CPE – A Glance Back
By Perry Moore, Ph.D., CPA, CIA, CRMA
Nine years ago, I looked at CPE for Tennessee CPA’s for were audited in 2015 for the 2013 – 2014 renewal cycle.[i] That article defined CPE and described its history, as well as discussing what CPE might become and whether it accomplishes what it was intended to do. Perhaps it is time to revisit the subject and see where, how, and in what areas Tennessee CPAs are obtaining their CPE, and how successful those CPAs are in meeting their CPE requirements.
I made a Freedom of Information Act request with the Tennessee State Board of Accountancy (Board) for CPE Audit data for the 2021 and 2022 renewal cycles. The Board provided me with four data files. Two of those files provided information about every CPA who was randomly selected for a CPE audit. Separately, some audited licensees voluntarily uploaded their certificates of completion to NASBA’s CPE Audit Service tracking program. Thus, the other two files provided specific course information for every course taken for those licensees who utilized the NASBA service. Use of NASBA’s program is optional in Tennessee. For each renewal cycle, the Board randomly selects ten percent of active licensees for a CPE audit. In addition, members of the Board are audited each renewal cycle.
What are Tennessee’s Requirements?
When did CPE become a requirement for Tennessee licensees? My previous article noted: “Tennessee adopted a voluntary CPE program in 1975. The Tennessee Accountancy Act was amended in April 1980 to require 120 hours of CPE every three years. This requirement was decreased in 1988 to 80 hours of CPE every two years.”[ii]
All Tennessee CPAs with an active permit must obtain CPE, which must be taken from NASBA-approved providers or State Board exempted-providers. Beginning with December 31, 2019, renewals, licensees cannot renew their license until they have met ALL CPE requirements. Specific requirements are the following:
- 80 approved hours every two (2) years with a minimum of 20 hours in each year.
- Of those 80 hours, at least 40 hours must be in technical subjects.
- If performing attest services (including compilations), at least 20 of the 40 technical hours must be in the Accounting and Auditing fields of study.
- If providing expert witness testimony, at least 20 hours must be in the general area in which the court deems the licensee an expert, such as tax, auditing, etc.
- The Ethics requirement for license renewal is two hours of Board-approved state specific ethics earned during every two-year licensing period. [iii]
The Board has changed its definition of technical subjects, when they incorporated NASBA’s Fields of Study,[iv] which NASBA updated in January 2024. The following table lists the currently defined technical fields in contrast to those previously defined. Fortunately for Tennessee CPA’s, the technical fields of study were expanded significantly.
|
Previously Defined Technical Fields of Study |
||||
|
Accounting |
Auditing |
Ethics |
Management Advisory Services |
Tax |
|
Currently Defined Technical Fields of Study |
||||
|
Accounting |
Accounting (Governmental) |
Auditing |
Auditing (Governmental) |
Business Law |
|
Economics |
Finance |
Information Technology |
Management Services |
Regulatory Ethics (State Specific Ethics) |
|
Specialized Knowledge |
Statistics |
Taxes |
|
|
Interesting Facts from the Data
Licensees reported earning the following amounts of CPE across the 2021 and 2022 renewal cycles.
|
|
Licensees renewing in 2021 n = 547 |
Licensees renewing in 2022 n = 580 |
||
|
|
2019 |
2020 |
2020 |
2021 |
|
Avg. Technical hours |
38.69 |
43.67 |
35.85 |
46.25 |
|
Range for technical |
1.5 – 370 |
8 – 302 |
1 – 182 |
5 – 600 |
|
Avg. Non-Tech hours |
9.49 |
9.77 |
7.61 |
9.37 |
|
Range for non-tech |
0.5 – 76 |
1 – 54.5 |
0.5 – 62 |
1 – 62 |
|
Avg. Total hours[v] |
44.70 |
50.36 |
41.49 |
53.59 |
|
Range for total |
1 – 379 |
13 – 352 |
1 – 244 |
1 – 938[vi] |
|
Avg. Carryover hours |
10.59 for the 21 licensees utilizing it |
8.23 for the 42 licensees utilizing it |
||
|
Avg. Penalty hours[vii] |
24.41 for those 51 licensees penalized |
19.73 for those 41 licensees penalized |
||
|
Avg. Combined hours |
96.39 |
96.37 |
||
|
Range for combined[viii] |
40 – 502.5 |
15 – 981.8 |
||
|
Licensees requesting “Home State Exemption” |
9 |
11 |
||
The previous study reported similar information, although only total hours earned was available at that time. In 2013 and 2014, licensees reported 44.1 and 53.0 hours, respectively, for a total of 97.2 hours earned for the two years. The data from 2019 – 2021 describes comparable results. Tennessee licensees continue to earn more hours in year two than year one. The range of hours earned is comparable: 8 – 300 (in 2013) and 0 – 190.5 (in 2014).
