A Global Credential?

I talked in my last blog about the changes that are taking place to the CPA exam. Among those changes is a move to offer the exam internationally. That movement will start next year when the exam is offered in a few international sites on a test basis. If all goes well, it is likely that will lead to an expansion to other international sites. Currently, about 10 percent of the CPA exam takers are foreigners who travel to a U.S. exam location to take the test. So this change will make it easier and less expensive for these types of candidates.

Some U.S. CPAs may be saying - why do I care? I already have my CPA license, and why should we make it easier for foreigners to take the exam? Well, I don’t think this is just a case of AICPA and NASBA trying to be altruistic and helpful to foreign exam takers. I think it is also a matter of trying to make sure that the CPA credential maintains its elevated status in the international marketplace. And that is why all CPAs should care about this matter.

Historically, the U.S. CPA exam has been the “gold standard” of accounting exams, and the CPA credential has been recognized as the most prestigious of accounting designations. But just because a person or business is successful today does not guarantee future success, and that is also true for the CPA credential.

Over the past few decades, there has been a growing competition among accounting credentials around the world. One of the main competitors is the Association of Certified Chartered Accountants, a British accountancy organization which offers the Chartered Certified Accountant qualification (ACCA) and has been working aggressively to promote it and get it accepted in countries around the world. It is currently estimated to have around 140,000 members and 404,000 affiliates and students in 170 countries. If you wound the clock back about 20 years, most CPAs who knew about the ACCA would have laughed if you told them it would become competitive with the CPA. Well, they would not be laughing now.

So a major part of this evolution on the CPA exam relates to making sure that the CPA credential is not marginalized in the international marketplace. Like it or not, we are operating in a global marketplace for goods and services. And that marketplace also includes accounting credentials and knowledge workers. AICPA and NASBA are to be commended for taking this matter seriously and for adopting strategies to maintain the elevated status of the CPA worldwide. Providing the CPA exam in international locations and establishing a means for successful foreign candidates to obtain their CPA credential are important steps to help maintain the dominance of the CPA in the world market.

Comments

[John sharbaugh]

The current plan is that anyone who wants to obtain a CPA credential will have to apply through a state licensing jurisdiction, as is currently the case. So anyone who takes the CPA exam in an international location and passes it would have to applly for licensure through a state board of accountancy in a U.S. jurisdiction.

[Tony]

I wonder how state licensing and jurisdiction will work for international test takers. Or will it not even matter because international candidates will likely practice outside the US and only desire the CPA as another credential?

Offering the exam internationally sounds more beneficial for immigrants wanting to come to the US for work and will increase profits for NASBA/Prometric/AICPA from the increase of exams administered and will also offer cheap labor (outsourcing) for the firms (Big4) that can afford visas/sponsorship.

I feel like there are already TOO many people taking the CPA exam. Although the pass rates are low, candidates can re-take as many times as they want with little penalty.

Also, what about online freelance/contract work (elancing, elance.com)? How will increased online competition effect the smallest of local firms? If every elancer has the CPA credential, won't that dilute the value of having a CPA credential and ultimately decrease fees? Why would I pay $50 for a local CPA to do my tax returns when I could pay $10 to an overseas elancer with a hundreds of 5 star reviews/feedback-reputation points.

How about cheating? The GMAT and Pearson (exam administrator ala Prometric) had a huge scandal of international test takers cheating on the exam.

For the record, I am a young CPA candidate (FAR/BEC passed, studying for AUD) and know nothing about the ACCA. I do know that I dislike the idea of offering the CPA internationally. NASBA/Prometric should wait on the SEC and forthcoming IFRS roll out before offering the CPA abroad.

They should focus their efforts on increasing the exam difficulty and increasing the failure penalty (higher fees for retakes, 1 year waiting period for retake, etc). AICPA/NASBA/Prometric should be satisfied with the increase in US college accounting majors. There's already a good supply of CPAs to meet demand. How will the CPA credential evolve when the supply of CPAs is greater than demand?

After reading this entry, I remain unconvinced. Offering the exam internationally is a bad idea.