CPA with Just 120 Credit Hours: The New Rule in 2025 Explained

The Changing Landscape of CPA Certification

The accounting profession is on the cusp of a significant change that will impact aspiring Certified Public Accountants (CPAs) across the United States. The American Institute of CPAs (AICPA) and the National Association of State Boards of Accountancy (NASBA) have proposed a new rule that will allow individuals to obtain their CPA license with just 120 credit hours, rather than the current requirement of 150 credit hours. This groundbreaking proposal aims to address the growing shortage of qualified accounting talent in the country, and it presents both opportunities and challenges for those looking to embark on a CPA career.

Understanding the Current CPA Requirements

Before delving into the details of the proposed change, it's essential to understand the existing requirements for becoming a CPA in the United States. Currently, the path to CPA certification involves two primary components:

• Education Requirement: Completion of a bachelor's degree (120 credit hours) plus an additional 30 credit hours, either through a master's program or by taking additional college courses, for a total of 150 credit hours.

• Experience Requirement: One year of relevant work experience under the supervision of a qualified public accountant.

This comprehensive educational and experiential approach has been the standard for CPA certification for many years, ensuring that aspiring accountants possess the necessary knowledge and skills to excel in the profession.

The Proposed CPA Pathway: 120 Credit Hours and Competency-Based Experience

The AICPA and NASBA's new proposal introduces an alternative pathway to CPA certification that aims to address the growing shortage of accounting talent in the United States. Under this proposed rule, individuals would be able to obtain their CPA license with just 120 credit hours, rather than the current 150-credit requirement.

The key components of this new pathway are as follows:

• Education Requirement: A bachelor's degree (120 credit hours)

• Experience Requirement: One year of relevant work experience

• Competency-Based Experience Pathway: Demonstration of competency in seven professional areas and one technical area, as signed off by a supervising CPA

The seven professional competencies outlined by the AICPA and NASBA are:

• Ethical Behavior

• Critical Thinking

• Communication

• Collaboration

• Self-Management

• Business Acumen

• Technology Mindset

Additionally, candidates must demonstrate competency in one of the following three technical areas:

• Audit

• Tax

• Business and Financial Reporting

This new pathway is designed to provide a more practical and experience-based approach to CPA certification, recognizing that real-world training and competency development can be just as valuable as traditional classroom-based education.

The Driving Forces Behind the Proposed Change

The AICPA and NASBA's decision to propose this new CPA pathway is driven by two primary factors:

1. Shortage of Accounting Talent

According to the CPA Journal, a staggering 75% of current AICPA members are 55 years of age or older, meaning that a significant portion of the accounting profession is nearing retirement age. This impending wave of retirements, coupled with a decline in the number of CPA candidates sitting for the exam (from 48,000 in 2016 to just 32,000 in 2021), has created a concerning shortage of qualified accounting professionals.

By introducing a more accessible pathway to CPA certification, the AICPA and NASBA aim to attract a larger pool of aspiring accountants and address the growing talent gap in the industry.

2. Emphasis on Practical, Real-World Training

The AICPA has also recognized that the current 150-credit hour requirement, while comprehensive in its academic approach, may not always translate directly to the practical skills and competencies needed in the real-world accounting environment. Accounting firms have reported that even individuals with master's degrees in accounting often require extensive training and onboarding when they join the workforce, as they still lack the hands-on experience and practical knowledge required to excel in their roles.

By shifting the focus towards a competency-based approach, the proposed CPA pathway aims to better align the certification process with the actual skills and abilities that are most valued by employers in the accounting industry.

What This Means for Aspiring CPAs

The proposed changes to the CPA certification process present both opportunities and challenges for those looking to enter the accounting profession. Here's how the new pathway may impact different groups of aspiring CPAs:

For Current Bachelor's Degree Students

If you are currently enrolled in a bachelor's degree program, this new proposal presents a promising opportunity. Once the new rule is implemented (expected in 2025), you will be able to pursue the CPA certification with just your bachelor's degree (120 credit hours), rather than having to complete an additional 30 credit hours. This means you can potentially enter the workforce and begin your CPA journey sooner, without the added time and expense of a master's program.

To take advantage of this new pathway, it will be crucial to maintain a strong GPA and focus on developing the key professional and technical competencies outlined by the AICPA and NASBA. Networking with accounting firms and seeking out relevant internships or entry-level positions will also be essential to gaining the necessary work experience and competency-based training.

For Current Master's Degree Students

If you are currently enrolled in a master's program, you may have the option to choose between the existing 150-credit hour pathway or the new 120-credit hour pathway, depending on when you plan to complete your studies and apply for CPA certification.

For those who are nearing the completion of their master's degree, it may make the most sense to continue with the current 150-credit hour pathway, as this is the established and well-understood route to CPA certification. However, if you are still in the early stages of your master's program, you may want to consider switching to the 120-credit hour pathway once it is implemented, as this could potentially save you time and money in the long run.

The Next Steps in the Proposed CPA Pathway

The AICPA and NASBA's proposal for the new CPA pathway is currently in the public comment stage, with the comment period open until December 6, 2024. During this time, accounting professionals, educators, and other stakeholders are encouraged to provide their feedback and insights on the proposed changes.

After the public comment period, the AICPA and NASBA will review the feedback and make a final decision on whether to move forward with the new 120-credit hour CPA pathway. If approved, the new rule is expected to be implemented in 2025, providing aspiring CPAs with an alternative and potentially more accessible route to certification.

Conclusion: Embracing the Future of CPA Certification

The AICPA and NASBA's proposed changes to the CPA certification process represent a significant shift in the accounting profession. By introducing a new pathway that requires just 120 credit hours and a competency-based approach to work experience, the organizations aim to address the growing shortage of qualified accounting talent and better align the certification process with the practical skills and abilities needed in the real-world accounting environment.

For aspiring CPAs, this proposal presents both opportunities and challenges. Those currently enrolled in bachelor's degree programs may be able to take advantage of the new pathway, while current master's students will need to carefully consider their options. Regardless of your current educational status, it will be crucial to stay informed about the proposed changes and to proactively develop the key professional and technical competencies that will be required under the new CPA certification model.

By embracing the future of CPA certification and adapting to the evolving needs of the accounting profession, aspiring accountants can position themselves for success in a rapidly changing industry. Whether you choose to pursue the existing 150-credit hour pathway or the new 120-credit hour option, your commitment to excellence, practical training, and continuous learning will be the keys to unlocking a rewarding and fulfilling career as a Certified Public Accountant.

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