Latest / The Accounting Podcast / What Will Replace 150-Hour Rule? | EY CPAs Fired For Taking Too Much CPE
Transcript
- Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding! Blake Oliver: [00:00:04] If you make a system that that you have to cheat to get through, you're not going to produce ethical CPAs, that's for sure. David Leary: [00:00:12] Coming to you weekly from the OnPay Recording Studio. Blake Oliver: [00:00:19] Hello, and welcome back to the Accounting Podcast, your weekly roundup of accounting news, and the number one podcast for accountants in the world. I'm Blake Oliver, CPA. And I'm. David Leary: [00:00:30] David Leary. Blake Oliver: [00:00:31] Not a CPA. David Leary: [00:00:32] Not a CPA. Blake Oliver: [00:00:34] But we will see plenty of CPAs at Intuit Connect where we're headed, uh, on the weekend. It's Friday, we're recording Friday and doing that in advance. Normally we're Monday and we are going to go to Vegas at the Aria to Intuit Connect 2024, which used to be called QuickBooks connect. David Leary: [00:00:54] Yeah. And you're starting to see on social media, people are enroute. They're already at the airport. They're checking their bags. They're getting on planes. So all the QuickBooks loyalty or Intuit loyal, I guess maybe it's more that they say it because they rebranded it, right? Right. This year. Blake Oliver: [00:01:09] The focus is mid-market. We're excited to learn about Intuit's Enterprise suite. That's what they're calling it, right? David Leary: [00:01:15] David, I know this is a branding problem because I feel like it's suite or solutions. And that's that's a branding problem because we don't. You're not sure? I don't remember it. Oh, okay. And that's a problem, right. If people can't remember what the name is that's a branding issue. It's so is is is the abbreviation or acronym they're using. The big chat though is going to be about price because they are just not being forthcoming about the price. Right. They want to go enterprise sales. And you have to. Blake Oliver: [00:01:47] Ask for the price. You have to talk to somebody. It's it's and whenever, whenever that's the situation, you know, it's going to be like $10,000 or more per year. David Leary: [00:01:56] I've heard it's pushing 20. That's. Wow. We'll have much more clarity about this after you come next week after we record. Blake Oliver: [00:02:03] That's my number one question. And if you're watching the live stream and you are going to be at Intuit Connect, come to my session. It is on Tuesday at 9 a.m. in breakout six. My session is called Accountants Automation Toolkit harnessing AI, Zapier, and Workflow Software. I am going to do a 90 minute session, and a big chunk of that is a live demonstration. Well, actually, I'm not doing it live. I, I prerecorded it because there's so many apps going on, I don't want something to break. Um, but I'm going to be presenting it live with screenshots showing you how you can build your own AI automation into workflow software using Zapier and ChatGPT and Process Street. And specifically, I'm going to show you how to automate financial statement analysis. Put that into an email that you can then edit, review, and send to your clients. And you could do that at scale. This is something that companies like your part time controller are doing. Bookkeeper 360 is doing. They're doing it in their own apps. But you don't have to have an app to do it. You can actually build it yourself with off the shelf tech. David Leary: [00:03:10] And I have a question. So I want to I'm going to go to this session for sure. Is this one of those sessions where if I pull my laptop out and I have Zapier and all my stuff ready to go and connected, can I follow along and hack this together as we go? Or is it more of digest it and rewatch it a bunch of times to build it? Blake Oliver: [00:03:27] I would recommend watching it following along, and then I will make the slides available so you can follow along with those slides later and see my methodology, because there are a lot of tricks and and actually in the demo, I screw up a few times and have to go back and fix things because it's so, you know, nitty gritty. And so I want to help save people a lot of time. I spent like a year learning how to do this, and we use this for so many things at earmark to automate. It's the perfect combination of human and AI. I'm really excited to share it, and I am committed to doing this as an earmark webinar once Intuit Connect is over. So for those who don't make it to the conference, right, we want to make this knowledge accessible to everybody. You'll be able to join it on an earmark webinar. So go to earmark Cpcomm, put in your email address on the top of the screen, and join our mailing list so that you get notified when that webinar goes live and is available. Um, David, let's thank our sponsors. David Leary: [00:04:26] So this week's sponsors, we have Live Flow, Zoho, specifically their Zoho Practice product and a new app called tabs. Tabs. And we'll have apps from all of them later in the episode. So support our sponsors, please. Blake Oliver: [00:04:39] Thank you for your support. And now on to the news. Our top story this week is about the AICPA and Nasba proposed competency pathway. And joining us to discuss it from the perspective of the great state on the West Coast. California is Amber setter. Amber is the chief enlightenment officer at Conscious Public Accountants and a friend of the show. Welcome back Amber. Amber Setter: [00:05:09] Thank you for having me. And, you know, massively gratitude to be on the number one accounting show in the world. Kudos to the two of you. Um, to talk more about a conversation that I think is really important and something that I care deeply about. Blake Oliver: [00:05:23] Well, thank you, Amber. And, you know, you're a big part of that reason, I think, why people come back. David Leary: [00:05:28] So I think this is a record. This is your third or fourth time. Amber Setter: [00:05:32] I think it is. My third time is a three peat. My anyone else done that before. Blake Oliver: [00:05:38] You might be the on the leaderboard there at number one. Yeah. We don't we don't often have people back. So uh but but when you sent me an email about this proposed AICPA Nasba Pathway to licensure I mean, I said, wait, we got to talk about this with Amber because I on the show, David and I have discussed my reservations with this new alternative model to the 150 hour rule, and it sounds like you've got some strong feelings about it, and perhaps have some insight as to what California might do when they when the California Board of Accountancy meets. So just as a refresher to our audience, this is the new competency based experience pathway that was issued in September by the AICPA and Nasba, together, the two major national organizations that govern the accounting profession. And what I want to pull up here is this chart here. So, Amber, would you mind just walking us through what this proposed pathway is? Amber Setter: [00:06:47] Yeah. So what? And it took me some time. I'll be honest. I read it and I said, what? This makes no sense. And then I had to talk to other people about it to make sure that I was actually understanding what they're proposing. Um, so what it is, is the very, very good news that I don't think we should step over and we would be remiss to not celebrate is that the AICPA and Nasba have finally put something out, which is an alternative