Accounting
New paths to CPA licensure
Published
2 months agoon

The ongoing staffing shortage is forcing the accounting profession to do some soul searching. Numerous factors contribute to the pipeline problem, including declining birth rates, a decreasing emphasis on college education, and fewer students majoring in accounting, to say nothing of entry-level salaries that can’t compete with those on offer in a number of other careers.
But of all the factors, the 150-credit hour requirement for CPA licensure has become something of a flashpoint, and has come to be emphasized as particularly prohibitive, which is now raising questions regarding what it takes and means to be a CPA today.
Three primary issues arise with the 150-hour rule: cost, time and lack of structure.
For starters, the cost of the extra year of education isn’t worth the starting salary into which accounting students are graduating. Young accountants are effectively paying more to make less.
According to a 2023 study by the Center for Audit Quality, 61% of nonaccounting majors cited higher starting salaries with other majors as a reason for not choosing to study accounting. Additionally, 57% said they did not want to pursue the fifth year of education required for CPA licensure, and 52% said they could not afford 150 hours and needed to start earning immediately after graduation.
Accounting starting salaries have not kept pace with neighboring professions and industries, like finance and technology. Students can graduate into higher-paying jobs with the same level or education, or less, than is required to start a career in accounting.

“If you just took [the Consumer Price Index] and applied it to the starting salary back in 1982, you’re very close to the starting salary of what the fifth-year students were a year ago, so the profession really hasn’t caught up,” said Edward Wilkins, an accounting professor and former audit partner at a Big Four firm. “Did they ever really get credit for that fifth year if it was just a CPI adjustment?”
The second issue is time. Accounting students and young professionals say the top hurdles to becoming a CPA are the time commitments to study for and take the exam, according to a survey by the Illinois CPA Society. Not to mention the fact that the professions’ spring and fall busy seasons coincide with the busiest parts of college semesters.
Thirdly, within the current framework, the requirements for the final 30 credit hours are not standardized. While some states have specific (and sometimes confusing) credit requirements, others do not even require those credits to consist of accounting courses.
“States, at the end of the day, get to make the call about how they’re going to license people,” said Jennifer Wilson, partner and co-founder of ConvergenceCoaching, and facilitator of the National Pipeline Advisory Group. “That creates an inherent set of nuances and inconsistencies in the 150-hour program.”
And firms aren’t the only ones feeling the effects of the decreasingly popular fifth year.
“What was a boondoggle beginning for the schools has flipped around because the customer goes elsewhere,” said Stan Veliotis, associate professor and chair of accounting and tax at Fordham University. “At the beginning, the customer had to come to you because you were the only one selling this product. Then they realized, ‘You know what, I could just substitute this with something else,’ and that’s what’s happening.”
Alternatives to the 150-hour rule
As the pipeline problem has grown worse and worse, many solutions and initiatives have emerged to reduce the cost and time of education. These programs alone do not fill the pipeline; however, they do provide immediate relief to students, especially those from traditionally underrepresented populations.
One such program is the Experience Learn and Earn program from the American Institute of CPAs and the National Association of State Boards of Accountancy, which is designed to be cost-effective and flexible, and to offer transcript credits, according to Liz Burkhalter, associate director of CPA pipeline at the AICPA and head of the ELE.
The program lets students with four years of college start working at participating CPA firms while taking low-cost online courses from Tulane University to get the the extra credits they need to qualify for CPA licensure. Earning all 30 hours cost approximately $5,000 for the more than 100 students who participated in its pilot year in 2024, with 25 graduating the program.
A private company called CPA Credits provides another cost-effective route to 150 hours. Founded by Jeffrey Chesner in 2020, it offers around 80 self-paced courses costing $675 each. Students taking 10 courses receive a discount, meaning a student could pay around $6,000 to earn all 30 credits through CPA Credits.
“Students just really don’t know exactly what they need or how to fulfill the 150 credit requirements. There are certain state boards which are very difficult to understand,” Chesner explained, noting that the bureaucracy of state boards sometimes makes it hard for students to get their questions answered quickly.
