CPA exam overhaul may raise hurdles for black accountants

As a black accountant with a CPA license, Nikki Winston is part of a profession she – and the Big Four – have strived for years to make less exclusive and more diverse.

Winston tells her clients – mostly first-generation black accounting graduates and seasoned professionals she advises to go her way – that the expensive chore of 150 college credit hours required to earn a CPA license is worth the sacrifice, opening up a potentially lucrative business or business. career as a chartered accountant.

This CPA licensing manual, however, is about to be rewritten and potentially more difficult. Even if some leaders, including the Big Four, deplore the requirement of education as an obstacle to the recruitment of minorities, the profession is still raising the bar to enter accountancy. The CPA exam is undergoing a major overhaul, triggering changes in what colleges teach, all to prepare students for an increasingly automated and complex field.

The impending changes are sparking debate on how to maintain high standards for the accounting profession while increasing opportunities for black applicants, battling a dismal statistic that only 1% of all CPAs are black.

“These candidates are in difficulty. Why isn’t this a more grandiose conversation? Said Winston.

Lamentable about diversity

Fewer than 7,000 CPAs nationwide are black, according to estimates cited by the National Society of Black Certified Public Accountants. The 1% estimate has barely budged in decades. In the smaller pool of accounting firms, only 2% of CPAs are black.

The reasons for the disparity are well known: lack of exposure to the profession, inequalities in education, competition with more fashionable careers, and lack of diversity among leaders and faculty. Another was controlled access through a rigorous state-issued identity diploma that barred black accountants from joining the profession in significant numbers until the 1960s.

The legacy of segregation persists today with the extra 30 hours of superimposed college credit as an additional hurdle. “It’s not the only barrier, but it’s a significant barrier,” said Darryl Matthews, president and CEO of the National Society of Black Certified Public Accountants, of the training requirements. The group formed in 2020 with the sole mission of helping more black accountants graduate.

“We have had some success in our community. The question is whether there is enough success and can we remove the barriers to progress, ”Matthews said.

The famous grueling CPA exam and 150 credit hours are obstacles to any hope. But applicants and clients of Winston often face additional hurdles, including family obligations, work and most importantly money, she said.

Winston’s clients tell him, “I just want to quit school, graduate, go to work and earn some money. Is the certification even worth it for me to stay in school during that extra time, ”she said.

It is too common a debate. First-generation students, especially black and Hispanic students, often pay for their education, and they want to start earning right away to pay off debts and support their families. Others try to slip into school or exam preparation in addition to a day job.

Some students find it hard to imagine what more they could accomplish when college graduation is itself a major achievement, said Theresa Hammond, who teaches at San Francisco State University and is a specialist in race in accounting.

“So putting yourself through the added stress of majoring in accounting,” Hammond said, “and then also having fifth year is a bridge too far.”

Bridging the gap

America’s largest accounting firms have launched initiatives to support under-represented CPA candidates – efforts that intensified in the months following George Floyd’s murder in 2020 spurred nationwide demands for racial justice and equality.

Since then, Deloitte LLP and PwC LLP have each described the 30-hour overtime as a barrier that disproportionately affects minority CPA applicants and hinders companies’ efforts to expand the recruit pipeline and meet new hiring goals in terms of employment. diversity.

Each of the Big Four is taking action to change the equation.

PwC will pay 40 black and Hispanic students to participate in a scholarship program at Northeastern University that will launch this year. Students will eventually earn a master’s degree in management worth 30 credit hours and a salary.

Paid employment and free tuition is a win-win solution for students, but also for the company, said Leah Houde, Head of Learning at PwC. It’s part of a larger $ 125 million effort to support black and Hispanic students and boost minority hiring for the company.

“We would like our staff to look the same as promotions from universities, which are 35% of under-represented minorities. We’re not there yet, ”Houde said.

Deloitte launched a $ 30 million scholarship fund with the goal of paying 800 underrepresented students to complete their masters, another offer to help students meet the 150-hour requirement.

Ernst & Young LLP created a million dollar scholarship to support students in underserved schools, and KPMG LLP designed an internship program for under-represented students, among the steps it took to increase by 50% of its black and Hispanic workforce by 2025.

Larger firms are making significant progress, but a concerted, profession-wide effort is needed to make systemic changes to the portfolio of future CPAs and increase opportunities for more minority accountants to join their ranks, said Scott Wiley , CEO of the Ohio State Society of CPA.

“We’re on the line as a profession to say we recognize how bad our numbers are. Let’s not coat that, ”Wiley said. “If we can’t demonstrate improvement, I don’t think any of us can say today that one in 150 serious conversations won’t happen in about five to 10 years. “

New skills

The planned overhaul of the CPA exam, which is part of a project called CPA Evolution, will test candidates from 2024 on data analytics, technology skills, and chosen specialties.

The reconsideration of the 150-hour requirement was briefly discussed but ultimately was not part of the CPA Evolution project, said Sue Coffey, CEO of public accounting at the Association of International Certified Professional Accountants, a sister organization of the American Institute of CPA.

“We are a learned profession and we have a mandate to protect the public. And we’re really not interested in lowering the bar, and neither can we lower the bar, ”said Coffey, who acknowledged the work the profession faces to make it more attractive to diverse applicants. In her opinion, research did not find that the 30-hour overtime was among the main disincentives for minority applicants.

The complex skills required of accountants are increasing, and the revamping of exams aims to prepare students for an increasingly automated field. These changes in testing and career expectations will also trigger updates on what colleges should be teaching.

The AICPA and the National Association of State Boards of Accountancy introduced a model program in June that preserves the ability to reach 150 hours, which can include advanced internship credits, community college, undergraduate work, postgraduate courses and internships.

For Matthews, explanations of the revised CPA requirements ring hollow. He said the 150-hour rule was daunting when it was first added over 20 years ago, and he considers the latest exam changes to shift goals again, making it even more difficult to do so. that many consider the most difficult professional examination.

Academics and those who support CPA applicants fear this will increase pressure on students to consider graduate school with its even higher tuition fees.

“CPA Evolution creates another hurdle that will impact whether 1% will never equal 1.5% or never be 2%,” said Kelly Richmond Pope, professor of accounting at DePaul University.

The expertise required to become a CPA is warranted, Guylaine Saint Juste, CEO of the National Association of Black Accountants, said in a statement. But there are other ways to earn the extra 30 hours the profession might consider, she said – internships, for example, as well as work experience and even board service.

Winston, the CPA exam coach, welcomes the curriculum and testing changes, which she says will better prepare accountants with skills relevant to today’s business.

“It’s a hindrance as far as you allow it,” Winston said of the 30-hour overtime. “Speaking for Blacks and Browns, we’re already behind the eight ball. And we’re already used to climbing the hill to get to where we want to go.