to the 150 hour rule. Right. So for years and years and years, we heard it wasn't possible to get rid of the 150 hour rule. I came on the show in early August and said, guess what? The California Board of Accountancy has advised their staff to write some regulations that are going to be an alternative. I think it's a big domino and it has been a big domino, right? So now finally, I feel like very, very good news. More clapping to to happen that we're seeing something with a bachelor's degree that will be considered an equivalent to the 150 hour rule, and that is big. Amber Setter: [00:07:50] Now the question is going to be what is going to replace it? And that's a big question. So what the AICPA and Nasba have put out is that an equivalent to 150 hours, someone would still be required to earn a bachelor's degree. So you're going to see, just for what it's worth, a move away from the numerical number of units, because there's conversations in higher ed that the number of hours to get a bachelor's or master's might change. So we're going to go to language. It's going to say bachelor's or master's here. It's saying a bachelor's degree. They're going to also have to complete one year of general experience pass the CPA exam. But the real kicker in here in this particular proposal is they're also introducing something new called a competency based experience pathway. So this is not going to come in lieu of the already existing general experience that the state boards are the ones that handle today. They're saying, hey, we want to insert something or ourselves into this process with this competency based experience pathway. Blake Oliver: [00:08:57] Okay, so that makes a lot of sense. This chart here on the screen is extremely confusing to me. And we actually misreported this when we first received it because it says one year of experience, not two years of experience. And so I thought initially that it was going to be bachelor's degree, one year of experience. And then whatever this competency based experience pathway is. But the competency based experience pathway is like another year of experience, right? Correct. Amber Setter: [00:09:34] If you read the fine print, it's 2000 hours. And it's not just any 2000 hours, it's 2000 hours that right now they're saying has to be done in eight different competencies. Right. So the passion that I have for this subject and sort of what brings me to this conversation is my career progression includes being a campus recruiter. So talking to thousands of students about the educational requirements they need to be eligible for CPA licensure. So we would hire them or not. And then being a learning and development manager in the firm who is responsible for all the initial licensure, do you know how hard it is to help someone sign off on their experience? Right. In California when I had that role, there's two types of license. There's a general license, and then there's an attest license, which makes sense, right? If someone's going to sign off, they should have stricter requirements. Totally get it. But that's not easy to actually track and staff people accordingly. And so now we're going to put in an additional 2000 hour experience requirement on eight different subjects. It's wild. It's impractical in the actual practical application. I think it's going to be very bureaucratic if it goes through. Blake Oliver: [00:10:51] So the I was hoping that we would go back to the previous model, or just add that in to the options to the different pathways where it was very simple. It was 120 hours of education and two years of experience, and the experience for both years is like the experience requirement now, where it's just a sign off by your supervisor who sometimes has to be a CPA, sometimes not, depending on the state. And it's just hours, right? Do your 2000 hours in or 4000 hours, whatever it is. Right. But it's not that. It's it's a lot more complicated. David Leary: [00:11:31] So there's the checklist. We looked at that because that's what we thought like, oh somebody has to go through and say they have these competencies. But you're saying, Amber, if I'm hearing correctly, whoever is signing off on that checklist needs to make sure they did X amount of hours in each one of those competencies. Amber Setter: [00:11:45] I, you know, I haven't read that much fine print. I know it's 2000 total hours and they have to demonstrate seven core competencies. And then the eighth is what they're claiming is flexible, right. So I don't know if you're familiar with what they did with CPA evolution. When they modified the CPA exam they took out the Bec section. And they added in discipline section so people could study what is more relevant, what they're more interested in, which I think is a wonderful idea, but they've kind of taken that quote unquote flexible model and thrust it into here. So you see seven core competencies and then a choice for your eighth competency. So it's it's quite convoluted. Um, I think I mean, I know what it was like to be in a firm to try and help people through this. And I'm like, I mean, I'm my eyes go sideways when I see all this stuff. Blake Oliver: [00:12:40] Yeah. The thing that bothered me when I saw this or the the potential issue, I saw having been a manager in a large public accounting firm, is that this certification form is going to become the responsibility of managers, directors and partners in firms. And are we seriously expected to evaluate all of our staff for all of these competencies? It's a lot of extra work unless I'm just checking yes and signing off on it, in which case it's what's. David Leary: [00:13:16] The point of this? Blake Oliver: [00:13:16] What's the point? Right. So you mean that's. Amber Setter: [00:13:19] Not going to protect the public? Blake Oliver: [00:13:21] Yeah. And so, um, so that's that's a concern of mine. The other question I have, Amber, is, is like, how will all of this be administered? What is the the the mechanism for processing all of this paperwork? Who is going to be in charge of this? Is it the states or is it somebody else? Amber Setter: [00:13:43] Um, I don't know. I think that's something to be determined. There is a survey that they put out in this, and in the survey they asked questions. And the questions something along the lines, would you like nasba if we do this to be like the National Registry? And that to me is kind of a red flag. As somebody who knows what it's like with a CPE registry and what it is to get certified to be able to give CPE. It costs a lot of money that Nasba makes money off of. So I have a little professional skepticism there. I mean, but that the I don't know that this is really thoughtful in terms of the practicality of it. And I think if we take a really big step back, what I'm a little just concerned about when I'm observing what I see posted on LinkedIn and what I'm seeing in conversations is people are, you know, there's this misbelief that like, yes, the AICPA and Nasba are offering an alternative to the 150 hour rule. Right? And it's like, imagine you're in the desert, you know, you're crawling through the desert and you're thirsty. I need water, I need water, I need water, I need I'm dying of thirst. Amber Setter: [00:14:57] And the Nasba and the AICPA have come up with a glass of pond water and you're like, oh, finally, like something. But you don't realize that pond water is not clear at all and that there's bacteria in it that's actually