Ethics Sage is a Top Philosophy Blog
Causes and Solutions to Gun Violence in America

Is the 120/150-Hour Requirement the Answer to Barriers to Entry into the Accounting Profession?

Costs and Benefits of Adding 30-units to Accounting Students' Requirements for Licensure as a CPA

One of the most talked about issues in accounting right now is whether the 150-hour requirement to qualify for licensing as a CPA creates a barrier to entry for many accounting students that should be revisited. Recent changes in the laws in many states have moved to a bifurcated system in which students must have 120 credit hours of college education to sit for the CPA exam and 150 credit hours (225 for quarter schools) to be licensed as a CPA.

The results of a study of taking the CPA exam found that the literature on the 30-hour requirement is mixed with some researchers finding that candidates with advanced degrees performed significantly better on the CPA exam than candidates with only an undergraduate degree while others found the overall pass rates better after candidates completed just an undergraduate degree. Some found that master’s and MBA degrees positively impact the probability for promotion from senior manager to partner for professionals in public accounting. It is safe to say that the jury is still out on whether the additional education requirement is preparing students to become better CPAs.

Expanding the Knowledge Base for CPAs

Leading professional organizations such as the AICPA, the National Association of State Boards of Accountancy (NASBA), and the Federation of Schools of Accountancy have consistently supported the 150-hour education requirement for entry into the accounting profession. The AICPA was an early supporter of the 150-hour requirement. According to a post online, Why an Emphasis on 150 Hours of Education for Aspiring CPAs (, the following reasons are given why a traditional four-year undergraduate program is no longer adequate for obtaining the requisite knowledge and skills to become a CPA (

  • Significant increases in official accounting and auditing pronouncements and the proliferation of new tax laws have expanded the knowledge base that professional practice in accounting requires.
  • Business methods have become increasingly complex. The proliferation of regulations from federal, state, and local governments requires well-educated individuals to ensure compliance. Also, improvements in technology have had a major effect on information systems design, internal control procedures, and auditing methods.
  • The staffing needs of accounting firms and other employers of CPAs are changing rapidly. With more sophisticated approaches to auditing now in use, and with the increase in business demands for a variety of highly technical accounting services and greater audit efficiency, the requirements for effective professional practice have increased sharply. The demand for a large quantity of people to perform many routine auditing tasks is rapidly diminishing.

Additionally, the Bedford Committee (1986) and Treadway Commission (1987) supported the need for the fifth year of education for students to develop higher-quality technical skills, communication skills, analytical skills, and problem-solving skills. The Treadway Commission also recommended that the accounting curricula should integrate the development of ethical values with the acquisition of knowledge and skills to help prevent, detect, and deter fraudulent financial reporting. The Commission suggested that the development of case studies based on actual situations should be a priority to sensitize students to the challenges of making ethical decisions.

Is it possible for bachelor’s degree programs in accounting to cram these areas into their program? Accounting educators are always complaining about not having the time or space to add new material to existing bachelor’s degree programs. Nothing has changed in this regard. There needs to be additional education on some level and in targeted areas for accounting professionals to meet the service needs of their clients. The question is how best to do it.

Consider that only recently has technology knowledge become a must for most practicing CPAs. Skills in areas such as big data, data analytics, cybersecurity, artificial intelligence, and blockchain are among the biggest trends in accounting and finance. The accounting profession may choose to hire specialists in these areas outside of accounting. However, would it not be better to include relevant coursework in the extra 30-unit requirement? Perhaps a double major—Accounting and Information Technology—is the answer.

CPAs need to be knowledgeable about technology topics for personal and professional development, especially considering that Congress introduced a bill to add accounting to the Science Technology Engineering and Math (STEM) education category. The AICPA voiced its strong support for the Accounting STEM Pursuit Act of 2021 because it establishes the accounting profession as a STEM career pathway and supports long-standing efforts to create more diversity in the future accounting workforce. The legislation is an important step in recognizing the clear and logical connection between accounting and technology.

Stakeholder Considerations

Kusaila et al. examined whether significant benefits of the 150-hour requirement exist for stakeholders. The authors surveyed professionals in CPA firms, individuals, and corporate executives and found that 47% of those surveyed disagreed or strongly disagreed that significant benefits accrued while 33% strongly agreed or agreed that those benefits accrue to CPA firms. The authors found that 42% of individual respondents strongly agreed or agreed that significant benefits accrued to individuals resulting from the 150-hour requirement while 31% of corporate executives strongly agreed or agreed and 33% of CPA firms answered the same.[1] Core

The accounting curriculum has been moving in the direction of incorporating skill sets in communication, critical thinking, and analytical reasoning. The CPA exam has been moving in this direction as well. Accounting professionals should have these skills to make decisions in a complex business environment.

