The Indiana Board of Accountancy approved a rule change in July 2016 that allowed competency-based ethics education to count as an option toward CPA license renewal. Last month, Indiana broadened that original rule change by becoming the first state in the nation to adopt legislation to permanently approve competency-based learning as an option for CPA license renewal in all areas of education.

House Bill 1467, which went into effect on July 1, 2017 passed unanimously in the Indiana House and Senate, and was signed into law by Gov. Eric Holcomb. Indiana CPA Society (INCPAS) officials say the new law is a significant development over last summer’s rule change because it provides permanent legislative change to the actual law governing CPA license renewal. It also allows competency-based learning options in all areas of education that fall under the umbrella of CPA license renewal – not just ethics education. “The passing of this law is historic because it is the first comprehensive, large-scale change to CPA license renewal that we are aware of, not just an incremental change like adding our previous ethics rule or incorporating microlearning in other states,” said Jess Halverson Bowyer, strategist for the INCPAS CPA Center of Excellence. INCPAS President and CEO Gary Bolinger, CAE, said the legislation “will enable the Board of Accountancy to write rules that make learning personal and measure what matters,” adding that he hopes the new law will spark other states to eventually follow suit with similar legislation. “It has the potential to expand beyond Indiana and even beyond CPAs by serving as an enhanced professional development model for other licensed practitioners,” Bolinger said. “We hope what we have enacted here in Indiana creates a robust dialogue among states, regulators, the AICPA, and NASBA.”

Indiana officials say adopting competency-based education as an option for CPA license renewal will ensure that a certain level of the subject material is learned and at a pace that works best for each practitioner. Bolinger said competency-based learning ensures greater mastery of the subject over the traditional hours-based approach in several ways, including the fact that a valid competency-based course requires active participation. “This isn’t just a ‘poll’ to see if you are sitting at your computer or a required period of time sitting in a chair,” he said.

Competency-based courses may also include short “quizzes” to demonstrate mastery of a particular subject and a social-learning aspect where participants will be able to see other participants’ comments. “The community will very likely reject any participant who does not participate in a meaningful way,” Bolinger said. He added: “This is an important development for Indiana CPAs and the profession as a whole because it is imperative that the profession has access to any meaningful experience to enhance competency. The world is increasingly complex and restricting CPA learning to hours-based learning does not serve the profession or protect the public adequately.”

Bowyer said the competency-based learning approach is also more effective than the hours-based approach because it gives CPAs the ability to plan ahead and seek out the effective learning they know they need for their careers, no matter the format. With the hours-based approach to CPE, the implied goal for CPAs is to check the boxes off as done to get their 120 hours, she said. This means CPAs are forced to pick courses based on what might fit into their schedule and what’s offered in their area, instead of being able to select learning more relevant to their goals. An option for developing a competency-based learning plan, however, gives CPAs a format for seeking out more meaningful and relevant knowledge, whether it’s offered in an online course, a book, or volunteering for a board.

“We want CPAs to be able to ‘count’ all of these types of learning they already do for credit,” Bowyer said. In their next step toward implementation of competency-based learning as an option for all areas of CPA license renewal, Bowyer said INCPAS has begun working with the Indiana Board of Accountancy to develop the reporting framework, create a learning plan template, and promulgate a rule to implement the statute.