NOTE: The following is an unpublished working paper. For a copy of the current version, complete with references and footnotes, please email the author at irv.nelson@usu.edu.

Executive Summary

THE ORIGINAL INTENT of the accounting profession for university programs in accounting was to provide a broad, liberal education that would impart a wide range of knowledge and develop minds trained to think analytically and critically.

INCREASING COMPLEXITY during the 20th century has caused the common body of accounting knowledge required of CPAs to expand beyond the point where it is possible to acquire both that knowledge and a broad, liberal education in four years.

THE NEED FOR MORE THAN FOUR YEARS of university study has been apparent for many decades. Calls for a 5-year requirement date back to prior to World War II. The AICPA has officially supported a 5-year requirement for nearly forty years.

THE MOTIVATIONS OF PROPONENTS of the 150-hour requirement are to benefit clients, students, and society in general by producing better educated, more well-rounded, professional accountants.

THE MOTIVATIONS OF MOST OPPONENTS are largely self-serving. Many are attempting to protect special advantages they enjoy under the old law. Some individuals with worthy motivations oppose the law based on inaccurate information.

MOST CRITICISMS of the 150-hour law are either false or inflated. Many statistics used to support criticisms are taken out of context or are seriously flawed.

A LEGITIMATE CONCERN of the 150-hour requirement is access to the profession for economically disadvantaged individuals. This issue is not limited to the accounting profession, but encompasses all professions that require postgraduate education. The education requirement of any profession must be based on the skills and the body of knowledge required for competency. The CPA profession is actively engaged in efforts to increase accessibility for poor students, but more needs to be done.

MOST ANTI 150-HOUR ARGUMENTS and concerns, whether legitimate or not, miss the main point. The true issue to be addressed is, "How many years of college education are needed to adequately prepare individuals for entry into the CPA profession?" The conclusion that at least five years is needed is inescapable.

THE 150-HOUR EDUCATION REQUIREMENT is a result of political compromise. For 100 years, the profession has wanted a model of education patterned after those of other professions, such as medicine and law. A century from now, the 150-hour requirement may be remembered as a step in that direction.

This article provides both a historical context for properly understanding the 150-hour requirement and responses to some of the most common criticisms used by opponents in their lobbying efforts. CPAs in non-150-hour states may find the information helpful in answering legislators' questions. CPAs in states which have already passed the requirement will gain a better appreciation for the magnitude and length of the profession's struggle to secure a professional model of education for CPAs. End notes have been included to document assertions and to provide references to additional resources.

Historical Origins

Many arguments have been made for and against the 150-hour law. Why is it the subject of such intense debate? What are the motivations of its supporters, versus those of its opponents, and what is the nature of their respective arguments?

To properly understand the 150-hour requirement, it is necessary to know something of the history of accounting education in the United States. One hundred years ago, there was no accounting profession. Accounting was a trade; one became an accountant by apprenticing. There was little differentiation between accounting and bookkeeping. There were no university degrees in accounting. There also were no laws governing accounting, nor any state licenses.

A profession may be distinguished from a trade by such things as a national organization of professionals, the teaching of the subject in professional schools at universities, state licensure and regulation, and a code of ethics. In the years surrounding the turn of the twentieth century, accountants organized themselves into a profession by establishing a professional organization (the forerunner of the AICPA), adopting a stringent code of ethics, promoting the teaching of accounting at universities (accountants were instrumental in establishing colleges of business at universities throughout the country), and getting state laws enacted to license and regulate accountants (Certified Public Accountant laws). The statutes varied from state to state, but generally required a certain educational requirement (usually, a university degree in accounting), passing a professional entrance examination (the Uniform CPA Examination), and several years of experience to qualify for a license.

Despite their success in establishing a new profession, the accountants were frustrated from the beginning in two respects. First, the educational requirement they wanted was greater than state legislatures were willing to write into law; and second, the university accounting programs they had done so much to foster turned out to be more narrow and technical than they had desired.