The CPA Evolution initiative that was adopted by the AICPA and NASBA in 2020 aims to transform the licensure model to recognize the rapidly changing skills and competencies the practice of accounting requires today and will require in the future. This includes identifying “Core Disciplines,” or the knowledge and skills considered essential for practicing CPAs, and technical areas of study. NASBA recognized that:[2]

“Entry-level CPAs are performing more procedures that require deeper critical thinking, problem-solving and professional judgment. Responsibilities that were traditionally assigned to more experienced staff are being pushed down to the staff level. As a result, newly licensed CPAs need to know more than ever before to meet the needs of practice. To protect the public, the CPA licensure model must reflect these changes.”

The CPA Evolution initiative is a step in the right direction. According to NASBA: “The new model enhances public protection by producing candidates who have the deep knowledge necessary to perform high-quality work, meeting the needs of organizations, firms and the public.”

Pipeline Issues

The 2021 AICPA Trends report on accounting education, the CPA exam, and public accounting firms’ hiring of recent graduates shows that the number of accounting graduates with bachelor’s and master’s degrees has been declining between the 2009-2010 and 2019-2020 periods. The decline is most pronounced during the past four years.[3]

Exhibit 1 details the number of degrees awarded starting in 2014-2015, the baseline year and comparative numbers for 2015-2016 through 2019-2020. The net decline over the five-year period was 6,251 degrees or about 8%. The decline has been most pronounced during the past two years. Given these results, it is not surprising that accounting firms are concerned about the pipeline. If this trend continues in the future unabated, the firms may increasingly turn to nonaccounting students to fill their needs. According to the Trends report, the hiring mix is 57.3% of new graduate hires being accounting graduates and 42.7% being non-accounting graduates, a shift of 11.5% from 2018.



Trends in Accounting Degree Completion 2014 – 2015 to 2019 – 2020



Degree Programs

Change from Previous Year

Academic Year







2014 – 2015






2015 – 2016






2016 – 2017






2017 - 2018






2018 – 2019






2019 – 2020







2015-2016 through







% Of Degrees





The good news is the Trends report indicated that accounting programs are optimistic that enrollment in both degree programs would be the same or higher in 2021-2022 compared to 2020-2021. Those numbers are not available yet. Also, the Bureau of Labor Statistics has projected 7% growth in accounting and auditing jobs from 2020 to 2030, about as fast as all occupations.

Barriers to Entry

An important stakeholder group in any discussion about barriers to entry are minorities. The National Association of Black Accountants (NABA) points out that the accounting firms have described the extra 30 hours as a barrier that disproportionately affects minority CPA candidates and stymies the firms’ efforts to broaden the pipeline of recruits and meet new diversity hiring goals. According to NABA, fewer than 7,000 CPAs nationwide are Black (1%), with only two percent in public accounting.[4]

These initiatives are important to meet diversity and inclusion goals. The firms need to take the lead and develop similar programs across the country that can provide an incentive for underrepresented minorities to enter the profession and alleviate the barriers to entry. These efforts also help to overcome the financial aid argument against the 150-hour requirement and provide a solid foundation to be successful in accounting.

The 120/150-hour model may be the answer to reduce or eliminate the barriers to entry into the accounting profession. CPA firms can provide paid internships after graduating with a four-year degree rather than between the third and fourth years of a bachelor’s degree program. Some universities have already partnered with the large firms to offer paid internships and/or other financial support to help cover the additional cost to complete the 30-units, including Northeastern University (PwC) and LMU (Deloitte). This would alleviate a barrier to entry into the profession.

Here is a novel idea. The firms should consider a loan to pay for the extra education that would be forgivable if the recipient remains with the firm for some set period such as five years. The firm would then have ample time to convince accounting graduates to remain with the firm, build their careers, and combat the mobility problem.

Benefits of the 120/150-Hour Requirement

            The following benefits exist in the 120/150 model when compared to the 120-hour requirement.

  • Enables accounting students to enter the workplace after graduating with a bachelor’s degree or after completing 120 units of education, depending on state requirements.
  • Additional 30 units may increase the likelihood of being hired by accounting firms, especially if students complete finance and information technology courses.
  • Additional 30 units can enhance candidates’ communication, problem solving, analytical reasoning, and ethical reasoning skills and enable them to move up in the organization more quickly and better serve client needs.
  • Ability to earn money right away rather than delay it until the completion of the extra units thereby mitigating the additional costs to gather the 30 units.

Ethics Education

I have been involved in ethics education for 30 years. The sixth edition of my accounting ethics textbook was just published by McGraw Hill. There are many discussions of why ethics education is important and how it can be accomplished. I am a supporter of requiring 30-units beyond the bachelor's degree. 6e cropped use

Any discussion of the 120/150 model should consider the role of ethics education. Ethical reasoning skills are essential to enhance professional judgment, support professional skepticism, and make ethical decisions when a contentious environment exists between an auditor and the client. NASBA, for its part, calls for ethics education through a standalone accounting or business ethics course or integration throughout the curriculum.

One study of enforcement actions against CPAs found that there was a breakdown in CPA’s behavior that appears to be happening at the level of individual professional judgment, not at the level of bright line rules. The authors concluded that the finding “has significance for ethics education and training moving forward.”[5]

Ethical Lapses at Accounting Firms

Recently, it was disclosed that two of the Big Four firms have been caught cheating on ethics and/or internal training programs. Many accounting educators could only shake their heads in disbelief. I was certainly one of them.

