For the Good of the Profession
This blog is usually devoted to not-for-profit organization management issues, but today I would like to deviate from that subject and talk about some developments in my beloved accounting profession. As many of you are aware, the regulators in virtually all jurisdictions require 150 credits (five years of college education) for professional licensing as a certified public accountant (CPA). This has been the norm for almost four decades now. For instance, Florida was one of the first states to require a fifth year of college to qualify for a CPA license back in 1983. Other states fell into line until today only the U.S. Virgin Islands does not require 150 credits for licensure.
Interestingly enough, the extra 30 credits do not have to be taken at the graduate level or in a business related subject at all. Students can satisfy the requirements by taking classes in any academic subject as long as the additional credits appear on a college transcript. In recent years one of my students completed a second bachelor’s degree in music and that qualified her to become a CPA when she passed the Uniform CPA Examination. Other students will complete their bachelor’s degree and then take additional courses at a community college.
What was the purpose of requiring another year of college education? Presumably the business world was becoming and still is becoming) more and more complex and the profession recognized it over forty years ago. As the American Institute of Certified Public Accountants (AICPA) website (1) notes: “A certified public accountant (CPA) in today’s environment must not only have a high level of technical competence and a sense of commitment to service, but must also have good communications and analytical skills, and the ability to work well with people. Employers are looking for individuals who have the ability to analyze and evaluate complex business problems and the interpersonal skills and maturity to make decisions in a client- and customer-service environment.”
Why were business subjects or additional accounting courses not required? I think a close reading of the above quote puts everything into perspective. At the time the profession seemed to believe there were several deficiencies in the training of accountants, including communication skills. Therefore, even more liberal arts courses would help an accountant become a more critical thinker and better business person. I also believe the profession wished to have well-rounded professionals who could function not only as a CPA but as an informed member of society. As I tell my students, accounting firms can hire computers to do accurate accounting. However, the firms are looking to hire interesting people who can relate well with the clients, stakeholders, and other employees of the firm. I believe this has happened but I also think it is time to rethink the 150 hour requirement.
To be sure I don’t want the 150 hour requirement to be abolished. That would be a step backwards in my opinion. State Boards of Accountancy are not inclined to do that either since there is reciprocity and portability among the various states. CPAs licensed in one State can temporarily work or be licensed in another State since each has similar educational requirements. Removing the 150 credit hour requirement would need to be done by all jurisdictions or there would be mass confusion as CPAs from one state tried to work in another. No one wishes to see that.
The requirement does have several serious implications though. First, the extra cost has increased the barrier to entry. While the AICPA disputes this, the actual results seem to tell a different story. Minority groups are underrepresented at the professional level in accounting firms (2) and some believe the 150 hour requirement is a cause.The total number of accounting graduates seems to be dropping (4) and firms are afraid they will not be able to secure sufficient talent in the near future. The latter concerns were expressed at a meeting of the State Board of Accountancy of NJ during its May 2022 meeting (4) During the same meeting the State Board took direct aim at the fact the additional credits did not have to be in a business related subject, saying this requirement “…makes little sense.” It should be noted that even the AICPA believed most students would pick up the additional education through graduate programs such as a Master’s of Accountancy degree. The NJ State Board also noted there seems to be very little correlation between the extra year of college education and success as a CPA.
As a result of these concerns, the NJ Board approved a “Work for Credit” program where students can earn 30 credits by working in a co-op program with an accounting firm. Students will work for nearly a year with a sponsoring accounting firm to achieve the extra 30 credits. Since the students will be paid, there will be significantly less financial burden on them. Hopefully, this will also increase minority participation within the profession. I am very much inclined to agree with this approach to solving some of the problems in the accounting profession. Afterall, who can disagree with better trained CPAs and greater opportunity and participation in the profession?