It is important to recognize that at that time, the business world was comparatively simple. There was no SEC and thus, no mandatory audits. Likewise, there was no income tax and thus, no IRS. There were no rule-making bodies such as the APB and FASB -- codified accounting rules and pronouncements did not yet exist. There were no capital leases, common stock equivalents or post- retirement benefits to account for. With the exception of the railroads, there were also virtually no large corporations. It is difficult for most of us today to imagine such an uncomplicated accounting world. In that environment, legislatures had difficulty believing it should take more than a few years to learn all there was to know about accounting. They also could not imagine any dire consequences to society that could conceivably result from an unqualified person practicing as an accountant. As a result, the original goal of patterning accounting education after the legal and medical professions' model was never realized. It took many years and much effort to convince the various state legislatures to require even a baccalaureate degree. Until the 1980s, virtually no state laws required more than that. (Until the 1950s, there were some states which had no education requirement at all, and even today a handful still require less than a four-year degree for licensure!)

The four-year degree that eventually became the norm falls short of the professional education model (four-year liberal arts degree followed by a 3-4 year, professional graduate program.) From the beginning, CPAs have felt that the complexity of the common body of knowledge, the skills necessary for success, the magnitude of the public duty, and the implications of incompetence in public accounting are on a par with medicine and law and that education before professional entry should therefore be comparable with those professions. Most CPAs feel these factors are far more consequential now than they were 100 years ago, making arguments for required graduate education correspondingly more compelling.

The second problem was closely related to the first. Because there was no graduate degree requirement, accounting was taught at the undergraduate level of college. Accounting students were thus less prepared for broad, conceptual approaches to professional education than were the already-educated graduate students in legal and medical schools. Accordingly, accounting professors adopted a rules-oriented, procedural approach which was the antithesis of the professional accountants' original objective for a university education. The professional accountants believed accounting required a wide range of knowledge and minds trained to think analytically and critically. They supported a broad program emphasizing theory and philosophy and were disappointed with the narrow, technical focus of university accounting courses. They expected a graduating student to "have a sufficiently broad knowledge of the so-called arts and sciences to give him a proper appreciation of present-day civilization. He should know the major scientific facts about the world he lives in and should have an appreciation of the richer fruits of civilization, usually known as the fine or liberal arts... He should be able to express his thoughts clearly and forcefully in his mother tongue."

The business world changed significantly during the twentieth century. Businesses became larger and more complex. Income tax and securities laws were enacted. New kinds of transactions were invented. As business became more complicated, accounting rules proliferated. To cover these new topics, more accounting courses were added to the curriculum, which reduced the number of courses in liberal arts and general business. Thus, accountants became ever-more narrowly educated. Additionally, rules proliferation forced accounting courses to become even more technical than before. Professors taught students to memorize increasing numbers of formal accounting rules, with correspondingly less focus on essential business and social issues and underlying theories and philosophies.

In this way, the already too-technical focus of accounting programs became even more technically oriented. As a result, CPAs found that new hires were increasingly unprepared for success in the profession. Accounting graduates lacked communication, interpersonal, critical-thinking, and professional skills, as well as general knowledge of cultures, history, the arts and sciences, and business. Additionally, they had a very shallow understanding of the issues and theories underlying memorized accounting rules -- they knew the "right answer," but didn't know why it was the right answer. In short, graduates were not well-rounded in the tradition of a classical education.

This result should hardly be surprising; with the growth in the "common body of knowledge," there simply is not time in four years to cram the ever-expanding technical rules and procedures into students' heads and still provide for the well-rounded, general education that was the original intent of university programs in accounting.

Evolution of the 150-hour Requirement

Arguments that more than four years of college study are needed to prepare students for entry into the accounting profession are not new. As early as 1936, CPAs advocated five years of study past high school, including a graduate degree, as the minimum educational requirement for CPA certification, and proposed that free-standing, professional schools of accountancy, similar to schools of medicine and law, should be established to confer such degrees. Similar views have been consistently expressed by practicing CPAs ever since. Since 1959, the leadership of the AICPA has officially advocated postgraduate education as a requirement for CPA certification.

