Does the 150-Hour Requirement Affect Student Enrollment? Money Talks.

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I find it frustrating that CPAs are still debating the wisdom of the 150-hour requirement to sit for the CPA exam (April 2004). The data that the author presents in Exhibit 1, which shows the increased first-time pass rates, supports the 150-hour requirement to sit for the CPA exam. The 2001 national wage information in Exhibit 2 does not relate to the issue. My interpretation of Exhibit 2 is that these are averages for all levels of experience, not for first-year employees. Also, the “Accountants and Auditors” category is not necessarily CPAs. Robert Half's annual salary guide provides contrasting information—that salaries are 10% higher for certified, as opposed to noncertified, accountants. The Robert Half salary guide also indicates that salaries are higher for those with master’s, rather than bachelor’s, degrees.

I can state anecdotally that students who complete a 150-hour BBA/MBA at St. Bonaventure University generally have better choices for their first full-time positions, and within two years appear to be substantially further along in their careers than many students who graduate with the 120-hour BBA only. I should also point out that the CPA designation is needed only for a few specific career options in accounting, and students who are not interested in those directions, or in sitting for the CPA exam, are not required to complete a 150-hour degree. We in academia must realize that a one-size-fits-all, CPA exam preparation–focused accounting degree, is history.

The best remedy to increase the number of CPA candidates is for employers to increase the salaries, and the number of internships, in those fields that require the CPA designation. Money talks.

Susan B. Anders, PhD, CPA
Associate Professor of Accounting
St. Bonaventure University, School
of Business, St. Bonaventure, N.Y.

The Author Responds

The 150-hour requirement has allowed students in Florida to earn a higher passing rate on the CPA examination. A higher percentage of students passing the exam does not necessarily mean that more CPAs are entering the market for employment. If fewer students are sitting for the exam, there will be fewer CPAs in the market. As this trend continues, we can expect a shortage of accountants, and the accounting profession will see an increase in salaries because there are fewer accountants in the marketplace. Firms, however, have not been willing to pay a sufficient salary differential in order to compensate for the educational expenses of obtaining five years of undergraduate education.

According to Leslie Shapiro [“When More May Be Too Much,” 40 National Public Accountant 7 (1995)], the financial burden placed upon students for this extra year of education is approximately $36,000. In 1999, Miami University accounting department chair John Cumming noted that a five-year graduate has a expensive opportunity cost that will enable the graduate to earn wages of $2,000 or 8.3% more than graduates who hold a four-year degree. In Exhibit 2, I was demonstrating that individuals entering other fields receive higher compensation, on average, than those entering taxation, accounting, and auditing. The additional costs imposed upon students for this fifth year of education has created a barrier for some students, with no substantial increase in wages.

A five-year graduate may decide that accounting is a less attractive career to pursue. The implementation of the 150-hour requirement has resulted in the decline of students undertaking accounting as a career. This downward spiral can be seen in Exhibit 1. In 2001, there were only 602 first-time candidates taking the CPA exam in Florida; in 1980 there were 1,862. The drop between these years is 67.67%. The passing rates may have risen from 15.4% to 28.9%, but the fact remains that fewer students are pursuing accounting as a career. With fewer students entering the accounting profession, we will see a scarcity in the supply of accountants.

It is evident that this requirement had an impact on students entering the profession of accounting as a career path. When there is a shortage within a profession, the demand will drive up the starting wages. Higher wages can explain why Florida has seen an increase in the number of first-time candidates after 1984. In 1985, Florida had 407 first-time candidates, and in 1991 it reached a high of 824 candidates, which is still well below the 1,862 candidates in 1980 before the 150-hour requirement took effect. This 1991 increase is related to the student’s perception of earning a higher wage after graduation. Unfortunately, this higher wage is temporary and will not likely continue in the future. Money does talk, and the accounting market will become saturated, and as supply exceeds demand accountants will find a crowded market in which they will have to settle for less in the form of wages. As accountants’ wages are adjusted to a lower level, the profession will become less appealing to students. This is evident in the decline of first-time candidates (560) in Florida in 1996.

Last, the additional classes during the fifth year do not prepare a student for a career in accounting. Florida CPAs felt that the new breed of accountants did not lower training costs, and that its hired graduates were no better prepared than four-year-degree graduates. The only detectable difference was the enhanced public perception of the accounting profession. Many good and bright accounting students will continue to choose business majors where a four-year degree is sufficient. The education shifts have already occurred in Florida, where the law has been in effect since 1984. The effect on student enrollment and the supply of accountants and accounting educators may decline as a result of this legislation. Perhaps the problem perceived by the AICPA and the Bedford Committee lies not in the quality of education being received by prospective accountants. The accountants of the Enrons, WorldComs, and Tycos of this era might be examples of what is actually wrong with the accounting profession as a whole.

Patricia B. Abels, ABD

Small Business Resources in Government Procurement

Your article “Government Procurement Basics” (May 2004) was very interesting and informative for those companies seeking to bid on federal government procurement opportunities. The authors, however, omitted an important point in their discussion of seeking resources for a failed proposal, especially as they affect small businesses.

Many small businesses bid on federal contract opportunities, especially in the area of “small business set-asides,” those procurements solely applicable to small businesses. A small business vendor whose bid is bypassed for a higher bid can use an appeal procedure through the U.S. Small Business Administration (SBA), called a Certificate of Competing (COC). When a small business is bypassed in favor of the next lowest bidder because the procuring agency finds the small business to lack either financial or technical capabilities or both, the case must be referred to the SBA for COC action. The SBA will contact the vendor and advise that the company can file for a COC.

Should the vendor decline, the case is closed, and the procuring agency goes to the next lowest bidder. If, however, the vendor avails itself of COC action, it must file papers with the SBA, which in turn will perform an independent review of the vendor’s capabilities, financial and technical. When the SBA finds affirmatively, a COC will be issued for that particular procurement, and the procuring agency must then award the contract to the small business.

The procuring agency may request a hearing with the SBA in order to possibly overturn the issuance of the COC, but in most cases the SBA and the small business will prevail.

I don’t mean to muddy the waters; however, because small business does bid on many contract opportunities through “small business set-asides” and unrestricted procurements, I thought it was important to make known the role of the SBA in federal contracting.

Martin Bass, CPA (Retired)
Floral Park, N.Y.




















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