In June 2022, Ernst & Young was sanctioned by the SEC amid charges that dozens of its audit staff cheated on an ethics exam required for continuing education and withheld evidence during the investigation. EY admitted to the facts underlying the SEC’s charges and agreed to pay a $100 million penalty and undertake extensive remedial measures to fix the firm’s ethical issues.[6]

According to the SEC’s investigation between 2017 and 2019, 49 EY audit professionals cheated on exams by using answer keys and sharing them with their colleagues. In addition, “hundreds of other audit professionals” cheated on courses, including those addressing ethical obligations. And a significant number of EY professionals who did not cheat themselves, but knew their colleagues were cheating and facilitating cheating, violated the firm’s code of conduct by failing to report this misconduct,” according to the SEC.

The Director of the SEC’s Enforcement Division, Gurbir Grewal, responded to the EY scandal by saying: “This action involves breaches of trust by gatekeepers entrusted to audit many of our nation’s public companies. It’s simply outrageous that the very professionals responsible for catching cheating by clients cheated on ethics exams of all things.”

The SEC also investigated KPMG because its auditors, including some senior partners in charge of public company audits, cheated on internal tests related to mandatory ethics, integrity and compliance training, and shared answers with other partners and staff to help them also attain passing scores. Twenty-eight of the KPMG auditors cheated on four or more occasions. Certain audit professionals lowered the required score to the point of passing exams while answering less than 25% of the questions correctly, the SEC said.

Can additional ethics education requirements help stem the rising tide of ethical failures like these? There is no way of knowing. However, we need to recognize that the environment has changed in accounting firms where 100% of the partners no longer must be CPAs. Also, with the increased hiring of non-accounting students comes the concern that they may not have been schooled in the ethics of the profession. Moreover, the culture of ethics and professionalism that served the firms so well for many years seems to be conflicted now perhaps because professionals in fields such as advisory services might be tempted to place commercial interests ahead of professional ones, thereby compromising integrity.

Future Research

The analysis of whether the 150-hour requirement, or the 120/150 model, is good or bad for the profession depends on gathering additional information to address the following issues that can only be determined with the passage of time:

  • Are the extra units of education cost effective?
  • Can the downturn in the number of accounting graduates be reversed?
  • How does the additional education impact students’ career path?
  • Do the additional hours create a more competent CPA, one who is better able to thrive in the profession.
  • Do the additional hours create a more ethical CPA, one who is better able to live up to the ethical standards of the accounting profession?
  • Do the additional hours create a candidate better prepared to protect the public interest.

Accounting educators are urged to conduct research in these areas to better understand the long-term benefits of additional education and implications for the accounting profession.


Three factors need to exist to support the 150-hour requirement: (1) adequate programs provided by colleges and universities to appeal to a wide variety of accounting students with different needs; (2) movement in the CPA exam to incorporate knowledge of targeted disciplines and competencies; and (3) a supportive accounting profession that develops initiatives to attract underrepresented groups and provides financial aid and work-experience while completing the additional 30 units or a master’s degree.

CPAs should be prepared to perform the complex activities which are increasing with the advent of new technologies, complex financial instruments, and a wealth of new standards and rules. The 120/150-hour requirement can be developed in a way to meet these challenges and provide the skills essential to meet client service needs.

The recent ethical lapses, which were inconceivable years ago when it was truly an accounting profession and not a professional services network, need to be addressed. The additional 30 units should include an ethics component that promotes ethical behavior and decision making and emphasizes making sound professional judgments.

It is time for the SEC and PCAOB to address the issues addressed herein. The role of auditors as gatekeepers that places the public interest above all else must be strengthened. These regulatory agencies are responsible for the enforcement of CPAs and accounting firms with public clients. They have a vested interest to ensure that CPAs are adequately educated to perform complex activities in accordance with technical standards, exercise sound professional judgment, and meet their public interest obligations.

The 120/150 model is a good compromise that provides benefits to mitigate the barriers to entry into the accounting profession. Accounting professionals should do their part by recommitting to high ethical standards which may help to entice accounting students to join what historically has been a well-respected profession.

Blog posted by Dr. Steven Mintz, The Ethics Sage, on November 23, 2022. You can sign up for Steve’s newsletter and learn more about his activities on his website  ( and by following him on Facebook at: and on Twitter at:


[1] Kusaila, M.M., McCarthy, M.M., & Kulesza. M.G. 2021. 150 Credit Hours: Stakeholders’ Benefits and Students’ Skills and Attributes. Journal of Accounting and Finance. 21(3): 191-204.




[5] DeLaurell, R., Daniels, R. B., & Pelzer, J. (March/April2022). “SEC Enforcement Actions Support Critical Skills-based Ethics Training,”

[6] Ernst & Young to Pay $100 Million Penalty for Employees Cheating on CPA Ethics Exams and Misleading Investigation: Largest Penalty Ever Imposed by SEC Against an Audit Firm,” June 28, 2022,