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What’s the Value of Professional Licensing?

06Jun
Green KeyAccounting + Finance

Three more states are considering allowing out of state accounting firms to provide services without the need for the firms to register or obtain state licenses.

Already 30 states have CPA firm mobility laws, allowing them to practice without having to provide notice to each state’s accountancy board. That puts firms on the same footing as individual CPAs who can practice in all 50 states without having to be licensed in each.

“A big priority for the AICPA now is firm mobility, which ensures firms can also work from state-to-state,” said Marta Zaniewski, AICPA vice president, state regulatory & legislative affairs. “It’s equally important that clients and the public have access to various firms’ subject-matter expertise and services that may or may not be available to them in their home jurisdictions.”

The Association of International Certified Public Accountants in partnership with the National Association of State Boards of Accountancy is working collaboratively with the legislatures of Alaska, Maine and Oklahoma where firm mobility bills have been introduced.

“We try to push forward the UAA model everywhere, but every state will do it their own way, and there are probably slight differences in different jurisdictions,” Zaniewski told The Journal of Accountancy.

The Uniform Accountancy Act (UAA) was developed by the AICPA as model legislation for all states. The 30 states that now have firm mobility laws in place follow the broad strokes of the UAA, though most have made minor adjustments to fit their individual needs.

Licensing of professionals and occupations has itself come under scrutiny in recent years, with several states considering loosening requirements. To address the lack of hard data about the value of licensing, the Alliance for Responsible Professional Licensing (ARPL) last year commissioned a study of the impact of professional and occupational licensing.

Among the key findings in the recently published report is that licensing of the highly skilled professions – lawyers, doctors, engineers, accountants and the like – improve earnings overall, but have a better than average benefit for women and minorities.

Licensing value chart.jpg

Licensing, the Oxford Economics research firm found:

  1. Positively contributes to narrowing the gender-driven wage gap giving men an average 5.6% boost and 7.4% for women;
  2. Female engineers, surveyors, architects, landscape architects, and CPAs can expect a 6.1% hourly wage increase on average after becoming licensed in their field.
  3. Minority engineers, surveyors, architects, landscape architects, and CPAs can expect an 8.1% hourly wage increase on average after becoming licensed in their field.

Observed Alice Gambarin, a senior economist at Oxford Economics, “[The] findings suggest licensing is an important economic tool for professionals.”

Photo by Hunters Race on Unsplash

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It’s “green shoots,” eFinancialCareers said in reporting the news earlier this month. “After recruitment plummeted relative to levels in late February, Big Four firms in both the U.K. and the U.S. are beginning to hire again – tentatively.”

Collectively, the four – Deloitte, EY, KPMG and PwC – employ about 1.1 million people worldwide, so, as the eFinancialCareers report notes, “When the hiring engines …splutter to a halt, it matters.”

Now, as businesses slowly begin to reopen, the Burning Glass data shows the Big Four have slowly begun to recruit for auditors, consultants and business analysts. The eFinancialCareers report says, “There’s also notable demand for digital consulting expertise at Deloitte in London, alongside roles in data science and for cloud consulting professionals and cyber-security consultants.”

Summer internships however, have been significantly altered.

Before the coronavirus caused governments to order businesses to close and citizens to shelter at home, the four firms would have spent the first months of the year completing their summer intern hiring and finalizing the recruiting of top accounting and MBA students. eFinancialCareers said PwC alone hired almost 4,000 entry level auditors and interns in the U.S. last year.

This year, that hiring has been scaled back. Both Deloitte and PwC scrapped their UK internship programs, according to the Financial News. In the US, all four firms have made significant changes to their internship programs, transitioning them into remote work or, as in the case of KPMG, Deloitte and PwC, shortening them but promising the interns full-time entry level jobs when they graduate in 2021.

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Accountants have always dealt with data, but now their adoption of “Big Data” is set for a break out.

The Institute of Management Accountants says the accounting profession will double its use of big data, exceeding the implementation of other technologies such as data visualization and process automation. The IMA report — The Impact of Big Data on Finance Now and in the Future — foresees big data analytics having its greatest, initial impact in performance management. While this includes employee performance, analytics use will involve organizational processes, equipment and the like.

In the IMA survey, 100% of the responding organizations said they were already using big data analytics in performance management. Three-quarters were also sifting through reams of data to help in formulating business strategy.

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