going to be destructive to you. And so I really want to caution people to not just accept this alternative to the 150 hour rule without some discernment on the actual impact that it could have on the candidates, because we're talking about how burdensome this is for the firm's candidates are wildly confused by an application process that has existed for decades. Right. We asked them to Do you learn what state board they need to apply to, and then they have to pay their money and go on the Nasba website, and then they have to go schedule with Prometric, and then they need to monitor the AICPA website for score release and administration dates, because now there's blackout periods again. So we're asking candidates to go through a labyrinth of a confusing process. We don't need more confusion with an eight point competency model. Blake Oliver: [00:16:09] And you pointed out in your letter to AICPA and Nasba, which you shared with me, that, uh, candidates have to navigate and interact with at least five different stakeholders on their path to licensure. First, you've got your state Board of Accountancy. Educational requirements differ. Which state board do you apply to? Is it the state where you graduated from? Is it where your employer is located? Is it where you physically sit while you're working? Then you've got to go to Nasba and they collect their exam fees and schedule you. Then you've got to go to Prometric to schedule your exam. Then you get to go to the AICPA in order to monitor the score release timeline and figure out when you're going to get that information. And then you got to get your employer to sign off on the work experience. And this would add another step into that. Amber Setter: [00:17:03] Yes. And let's also remember that people don't stay in jobs for beyond two years. So if we have a experience kind of requirement that it's one year of your general and then it's one year of your competency, that's difficult. I'm actually coaching someone right now who has a job in a very prominent, established organization, a brand we all know, and this particular person works in a role that's all around, like financial budgeting and analysis within the marketing organization of a multi-million dollar huge company. And in my conversations with her, I said, at some point, you're going to have to talk with your employer about transitioning into a role where you're actually working with the CPA that's going to be able to sign off on your experience, right? Like, God forbid someone's not in a public accounting firm like public accounting firms at least have a grasp of some of this. But if someone's in industry or is working in a nonprofit, you think you're going to have these what they're terming CPA evaluators that are going to understand all of your eight competencies and sign off like it's going to be a new barrier to entry. Blake Oliver: [00:18:18] So the person who signs off needs to be a CPA in this pathway. Amber Setter: [00:18:24] Um. Let's look. It's in here. There's so much fun stuff. I mean. Blake Oliver: [00:18:29] Yeah, it says CPA evaluator name. So so this is actually requiring that you have a CPA EPA supervising you, which is actually one of the biggest challenges to getting the experience requirement currently is that many aspiring CPAs are working for managers who are not themselves CPAs anymore. So how do you get your experience requirement? It's almost impossible in a state that requires that, so this just makes it worse. I don't know if the people who came up with this have really thought it through. David Leary: [00:19:03] And you know how this is going to be. The CPA is going to be busy. They're like, just fill it out and I'll sign it. And so you're going to go through and check it. You're going to fill the whole document out, put the check marks in and then put it on their desk. They'll sign it and then move on. Blake Oliver: [00:19:13] Yeah. But we should not be designing systems that encourage that kind of unethical behavior. If you if you make a system that that you have to cheat to get through, you're not going to produce ethical CPAs, that's for sure. You know, just like those ethics exams that were impossible to pass. So everyone's, you know, sending around the answer sheet at at all the big four. It's just. Yeah. Amber Setter: [00:19:37] Well, that's I think why I was so surprised by it, because I'm like, wait, we're they're suggesting we're going to layer in something entirely new. And as I sat with that, I thought, it just feels like there's a lack of trust, you know, in ways it's inferring that there's not trust of the state boards to continue doing what they've been doing, which is to handle and, and do whatever they need to do to ascertain someone's getting the right experience for the right type of license. And then we're looking at some competencies that I think they must have copy and pasted from somewhere else. Like, these are things that it seems like you would be learning in your academic experience. And I don't know why we need this extra thing. Blake Oliver: [00:20:25] Yeah, it just seems overly complicated. And we should be aiming for simplicity and streamlining initial licensure, not making more paperwork and making it more confusing and making it more complicated. Amber Setter: [00:20:41] Correct. And that's where I think that it's, you know, I don't want to step over how amazing it is that that domino did fall, right. Like, we are now at a at a point where it's okay if we're not going to have the 150 hour rule, what are we going to do and what are we going to have that we can be aligned on and feel comfortable with, with the path forward? Right. I'm not comfortable with this because of it's it's really complicated and we need simplicity. And I think that I would encourage everyone to, in the profession to just really slow it down and use discernment as we think about what the solution is going to be. Let's not just be super happy that the AICPA and Nasba said, okay, here's here's our alternative to 150. And then you take it and you drink that pond water. Yeah, maybe you could wait and hold out for some filtered water. Blake Oliver: [00:21:31] To me, it feels like, uh. It's like the wall is coming down and but, but but the national leadership is just retrenching and putting up new barriers in place of the old ones. And I don't even know if they're doing it consciously or if this is just how bureaucrats think. But it's not simple. It's obviously very complicated because we've been talking about it for 20 minutes and probably on this show, we've talked about it for over an hour just to figure this out. And you think that the CPA candidates are going to be able to figure this out and and everybody is so busy, why create more work for people? Um, I mean, it must be people who just don't have enough work to do themselves. That's all I can think of. They sit on committees and they they they come up with these harebrained ideas. I'm. I just got to say it like I see it. It. This just makes no sense to me. Why not go back to what it used to be. It worked. And most CPAs were licensed under the old regime. So, you know, are you saying that like, today's CPAs are not competent? Amber Setter: [00:22:42] That's the ultimate irony, which I'm like, about to burst out laughing, is the people that are most resistant to this are the ones that didn't even get a fifth year of education, if you think about it. Yeah. And yeah, that's I think I was especially