My previous analysis found that only two licensees utilized carryforward hours in that renewal cycle. Clearly, more CPAs depend on such hours now, as just over 7% of 2022 audited licensees utilized it to make up their shortfalls by an average of 8 hours. A maximum of 24 hours may be carried forward to the next reporting period.
As noted above, almost ten percent of those audited in 2021 were assessed penalty hours. While that percentage fell to seven percent in 2022, several licensees renew each year without fulfilling all CPE requirements. Those ‘caught’ were not close to meeting their CPE minimum requirements based on the average number of penalty hours earned.
However, at the other end of the spectrum, several licensees certainly exceeded the 80 hour requirement. The data for 2021 and (2022) shows that 120 (113) licensees had at least 100 hours, and each of the top nine exceeded 200 hours.
Several licenses requested an exemption from the Tennessee CPE requirements since they reside in another state and are also licensed in that state. In such situations, the licensee must only fulfill the state of residency requirements, even if those requirements are different from Tennessee. However, the licensee must be licensed in both states. The author is aware of one Tennessee CPA who resides in Florida who wanted to claim the “Home State Exemption” since Florida does not require a minimum of 20 CPE hours per year. Unfortunately, since she was not licensed in Florida, she could not take advantage of the exemption.
Conversations with many licensees anecdotally suggest that many licensees wait until the end of the year to obtain most, if not all, of their CPE. The data given in the table below lists the number of courses taken in each respective quarter:[ix]
|
|
2019 |
2020[x] |
2021 |
|||
|
First Quarter |
211 |
17% |
670 |
16% |
435 |
18% |
|
Second Quarter |
344 |
27% |
1,045 |
25% |
457 |
19% |
|
Third Quarter |
311 |
25% |
728 |
18% |
570 |
23% |
|
Fourth Quarter |
385 |
31% |
1,672 |
41% |
980 |
40% |
While many Tennessee CPAs are waiting until late in the year to finish their CPE, the data suggests that approximately sixty percent of CPE is earned in the first three quarters of the year. However, 18% of CPE is earned in the month of December.
A deeper dive into the individual licensee’s audit data reveals the following information for those who utilized the NASBA tool:
|
|
2020 – 2021 Renewals |
2021 – 2022 Renewals |
|
Number of licensees |
75 |
109 |
|
Total number of sponsors utilized |
162 |
200 |
|
Highest number of sponsors utilized by one person |
21 |
16 |
|
Average number of sponsors utilized by each licensee |
5.6 |
5.8 |
|
Number of courses taken |
2,925 |
4,883 |
The list of the top ten sponsors across both renewal cycles only includes five sponsors who were on the top ten list in 2013-2014:
|
|
Sponsor (*) Indicates previous appearance |
Number of Courses Utilized |
|
1 * |
Tennessee Society of CPAs (1)[xi] |
1,247 |
|
2 * |
Deloitte (2) |
801 |
|
3 |
CPAacademy.org |
639 |
|
4 * |
AICPA (3) |
552 |
|
5 * |
Ernst & Young (5) |
420 |
|
6 |
HCA Healthcare Internal Audit |
327 |
|
7 |
Kaplan Financial Education |
225 |
|
8 |
Becker |
178 |
|
9 * |
KPMG (6) |
165 |
|
10 |
MasterCPE |
131 |
Of the top ten, the top five remained relatively unchanged. However, there was significant movement among sponsors, as CPAacademy.org did not even appear in the previous list. Other sponsors dropped down and still others proved more popular among the licensees audited.
