Approval of Competency-Based Education for Indiana CPAs Could Set Bar for National Change

Sep 30th 2016
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In a move that could transform the professional development model of learning for Indiana CPAs, and potentially have a carryover effect for CPAs nationwide, Indiana Gov. Mike Pence signed a new rule that approves competency-based education to count toward Indiana CPA license renewal.

This groundbreaking rule change – initially proposed by the Indiana CPA Society (INCPAS) and signed on Sept. 22 by Pence, the vice presidential running mate for Republican presidential nominee Donald Trump – marks the first time in the history of the CPA profession that competency-based, and not hours-based, education has been permanently approved.

The Indiana Board of Accountancy approved the rule change on July 15.

So, how might this impact CPAs in the future?

According to INCPAS, the rule change not only paves the way for competency-based education to replace the decades-old hours-based model in Indiana, but it also could potentially open the door to national transformation. It signifies the first major change to the CPA profession’s education model since it was introduced in the late 1960s.

“The governor’s signing of this new rule is a landmark event for the CPA profession in Indiana,” former Crowe Horwath CEO Mark Hildebrand of Carmel, Indiana, said in a written statement. “The Indiana CPA Society has worked long and hard to begin the process of transforming the professional education model for CPAs, and this is a significant step in that journey.”

Pence’s signing brings the new rule to its last two steps before becoming official. It now will be published in the Indiana Register and then becomes effective on Oct. 22.

The rule adds two new options for obtaining the required ethics education that all licensed Indiana CPAs must get every three years. The first new option is to take a competency-based course, with completion measured by participation, not by the length of time it takes to complete. The second new option is to earn credit for experience serving in a noncompensated ethics capacity for a professional or trade organization. The traditional, four-hour classroom course will remain as the third option.

INCPAS would ultimately like to see all Indiana “CPA learning” become competency-based, said its president and CEO, Gary Bolinger, CAE.

“Competency-based courses have been proven to be more meaningful, more adaptive to a learner’s needs, have much broader application, and be more engaging than traditional classroom courses,” he said.

However, Indiana’s complete transformation to competency-based education will not happen overnight, Bolinger cautions.

“Professional education is behind higher education in this area, and we need to catch up,” he said. “It may take a series of smaller steps, such as this one, to get the momentum going. But once it becomes clear that competency-based learning is the best method for both CPAs personally and for CPAs to serve their clients’ and employers’ needs, we believe this transformation will occur.”

On a larger scale, Bolinger said, this watershed rule also has the potential to set the stage for national change – if state CPA societies around the country choose to follow in INCPAS’s footsteps by updating their professional development offerings to include competency-based learning and pursuing regulatory changes for it to count toward CPA license renewal.

“Moving completely to competency-based education on a national level will take all parts of the chain to be visionary, future-focused, and not afraid to try new things, refining as we go,” he added. “We recognize it will also take a considerable amount of time, effort, and coordination among state CPA societies, boards of accountancy in the 55 jurisdictions, and national leadership from the AICPA and NASBA. It’s not an easy or short-term effort.”

It is difficult to tell what CPA license renewal requirements could look like in each state because the CPA profession is regulated at the state level, Bolinger said, so transformation will be different from state to state.

“Just as all states (except Wisconsin, which does not have a continuing professional education requirement) currently have an hours-based education requirement, our hope is that the education model in the broadest sense nationally will eventually become competency-based,” he said. “The reality is that it will likely be a combination of competency-based and hours-based in each state.”

However, any degree of competency-based education allowed in each state, he emphasizes, “will be an improvement over the current model.”

“Change is incremental,” Bolinger said. “Competency-based education is designed to do exactly what it says – make the learner, in this case CPAs, more competent. This then enables CPAs to be more responsive, more analytical, more agile and adaptive, and enable use of skills, such as critical-thinking and problem-solving, to function effectively in a business environment filled with increasing complexity and constant change.”

Related articles:

Indiana Looks to Expand Ethics Requirement for CPAs
Indiana Adopts Competency-Based Education for CPA License Renewal

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