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Gatekeeper of the accounting industry: Why the 150-hour CPA requirement must evolve

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Becoming a Certified Public Accountant is no small feat. The CPA exam is one of the most demanding professional exams in the U.S., with a notoriously low passing rate. Adding to the challenge is the 150-hour education requirement, equivalent to a five-year degree program. When it was introduced in 1983, the additional education made sense. Interest in accounting was booming, and the educational requirement ensured that only the most qualified were entering the field. But does this requirement still hold up today?

A system rooted in the past

This decades-old rule was first introduced in Florida to raise the standards and credibility of the profession, and the other 49 states followed suit over time. Today, the extra year of education — with its significant time commitment and cost — is turning potential CPAs away, especially when they can pursue alternative careers with just a four-year degree. The Bureau of Labor Statistics projects that we’ll need around 126,500 new accountants and auditors every year for the next decade to keep pace with the growing number of businesses and maintain the economy’s health, but the U.S. currently produces about 65,305 accounting graduates annually. 

Additionally, researchers from MIT Sloan found that adding a fifth year of education has yet to improve the quality of CPAs. The accounting profession shares a similar sentiment. In fact, according to Intuit QuickBooks’ 2024 Accountant Tech survey, nearly all (98%) accountants agree that alternative pathways to CPA licensure can prepare upcoming accountants as effectively as or more effectively than the traditional 150-hour pathway. Instead, the 150-hour requirement has led to a significant 26% drop in minority entrants into the profession. In essence, we’re just making it harder for talented people to enter the field, which doesn’t promote diversity or benefit the industry.

As fresh talent struggles to break into the industry, seasoned CPA-certified accountants are exiting just as noticeably. According to the International Federation of Accountants, over 300,000 U.S. accountants and auditors left their jobs between 2020 and 2022, leading to a 17% decline in registered CPAs. As college enrollment in accounting programs declines and firms continue to face severe staffing shortages, what once raised the bar in the industry has become a stumbling block. 

Rethinking the CPA path

It’s time to reevaluate the 150-hour rule and consider whether an additional year of education is necessary to become a CPA. Instead, the industry should consider substituting practical work experience. This approach could combine four years of college education with two years of relevant, hands-on accounting experience. Another consideration: allow anyone with a bachelor’s degree to take the CPA exam, regardless of their field of study. If they can pass one of the most challenging professional exams in the country, their major should not be a barrier to entry. 

To further streamline the profession and adapt to modern work practices, we should advocate for automatic mobility of CPA licenses across all states. Just as a driver’s license issued in one state allows you to drive anywhere in the country, a CPA license should grant the ability to practice in any state without additional hurdles.

These alternatives could open the door to a broader range of candidates, including those who cannot afford five years of college or come from different educational backgrounds.

Adapting to modern times

Finally, we must embrace innovation and advancements in technology. As education evolves, so should our approach to CPA licensing. For example, we have coding bootcamps that turn people into software developers in months, so why not have the same for accounting? These fast-track programs could provide focused, practical training and allow people to enter the accounting profession more quickly and conveniently without sacrificing the necessary skills and curriculum needed for success. 

We’re already seeing similar programs in action, like Intuit Quickbooks’ ProAdvisor program, which offers beginner to advanced training programs that help individuals earn Continuing Professional Education credits. By adopting and expanding a similar training model for CPA certification, we can uphold high standards and make the path to becoming a CPA more accessible and adaptable for those interested in the profession.

While the creation of the 150-hour CPA requirement was well-intentioned, the needs of the accounting industry have evolved. With so many businesses relying on CPAs to manage their finances, it’s time to rethink this requirement to attract and retain the talent needed to drive the economy forward.

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IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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