excited by what California offered. Um, in in is offering because they're, they're working on that legislation, which is let's go kind of back to what it was. Right. There were two key pieces in California, which is we're going to go to a bachelor's degree in two years of experience, which is wonderful. And then for the mobility piece, we're just going to recognize other states. If you're a CPA in another state, we trust the other state that they have decided what seems appropriate in terms of education, ethics and experience, and let's leave it at that. Kind of like the analogy that you use often with the driver's license. And this alternative that Nasba and AICPA have put out to me is we don't trust people in the ecosystem. We're going to insert ourselves into the process, and it just doesn't feel right. You know, like the AICPA is a membership organization that I wish they, you know, a different way they could have approached this was to be to say to the membership or the profession, hey, we've heard you the 150 hour rule is a barrier to entry. And we want to rethink this. How are we going to go in on this together? Instead, they came up with this report that is totally out of touch with what it's actually going to be like for a candidate and the employers. David Leary: [00:24:27] What's the legal battle of this going for before the battle was when an alternative pathway. No, there's no alternative pathways now. Now it seems like everybody's on the same page. There needs to be an alternative pathway to 150. But now it's whose alternative do they want to use? So is there a brewing battle between, you know, you have almost 20 states that have some sort of legislation now I think, bubbling up. And then you have the other states that don't is AICPA and Nasba. Is their strategy going to be to go to all those states that don't and say, hurry up and adopt our plan? And then you got this tipping point where the other states are going to have to concede, whereas California, other states like California and Minnesota that are a little bit tougher on this, are they just going to really push back? Is there a revolt happening? Like what's your take on the the politics of this? Amber Setter: [00:25:09] I don't know what's going on from a legislative perspective candidly, but as I hear you say, that it feels like what we really need in the profession is psychological safety. And psychological safety is we can have high intellectual friction. I once heard Ron Baker talk about Vera Sage they described as a think tank. We can battle in the arena of ideas, and we need low social abrasion. And I'm afraid that there's a lot of social abrasion here where if, God forbid, you speak up against these behemoth entities, that you don't have a space, they're like, you can't you can't have a divergent perspective. And that's not what we need. We don't need political fighting. We have enough coming up with our presidential election, right? Like, can we just all agree that we want the public protected and that we want more CPAs, and we need to do these things together and collaborate together and not try to, you know, I've said, and I'll say it again, I feel like right now there are four E's for CPA licensure. It's experience, education, ethics and ego. An ego is putting out plans that are not actually thoughtful and helpful to the ecosystem. Blake Oliver: [00:26:36] And you know what the proof is of your theory, Amber. It's that the top down leadership has failed to improve the CPA profession. Over the last 20 or 30 years. We have seen salaries stagnate. We have seen the number of CPAs decline. All the numbers are going down. I accept the only. The only number that seems to be going up is accounting firm profits. That's about it. That's the only good news there is. And that doesn't help the people who are entering the profession, because that's 15 years down the road and they're not as interested. So I want to highlight some of our live stream viewer comments. Welcome to the live stream. Lo-fi has a really good question about the education requirement. Amber, you said a bachelor's degree, But I think there's potentially still some required accounting courses, even in the California plan. Amber Setter: [00:27:33] Yeah. So the question is I have a master's in economics. And what are the implications if I want to take the CPA exam? That's a good one I don't know. This is again going to be and this is another area where confusion comes in for a candidate. Right now every state makes up its own educational requirements. Right. And so that's where they're like, well do I follow the requirements based on where I work or where I live or where I went to college? I don't know, I would assume that there's going to be accounting related in there. I just don't know that off the top of my head. And this is all dynamic and moving fast, and. Blake Oliver: [00:28:10] My hope is that the states will get rid of the requirement for specific accounting courses because of this exact situation where you have somebody who's really smart, got a master's in economics, which I know because I've taken it is really freaking hard to get a master's in economics. Like I barely made it through macro. And so if you can do that and you can pass the CPA exam, I don't see why we should make you go back and sit in a classroom to go get 20 something courses in accounting, which you probably already learned on the job. And that's that is really if AICPA and Nasba really wanted to open up the pipeline to a lot of smart people, that would be something that they should consider. Absolutely. I hope California really thinks hard about that. Get get rid of the listing of classes. And what that will also do is it will empower educators to change the curriculum, to adapt, to adapt it to the times. Because when you have to teach these specific courses, it doesn't leave a lot of room for innovation. There's like not much space in the curriculum. Amber Setter: [00:29:19] You're so right. I mean, you know, if I look at the history of in California. They were the 49th state to adopt the 150 hour rule. Right. And they the reason that they went really specific is they didn't want hollow units. They didn't want the basket weaving. They wanted it to be meaningful. But then it has an unintended consequence, which is it's too restrictive. And you're right, the educator community has to go and say, what is the board requiring? And then how do we change our curriculum and all of our course titles? And then there's a ton of time being wasted making sure taking and tying all those things match. So I do really believe that there's a lot of value in studying other disciplines and having other work experiences that come in and fuze our profession with different perspectives. And look, no one's saying, let's make the exam any easier, right? By the way, I asked the AICPA. I said, what is, you know, on average, how many sections does a candidate take to pass for? They take six and a half sections on average. To pass for the exam is not easy. Most people, the majority of people are going to fail one or more sections. So we're not, you know, anyone that says we're diluting it, these old gray haired people that took four years of education. We're not diluting it by any means. We're just trying to make sure that the public is protected and there's enough people to do the work, and there's not right now. Blake Oliver: [00:30:49] And I want to point out just how restrictive