NJ CPA licensure reform bill awaits signature

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The basics:

• NJ Senate passed S4493, creating a new CPA licensure pathway
• Alternative route allows bachelor’s degree + 2 years experience
• Updates practice mobility rules for CPAs licensed in other states
• Bill aims to address talent shortages, increase access to accounting

A CPA licensure reform bill sits on the governor’s desk, aiming to ease entry and widen pathways for the accounting field here in New Jersey.

On Dec. 18, the New Jersey Senate passed Senate Bill 4493. The clearance paves the way for a new licensure option beyond the long-standing 150-credit-hour education requirement. The bill follows Assembly approval of companion legislation, Assembly Bill 5598, back in May. The bipartisan bill passed unanimously in both chambers. The measure now awaits the signature of outgoing Gov. Phil Murphy or incoming Gov.-elect Mikie Sherrill.

Under the new law, individuals would be eligible for CPA licensure by earning either:

• A bachelor’s degree and completing two years of professional experience, or
• Following the existing 150-credit-hour pathway paired with one year of experience.

In both cases, candidates must pass the CPA exam.

The legislation also updates practice mobility rules. The changes would allow CPAs licensed in other states to practice in New Jersey if they meet comparable – rather than “substantially equivalent” – standards. Those include holding a bachelor’s degree, passing the CPA exam and having at least one year of licensed experience.

CPAs already licensed in New Jersey before the bill takes effect would automatically retain their credentials under a safe harbor provision.

Attracting talent

“As legislators, we should be doing everything we can to make New Jersey a destination for top-tier professionals, and that’s exactly what this bill aims to do,” said Senate Republican Leader Anthony Bucco, R-25th District, a prime bill sponsor, in a Dec. 18 statement. “By cutting unnecessary red tape, we’re making it easier for current and aspiring public accountants to practice here without jumping through excessive hoops. It’s a commonsense move that helps qualified individuals succeed and strengthens our workforce.”

The New Jersey Society of CPAs drafted the proposed changes to the state’s Accountancy Act. NJCPA said the legislation aims squarely at increasing access to the profession and responding to talent shortages — a topic that NJBIZ has previously reported extensively on.

“CPAs help businesses thrive and strategize for the future,” Aiysha “AJ” Johnson, NJCPA executive director and CEO, told NJBIZ. “With accounting enrollments on the rise, this bill is coming at a great time to be able to offer career choices for those looking to become CPAs.”

Work for credit

The alternative pathway is modeled after the work for credit program. Piloted here in New Jersey, the route offers a way to address industry talent pipeline challenges and remove the barrier for entry. That concept was architected and advocated for by Dan Geltrude, founder and managing partner of Nutley-based Geltrude & Co., and “America’s Accountant.”

NJBIZ previously reported on the initiative. It launched with a 2022 pilot between Saint Peter’s University and PwC. The debut followed approval by the New Jersey State Board of Accountancy as an alterative path for students to earn the final credits needed for CPA eligibility through real-world work experience. That collaboration sparked a number of others throughout the state between universities and accounting firms.

And the concept has quickly gone national. Both the American Institute of CPAs and the National Association of State Boards of Accountancy approved updates to the model accountancy law to include a bachelor’s-degree-plus-experience pathway. Other states have rapidly adopted it and, in fact, signed legislation into law even before New Jersey.

So far, 24 states have passed similar legislation – with four additional states introducing bills.

Geltrude said that while it is a great thing for the legislation to reach the governor’s desk, it’s unfortunate that New Jersey squandered its leading role on this issue and was not among the first to codify the pathway with a law.

“Because New Jersey – we were the pioneers in looking for a substantial change in the way CPA licensing work,” Geltrude told NJBIZ. “We knew that what we had was broken and needed to be fixed. So, the irony here is that we were out there beating the drum, getting the national attention on this issue with work for credit.

“But what happened was that work for credit, which we invented, became the stepping stone.”

Driving change

He said that other states saw the concept and said, “Let’s use it as a stepping stone and go even further.”

“It’s somewhat unfortunate that New Jersey is not getting the recognition for being the catalyst for this change,” said Geltrude. He noted that aforementioned point that half the states have passed similar bills. “So, we somewhat fell behind legislatively. And I’m not saying it’s anybody’s fault. It just didn’t happen. But the truth of the matter, and people that know, know that New Jersey was the catalyst for all of this happening.

“Once this is signed, I do think that we are going to see an increase in more students going into accounting – because the structure was just too cost-prohibitive to have that extra year. It’s not necessary.”

But the truth of the matter, and people that know, know that New Jersey was the catalyst for all of this happening.
— Dan Geltrude

Geltrude lauded Johnson’s leadership on this issue since taking the helm at NJCPA in 2023. He described it is a game-changer for the state.

“It’s tremendous,” said Geltrude, stressing that the shortage of an accountants as a problem that does not just affect that sector but the broader financial world. “The big picture danger is not having enough accountants means that you’re sacrificing quality, which means you could have a major scandal in the stock market. Because the quality of the work – and the reliance that investors and creditors have on these financial statements.

“And if those financial statements are misleading in any way, you have a major crisis.”

He said it is a big deal to attract more people to the profession.

“We’re going to benefit from it – the profession and the state,” said Geltrude.