Spurred in part by the barrage of high-profile accounting fraud scandals that have plagued the country over the past several years, California is catching up with national standards for CPA licensing. Experts say the state has a chance to become a leader in CPA education.

As a result of SB819, passed in October, California students will be eligible to sit for the CPA exam after one year of professional experience, a four-year degree plus an additional 150 academic units - which will now include more specific mandates for ethics and accounting coursework.

"The idea behind the changes, said Ruben Davila, a professor of Clinical Accounting at USC's Marshall School of Business who chairs the Accounting Education Committee, "is that the business and financial world has become much more complex, and we need students to graduate with more sophisticated abilities to handle this complex world."

Michael Moore, who leads the Accounting and Information Systems Department at UCR's Anderson Graduate School of Management and is the lone UC representative on the Committee, also pointed to the need for a "higher educated cadre of professional" and an impetus in consumer protection. "A lot of this revolves around a move to upgrade the quality of professionals practicing in the public accounting arena," he said. "There have been a number of high-profile cases of fraud - Enron, Worldcom, take your pick - so they really feel that accountants who want to be certified by the state should get an additional year of education."

One path

Prior to the legislation, Californians could opt for two different paths to CPA licensing. The first - a bachelor's degree, two years of experience and a certain number of accounting courses - has been scrapped.

In the past, critics said this route kept the state at a competitive disadvantage with the 46 other states that had adopted a national standard of 150 additional units. California's CPAs licensed this way were deemed not "substantially equivalent" and thus sometimes prevented from serving out-of-state clients or those with business in other states.

In the second path, which SB819 makes the only accepted route to licensing, students take an extra 150 units instead of a second year of experience.

The problem with the second path in the past, said Moore, was with 30 extra units that were left unregulated.

"There was no specificity to what these 'hollow units' could be - they could be anything. So students could satisfy the requirement but really take no courses related to accounting or business," Moore said.

This is what the Accounting Education Committee, which met for the first time in April, is trying to determine - some kind of framework or guidelines for how students fill these "hollow units."

Much of the discussion at the first meeting, said Moore, revolved around content, level and delivery of courses.

Betty Chavis, professor and chair of the Mihaylo College of Business and Economics at Cal State Fullerton and a member of the committee, said at this point the members are trying to figure out what kind of regulations make the most sense.

"I think the issues are really, 'do we mandate courses, level of courses, or do we give guidance?'" said Chavis.

Davila said he thinks the guidelines will likely end up allowing students to pursue areas of study that relate to their professional interests.

"We care that the education is substantive and will help someone pursue their career, and will not only mean accounting, but becoming sophisticated in an area of business."

Contrary to a popular misconception that the new law will just add length (and therefore, cost) to the curriculum, said Davila, the changes are aimed at helping students specialize in a particular area of accounting (e.g., public accounting or healthcare).

"We want students to have flexibility. We want them to become sophisticated, so the idea is that we won't prescribe in any area - except maybe minor ones, but not specific courses. Within that area it could be any number of things."

The issue would then be finding a way to regulate this difference - between the "hollow" units, and ones that will be enhance students' individual curriculums.

Access and diversity

With professors from private, state, UC and community college systems, the Accounting Education Committee reflects the diversity of institutions offering CPA education - and that of the clients they serve.

This mix accounts for unified support behind the legislation, which passed unanimously and was endorsed by several interest groups - including minority groups like the California Hispanic Chamber of Commerce and the National Association of Black Accountants.

"I think the profession is solidly behind this bill," said Moore. "I think everyone wants to enhance the quality of the people coming into the profession. It's a very popular bill; it's up to us to make it work now."

But the diverse interests at work also present some potential areas of conflict.

"I think some of the issues have been hanging for a number of years," explained Moore, "and there's been some opposition to the increased education requirement in part because some people perceive it as a barrier to entry of the profession."

For those students who come from economically disadvantaged backgrounds, an extra year of education can be a significant consideration.

"A couple problems we'll be facing will be that there are community colleges involved," said Chavis, "which don't offer graduate or more advanced courses, so we have to be sensitive to that. We also have to be sensitive to prerequisites for different courses, so I think we've got quite a job ahead of us."

When they get closer to the details, said Moore, "there could be some issues about how we deliver this fifth year of education so there's not a barrier to entry for lower-income and minority groups."

Approving community-college-level courses could go a long way toward mitigating these issues, committee members said.

"We have representatives from community colleges, which can deliver education at really low costs," said Moore. "If the Committee decides that business or accounting courses by city colleges could qualify, it could really minimize some of these issues."

Davila also highlights the community college level as "a viable alternative to resolve the issue of barrier to entry." But he also pointed out that there is "a tradeoff - a more sophisticated education for a higher cost. If you want to enter this profession, the reward side is pretty high. And there are very few professions where people are licensed (like doctors and lawyers) and do that straight out of undergrad."

Davila says there has been a "big learning curve" for people like himself and Moore, both from bigger, four-year universities, to realize that not everyone has the same issues, needs and restrictions.

"We're not all from big universities, there's a broad diversity with different resources and different clientele with different desires - not everyone lives in Los Angeles," said Davila. "I think lot of times people who dominate the discussion are people from Los Angeles, and we're trying to be sensitive to people from smaller jurisdictions."

Pressure is on

Moore says it's too early to predict where they might end up, but expects that after gathering more information and another meeting, they'll be closer to an ultimate drafting by the Department of Consumer Affairs.

The timeline will depend on how smoothly things go, said Chavis, "and how much public input we receive - we have to consider that."

The Committee's meetings are all public, and visitors are given a chance to ask questions and voice concerns.

"We also receive letters and emails," said Chavis, adding that, "this is important, because we do want the public support and questions."

But the legislation, which will take effect on Jan. 1, 2014, will affect students who are already in school. This adds a sense of urgency to the proceedings, said Davila.

"I think there are a lot of people who don't know what's happening, even though it's been publicized. So there's a sense of urgency about getting this done. Students in school right now will grad in 2015, some earlier, so there are people already in the education process who will be impacted."

Changing curriculums is not as easy as it sounds, said Davila, and will require time and a marshaling of resources - which could be more of a challenge for some schools.

Looking ahead, Chavis notes that the Committee's work gives the state a chance to stay ahead of the fray and lead by example.

"In my opinion, California has a chance to be a real leader in CPA education because we're doing what many states didn't. A lot of states passed a law and said any classes can be taken. I think the legislature was really far-sighted in wanting the type of courses to be identified."

Over the long-term, she says, as the world moves toward global financial reporting norms, new rules will have to allow for constant change.

"I think we really have to be farsighted in approach so what we come up with is one that will work somewhat into the future."