the education requirements are in California and in many states. Here is the California Board of Accountancy tip sheet with educational requirements for CPA licensure, you have to have at least 20 units in accounting study from the list of accounting subjects here, which is accounting, auditing, taxation, financial reporting, financial statement analysis and internal external reporting. And then you've got to have no more than 14 units in business subjects, and they're specifically in these subjects. So if your course doesn't have that in the title, it can be hard to get it accepted. Like you said, Amanda or Amber, I apologize. And and then you've got to have these specific units from these other areas. Right. So it it's just it's very prescriptive. Why don't we just require the bachelor's degree. Amber Setter: [00:31:46] Well that's what I believe California is going to. But it might be I don't I can't speak specifically, but they are getting away from that. They're recognizing while it was designed with good intent, it is too restrictive. And by the way, that tip sheet and the formation of that tip sheet, fun little fact was the catalyst for me doing the CPA exam seven years later, because I really didn't like it was so prescriptive. That said, you could take a business leadership course, but it had to say business leadership. And I thought, I have a master's in leadership and not one of my classes was qualified. This is a joke, right? And I want to I want to shape what's going into this. And they said, well, if you want to shape it and have a seat at the table, you got to be a CPA. So I did it seven years later. That's fun. Little fact, because I didn't like that. I didn't like that then. And that's the advocate in me is like, how do we make this better for people? How do we make this better for the profession? I'm a proponent of education. I have over 150 hours. I just don't like what it's doing. Blake Oliver: [00:32:49] We have a comment here from Arvind who says In Texas at least, they divide CPA candidates into 4 to 5 admin people that will read the application and they are very useful in crafting the experience statement. So there is a mechanism to evaluate. I don't really understand that. Amber Setter: [00:33:06] I don't either. But what I am reading in that is that states do it differently in order. What qualifies for experience. And I would imagine that there is still room for a competency way to exist with the states. Yes. You know, we don't have to throw the baby out with the bathwater and say competencies all bad. What's bad to me is layering in another experience requirement and a state board requirement, and the amount of confusion that creates in the system. So maybe state boards will want to do something like this, but that's going to be a state issue where it's always been the responsibility and under the authority of the state. Blake Oliver: [00:33:54] Yeah. I think you're pointing out one of the problems with this whole relationship between Nasba and the state boards, which is that Nasba pushes legislation to the state boards, which then adopt it, and the state boards aren't going to actually have to implement it. If they had to create a system to track all of this experience and process all of this paperwork. Maybe they would realize this isn't such a great idea, and it should be streamlined because it's going to create a lot of costs. But the way that it's done is that Nasba creates the rules. It's really complex. But Nasba also benefits in the form of all these fees they collect and who pays those fees. It's the CPA candidates, not, you know, not not the boards of accountancy. Right. Amber Setter: [00:34:45] So and in this proposal it will also be the CPA firms. Right. So I you know, I was a learning and development manager. I had to choose certain technology that was, you know, you could use to administer CPE based on rules that Nasba made up, not what was the best learning mechanism and technology out there. Right? Kudos to Mark for figuring out the podcast thing. Like, hey, we. Blake Oliver: [00:35:11] Hacked it, we hacked it, we read all 66 pages and we reverse engineered it to work for podcasts. Amber Setter: [00:35:17] See what I mean? All 66 pages at. Least with this thing, we only got 12 on this PDF over here. Blake Oliver: [00:35:22] Oh, there's more guidance coming, I'm sure. Um. Chayton says being a student in the middle of this has been a roller coaster with so much confusion. How do students choose the right path? Is it better to just stick with the masters? Amber, you got any advice for Chayton there? Amber Setter: [00:35:39] Well, this is a good this is a good question. Um, because I found myself thinking to a student, should I just tell them to not do the masters and just hold off for a minute? You know what I mean? Like, it's it's the it's a tough call. I to really be able to understand that. I'd have to understand more about the legislation, how soon and fast this is going to happen or not happen. Um, you know, the reality for a candidate is if they want to work in a CPA firm environment, there are often internal rules around promotion that you need to be a CPA to get to a certain level, and some of those firms are also strict on we only hire CPA exam eligible candidates. And I don't know that the firms are going to be, uh, have their finger on the pulse of all of this to know exactly when how it's going to shape shift. Cpa exam eligibility anymore. Blake Oliver: [00:36:43] Light em up. Says a big reason I chose to go work for a CPA firm was to ensure I got the work experience needed. Under a CPA. I had almost ten years of accounting experience under non CPA managers prior to going public. See, I feel like prior experience should also count. It shouldn't start magically when you complete your CPA exam. If you've got ten years of business experience doing this sort of stuff, why? Why not accept that. Amber Setter: [00:37:12] I, I'm it's interesting. That's where I think something like I like in California where we have a general license and we have an a test license because maybe there is, you know, maybe if people are relying on the work in a certain way that you want to ascertain that they have specific experience in those areas. And I think that really does protect the public a lot more. And so there is a general CPA, but then there's another, another type. Um, and it's not something you put on your business card or LinkedIn that says I'm this or that. It's just it's on the back end of what you're able to do or not do. Blake Oliver: [00:37:49] I'm really glad you brought that up, Amber, because, um, I'm a non attest CPA in California. I didn't want to go into audit, so I have that or I had that type of license and I, I learned after I left California that a lot of states don't. There's just one type of license, but I was able to, uh, transfer my license to the state of Arizona and get an Arizona CPA license from California without ever having done a test. So I'm not going to test it, but theoretically, I could go sign audits now with my Arizona license. So this whole I just want I brought that up because this whole idea of substantial equivalency falls apart when you actually dig into some of these details, right? You the the national organizations try to create this unified single system of experience and education and the exam, the only thing they've managed to do is standardize the exam. Everything else is actually still very much