Just Abolish the CPA Exam, Says Guy


For at least a year now, we’ve been getting emails from some guy who really, really doesn’t like the CPA exam. And for at least a year now, we’ve pretty much ignored them because, well, abolishing the CPA exam is up there with curing cancer and people learning how to use turn signals, as in there’s no way any of that would ever happen in our lifetimes, or ever.

Still, maybe he has a point? So we figured we’d toss this one to the peanut gallery and see what you think.

Let’s start with the first email he sent us, way back in January 2020.

I believe that sooner than some of us hoped. This exam will be history and will go down in the record books as the most outstanding failed attempt to test the knowledge of those we wish to be licensed by their respective state for the lawful practice of their profession. For time immemorial before the CPA exam was computerized, those who took it for the first time and passed all four parts were 5% of of all taking the exam at a particular time.

It would be incredible to anyone that after so many years that percentage remains more or less the same. Who failed? The institutions of higher learning? The student candidates?

It appears to many that the exam is designed to test not what you know but what you do not know. The exam appears to serve as the artificial barrier to entering the profession by testing the candidate rigorously not on his current knowledge but on his lack of it. In 2021, since the technology part will be added to the test, how about eliminating CPE and, instead, retesting everyone?

The time has come to eliminate the CPA exam, test the candidate on what he/she knows, develop at least three levels of expertise at the Bachelor, Master and PhD levels within the school curriculum and once graduated, the student will be automatically certified when he receives his diploma for different levels of expertise. Finally, the certified graduated student should be federally licensed automatically after paying a fee to be able to audit a client as required by the SEC. This will eliminate the massive conflict of interest presently existing between client and auditor.

The federally licensed auditor will file his audit report with SEC to protect the public interest.

In 2019, we addressed the CPA exam as a barrier to entry, namely how CPA review and exam fees can be a huge burden for someone from a less-than-privileged background who, in true American fashion, somehow managed to pick themselves up from the bootstraps and secure a degree but might not have much left at that point to put toward licensure.

Additionally, the 150-hour rule has been cited as putting further strain on candidates, as this 2006 paper by Charles G. Carpenter & E. Frank Stephenson in the Journal of Labor Research shows. From the abstract:

[T]he imposition of the 150-hour education requirement reduces the number of candidates sitting for the CPA exam by 60 percent and that the “grandfathering” provisions of the 150-hour rule produce a substantial transitory increase in the number of candidates sitting for the exam in the year prior to the rule’s effective date. Examination of candidates’ pass rates on the exam also finds behavior consistent with the hypothesis that the 150-hour rule is a barrier to entry.

OK so they’re guarding the gates. Not all that surprising nor scandalous, you can’t just let any old riff-raff go traipsing through the profession signing off on shit all willy-nilly.

Back to the guy who hates the CPA exam. A month after his initial email he was at it again. Although he strongly believes the CPA exam should be abolished, obviously he’s not completely insane and suggesting that people should be allowed to practice accounting as easily as someone who draws dicks on bathroom stall doors calls themselves an artist. There’s a plan, and he laid it out for us:

SEC should licence CPAs for auditing SEC – registered public companies. There is an undeniable and tacit conflict of interest when you pay millions to the professionals charged with auditing the records of your organization and you have been doing it for decades, year in and year out. All CPAs charged and licenced by SEC to audit should have a PhD in Accountancy from an accredited US institution and be specialized in one or more of several branches of Accountancy. All CPAs charged and licenced by US Treasury, IRS, should have a Master of Science in Accountancy and be specialized in one or more of several branches of Accountancy. All accountants graduated with a Bachelor of Business Administration and majored in Accountancy should not need to be licenced and their professional activity in the field of accounting should be limited to bookkeeping and under the supervision of a licenced CPA.

No more state boards of public accountancy, no more state licencing and no more inadequate education on which to base such a portentous statement that expresses your opinion as to whether or not the public company’s financial reports present fairly the financial condition of it for the business period measured.

For someone who understands the barrier to entry, he sure loves him some advanced education. Moving on. We got another email a few months after that, though I’m not sure what “great news” he was referring to as he makes no mention of the article he was responding to.

Great news! and looking forward to the online examination; and later, followed by graduate studies leading to the PhD in Accountancy requiring a dissertation comprised of a comprehensive audit and tax preparation together with an audit of the client’s internal control system effectiveness. Upon completion of the required courses to be awarded the PhD in Accountancy degree and the presentation of the dissertation to the university’s examining board for evaluation and approval the candidate will be invested of his doctorate and issued his licence to practice his profession as a Certified Public Accountant. This licence will automatically be legally recognized by the US Securities and Exchange Commission authorizing the CPA to audit the records of an SEC-registered public company. The CPA exam as we know it today will be a thing of the past and not soon enough forgotten forever.

That last line reminds me of myself 13 years ago screaming into the abyss about how all the evil banksters were going to jail for blowing up the economy, which I sincerely believed at the time (spoiler: only one did). Ah to be young again.

So what do we think? Is this dude completely off his rocker? Or the next Barry Melancon, here to lead the chosen people out of Egypt (Prometric) and into the promised land? I’d love to know what the benevolent overlords at the AICPA think about all this.

The post Just Abolish the CPA Exam, Says Guy appeared first on Going Concern.

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