US monetary policy changes are causing friction in the industry

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A proposed overhaul of US accounting eligibility rules could expose firms to discrimination lawsuits and increase barriers to entry, according to a body that represents the nation’s largest accounting firms.

In a private opinion letter seen by the Financial Times, the Institute for Audit Quality – which represents the big four and other major firms – criticized the proposed changes as “unnecessarily complex”, and we can “introduce unconscious bias” into the correspondence process.

The CAQ’s intervention pits the major accounting firms against the two organizations that set the rules for how to qualify as a certified public accountant – the American Institute of CPAs and the National Association of State Boards of Accountability – on how to prevent the decline of young people.

The AICPA and Nasba in September proposed to drop the requirement that investors complete the equivalent of five years of university education, one more than the old undergraduate degree, a law that has been accused of put young people into work.

The two organizations have proposed an alternative education system: to replace the fifth year of education with a one-year on-the-job training requirement by the firms, which will have to ensure that the employee has acquired a lot of technical and professional knowledge.

Liz Barentzen, CAQ’s vice president, wrote in an opinion letter sent last month that “the broad set of skills, performance indicators, and assessment requirements create an unnecessarily complex system that can be difficult to implement it consistently across regions”.

And he added: “Qualitative assessment projects can introduce bias and unconscious bias into assessment processes, which can cause work-related problems (eg claims of discrimination) that would otherwise not be there.”

The lack of accounting has begun to appear as a risk factor in the financial statements of some companies, and some small firms are withdrawing from non-traditional businesses such as auditing for local governments. Labor leaders have warned that big firms could face a hiring crisis if trends are not reversed soon.

The number of people taking the CPA exam dropped from a peak of more than 100,000 in 2016 to a 17-year low of just over 67,000 in 2022 and, after a small uptick last year, are projected by the AICPA to resume their decline. short term. The benefits of young people taking accounting courses at university have declined in recent years, as they seek higher-paying jobs in finance or technology.

The CAQ has argued that tackling the shortage needs to include widening the appeal of accounting among students from diverse backgrounds, for whom the costs of a fifth year of university can be particularly difficult.

The AICPA and Nasba have committed to providing public comment on their proposals by early 2025.

Sue Coffey, the AICPA’s executive director of public accounting, said it was “getting mixed opinions” about its proposals.

“It is important that the license paths are clear and strong for students. Working with Nasba and different stakeholders, we will know more next month about what this looks like,” he said.