I also looked at the Fields of Study of each course taken, which describes the subject discipline for each course taken. The top five for each reporting cycle are provided below. Obviously, technical fields rank highly each year, with taxation courses taken more than any other area.
|
|
2020 – 2021 Renewals |
2021 – 2022 Renewals |
|
1 |
Taxes (581) |
Taxes (1,101) |
|
2 |
Accounting (580) |
Accounting (845) |
|
3 |
Specialized Knowledge (351) |
Specialized Knowledge (658) |
|
4 |
Auditing (288) |
Auditing (381) |
|
5 |
Personal Development (166) |
Personal Development (285) |
I was also curious as to how each licensee obtained their CPE; were they attending a course in person or virtually? I looked at the delivery mode reported in the NASBA data.
|
|
2020 – 2021 Renewals |
2021 – 2022 Renewals |
|
1 |
Group Internet-Based (1,381) |
Group Internet-Based (3,038) |
|
2 |
Group Live (780) |
Self-Study (1,051) |
|
3 |
Self-Study (764) |
Group Live (793) |
|
4 |
|
Blended Learning (1) |
Certainly post-COVID, it is not surprising to observe the number of courses taken virtually. The percentage drastically increased in the second renewal cycle. While many sponsors did eventually return to a live environment, the numbers are not necessarily that strong. Some sponsors who used to present ONLY in a live environment have abandoned that delivery mode entirely. Conversations with TSCPA meeting staff, as well as other groups that I present to both report lower attendance at in person events post-COVID. The striking observation is that attendees enjoy the ability to multi-task while taking a Group Internet-Based course.
While Nano learning has been approved and was discussed in the previous article, no audited licensee reported any CPE obtained through that delivery mode. Surprisingly, one licensee did report a “Blended” learning experience which combines features of self-study with either a Group Live or Group Internet-Based experience. I was surprised by how strong the self-study delivery mode remains.
In closing, a high percentage of Tennessee licensees continue to fulfill their CPE requirements by their renewal date. Several do not, though, who are penalized. Many of the courses taken are in the technical subject areas, with more licensees earning their CPE virtually. More licensees are utilizing their carryforward hours, and a few have taken advantage of the “home state exemption.” The Tennessee Society of CPAs is the top provider utilized, and more licensees enroll in their state specific ethic courses than any other ethics provider.
About the Author
Perry Moore, Ph.D., CPA, CIA, CRMA is the Charles E. Frasier Chair of Accountancy and Director of the MAcc Program at the Pfeffer Graduate School of Business at Lipscomb University in Nashville. He can be reached at perry.moore@lipscomb.edu.
[i] Moore, Perry. 2016. “CPE: Now and the Future.” Tennessee CPA Journal 61 (5), 12-14.
[ii] ibid
[iii] Based on information obtained from the Tennessee State Board of Accountancy website. Accessed January 19, 2024. Available at: https://www.tn.gov/commerce/regboards/accountancy/license-applicant-resources/continuing-education.html
[iv] National Association of State Boards of Accountancy. 2024. “Fields of Study That Qualify for Continuing Professional Education.” Accessed January 19, 2024. Available at: https://cdn.asp.events/CLIENT_NASBA_287596D2_5056_B733_49DFF69B632BDF66/sites/LearningMarket/media/Documents/2024-standards-fos/2024-Fields-of-Study-Document.pdf
[v] Technical hours plus Non-Technical hours will not equal Total hours for each year based on how the data was analyzed. Similar explanation for the combined hours as well.
[vi] The data for the individual at the high end was not broken out by technical/non-technical for either year. Only their total combined hours was provided.
[vii] Penalty hours are assessed as follows: failure to meet the 80 hour requirement (8 hours); failure to obtain 40 technical hours (8 hours); failure to obtain 20 hours in accounting or auditing if performing attest work (8 hours); failure to obtain 20 hours in each reporting year (8 hours; could be assessed in each year); and failure to complete the state specific ethics course (8 hours). These penalty hours are cumulative, as licensees frequently fail to obtain the needed amounts in multiple areas.
[viii] The combined hours include hours not listed for the specific years due to carryover and penalty hours.
[ix] This data ONLY pulls from those licensees who utilized the NASBA CPE Tracking Tool.
[x] 2020 includes data for two years (the second year for the 2019-2020 auditees and the first year for the 2020-2021 auditees).
[xi] Courses offered by the TSCPA and its individual chapters were not identified separately in the data.