For this reason, CPA Credits also offers free transcript evaluations to help students determine exactly what credits they need. The company provides about 50 evaluations per day, according to Chesner.
Some states have also developed similar initiatives. The Florida Institute of CPAs, in partnership with Nova Southeastern University and three accounting firms, launched the Bridge to CPA pilot program in May 2024.
Meanwhile, the New Jersey Society of CPAs offers numerous initiatives, including The CPA Pathway Apprenticeship with Withum and Seton Hall University, and a work-for-credit program with Saint Peter’s University and PwC.
NJCPA is hoping to draft legislation by spring and pass a bill by the summer to create alternatives to the 150 rule, according to its CEO and executive director, Aiysha Johnson.
“We’re not looking to get rid of 150 because we want to be additive — we want to add to the current framework,” Johnson said. “What we want to do is include an option where a student can graduate with 120 hours plus two years of experience, or a master’s plus one year of experience. That would lend three distinct pathways.”
“Work-for-credit could still be an option within this framework,” she added. But the main priority is “to ensure continued practice mobility, and we think the way to do that is through automobility with specific guard rails, which we would put in our legislation.”
New Jersey isn’t the only state on this wave. The Ohio Society of CPAs announced Jan. 9 that its state governor signed a bill that creates a second pathway to licensure, effective Jan. 1, 2026. The bill requires a bachelor’s degree, two years of work experience, and passing the CPA exam.
The Minnesota Society of CPAs introduced a similar bill in February 2023 that creates two additional pathways: 120 credits and two years of work experience, or 120 credits and both one year of work experience and 120 CPE credits earned concurrently.
Arkansas, California, Indiana, Iowa, New Hampshire, South Carolina and Utah are also at various stages of considering developing and proposing alternative licensure requirements.
However, the profession has mixed opinions on changing licensure requirements. Sixty-nine percent of stakeholders, responding to a survey by NPAG, said that they agreed that changes should be made to components for CPA licensure, while 60% said they were concerned about changes negatively affecting the profession’s reputation.
An image to maintain?
When the AICPA raised the education requirement from 120 to 150 credit hours in 1998, the thinking was that the extra year of education would boost the credibility of the profession and make for a more well-rounded accountant. Now, with talks of changing licensure requirements again, a major concern among some experts is maintaining the prestige of the CPA. Some critics argue that experience-based education may liken accounting to that of a trade apprenticeship.
“The question is, if we allow experience to count, does it make it less professional? And my answer is this: It doesn’t have to,” Wilson said. “Experiential learning delivered under the supervision or by university professionals through an employer is not really cutting corners. That’s different. You’re still getting transcript college credits. That’s not a corner-cutter — it just moves the cost of that education to the employer.”
She says the key is for states to prescribe consistent competencies — skills and abilities that can be demonstrated in measurable ways.
“The reality is that many of our experienced, talented, smart CPAs across the country were graduates when there was the requirement of 120 hours, so a bachelor’s plus two years of experience,” added New Jersey’s Johnson. “I think it’s hard to question the rigor when we have so many professionals out here, so many executives, doing great work to say that that’s something that we should not consider.”
The priority in making changes to CPA licensure is maintaining mobility. The 150-hour rule has been uniform across states for more than two decades, but the mobility and ease of interstate practice starts to fissure here: Inconsistencies are a challenge for employers to manage, especially when employing people in multiple states or serving clients in multiple states. Changes to licensure requirements at the state level mean employers will have to keep track of those differences, similar to how they track differences in CPE, Wilson said.
“We’re going to have some increased complexity back on the service providers and the employers and the CPAs themselves to figure out: What are the rules to practice in this state?” Wilson said.
New reasons to CPA
Beyond making the CPA less prohibitive, the profession also needs new ways to make the CPA appeal to the next generation of talent if it wants to boost the candidate pool. The old arguments just aren’t cutting it anymore.
“The old story was, ‘The fifth year is mandatory, starting salaries are fine, you’re going to make more than all those other business majors midcareer and above, so just wait till then, kid.’ But people don’t want to hear about midcareer,” Wilson said. “No, they want to be able to move out of their parents’ house. They want to be able to afford a car payment and housing and whatever loan payments they may have on college, immediately, and still have a good quality of life.”