different in a lot of meaningful ways. And we like to talk about that Ohio pathway where you don't have to, or there's a New York pathway where you don't even need a degree, and that is somehow substantially equivalent. There's a lot of ways you can get it. Amber Setter: [00:39:09] I didn't even know that fun stuff. Yeah, yeah. Blake Oliver: [00:39:11] There's, like, a bunch of sneaky ways you can get in in different states that for some reason, NASA considers substantially equivalent. And I don't know how, but maybe they just did it to like, say, you know, declare victory, right? Um, we have another comment here. I'm starting my accounting master's degree in a few months. I don't have an accounting bachelor's degree. Do you think the master's is still worth it if I'm trying to get into accounting? Amber Setter: [00:39:34] Yeah. So there. I wish I had it up on my second monitor, but I don't. But there is there's a convert a bit of this where it can also be a master's degree. Right. So a master's in accounting, a master's in taxation. There's something like an LLM, like a law degree. And, you know, a master's in tax had a baby. Sorry for those who have it. I'm not explaining it and articulating it exactly right. But absolutely. And I when I used to be a campus recruiter, we recruited from at the time, it's changed. But San Jose State had a master's in accounting program for non-business majors. Those were some of my favorite people to hire. Right. They did different things. They had different backgrounds. Then they they're kind of like your story, Blake. They got a a role in accounting. They're like, oh, I'm good at this. Or I could make money. Now I want to go get my master's in accounting so I can become a CPA. And I think there's value in that. And there will be a space for that master's degree in this as well. Blake Oliver: [00:40:35] Here's another comment. You shouldn't need a degree for anything regulated by the government. If you can pass a test, you should get the position. I don't care if it's plumbing or accounting. There is no reason you should have to go to school for four years, or be under a plumber for ten years to become a plumber or CPA. That might be a bit extreme. Uh, I mean, you have to do some work. David Leary: [00:40:58] You need some experience. Yeah. Blake Oliver: [00:40:59] It's like like experience is important. I do believe that, like, because you can't know everything from a book. You know what I mean? I'm sorry. Yeah. Amber Setter: [00:41:10] No, I'm. I'm actually going for my highest level of my coaching certification right now, which has, uh, it was 11 competencies. They swindled it down to eight. And it's a lot to have someone supervise your work and look at every single area and tell you if you're hitting it or not. Like, you learn and grow a lot. I think there is absolutely a place for experience, and. Blake Oliver: [00:41:33] I actually feel. But you're going to laugh because I actually think there's an area where we need to increase the requirement. I think our education, or I think our experience requirement is woefully inadequate. Um, one year of experience to be a CPA. Are you kidding me? I passed my exam. I go work for one year. I learn very little. They basically have onboarded me and onboarded me in that time. And now I'm a CPA and, um, you know, like a lot of other professions, they have a much longer experience requirement. The Institute of Management Accountants has a three year experience Requirement and that doesn't prevent them from growing. So I think it's possible if we streamline the education requirements to only require a bachelor's, we could actually increase the experience requirement, as long as we also don't make that too complicated. Make it very simple, and we would actually get better. Cpas and CPA firms would be really happy because they'd have people who want to stick around for three years. Well. David Leary: [00:42:30] They're already training them anyways. Even with all this extra hours of education, the firms have to train them and teach them anyways so they have less education. As long as they're competent, they get the bachelor's, then bring them in. You're going to train them anyways, so train them and you're right. Like on the other end, the requirement should be the work experience. Blake Oliver: [00:42:51] Ray says all experience is not equal, including professional experience. And Amber, I think this comes to the this this this relates to that trust issue that we seem to have with AICPA is, is they don't seem to trust the firms to to train the people. Amber Setter: [00:43:11] Yeah. And and David, your points are well taken because when I was in a learning and development role, which wasn't just where I was, I saw what we administered. But I talked to tons of learning and development professionals throughout the profession. And it is pretty much a norm in public accounting firms that everyone's getting at least 40 hours, if not more, whether you're licensed or not, like curriculums are built in that way. And the thought process and the mental model is education, education, education. So I hadn't thought about that until you made those points in this one comes in, we don't need a competency model to tack off what's inherently happening in firms. It's already there. How much training? I mean, so much training that apparently they fired some CPAs for taking too much CPE. But it's, you know, a lot of training gets done in the organizations. Well. Blake Oliver: [00:44:11] Here's another comment. The problem really is that young people are more and more not willing to meet the requirements because they see others working less and making more. And that's the related issue, which is that starting salaries in the profession have stagnated, have not kept up with inflation, and we still have really long hours in the profession. So you, you tack on this really complicated pathway and expensive pathway and what do you get. You get people not considering accounting as a major. Might as well go into something related in business. Nathan says I'm waiting. I'm wanting to start my own firm eventually. Starting master's soon. All ears. Right now. Awesome. Nathan. Well, I want to say, and I have to repeat myself on every episode. So people don't think that I hate accounting because I love accounting. That's why we talk about this stuff. Uh, owning your own small accounting firm is one of the best jobs in the world. Yes. Right. You get you get to. If you do it right, you get to set your hours, you get to pick who you work with, you get to make lots of money, and you can work from anywhere, and you can do really interesting and rewarding work. So that's what we've we've buried that amazing pot of gold at the end of the rainbow behind this giant wall that the national organizations seem to be putting up. And I would. Amber Setter: [00:45:42] Add to that, I've been in the industry over 20 years. I think now is the easiest and best time it's ever been to be a sole proprietor. You know what I mean? Like the tech stacks you can get get out there the ways in which practitioners share with one another, like, oh, I do this, I do this. Like people on LinkedIn are even sharing their financials of what it's like to be on their own versus when they were in a firm. You know, it used to be you had to be in a firm to have the platform, to have the technology, to have the CPE, whatever. You don't need the firm anymore. You can run your own thing