Asking Tough Questions About the 150-hour Requirement

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JULY 2006 - The idea to require students to complete additional, postgraduate education before becoming eligible to receive a CPA license was first introduced by the AICPA in 1959. In that year, the AICPA’s Special Coordinating Committee to Study the Report of the AICPA Commission on Standards of Education and Experience for CPAs recommended that postgraduate study be adopted as a requirement for the CPA certificate.

Implementation of the concept was slow. Not until 1978 did the first state, Hawaii, enact a law requiring candidates to complete 150 hours of education to sit for the CPA exam. Since then, the 150-hour requirement has taken off: today, most U.S. states have statutory language that provides or will provide for the requirement, and there appears to be little doubt that it’s here to stay. New York was one of the last states to enact the requirement, and it will officially become law here on August 1, 2009. That means today’s college sophomores in New York will be the first in the state mandated to fulfill the requirement.

The requirement’s ubiquity and the fact that it’s about to become law in New York State means it may be time to start asking tough questions about its efficacy and impact. Most fundamentally: Has the requirement been working in the states in which it has passed? The question may sound simple, but answering it definitively is not easy. Still, attempting to do so is critically important to the future of the profession. Examining the 150-hour requirement’s objectives—and seeing if it is meeting those objectives—is a good place to begin.

Objectives and Questions About the 150-Hour Requirement

According to the AICPA, the 150-hour requirement’s objective is to “improve the overall quality of the work performed by CPAs confronted with advancing technology, an increasingly complex business environment, and society’s continuing demand for accounting and assurance services.” Determining whether the requirement has met this objective requires more specific questions to be asked first. Here are a few:

  • Does the requirement improve students’ writing skills?
  • Does the requirement improve students’ analytical skills?
  • What about their ability to adapt to “advancing technology”?
  • Is 150 hours of education enough to “improve the overall quality of the work performed by CPAs”?
  • Should a master’s degree be required to become a CPA?

While it’s certainly too early to answer these questions with respect to New York State, we can look to other states that have implemented the requirement for some clues. The Illinois CPA Society, for example, recently published an examination of the requirement’s impact on the profession. Among the report’s major findings: Most employers think intellectual and interpersonal skills are more important than accounting knowledge, and most 150-hour graduates are not being offered significantly higher staring salaries than 120-hour graduates. More study is needed to corroborate these findings, but it’s a start.

The long history of the 150-hour requirement has not yet produced sufficient analysis to evaluate its impact on the profession. We must begin by asking the tough questions.

Louis Grumet
Publisher, The CPA Journal
Executive Director, NYSSCPA




















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