Beginning in the 1970s, the AICPA also advocated the establishment of schools of accountancy. Later in that decade, a few universities established schools of accountancy and began to offer masters degrees in professional accountancy. Those fledgling programs also pioneered accreditation for graduate programs and formed the Federation of Schools of Accountancy (FSA), the organization of accredited graduate programs in accounting.

However, despite official position statements favoring postgraduate education and the availability of professional masters degree programs at institutions across the country, the movement toward making graduate study an official requirement for licensure made little progress for another ten years. During the 1980s, only three states, Hawaii, Florida and Utah, passed laws requiring postgraduate education. Despite widespread agreement regarding the need, there seemed to be little momentum.

In the late 1980s, the leaders of the profession embarked on a two-fold strategy to "get the ball rolling." First, to increase the political feasibility of the increased educational requirement, they decided to compromise on what they were asking for. Rather than seeking a masters' degree requirement, they changed their wording to reflect 150 semester hours of university education, including a bachelors degree in accounting. Second, in 1988 the AICPA Council placed on the ballot a proposed by-law change that would require applicants for membership in that organization after the year 2000 to have 150 semester hours of university education.

In January 1988, in an 83% landslide, the general membership of the AICPA voted "YES." That vote was the culmination of decades of frustration. In effect, the CPAs said, "Regardless of what the state legislatures do, we won't let anyone join our organization without 5 years of college education, starting 13 years from now." The implication was that even if someone was licensed as a CPA, he or she could not join the professional organization of CPAs unless the requirement was met. Clearly, CPAs hoped their vote would serve as a catalyst to change state laws.

To a large degree, their hope was realized. During the ensuing years, many state legislatures considered bills to require 150 semester hours of university education as a condition of licensure. As of this writing, 38 jurisdictions (states and territories) have passed 150-hour requirements through legislation or regulation. Most of the remaining 16 jurisdictions which license CPAs in the United States have made progress in that direction, with varying degrees of success. However, the movement has faced stiff opposition from special interest groups, which in some states has stalled or at least slowed the passage of 150-hour legislation.

When considered in its historical context, the motivation of the accounting profession in sponsoring the 150-hour education requirement for licensure of CPAs is clear: increasing complexity has caused the common body of technical and accounting knowledge required of CPAs to expand beyond the point where it is possible to acquire both that knowledge and a broad, liberal education in four years. Accounting graduates have been found lacking in key skills and general knowledge necessary for success in the accounting profession. Additional hours are needed to remedy the deficiency and provide the well-rounded, general education that was the original intent of university programs in accounting, while maintaining (or improving) the current level of technical training.

This motivation has at its core the best interests of four groups: the general public, who rely on the professionalism of CPAs; the accounting profession, which needs properly trained graduates; business clients, who rely on the expertise of CPAs; and accounting students, who expect to be prepared to succeed in the CPA profession upon graduation. All of these groups suffer under the present system, which inadequately prepares students for success and competence as CPAs. All of these groups will benefit from the 150-hour requirement.

Opponents' Motivations

As state legislatures and regulators have considered the merits of the 150-hour requirement, they have been bombarded by special interest groups engaged in intense lobbying efforts to defeat the law. Who are these groups, and what are their motivations? It is this author's personal observation that most of those who oppose the 150-hour law may be categorized into one of four groups, each of which has a special interest in maintaining the status quo: businesses which market commercial CPA Exam review courses; small four-year colleges and universities; certain large, research-oriented universities; and minority-advocacy groups. Let us consider the motivations of each group.

Enterprises that market CPA Exam review courses maximize their revenues through large numbers of accounting graduates, who are ill-prepared for the CPA Exam upon graduation and thus have a low pass rate. These businesses lose revenue as either the number of graduates drops or the quality of graduates increases. The 150- hour requirement is a threat to their profitability on both factors.

