and credits. In this article, we will present some of the different paths to take to obtaining 150 credits, as well as the costs and benefits of each. We will also present less commonly taken routes, which we consider the future of the accounting profession and CPA licensure.

For CPA candidates still determining the direction to take pursuing their careers, Exhibit 1 identifies examples of various ways that they can complete their required credits, outside of the 120 credits obtained through a bachelor’s degree, and still develop a specialized approach to embark on their desired career path, based on interests and available resources. The table below is not exhaustive, but rather, serves as an example of the three primary routes CPA candidates take to meet the 150-credit requirements. While there is no “right” or “wrong” path, we have outlined the pros and cons of each choice to detail how they potentially yield different results. These should be taken into consideration by CPA candidates when outlining desired career goals.

Exhibit 1: Primary Routes to 150 Credits

Each candidate should closely examine how they want to use their CPA license—whether they want to do taxes, become a controller for a private company, provide services through public accounting, or take an entirely different route by pursuing emerging technologies. For those still in the planning stages of their long-term goals, it may make the most sense to take a broader route (e.g., a general Master of Business Administration [MBA]) or less-expensive route (e.g., additional general undergraduate courses in an area of interest). Setting time aside for goal setting and career-planning will help determine the best approach for each person.

This is most often complemented with additional licenses and certifications. For example, a CPA wanting to specialize in financial planning would also want to obtain a Certified Financial Planner (CFP) certification. Alternatively, for a CPA who seeks a career in forensics and fraud prevention, it may make sense to pursue a master’s degree in forensic accounting and become a Certified Fraud Examiner (CFE). Later, we will detail how CPA candidates should consider the future of business and accounting and how its impacted by data and technology.

Every business and organization requires the use of accounting in some way, shape, or form. Whether recording general ledger transactions, filing taxes, or preparing financial reports, there will be a need for human judgment in the field of accounting. Because of this, traditional areas of accounting (e.g., financial, and managerial accounting, controllership, audit, financial reporting, internal control, taxation) will likely continue to influence the skill pool for the near future; however, a well-rounded CPA candidate may want to consider enhancing their skills outside the traditional domain. Some skills, while not traditionally associated with accounting, can be complimentary or even necessary as the profession evolves. For the remainder of this article, we will discuss two examples of alternative paths for CPA candidates to take in major practice areas with a growing need for CPAs with complementary skills outside of the traditional accounting profession.

Statistics

The overlap between statistics and accounting is traditionally limited to the use of statistical sampling or forecasting. It is often cost-prohibitive to test an entire population in search of an answer to a question (e.g., Was the control performed? How many dollars in the population are misstated? Were the recorded transactions in compliance with stated criteria?). A well-prepared sample can provide an Accountant a reasonable approximation (i.e., the “estimate”) of the true value in a population, within an acceptable range.

Financial Statement Auditors perform two types of substantive procedures to confirm whether the auditee’s recorded balances are fairly stated: statistical sampling and substantive analytical procedures. While computer software does the heavy lifting of calculating sample sizes, understanding the parameters involved those calculations is paramount to performing quality work that balances precision of the estimate with team resources (e.g., budgeted hours for tests of details). A CPA candidate who studies statistics may develop an understanding of statistical variance, which is key to appreciating how sample sizes and precision estimates are computed. Precision is a mathematical measurement of sampling risk of the estimate, which is integral to understanding if an auditor has performed an adequate amount of work to form conclusions at the desired assurance level.

Similarly, forecasting may be used as a substantive analytical procedure in assurance work. The Accountant’s objective is to use historical data to create a dollar expectation (similar to the “estimate” in sampling) for the auditee’s forthcoming reported balance. Similar to statistical sampling, the expectation should be mathematically precise. If the reported balances are within the precision limits, no further inquiry may be needed. Understanding precision and the level of assurance it provides may require specialized statistical training.

Scripting

Scripting is an increasingly valuable skill for CPAs. While we are not suggesting that Accountants must become Software Developers, we are suggesting that the ability to write and read scripts will allow an Accountant to apply their accounting domain knowledge at scale and with a high level of flexibility. Providing accounting services to large entities already requires professionals to analyze sets of records that often extend beyond the size limits of a Microsoft (MS) Excel Workbook. Ever-reducing costs of data creation and storage produces an increased number of large record sets at the disposal of accounting professionals. Scripting allows Accountants to combine, summarize, sort, and filter millions, or even billions, of records to meet their business objectives.

While traditional record sets are continually increasing in size (e.g., subsidiary ledgers, general ledgers, journal voucher lists), nearly all organizations also possess vast quantities of so-called “unstructured” or “semi-structured” data in the form of paper or scanned documents, video files, images, and e-mail repositories. Additionally, public data can be extracted from websites or social media platforms. Using scripting to convert unstructured, semi-structured, and publicly available data into a usable format does not require advanced degrees in computer science, but it does require Accountants to possess the necessary technical skills to combine extraction and analysis techniques with their knowledge of accounting or management’s objectives. Developing these technical skills may seem intimidating to individuals new to scripting, but they are attainable.

Many Accountants see script syntax as an unfamiliar language—strings of seemingly incomprehensible numbers, multi-colored letters, and indented punctuation marks. However, learning syntax is a matter of memorization and practice—two things all CPA candidates are familiar with. Most Accountants can become highly competent data analysts with determined practice. The real challenge (and value) comes from learning to think in a specific way to apply accounting knowledge. Scripters are required to think with a high level of precision because piecing together commands and functions in an inexact way creates a script that either a) does not execute or b) will execute but creates output that is incongruent with the objective of the analysis.

What does this all mean?

The future of the accounting profession is changing. There will always be a need for traditional Accountants who can recognize the language of general ledger entries, accounts payable (AP) accruals, and month-end closing procedures. It has become increasingly apparent, though, that these processes are quickly becoming digitized for most organizations, if they have not already. In our experience, there is an even greater need, now more than ever, for CPAs who are capable of creative thinking. The profession would benefit from CPAs who can think and strategize like an Accountant but leverage the skills of Data Scientists and emerging technology experts. This creates diverse thinking for accounting and finance professionals, data-driven solutions, and efficiency through technology. CPA candidates must obtain the 150 credits one way or another. It is time to start thinking outside the traditional approaches and begin your CPA journey looking forward to the future of the profession.

This publication is for informational purposes only and does not constitute professional advice or services. Readers should first consult with a professional before acting with regard to the subjects mentioned herein.

Kearney & Company, P.C. (Kearney) is a Certified Public Accounting (CPA) firm that is exclusively focused on providing accounting and consulting services to the Government.

1 American Institute of Certified Public Accountants (AICPA)-reported 2021 Quarter (Q)2 pass rates, https://www.aicpa.org/resources/article/learn-more-about-cpa-exam-scoring-and-pass-rates
2 National Conference of Bar Examiners (NCBE) Bar Exam Results by Jurisdiction, https://www.ncbex.org/statistics-and-research/bar-exam-results/
3 Virginia Board of Accountancy (VBOA) Education Requirements, https://boa.virginia.gov/cpa-exam/requirements/