But one aspect that has always pulled talent, and still does, is the stability and career mobility the profession offers. The skills an accountant learns are highly transferable and ultra-employable.
“You can gain deep expertise across industries. You can work for startups, government corporations, public accounting. There are so many opportunities that you can make your own,” Johnson said.
And the CPA remains a highly respected credential that displays discipline, rigor and trust. The credential is the third-most valued certification or degree considered when hiring chief financial officers, according to a study by the Pennsylvania Institute of CPAs.
“It’s almost like buying a piece of meat in the supermarket: It’s got the USDA stamp on it, versus a piece of meat that doesn’t have the stamp on it,” Veliotis said. “Maybe it’s still OK, but it doesn’t have the stamp, whereas if it does, it’s more likely that it’s reliable.”
“I don’t think that it’s all about the year-one or year-two experience,” Johnson said. “I think it’s really about the foundation that they can create for themselves, the success that they can have in their communities, and the legacy that they can build within their families.”
It’s important for the profession to communicate a strong message because the consequences of an accounting shortage don’t just impact one accounting firm or industry, she added: “We’re talking about overall threats to corporate governance and financial reporting. And we see that with government agencies and not being able to submit their filings on time. There’s a lot of risk associated.”
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Accounting
Senate unveils plan to fast-track tax cuts, debt limit hike
Published
38 minutes agoon
April 2, 2025
Senate Republicans unveiled a budget blueprint designed to fast-track a renewal of President Donald Trump’s tax cuts and an increase to the nation’s borrowing limit, ahead of a planned vote on the resolution later this week.
The Senate
Republicans say they are assuming that the cost of extending the expiring 2017 Trump tax cuts will cost zero dollars.
The draft is a sign that divisions within the Senate GOP over the size and scope of spending cuts to offset tax reductions are closer to being resolved.
Lawmakers, however, have yet to face some of the most difficult decisions, including which spending to cut and which tax reductions to prioritize. That will be negotiated in the coming weeks after both chambers approve identical budget resolutions unlocking the process.
The Senate budget plan would also increase the debt ceiling by up to $5 trillion, compared with the $4 trillion hike in the House plan. Senate Republicans say they want to ensure that Congress does not need to vote on the debt ceiling again before the 2026 midterm elections.
“This budget resolution unlocks the process to permanently extend proven, pro-growth tax policy,” Senate Finance Chairman Mike Crapo, an Idaho Republican, said.
The blueprint is the latest in a multi-step legislative process for Republicans to pass a renewal of Trump’s tax cuts through Congress. The bill will renew the president’s 2017 reductions set to expire at the end of this year, which include lower rates for households and deductions for privately held businesses.
Republicans are also hoping to include additional tax measures to the bill, including raising the state and local tax deduction cap and some of Trump’s campaign pledges to eliminate taxes on certain categories of income, including tips and overtime pay.
The plan would allow for the debt ceiling hike to be vote on separately from the rest of the tax and spending package. That gives lawmakers flexibility to move more quickly on the debt ceiling piece if a federal default looms before lawmakers can agree on the tax package.
Political realities
Senate Majority Leader John Thune told reporters on Wednesday, after meeting with Trump at the White House to discuss the tax blueprint, that he’s not sure yet if he has the votes to pass the measure.
Thune in a statement said the budget has been blessed by the top Senate ruleskeeper but Democrats said that it is still vulnerable to being challenged later.
The biggest differences in the Senate budget from the competing House plan are in the directives for spending cuts, a reflection of divisions among lawmakers over reductions to benefit programs, including Medicaid and food stamps.
The Senate plan pares back a House measure that calls for at least $2 trillion in spending reductions over a decade, a massive reduction that would likely mean curbing popular entitlement programs.
The Senate GOP budget grants significantly more flexibility. It instructs key committees that oversee entitlement programs to come up with at least $4 billion in cuts. Republicans say they expect the final tax package to contain much larger curbs on spending.
