Redefining the Pennsylvania CPA Requirement

The Pennsylvania Institute of CPAs (PICPA) reported on June 19, 2013 that “(Pennsylvania) Governor Tom Corbett signed House Bill 40 (now Act 15) into law… amending the CPA Statute. This law redefines the experience requirement to become a CPA. Candidates no longer have an attest mandate, but they will still be required to complete the overall hours of experience. The law will be effective August 18, 2013. State Rep. Gordon Denlinger, CPA, introduced this legislation to allow the experience requirement to encompass service or advice in any of the areas of accounting, attest, compilation, management advisory, tax, or consulting… Experience hours will be acceptable if gained through employment in government, industry, academia, or public practice.” A snapshot of the “before and after” requirements is linked to here.

I have mixed feelings about the elimination of the attest experience requirement. Selfishly, it certainly makes life easier in the outsourcing practice at my firm. We no longer need to worry about giving our employees attest hours in our assurance group, and temporarily backfilling their roles while they are on audit engagements. I am sure our counterparts in the tax practice are equally happy about this. It should make it easier to recruit new accounting graduates into outsourcing, because they no longer have to worry about how they are going to get their attest hours to earn their CPA licenses.

But I also have some reservations about this new law. CPA means “Certified PUBLIC Accountant.” The key distinguishing characteristic of a CPA is the ability to perform an independent financial statement audit or review, and provide assurance as to the presentation of financial statements in conformity with generally accepted accounting principles. It therefore seems heretical to take the attest requirement out of becoming a CPA. Yes, there are many other aspects of accounting that have nothing to do with auditing. For example, management accounting is recognized as its own discipline – but there are already designations for that: the Certified Management Accountant (CMA) and the Chartered Global Management Accountant (CGMA).

I suppose the problem is that neither the CMA nor the relatively new CGMA are as well-known or understood, nor do they carry the same prestige as the CPA. In contrast, the CPA designation is much more familiar. In business, it is a litmus test of the capabilities of a candidate for an accounting position, whether in public practice or private industry. It is even familiar to the mainstream public, which sees it as an indication of general competency in accounting or tax without necessarily understanding the distinction of being qualified to audit financial statements. In the public’s perception, a CPA in the accounting profession is analogous to a licensed attorney in the law profession. As an attorney may specialize in any number of areas of law, the public sees a CPA as potentially specializing in any number of areas of accounting – not necessarily with any particular expertise in auditing. Truth be told, many of today’s CPAs who met the soon-to-be-obsolete attest requirement have not actually performed any audits for years or even decades. From that perpective, this new law may be viewed as simply catching up to what the CPA designation has already evolved into and what the public perceives it to be.

So what do you think of this new law? What impact, if any, will it have on alternative certifications such as the CMA? Please comment below.