The accounting faculty of some small, four-year colleges and universities which offer no advanced degrees oppose the law because they view it as a threat to their accounting programs. They believe it will take students (and money) away from them and into the larger universities. Even institutions which would not be affected significantly may still oppose the law for political or image reasons. Accounting departments at small schools want to continue to advertise in their promotional materials that their programs qualify students for entry into "the CPA profession." (On the other hand, non-accounting faculty and administrators at some small universities support the law once they realize it has the potential to increase utilization of excess capacity in humanities, arts and sciences.)

Some accounting academicians at large, research-oriented universities which currently offer no professional masters degrees also oppose the 150-hour requirement. Individual accounting faculty members may oppose the requirement because it might necessitate a shift of resources and attention from the Ph.D. program, or simply because of the work it would entail. Some faculty members spend little time teaching undergraduate students; their primary interest lies in performing theoretical research. Such faculty have little incentive to support a law which might increase their non-Ph.D. teaching load and require time and effort to restructure their curricula. (Ironically, a few professors oppose the law for the opposite reason; they would like to see a masters degree requirement and don't feel the 150-hour law goes far enough.)

Even at universities where most of the accounting faculty support the 150-hour requirement, sometimes the university president, the dean of the college of business, and/or the chair of the accounting department may oppose the 150-hour law. Various levels of university administration have different agendas and are often in conflict with each other on this issue. For example, some college of business deans oppose the requirement because they view an accounting masters program as a threat to their pet MBA programs. Some university presidents may oppose on the grounds that a new masters program would require additional funding and resources during a time of fiscal austerity.

The primary motivations of the above three groups of opponents (CPA Exam review businesses, small universities and large universities) seem to lie not in the interest of the general public, the CPA profession, the business community, nor the students, but in protecting their own special advantages under the old law.

Although most minority CPAs voted in favor of the requirement, some minority advocacy groups have also expressed opposition to the 150-hour legislation. Their concerns relate primarily to the financial burden the additional hours would place on economically disadvantaged students. However, these legitimate concerns are sometimes supported with flawed statistics and emotional rhetoric rather than sound analysis of the facts.

Universities and minority groups wield significant political power. Through lobbying efforts financed largely by businesses which market CPA Exam review courses, opponents claim to have defeated or at least delayed passage of the 150-hour law in a dozen or so states. Proponents respond that a variety of factors has contributed to delayed passage of the bill in certain states, and that the effectiveness of opponents has been exaggerated. In any case, opponents' tenacity cannot be denied, and their arguments warrant a response. Listed below are some of their most common arguments against the 150-hour requirement, with a response to each.

Arguments Against the 150-Hour Requirement and Responses

1. The 150-hour requirement is an attempt by CPAs to limit competition. Its motivation is protectionism by limiting the number of entrants into the profession.

This allegation is patently false. In truth, the CPA profession is greatly concerned about attracting sufficient numbers of talented students into accounting. In 1989, just one year after the AICPA vote for the 150-hour requirement, the largest national CPA firms issued a joint position statement which expressed deep concern over their future ability to attract sufficient numbers of talented graduates into their firms. They also voiced apprehension that the 150-hour requirement might "exacerbate the current trend toward declining enrollments" in university accounting programs. To ensure that future students would perceive the additional investment in time and tuition as worthwhile, they committed to provide "increased opportunities upon graduation." Clearly, the "Big Six" do not desire to limit the number of accounting graduates!

In the last several years, the AICPA has expended significant resources developing a comprehensive marketing package to attract greater numbers of qualified high school and college students into accounting programs. Through the donated time and money of local CPAs, its award-winning video, "Accounting: The One Degree with 360Oof Possibilities," has been distributed nationwide to high schools and colleges. The AICPA has also devoted substantial effort and money producing an interactive, CD-ROM-based recruiting package called, "Room Zoom: The CPA SourceDisc," which is receiving even wider distribution. Such efforts hardly characterize a group which is trying to limit the number of entrants. A more accurate description of the accounting profession's position on this matter might be, "CPAs favor the 150-hour requirement in spite of their concerns over its potential effect on the number of entrants into the profession, and are actively engaged in efforts to mitigate this potential side-effect."

