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Why CPA Candidate Numbers Have Decreased: Part 2

Jan 16th 2019
Owner/Publisher IPasstheCPAExam.com
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As we discovered in this series’ first article, CPA candidate numbers have been declining for decades.

While they ranged from 120,000-140,000 in the 80s and 90s, they’ve mostly stayed below 100,000 since 2004. Stricter requirements and rising fees seem to be keeping candidates away from the CPA, but a few other factors are also to blame.

In this second and final article, we’ll uncover two additional contributions to the career path's suffering popularity and assess whether hope is on the horizon:

2 More Factors Affecting CPA Candidate Cohort Size

1. International CPA candidates have struggled to meet the certification requirements in recent years

NASBA’s Candidate Performance Report began recording international candidate numbers in 2006. At that point, the percentage of internationals was 10.45 percent. From 2007 to 2016, that percentage averaged just 9.19 percent.

In 2011, the AICPA started offering the CPA Exam outside the U.S. Also, 46 jurisdictions currently participate in international candidate programs. But despite these concessions, the process of earning the U.S. CPA remains very challenging for internationals. And with many jurisdictions releasing more restrictive requirements in recent years, international candidates are running out of state board options.

For example, Colorado used to be ideal for internationals. It was one of the last states to adopt the 150- hour rule and automatically qualified ICMAI and ACCA members for the exam. But in 2009, Colorado ceased substituting ACCA certificates for the education requirement. It also reduced the number of countries from which a CA certificate was considered equivalent to a four-year degree. Furthermore, in 2015, Colorado stopped accepting a bachelor’s, master’s or doctoral degree with a certain number of
accounting and business credit hours in lieu of the experience requirement.

Other states made similar moves. In the past, Delaware accepted associate’s degrees, while Michigan granted an NTS for the CA certificate. At one point, Maine didn’t even require an accounting degree. And New Hampshire advocated heavily for internationals by recognizing Indian CA certificates, requiring fewer accounting credit hours and helping international candidates take the exam in the U.S. But, no longer. Finally, fewer states have the two tiers internationals appreciated.

Now, just eight jurisdictions work well for internationals. Furthermore, those who test abroad must obtain the license in three years and pay an additional $356.55 for each section. Clearly, internationals must overcome extra hurdles to earn the CPA, and these hurdles are pushing candidate numbers down.

2. The popularity of other accounting certifications has grown

After its 1896 establishment, the CPA enjoyed many years without much competition. Then, in 1941, the Institute of Internal Auditors (IIA) launched and eventually released the Certified Internal Auditor (CIA) certification. The Institute of Management Accountants (IMA) has been around since 1919, but in 1972, it debuted the Certified Management Accountant (CMA) credential.

By now, dozens of accounting designations exist, but some remain obscure. However, the CIA and the CMA are giving the CPA a run for its money with their growing membership. The AICPA boasts over 431,000 members, and, as of April 2016, there were 664,532 active CPAs. But the number of CPA candidates is decreasing, and the number of CMA and CIA candidates is increasing.

In 2017, the IMA experienced record-breaking growth as CMA candidate numbers peaked at 41,000, and, overall, IMA membership grew 11 percent to 90,0000+. The IIA hit similar milestones, as it awarded 149,083 CIA certifications in 2017, over 6,000 more than in 2016. Since 2007, the IIA has tracked a more than 88 percent increase in CIA certifications. Global IIA membership has also risen steadily, going from 164,896 in 2008 to 193,592 in 2017.

How have the IMA and the IIA managed to improve their certifications’ popularity? Increased advertising has helped. The IMA proudly explains that they produced their award-winning, first-ever integrated marketing campaign in 2017. Consequently, other accounting organizations have also filled the airwaves with certification plugs.

The IMA and IIA also appeal to internationals with simple certification requirements. As Dr. Philip Yaeger of Yaeger CPA Review elucidates, “The CMA has had tremendous growth in the far East and China. Because as long as accountants in China get some U.S. certification, the Chinese corporations will pay them phenomenal salaries. At some point, Chinese students were going for the CPA, but now with the experience requirements being so hard, the Chinese students are taking the CMA. The CMA has been
growing 60 percent in the East. The CPA has not.”

The CIA and CMA certifications also cost less than the CPA. Moreover, the IMA’s 2018 salary surveys find that CMAs around the globe typically make more money than both non-certified and Certified Public Accountants. Also, the 2019 Robert Half Salary Guide reveals that CIAs with just one to three years of experience in financial services can earn 6-figure incomes. Clearly, with more to make and less to lose with the CMA and CIA, some accountants are forsaking the CPA.

The Future of the CPA Candidate Population

Back in the day, the CPA certification was all the rage. But with more exacting requirements, higher fees, fewer concessions for internationals and other attractive certifications available, today’s accountants have enough reasons to be less enamored with the CPA. Millennials specifically aren’t as keen to pursue the CPA ASAP, as they crave a work-life balance that major public accounting firms fail to offer. As Dr. Yaeger confirms, “They are willing to work but not as indentured servants for 60-70+ hours a week.”

Therefore, something’s got to give if the AICPA truly wants CPA candidate numbers to resume all-time highs. However, as the certification continues catering to public accounting and the AICPA leaves the IMA’s and IIA’s marketing efforts unmatched, improving the candidate population doesn’t look like a priority.

So, candidate populations in the 90k range (or lower) may become the new norm. And if life with other certifications (or simply without the CPA) satisfies accountants, the presence of fewer CPA candidates may not be a bad thing. But it may be a permanent thing if all the aforementioned factors remain.

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