California board anticipates rise in CPA license applications after exam changes

The California Board of Accountancy (CBA) held a Qualifications Committee meeting on January 22, 2025, to discuss significant updates regarding the CPA exam and licensing trends. The meeting began with a presentation on the recent introduction of the CPA evolution, which took effect in January 2024. This change has led to an increase in both first-time and repeat exam applicants, as many are eager to pass all four sections of the exam before the new format is fully implemented.

The committee reviewed data indicating a notable spike in CPA exam applications, reminiscent of trends observed in 2015 and 2016 following previous changes to the exam. The presentation included a new table listing pass rates for the CPA exam, although these figures reflect performance prior to the CPA evolution. Future reports will include updated pass rates under the new exam structure.

The committee also examined trends in CPA license applications, which have seen a steady decline since 2020, reaching a ten-year low in 2022-2023. However, with the recent uptick in exam applications, the CBA anticipates a corresponding increase in CPA license applications in the near future.

Graphs presented during the meeting illustrated the status of accountancy corporations and partnerships, showing a spike in applications in 2018 and 2019, followed by a leveling off in subsequent years. The data revealed that of the 2,881 new CPA licenses issued in 2023-2024, 418 were renewals, while 2,463 were first-time applicants.

The committee discussed the current CPA population, which continues to grow at approximately 2% annually. As of June 30, 2024, 61% of CPAs were in active status, with a median age of 48 years. The meeting also highlighted the challenges posed by delinquent licenses, with committee member Jones raising concerns about the reasons behind this trend. The CBA acknowledged that completion of continuing education (CE) requirements is a barrier to license renewal, contributing to the number of delinquent licenses.

In response to these concerns, the CBA is exploring ways to modernize its continuing education requirements. A working group has been established to discuss potential changes, with plans to present a regulatory package by the end of 2025 aimed at improving the quality and accessibility of CE.

The meeting concluded with a reminder that licensees in delinquent status cannot practice as CPAs until they meet renewal requirements. The committee expressed a commitment to addressing these issues and enhancing the overall effectiveness of the licensing process.