Nevertheless, opponents delight in hurling the charge, casting the AICPA as a greedy cartel. Naivety notwithstanding, consider the political impact of the Hispanic Coalition on Higher Education in California calling the AICPA "a trade association requiring superfluous additional education, ostensibly to improve the profession but, in reality, to limit the number of new entrants into the field."

2. The 150-hour law will cause a drop in the number of accounting majors, which will result in a loss of jobs for accounting professors.

This argument is used as a scare tactic to recruit accounting professors to oppose the 150-hour law. Statistics from Florida, one of the early states to adopt the law, are often used to support the argument: in the first year after the 150-hour law went into effect, first-time candidates sitting for the CPA Exam in Florida went from about 2,000 per year to about 50. However, this statistic fails to reflect 1) the one-time nature of the effect in the first year (the number of first-time exam-takers has since risen to approximately 800 per year); 2) how many Florida 4-year graduates simply cross the state line each year and take the exam in neighboring states (a problem which will be eliminated when all 54 jurisdictions have implemented the 150-hour requirement); 3) the fact that the pass rate on the CPA Exam in Florida has more than doubled since the change (which CPA exam review businesses find particularly disconcerting!), so that the number of successful candidates has remained essentially unchanged; and 4) the Florida 4-year graduates who elect to pursue careers outside public accounting, who no longer sit for the CPA exam. (In the past, many 4-year graduates who had no intention of entering public practice took the CPA exam, anyway. This is no longer an option for 4-year graduates under the new law.)

As other states have implemented the law with longer phase-in periods, they have not exhibited the drastic drop in the quantity of CPA candidates that Florida experienced. Besides, the number of applicants for the CPA Exam is not an accurate measure of the number of accounting majors. In truth, the actual effect of the new law on accounting enrollments in Florida is opposite from what opponents would like professors to believe. After a two-year adjustment period, the number of accounting majors at the University of Florida and Florida State University returned to prior levels. Increasing demand for entry into their programs has since led to further controls over admissions, resulting in a half- grade higher average GPA among their accounting majors. Overall, total accounting enrollments in Florida public universities have increased nine percent in the ten years since the law was passed.

Obviously, the fact that fewer of these students now sit for the CPA Exam in their home state than in the past has had few ill effects on accounting professors' jobs. Nor has it adversely affected CPA firms' ability to hire qualified candidates. CPA firms in Florida have reported that their new hires are "more well- rounded professionals" who are "more mature" and "more savvy" when they enter the firms. They also report better computer skills, presentation skills, and interpersonal skills, and higher overall quality. One firm reports that its Florida offices' new hires score higher than any other offices in the world on tests of auditing concepts. The new hires are also more prepared to sit for the CPA Exam and pass it earlier in their careers.

Of the 6,500 university accounting professors in the United States, the number on record as opposed to the 150-hour law is minuscule. While this does not imply that every accounting educator not listed as opposing is in favor of the requirement, it does suggest that the most vocal opponents are a very small minority. It is also probably safe to infer that, similarly to CPAs, the vast majority of accounting educators favor the requirement. Most faculty who were members of the AICPA in 1988 voted in favor of the requirement.

3. Small colleges and universities will be devastated because students who want to major in accounting will go to schools that offer a masters degree.

There are several flaws in this argument. First, only the public accounting profession is regulated by state laws, and only a relatively small percentage of accounting graduates ever become CPAs (fewer than 25 percent in 1994). There is no reason to believe the other 75 percent of accounting students will change where they go to school; the 150-hour requirement is irrelevant to them. In fact, some smaller universities may increase enrollments by strategically choosing to cater to these students, specializing in preparing them for other types of careers in the broad field of accounting.

Second, the one-fourth who pursue certification will still need an undergraduate education, and they will be likely to select the same college for that education regardless of the 150-hour requirement. Most factors which affect students' choices of where to attend school (location, loyalty, cost, etc.) will not change under the 150-hour law.

