State CPA societies in Minnesota and South Carolina are lobbying their respective state legislatures to abandon the 150-hour rule as a pathway to CPA licensure in response to the profession’s staffing shortage, The Financial Times reported.

The Minnesota bills, which were drafted with the help of the Minnesota Society of Certified Public Accountants (MNCPA), would enable four-year degree holders either to get two years of professional experience and take the CPA exam, or to take 120 hours of professional-education courses, get one year of work experience and take the CPA exam. Four-year degree holders would also have the option of completing 150 hours of college credit.

The bills, which were not considered in the legislature’s most recent session, are opposed by the AICPA, according to GoingConcern. The AICPA wrote to MNCPA members, arguing that the bills "would undermine the profession and the CPA license" and "make it harder for Minnesota CPAs to practice across state lines, physically and virtually."

Bob Cedergren, chair of the MNCPA, pointed to the dearth of talent at smaller firms as the reason behind his organization’s move. “The Deloittes and PwCs of the world have the masses, they have offices everywhere and the ability to draw on overseas talent,” he told the FT. “We needed to take some action.”

The South Carolina Association of CPAs (SCACPA) is proposing legislation that specifies possible alternatives to the 150-hour requirement and allow CPAs from other states to practice in South Carolina without 150 hours of higher education. SCACPA Chair David Knoble told The Wall Street Journal in March that many practicing accountants who graduated decades ago have four-year degrees, not five-year degrees, and do quality work.

The shortages are particularly acute in government accounting, the FT reported. Ratings agency S&P Global dropped coverage of 64 municipal bond issuers earlier this year because they failed to file audited financial statements on time. Minnesota State Auditor Julie Blaha told the FT that municipal authorities across her state are having a hard time finding external auditors. For that reason, she is considering proposing the elimination of annual audit requirements for some smaller local government agencies to stem a tide of late filings. 

One Minnesota authority, the North Fork Crow River Watershed District, was dropped by its auditor because, “They told us we were small peanuts, compared to everything else they were doing,” Colton Henjum, the district’s administrator, told the FT. It took him eight months to find an auditor who would conduct a legally required audit by Dec. 31. Of the more than 30 firms he contacted during that search, “[e]very single one said they didn’t have the manpower or are not taking on new clients.”

The 150-hour requirement replaced the previous 120-hour requirement in the 1990s. The rationale was to elevate the status of the profession to make it more akin to law or medicine. The effort took about two decades of work to align all 50 U.S. states and achieve reciprocation.

“What exists is a very delicate system of agreement and trust,” said Sue Coffey, chief executive for public accounting at the AICPA, in an interview with the FT. “This has been my challenge with Minnesota. It just takes one to upset the applecart and that could upend mobility across the country.”

“The 150-hour rule has prevented many talented folks from joining the profession,” one Big Four audit executive told the FT. “The cost of an extra year of school is prohibitive and isn’t necessary to succeed in public accounting, or business in general.”

A senior partner involved in recruiting at another Big Four Firm asked, “Is there an alternative, such as learning on the job, which is as good as or better than learning in the classroom?”

In March, the AICPA and the National Association of State Boards of Accountancy (NASBA) announced a program designed to offer firms some relief to talent shortages while helping recent graduates reach the 150-credit hour requirement. The Experience, Learn & Earn (ELE) program would make it possible for students to enter firms immediately after earning their bachelor’s degree. According to the announcement, "The impetus behind the ELE program is to help participants who are struggling with the means or a plan to earn 150 hours of credit. ELE combines online courses with early work experience and entry into a firm to provide flexibility, increased accessibility, and the rigor participants need to advance in their accounting career." A pilot program is scheduled to launch this fall. 

In July, the AICPA formed an advisory group to address the profession’s talent shortage.