150-Hour Requirement and Its Effect on Student Enrollment
Patricia B. Abels
Uniform Accountancy Act requires 150 hours of college education
in order to sit for the uniform CPA examination. Legislation
has made the 150-hour education effective in most states.
An unanswered question is the 150-hour requirement’s
long-term effect on student enrollments in accountancy programs.
In the early years of implementation, enrollments in most
programs have declined. Students may perceive the fifth year
of college as an additional opportunity cost, which they could
avoid by selecting another major, such as finance or information
systems, that requires only a four-year degree. A four-year
degree permits students to graduate earlier, obtain professional
positions sooner, and earn higher entry-level salaries than
with a five-year accounting degree.
of the Requirement
150-hour requirement was originally implemented with the
goal of developing versatile and intellectual CPAs. This
notion is not new; Nelson, in a 1995 article in Accounting
Horizons, wrote that the founders of accounting envisioned
CPAs as professionals with a well-rounded knowledge base,
consisting of writing skills, mathematical and algebraic
accuracy, and knowledge of geography, science, and language.
time, educators moved away from a broad, liberal education
and concentrated on instructing the technical aspects of
accounting, based on the conclusion that additional technical
accounting courses would strengthen students’ readiness
for the CPA exam.
was no longer time in a 120-hour degree program for the
broad education espoused by accounting’s founding
fathers. Concentration on the technical aspects of accounting
came with a price: a narrower knowledge base for accountants.
The 150-hour requirement attempts to expand accountancy
to a more broadly based education model.
education for CPAs has engendered considerable debate over
1959, the AICPA created the Beamer Committee to investigate
the overall quality of CPA education. The committee recommended
additional education beyond a bachelor’s degree in
1969, the AICPA formed the Anderson Committee to explore
the overall quality of accounting practice. The committee
concluded that all accountants should have the same foundation
of knowledge, and suggested that accountancy candidates
attend college for five years in order to hold a CPA license.
Candidates with a four-year degree could substitute one
year of qualifying work-related experience.
the 1970s, the growing complexity of businesses led to demands
from Congress to restructure the accounting profession.
The complexities fueling this pressure included the globalization
of businesses, the development of technology, the growth
of regulations, and the expansion of consulting services
by CPA firms.
1987, Congressmen Dingell and Wyden pressured the AICPA
to improve the quality of accounting services. The AICPA
answered by organizing the Bedford Committee, which endorsed
mandatory peer reviews, continuing professional education,
and 150 hours of college education, including a bachelor’s
degree, for membership in the AICPA. In January 1988, 83%
of the AICPA’s general membership voted in favor of
amending its bylaws for these endorsements. The amendment
to the bylaws stipulated that all new members, beginning
in the year 2000, must have 150 hours of college education,
including a bachelor’s degree. The primary objective
of this bylaw was to yield a well-rounded, well-educated
CPA primed for a rewarding career in accounting.
was the first state to adopt the 150-hour requirement, in
1983. In 1989, a survey of Florida CPA firms published in
Accounting Horizons found that new employees with
a five-year degree “were not necessarily entering
the accounting profession with significantly better perceptual
and analytical skills.” Florida CPAs did not rate
five-year accounting students as possessing better communication
skills or as better prepared to interact with the firm’s
clients. New accountants still required the same amount
of supervision. Florida CPAs did agree that the most important
result of the education requirement was the improvement
in the public’s perception of accountants.
passing rates for Florida’s first-time candidates
increased to 31.5% in 1984, after implementation of the
150-hour requirement (see Exhibit
1). Passing rates continued climbing to 36.6% in 1995,
with an average of 31.8% through 2001. In 1979–1982,
before implementation, the passing rate for Florida’s
first-time candidates averaged 15.8%.
1 also shows that the number of first-time candidates decreased
to 54 individuals in 1984, attributed by some to the many
(3,294) that accelerated their accounting degrees to 1983
in order to take the CPA exam under the old law. The years
after implementation, 1985–2001, however, still reveal
a low volume of first-time candidates (an average of 647),
when compared to 1979–1982 (an average of 1,657).
decline in first-time candidates can also be attributed
to other factors, such as fewer students majoring in accounting
because of the perception of the high cost of an additional
year of education.
must weigh the opportunity costs of another year of education
against the benefits of an accounting degree. (The national
2001 average wages for selected fields is provided in Exhibit
2.) A prospective five-year candidate may decide that
accounting is a poor major in which to invest time, money,
and effort, when the long-term monetary rewards are better
in other areas.
students (e.g., part-time students, single parents) may
also find it difficult to compete within the newly constructed
AICPA guidelines. Nontraditional students already take a
longer period of time to earn their bachelor’s degree;
this time is even further lengthened by the 150-hour requirement.
Proportionately more nontraditional students are women.
The increased opportunity costs of the 150-hour requirement
may further discourage nontraditional students from choosing
drop in the supply of CPAs would create an enormous problem
for CPA firms, industries, and government agencies. Smaller
employers could face a situation where they could not afford
to hire professional accountants without significantly restructuring
their prices or their workflow. The most likely responses
would have features of both: higher prices to their clients,
and more work performed by paraprofessionals.
that 150 hours of education is a requirement for AICPA membership
and states have made it a prerequisite to sit for the CPA
exam, there has been some backlash. Colorado was the first
state to alter its position, claiming the requirement imposes
an “overly restrictive entry barrier into the profession
with no demonstratable … benefit.” Other states
may follow Colorado’s example. New Jersey now permits
students to sit for the exam with a bachelor’s degree,
awarding the license after the 150-hour education and experience
requirements have been met.
evidence suggests that the 150-hour requirement has reduced
student interest in the accounting profession. Several factors
could come into play. First, a student’s investment
in an additional year for an accountancy degree is an important
signal to employers about her commitment to a specific career,
which remains at risk until a CPA firm hires her and she
passes the CPA exam and fulfills the experience requirement.
Second, starting salaries, even from the most generous CPA
employers, do not cover the out-of-pocket costs of an additional
year of college education, let alone compensate the student
for the additional investment. Third, many potential accounting
students will continue to switch to other business majors
where a four-year degree suffices, especially because their
goal of CPA licensure does not necessarily become easier
to attain with the additional education. The shift is most
apparent in Florida, where the law has been in effect since
B. Abels, ABD, is a doctoral student of accountancy
at the University of Sarasota (aka Argosy University), Sarasota,