Third, many 4-year institutions can offer degrees which will satisfy the requirement. The model statue does not require that any of the additional hours be at the graduate level, nor that any of them be in accounting. Because the main emphasis of the requirement is to broaden the education of accountants, an additional year of undergraduate work in the arts and sciences is a viable alternative to a masters degree in accounting. This important distinction is sometimes missed: while a masters degree may have been the historical intent, the model statute recommended by the AICPA which has guided the legislation in the majority of states does not require a masters degree.

Fourth, even if most 5-year students opt for a masters degree, this will not automatically put 4-year schools out of the CPA market. Transfer and articulation agreements are becoming more common; in fact, at some large universities, more than 60% of the business students are now transfer students. It is quite normal for students to obtain an undergraduate degree at one university and a professional graduate degree at another. In preparing students for other professions, the strategic focus of small institutions shifts from being an "end-consumer manufacturer" to that of a "raw materials supplier." There is nothing inherently undesirable about that role. Many smaller colleges pride themselves in successfully prepping students to transfer to professional law and medical schools. The fact that such schools do not have medical or law schools on their campuses does not reflect negatively on their image. On the contrary, their mission is to provide a liberal education which prepares students to succeed in professional schools' graduate programs. There is no reason why a similar strategic role in accounting cannot be successful.

Many traditionally black colleges fit into this category. Note that most of them do not offer medical, legal, architectural, etc. degrees, yet many of their graduates transfer to professional schools and successfully complete graduate programs to enter those professions. In fact, a 1990 survey showed nearly 3/4 of historically black college freshmen entered college with the intent of preparing for graduate school. Doomsday predictions that the 150-hour requirement will have a potentially devastating effect on accounting programs at historically black colleges and universities are merit less.

4. The cost to students and to the public will be enormous because all accounting students will have to complete an additional year of college to meet the requirement.

This claim is highly exaggerated. While 150-hours may be desirable for all accountants, the legal requirement for 150-hours is, and is likely to remain, unique to the licensure of CPAs. Only about one-fourth of accounting graduates are hired by public accounting firms, and this percentage is declining over time. More than half obtain positions in industry and government, which are not affected by the 150-hour law.

Although the fifth year would undoubtedly benefit all accounting students, the 150-hour law does not mandate all of them to complete an additional year. The reality is that many students will seek employment after four years. These graduates will still be able to get jobs and pursue satisfying careers in accounting. Alternatives to CPA certification and membership in the AICPA also exist for these individuals, including membership in the IMA or IIA and obtaining the CMA or CIA designations. Although many 5-year graduates will ultimately be employed in industry, a recent study sponsored by the IMA reported that industry is not mandating 150- hours for new hires, nor is it likely to do so in the immediate future.

Again, only those accounting graduates who pursue careers in public accounting will be required by law to meet the requirement. However, even if many more choose to pursue 150 hours of education, the cost effect will not be as great as opponents claim, for the following reasons:

a. Many baccalaureate programs in accounting already require more than the 120 semester hours traditionally associated with a four-year degree (the average is 128).

b. Most accounting students are already taking elective and other courses so that the average accounting student already has significantly more than 120 hours upon graduation.

c. Many students who change to accounting from other majors already have more than 150 total hours when they graduate with a bachelors degree in accounting.

d. In the absence of the 150-hour requirement, many accounting students already pursue masters degrees (both MBA and accounting).

In other words, much of the "additional" cost of the 150-hour law is already being incurred. The marginal cost is relatively low.

5. The CPA profession has done a poor job of attracting minority students and now holds the dubious distinction of having the smallest percentage of minorities of all the major professions. The 150-hour law could make this problem even worse.

This argument is illogical. Of all the "major professions" referred to, the accounting profession currently requires the leastamount of pre-entry education, not the most. More than four years of required college education does not appear to have kept minorities from pursuing careers in law, medicine, dentistry, architecture and many other professions. In fact, there appears to be a positive correlation between the percentage of minority professionals and the length of the education requirement. In other words, the more years of education required, the better a profession does at recruiting minorities.

