of the 150-Hour Requirement
MAY 2005 - In
his article “150 Hours and the Market” (The
CPA Journal, February 2005), John Yelvington asserts
that the market must move to raise salaries for five-year
graduates in order for the profession to attract a sufficient
number of new CPAs to meet demand.
my perspective, the evidence is clear: The 150-hour rule
has resulted in a decline in the number of candidates sitting
for the CPA exam that is especially notable in those states
that have enacted it. Numerous states passed the provision,
which in many cases became effective between 1998 and 2000.
Although the number of candidates sitting for the exam has
increased since then, the number sitting today remains remarkably
lower than it was in the 1990s.
decline can be seen within the context of the demands on
the profession for implementing the Sarbanes-Oxley Act.
Suddenly, CPA firm demand for graduates has soared, with
supply remaining a relative trickle.
result is what an economist would expect: With demand outstripping
supply, starting salaries have indeed increased. Thus, in
my part of Georgia, one graduate was offered $22,000 more
by an Atlanta office of a Big Four firm than another graduate
was offered by a small, community-sized CPA firm.
can speculate about possible consequences of this supply-demand
Increasing salaries offered by CPA firms;
Salaries by industry perhaps increasing, as this sector
strives to also attract the “best and the brightest”
in competition with the profession;
Struggles by non–Big Four firms to move their salary
offers closer to the Big Four in an effort to attract
Salary structural issues, as compression creates pressure
to increase the salaries of those not at entry level;
Fee pressure, as firms seek to recover higher operating
costs from clients, especially when the client is not
affected by Sarbanes-Oxley requirements; and
Pressure to use paraprofessionals to offload some of the
workload burden to less-costly workers.
G. Carpenter, PhD
Professor of Accounting
Campbell School of Business,
Mount Berry, Ga.