in this modern world. So there's never been a better time to do it on your own. Blake Oliver: [00:46:21] And if you want to hear from somebody who's doing it and working 15 hours a week and making $200,000 a year, I'm not kidding. Listen to my interview with Erica Goody on the earmark podcast. Go to podcast earmarks.com. She has ten clients. She builds them an average of like almost $2,000 a month each. And she's a virtual CFO. She has a contract bookkeeper who does the bookkeeping. She works 15 hours a week, gives her time to pick up her kids, take care of her kids. She works like three days out of the week, six hours a day. And she does it with Starlink internet out in like, Idaho. So it's like that is possible. Aaron says, I'm grateful for my masters. It was part of my original plan to get a CPA, but life got in the way and now I'm torn on finishing my pursuit of a CPA. Glad I have my M.S. in accounting in the meantime. And Edgar says Ray is correct. I worked for a small tax firm and went to a bigger one. It was not at the same level. And that's regarding this experience requirement. Here's what I would say. Edgar and Ray, regarding the variety or the range of experience quality. I don't think it's possible with any sort of administrative state to ensure that the experience is going to be the same. Accounting firms are vastly different. They serve vastly different clients. They do vastly different things. Like it's it's it's ridiculous, actually, to think that you could somehow give every CPA in the country the same level of experience. And that's why we have the exam. So the exam, David, sounds like you were going. David Leary: [00:48:11] To say something which also makes the checklist form of the competencies even more pointless, because the experience somebody has at one firm is so different than the other. There's just because they checked off those boxes, right? Blake Oliver: [00:48:24] Exactly. David Leary: [00:48:25] Experiences are so different in the skill level they might have or not have. Blake Oliver: [00:48:29] Yeah. It's meaningless. Uh, let's see what else we got. We've really stimulated some conversation. Uh, we fit pill red. Says what? That's crazy. She's living the life. Erica is living the life. It sounds great. She's got like, 2 million, like, acres of, like, national forest in her backyard. That sounds really good to me. As somebody who's recently gotten in touch with the outdoors. Um. All right. Oh, one more here. All all pro Leamington. Welcome back all Pro. The experience requirement was the big barrier for me. Had to change companies to get it. My old boss was a CPA and said they would sign off but turned out their license was expired. Amber Setter: [00:49:14] I think we would see a lot of people that have to change companies to get the experience that they need, because it's already existing. And this this proposal would amplify that. Blake Oliver: [00:49:26] All right. So Amber, this has been fantastic. Um, we're almost at the end of the episode. Do you want to just stick around while we talk about this e situation? Amber Setter: [00:49:36] Sure, I'd love to. I love talking about cheaters. Blake Oliver: [00:49:39] Okay, well, in this case, I actually feel really bad for these e employees. So this story was covered in Accountancy Age and on Going concern. E, formerly Ernst and Young, recently dismissed several employees for attending multiple online learning courses simultaneously. The courses were part of the firm's mandatory continuing professional education requirements. As we all know, accountants have to complete a set number of CPE hours annually to maintain their professional qualifications and in May of this year during the Ignite Learning Week. That sounds like such a big firm name for an event. Ey offered virtual training sessions on topics like digital branding and AI. The idea was to help employees meet their CPE obligations amidst their busy work schedules. I think busy being an understatement. David Leary: [00:50:36] And they encouraged them. Take as many as you can that fits around your schedule. Blake Oliver: [00:50:40] And some employees attempted to multitask by attending multiple sessions simultaneously to expedite learning. Ey determined that this violated their internal code of conduct and global learning policies, constituting an ethical breach. And they let them go. And the dismissed employees took to the interwebs to argue and complain that they were not warned that such multitasking would lead to termination. And they contend that e encouraged maximizing learning opportunities without specifying restrictions on simultaneous participation. I guess you could, uh, say that that goes without saying. But I do feel kind of bad for these folks. David Leary: [00:51:22] Because the culture of multitasking. Right. Well, and. Blake Oliver: [00:51:24] They live in a culture. David Leary: [00:51:25] Of three monitors. You've got to work hard so many hours. How do you get all your work done? You have to be efficient. And they just these employees actually are being extra efficient. Getting fired might have been too extreme. Blake Oliver: [00:51:34] And here's what I wonder is how often are E employees double billing their clients? Right. You got to hit those, uh, hourly billing minimums if you're. David Leary: [00:51:45] Working on two clients at the same time. Right. Maybe a script running. Blake Oliver: [00:51:49] So is that unethical? Maybe we should go through the timesheets and the logs of employee attendance and figure out, you know, how often they're double billing their clients for the same hour and refund their clients and terminate the staff? I don't know. David Leary: [00:52:05] But the reason this happened is because finally, there was a real fine to an accounting firm. We always joke about these ridiculous, oh, it's a $1 million fine, $1.2 million fine to these accounting firms. Remember, in 2022, the SEC fined E $100 million because they were cheating on the ethics exams, so now they're paying attention. The magic number. If you want to change accounting firms behaviors because that's essentially what this is. They don't want to get fined. You got to find accounting these big firms $100 million. It's the only way to get them to change their behavior. Blake Oliver: [00:52:33] Well, and if you're working at EY and you need to get your CPE done and you don't have time to do it during your week, we have a solution for you. It's called the earmark app. You can get it for free on the iOS and Android stores and on the web at earmark app. I'm not kidding. It's free. You create a free account, you can get one CPE for free per week, and you can do it while you're driving to work. You can do it while you're mowing the lawn. You can do it like Laura Lynn Wilson did while getting her nails done. Uh, let me know your stories of how you got your CPE. You can do it like I did hiking the Grand Canyon from rim to rim. The possibilities are limitless. That's earmarked app. Amber. We got it. Well, this episode will be turned into a course, but we got to get you on a course, too. Amber Setter: [00:53:19] I would love to, but one of the things to think about with this CPE cheating, and this is a different thing, that I actually approached the Board of Accountancy in California because I'm really passionate about mental health and had some ideas for CPE there, but I was informed that they're also looking at changes to CPE, and they've done some