Thus, it seems doubtful that the problem in attracting minority students into accounting will be exacerbated by requiring additional college education. In fact, quite the opposite may be true. Because the CPA profession remains the only major profession to not require post-graduate education, top minority students may be "turned off" to the CPA profession precisely because it is not perceived as equal to other professions. Those minority students capable of becoming successful CPAs (the "best and brightest") are seemingly attracted into professions which require graduate degrees. As stated by an African American educational psychologist, Virginia Flintall,

"The current four-year education requirement for CPAs compared with the eight-year requirement for doctors and seven years for lawyers has not encouraged more African Americans to select accounting over other professions. Quite the contrary,... (s)ince African Americans represent 3% of doctors, 2% of lawyers but only 1% of CPAs, one could conclude that the education demands of the other professions attract the brighter African American students to what may appear to be more intellectually stimulating careers... The increased education demands of the 150-hour requirement may, in fact, attract higher caliber students and therefore a greater number of African-American accounting students who become CPAs."

Empirical studies have suggested that the primary problem in attracting minority students into accounting lies not in educational requirements but in negative stereotypes. Several studies have reported that accounting suffers from a severe image problem, and that this problem is more severe with minority students than with whites. In one study, black high school students in Virginia ranked accounting against five other professions. Accounting did not receive a single first- or second- place ranking from the black students on any of 21 dimensions. Worse, accounting ranked last among the professions on 7 dimensions, including prestige, level of difficulty of tasks, and importance in modern society. Accounting ranked next-to-last in nine others, including relative level of career opportunity, specialization requirements, social responsibility, and job satisfaction. Black students appear to view accounting as a mindless exercise in number-crunching, lacking any vital importance to society -- an image reinforced by the fact that, unlike other professions, accounting does not require a graduate degree.

The AICPA has publicly stated its desire to increase the number of minorities in the field of accounting. In its recruiting efforts, the AICPA is specifically targeting black and other minority students in an effort to dispel inaccurate negative stereotypes and portray accounting as an important, stimulating career choice.

The theory that adding a graduate education requirement may actually increase the number of bright minority students who pursue careers in public accounting is supported by empirical evidence. There has been a substantial increase in minority accounting enrollments in the ten years since the 150-hour law was passed in Florida. The minority share of undergraduate accounting enrollments has increased nearly 50 percent (from 23 to 34 percent of all students) and has doubled (from 13 to 26 percent) in graduate-level programs. Interestingly, 40% of black CPAs hold graduate degrees, which is higher than the percentage of all CPAs with graduate degrees.

Bert N. Mitchell wrote,

"There is no reliable evidence that the higher education requirement deters minority entry to the profession... As a black accountant with 25 years of experience in practice, I believe that this objection is an argument of convenience for those having other reasons for opposing the postbaccalaureate education requirement or a vested interest in maintaining the status quo."

6. The 150-hour law could hurt poor minority and non-traditional female students who cannot afford the extra year.

Of all the arguments against the 150-hour law, this is the only one in which I find a degree of legitimacy. Certainly, additional educational requirements impose additional up-front costs to all students. The impact of these additional costs on economically disadvantaged students cannot be ignored. Increases in expected lifelong earnings do not diminish the immediate hardship during the educational process. Equal access to the CPA profession for poor students must be striven for, but not at the expense of the profession, the function it performs in society, and the public which relies on that function.

Nathan Garrett, a black CPA, wrote,

"I was among those who voted for (the 150-hour requirement) because I believe that CPAs need the additional education to serve our clients, employers and communities better... The profession needs people who can reason, analyze and communicate; who understand the world that confronts the entities they serve; and who have the technical knowledge and skills to perform engagements competently and efficiently..."

