‘The Dying Language of Accounting’

Paul Knopp, KPMG US CEO, writing in an op-ed on WSJ: According to a United Nations estimate, 230 languages went extinct between 1950 and 2010. If my profession doesn’t act, the language of business — accounting — could vanish too. The number of students who took the exam to become certified public accountants in 2022 hit a 17-year low. From 2020 to 2022, bachelor’s degrees in accounting dropped 7.8% after steady declines since 2018. While the shortage isn’t yet an issue for the country’s largest firms, it’s beginning to affect our economy and capital markets. In the first half of 2024, nearly 600 U.S.-listed companies reported material weaknesses related to personnel. S&P Global analysts last year warned that many municipalities were at risk of having their credit ratings downgraded or withdrawn due to delayed financial disclosures. Our profession must remove hurdles to learning the accounting language while preserving quality. In October, KPMG became the first large accounting firm to advocate developing alternate paths to CPA licensing. We want pathways that emphasize experience, not academic credits, after college. Most people today must earn 30 credits after their bachelor’s degrees — the so-called 150-hour rule — work under a licensed CPA for a year, and pass the CPA exam to become licensed. Research by the Center for Audit Quality finds that the 150-hour rule is among the top reasons people don’t pursue CPA licensure. A December 2023 study found that the requirement causes a 26% drop in interest among minorities. There is a consensus for change, but we can’t waste time. Many state CPA societies are working on legislation to create an alternative path to licensure. State boards of accountancy should replace the extra academic requirement with more on-the-job experience. A person who is licensed in one state should be able to practice in another even if reforms create different licensing requirements.