Time to Roll Back the 150 Hour Rule?

Given the current and future CPA shortage, it seems like a good idea to consider all factors that may attract, deter and retain industry professionals. Here’s one. The 150-hour requirement for CPA certification has long been a topic of debate within the accounting profession. Recent data suggests the need for a re-evaluation of this mandate, particularly in terms of its impact on diversity and inclusion.

📉 A study from MIT Sloan highlights a concerning trend: the implementation of the 150-hour rule has led to a 26% decrease in minority entrants into the profession compared to their non-minority counterparts. The study used public data and covered years 1986 – 2019. The study reflected an overall 14% decline in all new CPAs during that time. The added financial and time burden of obtaining the extra 30 credit hours, often equating to an additional year of education, along with salaries that lag behind finance & analytics majors may have be a factor to less accounting majors.

❓ Further complicating the issue, a 2024 survey conducted by the New Jersey Society of CPAs revealed that 62% of respondents see no significant skills difference between CPAs with 120 credit hours and those with 150 hours. Does this mean that the additional coursework may not necessarily translate to better-prepared professionals?

Given these insights, it may be time for the accounting profession to reassess the 150-hour rule. The goal should be to ensure that the pathway to becoming a CPA is rigorous yet thorough. Minnesota is leading the way with proposed legislation that would require 120 credit hours, passing the exam and two years of professional service.

💡 Revisiting the requirement could mean rethinking how we structure the CPA preparation process, including – like Minnesota – by integrating more practical experience opportunities or providing alternative pathways that do not compromise the quality of education or preparation but reduce the financial burden on students.

🤝 Let’s face it – AI and offshoring may be short-term band aids, but neither is the permanent long term fix to the CPA shortage. Time to consider all angles. And perhaps reconsider that 150-hour rule that seemed like a great idea 25+ years ago.

#Accounting #CPA  #150HourRule #CPACertification #CPACareer