However, Mr. Garrett also expressed deep concern over the potential impact of the requirement upon blacks and others who are economically disadvantaged. He felt it is incumbent on CPAs to adopt measures to ensure access to anyone who has the ability and desire, regardless of that person's economic well-being. He proposed increased contributions for scholarships and loans as partial solutions. Progress has been made in this direction. For example, the AICPA has instituted a voluntary dues check-off for contributions to a minority scholarship fund, and now awards nearly $1/2 million to over 200 minority students each year. Additionally, CPA volunteers serve as mentors to these students, providing insight into the profession, advice in interviewing techniques, assistance with resume writing, etc. In the states of Texas and Ohio, as part of the 150-hour bill, state fees for CPA licenses were raised, with the additional funds going to assist economically disadvantaged students in accounting programs.

It should also be noted that students who cannot obtain such scholarships are not necessarily locked out of the CPA profession. If they cannot find the means to stay in school another year, they may elect to pursue their professional careers with only a four- year degree and acquire the additional hours to meet the requirement through correspondence or night courses.

While we must do what we can to mitigate its effect on poor students, compassion must not override good judgment. As Mr. Garrett so eloquently wrote, "The time for improving the quality of our education has long since arrived. We dare not ignore the need or delay steps to fulfill it any longer."

Don't Miss The Main Point

I have attempted to provide a reasoned response to each of the principal arguments against the 150-hour law. In the final analysis, however, none of these arguments should determine the educational requirement. They all tend to draw attention away from the fundamental issue. The primary concern should not be on how the law will affect minorities, women, accounting professors, small universities, state budgets, CPA Exam review businesses, or any other interest group. Rather, the question should be, "How much education is needed to prepare students for entry into the public accounting profession?"

Dr. Rick Elam, former Vice President of Education for the AICPA, put it this way:

"The only reason for licensing and regulating certified public accountants is to protect the public from incompetent individuals who might attempt to sell auditing services to the public. CPAs are regulated throughout the industrialized world because no economy can operate without properly-prepared financial information that is independently attested to by outside auditors. The complex business environment of the future necessitates CPAs with at least 150 semester hours of college education."

Practicing CPAs think at least five years are needed, and they are not alone. In a 1994 study of 1,507 accounting seniors and 670 masters students, students were asked, "Considering what you know of the degree of complexity and the responsibilities of CPAs to the public, and also considering how many years it takes to become a lawyer or a doctor, how many years of college education do you think should be required to become licensed as a CPA?" Only 27% of the seniors answered, "4 years," while 56% responded "5 years." Interestingly, 17% believed that more than 5 years should be required! (Among 670 masters students, 19% responded "4 years;" 52% "5 years;" and 29% "more than 5 years.") The average response of white students was 5.00 years, black students 4.95 years, and hispanic students 5.26 years.

If someone claimed that there weren't enough minority doctors, would anyone propose reducing the number of years doctors have to go to school in order to attract more blacks into medicine? Would you want to be treated by a doctor with only a bachelors degree because some special interest group decided that there weren't enough black doctors, and more poor students could afford to become doctors if only four years was required? Would anyone seriously consider arguments about how many years it should take to become an attorney advanced by people who are in the business of helping students cram for the bar exam? Such scenarios are clearly absurd. Are the arguments against the 150-hour law any less? I think not.

The Future

It is reasonably clear at this point that the 150-hour education requirement will become a reality throughout the United States. New CPAs in holdout states will soon find themselves unable to practice in other states and excluded from membership in the AICPA unless they voluntarily meet the requirement. Thus, incentives for students to meet the requirement and for firms to only hire recruits who have met the requirement will increase over time, even in the absence of state law. Nevertheless, as the year 2000 approaches, it is increasingly important that the professionals in those remaining states organize an effective effort to secure passage of the requirement. The longer the inevitable is postponed, the more difficult the transition is likely to be.

Notwithstanding its eventual universal implementation, however, the 150-hour requirement may not be the final answer to the question of how much college education should be required of new CPAs and what form that education should take. The thoughtful reader will realize that the 150-hour requirement is a political compromise. In not requiring a graduate degree, it is clear the CPA profession is requesting less than it originally wanted. Thus, one hundred years from now, the 150-hour requirement may be remembered as just another step toward the goal of a professional model of education for CPAs.

To email the author, link here.

To read other articles by this author, link here.