Professional liability consequences associated with the proposed 2024 CPA licensing structure: An assessment of potential jurors

Abstract

The CPA Evolution testing model will consist of a core exam that focuses on the foundational elements of accounting (tax, auditing and accounting information systems, and accounting and data analytics) and one discipline-focused exam in one of three sub-discipline areas of a candidate’s choice: tax, technology, and assurance. Upon passing the core exam and one of the discipline exams, a candidate is eligible to become a licensed CPA and practice in any of the three sub-discipline areas. This study uses an experiment to test if the new exam and licensing structure potentially increases CPAs' professional liability when the CPA makes an error performing a service in a sub-discipline that they have not been tested on. Using an experiment and a sample of potential jurors, we find that when a CPA makes a large error performing a service in an untested sub-discipline, jurors are more likely to find the CPA to be liable, but the size of the error primarily influences the severity of any penalties they would assign. The results show how professional liability may be adjudicated after the new CPA exam and licensing structure is imposed.