Currently, only if you are a resident of the US Virgin Islands are you exempt from the 150-credit hour rule to earn your CPA license. That means that obtaining a license in all 50 states requires a CPA candidate to meet the 150-credit hour requirement before applying for their CPA license.
Typically, 120 credit hours will earn you a bachelor’s degree, which means that CPA candidates in most states are approaching the finish line on a Master’s degree before they are able to apply for their CPA license.
While the CPA designation carries important weight, and education is a key component of ensuring licensee competency, the lack of new CPAs year over year has some in the industry questioning whether or not we need to look at removing roadblocks.
The number of students graduating with accounting degrees has declined year over year for several years. Additionally, the number of individuals passing the CPA exam each year has also declined. This has many in the accounting industry worried about the future. The effects of qualified staffing shortages are already being felt.
Each year a more complex tax code makes it especially difficult to service all the taxpayers looking for professional help and not every CPA candidate ultimately becomes a tax expert.
The Association of International Certified Professional Accountants (AICPA) as well as many state societies are vehemently opposed to adjusting the 150 hour requirement. However, studies have shown the requirement to be a deterrent for some entering the industry. The cost to obtain the additional 30 credit hours beyond a bachelor’s degree can exceed $100,000 in some cases and takes an average of two years.
Meanwhile, students could be making an average salary of $60,000 a year with just their bachelor’s degree and forgo incurring the added costs.
A 2019 study from the Journal of Accounting Research found that there was no difference in quality of work from CPAs who were required to complete the 150 credit hours and those that were not. The “findings are consistent with the theoretical argument that increases in licensing requirements restrict the supply of entrants and do little to improve quality in the labor market”. (BARRIOS, 2022).
With AICPA opposition, it is unlikely that rule will be changed any time soon, but for the sake of the industry’s future, it’s a topic worthy of dedicated discussion.
BARRIOS, J. M. (2022). Occupational Licensing and Accountant Quality: Evidence from the 150‐Hour Rule. Journal of Accounting Research, 60(1), 3-43. https://doi.org/10.1111/1475-679X.12408
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