The Senate budget would also allow $150 billion in new spending for the military and $175 billion for border and immigration enforcement.
If the minimum spending cuts are achieved along with the maximum tax cuts, the plan would add $5.8 trillion in new deficits over 10 years, according to the Committee for a Responsible Federal Budget.
The Senate is planning a vote on the plan in the coming days. Then it goes to the House for a vote as soon as next week. There, it could face opposition from spending hawks like South Carolina’s Ralph Norman, who are signaling they want more aggressive cuts.
House Speaker Mike Johnson can likely afford just two or three defections on the budget vote given his slim majority and unified Democratic opposition.

Financial advisors and clients worried about stock volatility and inflation can climb bond ladders to safety — but they won’t find any, if those steps lead to a place with higher taxes.
The choice of asset location for bond ladders in a client portfolio can prove so important that some wealthy customers holding them in a taxable brokerage account may wind up losing money in an inflationary period due to the payments to Uncle Sam,
“Thats going to be the No. 1 concern about, where is the optimal place to hold them,” Spranger said in an interview. “One of our primary objectives for a bond portfolio is to smooth out that volatility. … We’re trying to reduce risk with the bond portfolio, not increase risks.”
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The ‘peculiarly bad location’ for a bond ladder
Risk-averse planners, then, could likely predict the conclusion of the working academic paper, which was
“Few planners will be surprised to learn that locating a TIPS ladder in a taxable account leads to phantom income and excess payment of tax, with a consequent reduction in after-tax real spending power,” McQuarrie writes. “Some may be surprised to learn just how baleful that mistake in account location can be, up to and including negative payouts in the early years for high tax brackets and very high rates of inflation. In the worst cases, more is due in tax than the ladder payout provides. And many will be surprised to learn how rapidly the penalty for choosing the wrong asset location increases at higher rates of inflation — precisely the motivation for setting up a TIPS ladder in the first place. Perhaps the most surprising result of all was the discovery that excess tax payments in the early years are never made up. [Original issue discount] causes a dead loss.”
The Roth account may look like a healthy alternative, since the clients wouldn’t owe any further taxes on distributions from them in retirement. But the bond ladder would defeat the whole purpose of that vehicle, McQuarrie writes.
“Planners should recognize that a Roth account is a peculiarly bad location for a bond ladder, whether real or nominal,” he writes. “Ladders are decumulation tools designed to provide a stream of distributions, which the Roth account does not otherwise require. Locating a bond ladder in the Roth thus forfeits what some consider to be one of the most valuable features of the Roth account. If the bond ladder is the only asset in the Roth, then the Roth itself will have been liquidated as the ladder reaches its end.”
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RMD advantages
That means that the Treasury inflation-protected securities ladder will add the most value to portfolios in a tax-deferred account (TDA), which McQuarrie acknowledges is not a shocking recommendation to anyone familiar with them. On the other hand, some planners with clients who need to
“More interesting is the demonstration that the after-tax real income received from a TIPS ladder located in a TDA does not vary with the rate of inflation, in contrast to what happens in a taxable account,” McQuarrie writes. “Also of note was the ability of most TIPS ladders to handle the RMDs due, and, at higher rates of inflation, to shelter other assets from the need to take RMDs.”
The
“If TIPS yields are attractive when the ladder is set up, distributions from the ladder will typically satisfy RMDs on the ladder balance throughout the 30 years,” McQuarrie writes. “The higher the inflation experienced, the greater the surplus coverage, allowing other assets in the account to be sheltered in part from RMDs by means of the TIPS ladder payout. However, if TIPS yields are borderline unattractive at ladder set up, and if the ladder proved unnecessary because inflation fell to historically low levels, then there may be a shortfall in RMD coverage in the middle years, requiring either that TIPS bonds be sold prematurely, or that other assets in the TDA be tapped to cover the RMD.”
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The key takeaways on bond ladders
Other caveats to the strategies revolve around any possible state taxes on withdrawals or any number of client circumstances ruling out a universal recommendation. The main message of McQuarrie’s study serves as a warning against putting the ladder in a taxable brokerage account.