research of other professions and found that in accounting with 40 hours is kind of the standard for an annual amount, that we actually have a lot of continuing education in comparison to other professions. And maybe we should move down away from that 40 hour model. And I think that would be really, really helpful. I mean, let's be honest, when you sit in an eight hour all day session, like I went to, I went to AICPA engage, and I literally saw somebody sitting in a session with a pair of sunglasses on just kicked back. They're sleeping, you know, but he got his badge scanned at the beginning of the end. Well, what if you only had, like, four hours a day and you could get some sunshine and you could have lunch with someone, or you could sleep in? That's right. Maybe people would learn and take away something. Blake Oliver: [00:54:26] Exactly. David Leary: [00:54:27] Yeah. And earmark. It's knowledge based. You have to prove knowledge. You can't just fall asleep because they scanned your badge at the door. Blake Oliver: [00:54:34] Yeah, you got to take a quiz at the end of every episode. And they're not easy. Like some of our instructors have said, they've taken the quiz for their own course and they've gotten 80%. They still pass. David Leary: [00:54:44] I've never passed one course. Even just demoing the app. You think, mathematically speaking, I should be able to guess once every 20 times. I should be able to guess four out of five correctly, and I've yet to do it. Demoing the app and showing people well. Blake Oliver: [00:54:56] That's great David. Our app is doing the job of gatekeeping the CPA profession from people like you. Uh, well, uh, thank you everyone who joined us. Madman Dan says if I can multitask doing house chores while listening to earmark, then those EU peeps should be reinstated. Yeah, well, you know, there's an argument to be made that, you know, your brain can operate separate from all these chores that you're doing, right. And actually, for me, as somebody who has ADHD, it actually helps me focus. If I just sit there in a classroom, I cannot retain the knowledge. My brain goes elsewhere. But if I'm like washing the dishes, which is my chore in the house, then I can focus. So it really all just depends on how your brain works, right? We need lots of different options for people, and we need Nasba to keep that CPE requirement really high so that people are. David Leary: [00:55:50] We should. Blake Oliver: [00:55:50] Increase it. People want. Yeah. We should actually increase it. Like like 100 hours a year. Because you can really earn it easily with the earmark app. Uh, see, this is what happens when you become part of the regulatory state. You. You know, now we have an incentive to increase the bureaucracy. We're going to start lobbying, you know, to increase CPE requirements. No, we will never do that. Because you know what? This is the long term vision for earmark. It's it's it's not just about CPE, right? It's about helping CPAs be better CPAs. And there's a lot of ways to do that outside of the rigid CPE structure that we have. Amber, we were just talking about this like I think before the show started, we. Amber Setter: [00:56:31] Were because I recently moved to a compound which I can host retreats at. It has like a cold plunge and an infrared sauna and an area to do yoga. And my dream is let's have a group of CPAs come before busy season and recharge themselves fully. Right. Like, let's not learn about the regulatory updates. Let's just actually be out in nature and take care of ourselves and do some wellness before you go into busy season. Or maybe after the deadline, you come here for a retreat and those things matter to you. That's what I'm passionate making CPAs better, but taking care of the whole human working in the profession. David Leary: [00:57:14] Well, issue for going. Amber Setter: [00:57:17] What was that? Yeah, well, I'm in conversation with someone who is a Nasba CPA registry certified. She's like, we could do some content. I could, we could do the CPE. I'm like, I don't care about CPA. Blake Oliver: [00:57:29] So, Amber, you'll love this. We are. We just applied to get live CPE approved. So we'll be able to do assuming we get through this process. I don't know what's going to happen. Amber Setter: [00:57:41] After this podcast. I know right. David Leary: [00:57:43] 2028 we might be able to offer live CPE. Blake Oliver: [00:57:45] It's okay. The people at Nasba Naspa don't know what a podcast is. We're good. Uh, we, uh, we have, uh, group live, uh, we're applying for, which is the in person and then group live internet, which for some reason is a separate application because I guess when you deliver a presentation over the internet, it is meaningfully different than if you deliver it in person. That's a mystery to me. But we had to pay an extra $1,000 for each of those. So, you know, nasba, I mean, I, I hope that they use our money wisely, right? And I hope that it doesn't take another eight months to get our, uh, application approved, which is what it took when we first applied for CPE was eight months. Um, we want to do a course in December that's live. So hopefully we can. And we'll be in touch. Uh, you could in California. Amber Setter: [00:58:35] You don't have to be. If you wanted to provide CPE for CPAs in California, you don't have to do the the Nasba way. So a little fun fact there. Oh, really? Blake Oliver: [00:58:47] You can I can use I can do CPE that just California State Board of Accountancy. Except, yes. Amber Setter: [00:58:52] For California CPAs. Of course. You still have to do certain things. Like you have to have a sign in sheet, you have to write a course description, learning objectives, all of those things. You just don't have to pay registry fees to nasba. Blake Oliver: [00:59:04] Good to know. Good to know. Yeah. Well, thank you so much for joining us. Amber, if people want to follow you online, where's the best place? Amber Setter: [00:59:13] Yeah, I'm on LinkedIn. Um, you can definitely follow me there. You could reach out to me at Amber at conscious Dot CPA. Um, always happy to have conversations like this and clarify, demystify and be an advocate and champion for people and making the profession better. Because like you, I love the profession. I just get a little bit of a mama bear and an activist when I feel like we're not taking the care of people in it. So thanks for letting me share that my wisdom and my passion here today. And if you. Blake Oliver: [00:59:45] Want to do an executive retreat for your firm, Ambers Place is. I haven't seen it in person yet, but it just looks fantastic on Instagram. So Amber, like, how many like, how big a retreat can you host? Amber Setter: [00:59:58] Um, if we if people want to stay the night, I can accommodate five because we have little apartments. And if we wanted to do a group activity, I don't know, 100. It's a pretty big space. That's awesome. Um, in North San Diego. Beautiful weather. Um, someone wrote in Cold Plunge. Nice. Yes, it is nice. I normally don't like the cold, but wow, those things are powerful and really just helping people have a wonderful mental health and know who they are and be happy and be a professional. That's what we're about. Blake Oliver: [01:00:30] Thanks everyone who joined us. We will see you again next week after we're back from Las Vegas. Bye, David. David Leary: [01:00:35] Bye, Amber. Hi, everybody. Amber Setter: [01:00:36] Hi. Have fun.