“Unsurprisingly, the higher the client’s tax rate, the worse the outcomes from locating a TIPS ladder in taxable when inflation rages,” he writes. “High-bracket taxpayers who accurately foresee a surge in future inflation, and take steps to defend against it, but who make the mistake of locating their TIPS ladder in taxable, can end up paying more in tax to the government than is received from the TIPS ladder during the first year or two.”
For municipal or other types of tax-exempt bonds, though, a taxable account is “the optimal place,” Spranger said. Convertible Treasury or corporate bonds show more similarity with the Treasury inflation-protected securities in that their ideal location is in a tax-deferred account, he noted.
Regardless, bonds act as a crucial core to a client’s portfolio, tamping down on the risk of volatility and sensitivity to interest rates. And the right ladder strategies yield more reliable future rates of returns for clients than a bond ETF or mutual fund, Spranger said.
“We’re strong proponents of using individual bonds, No. 1 so that we can create bond ladders, but, most importantly, for the certainty that individual bonds provide,” he said.
Accounting
Why IRS cuts may spare a unit that facilitates mortgages
Published
3 hours agoon
April 2, 2025
Loan applicants and mortgage companies often rely on an Internal Revenue Service that’s dramatically downsizing to help facilitate the lending process, but they may be in luck.
That’s because the division responsible for the main form used to allow consumers to authorize the release of income-tax information to lenders is tied to essential IRS operations.
The Income Verification Express Service could be insulated from what NMN affiliate Accounting Today has described of
“It’s unlikely that IVES will be impacted due to association within submission processing,” said Curtis Knuth, president and CEO of NCS, a consumer reporting agency. “Processing tax returns and collecting revenue is the core function and purpose of the IRS.”
Knuth is a member of the IVES participant working group, which is comprised of representatives from companies that facilitate processing of 4506-C forms used to request tax transcripts for mortgages. Those involved represent a range of company sizes and business models.
The IRS has planned to slash thousands of jobs and make billions of dollars of cuts that are still in process, some of which have been successfully challenged in court.
While the current cuts might not be a concern for processing the main form of tax transcript requests this time around, there have been past issues with it in other situations like 2019’s lengthy
President Trump recently signed a continuing funding resolution
The mortgage industry will likely have an additional option it didn’t have in 2019 if another extended deadlock on the budget emerges and impedes processing of the central tax transcript form.
“It absolutely affected closings, because you couldn’t get the transcripts. You couldn’t get anybody on the phone,” said Phil Crescenzo Jr., vice president of National One Mortgage Corp.’s Southeast division.
There is an automated, free way for consumers to release their transcripts that may still operate when there are issues with the 4506-C process, which has a $4 surcharge. However, the alternative to the 4506-C form is less straightforward and objective as it’s done outside of the mortgage process, requiring a separate logon and actions.
Some of the most recent IRS cuts have targeted technology jobs and could have an impact on systems, so it’s also worth noting that another option lenders have sometimes elected to use is to allow loans temporarily move forward when transcript access is interrupted and verified later.
There is a risk to waiting for verification or not getting it directly from the IRS, however, as government-related agencies hold mortgage lenders responsible for the accuracy of borrower income information. That risk could increase if loan performance issues become more prevalent.
Currently, tax transcripts primarily come into play for government-related loans made to contract workers, said Crescenzo.
“That’s the only receipt that you have for a self-employed client’s income to know it’s valid,” he said.
The home affordability crunch and rise of gig work like Uber driving has increased interest in these types of mortgages, he said.
Contract workers can alternatively seek financing from the private non-qualified mortgage market where bank statements could be used to verify self-employment income, but Crescenzo said that has disadvantages related to government-related loans.
“Non QM requires higher downpayments and interest rates than traditional financing,” he said.
In the next couple years, regional demand for loans based on self-employment income could rise given the federal job cuts planned broadly at public agencies, depending on the extent to which court challenges to them go through.
Those potential borrowers will find it difficult to get new mortgages until they can establish more of a track record with their new sources of income, in most cases two years from a tax filing perspective.

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