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It’s Time for State Boards of Accountancy to Move to the 120/150 Educational Requirement for Licensing as a CPA

Tearing Down Barriers to Entry

The most talked about issue in accounting education today is whether the 150-hour requirement to qualify for a CPA license that has existed for many years creates a barrier to entry that should be revisited. I have posted a blog on this topic before and expand the discussion to address the costs and benefits of a 120/150 educational requirement to be a licensed CPA.

120/150 System

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 (180 for quarter system schools) to sit for the CPA exam and 150 credit hours (225 for quarter schools) to become licensed.

Researchers at Utah State University collected data from 2006 to 2016 examining the effect of these changes on the number of first-time candidates sitting for the CPA exam as well as candidate performance. The findings were that a reduction in the number of credit hours required to sit for the CPA exam increased the number of candidates, while an increase in the number of prerequisite hours reduced the number of candidates.

The authors also found no relationship between changes in the CPA exam requirements and pass rates or scores. They conclude that requiring 150 hours instead of 120 creates a potential barrier to entry for licensed CPAs with no accompanying increase in candidate quality. This may be why a majority of states have changed their requirement from 150 credit-hours to 120 exam/150 license.

Meeting the Educational Requirement

Students do not necessarily have to get a master’s degree to obtain 150 semester hours of education. They can obtain an associate degree, take additional units at the undergraduate level, or take courses at the graduate level. Moreover, some states have added flexibility for students by allowing several online and hybrid degrees in accounting if they meet the same accreditation requirements as the in-person courses.

Students can also choose any of the following paths:

  • Combine an undergraduate accounting degree with a master’s degree, at the same school or a different one.
  • Combine an undergraduate degree in some other discipline with a Master’s in Accounting or a Master’s in Business Administration with a concentration in accounting.
  • Enroll in an integrated five-year professional accounting school or program leading to a master’s degree in accounting.

Whichever path they choose, ethics education should be part of the program. The clients of accounting professionals need to gain their trust and making ethical decisions is one way to do so.


According to Adrienne Gonzalez, writing for Going Concern, there is a list of concerns identified as the pipeline problem that is leading to an accountant shortage:

  • Low numbers of CPA exam candidates
  • A worsening accounting professor shortage
  • Baby Boomers (47% of AICPA membership) are retiring in large numbers, accelerated by the pandemic
  • Ongoing difficulties recruiting diverse candidates, thereby missing out on an entire pool of potential accountants.

The good news is the AICPA Trends Report indicates that accounting programs are optimistic that enrollment in both degree programs would be the same or higher going forward. In addition, the Bureau of Labor Statistics has projected 7% growth in accounting and auditing jobs from 2020 to 2030, about as fast as all occupations.

It is counter-intuitive that CPA firms have not supported the 150-hour requirement, given the expanded skill set and competencies needed for new hires to be successful in the profession and provide needed services to clients. In part, it may be due to candidates questioning why they should spend the time and money staying in academia to complete the 30-units when they could go directly into business. CPA firms may also feel undergraduates perform well enough that there is no need to wait an additional year to hire accounting graduates that meet the additional 30-unit requirement or pay a premium for master’s students.

CPA Profession Initiatives

Minorities represent an important stakeholder group in any discussion about barriers to entry. 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 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 2% in public accounting.

The largest U.S. accounting firms have launched initiatives to support underrepresented CPA candidates, an important step in alleviating the pipeline problem. PricewaterhouseCoopers has partnered with Northeastern University and developed a program to support minorities who have completed their bachelor’s degree by May 2023 or earlier and identify as an underrepresented minority, to obtain additional credit hours and a master’s degree while working at the firm. This is a paid part-time fellowship that combines real work experience at PwC and a tuition-paid online master’s degree program at Northeastern.

Loyola Marymount University and Deloitte announced the creation of the Deloitte Tax Diversity Scholarship to help fund the cost of tuition for ethnically and racially diverse students seeking a Master of Science degree in taxation. Selected students will see half of their tuition paid by Deloitte and the remaining half paid by Loyola Marymount. Deloitte’s goal is to ease the financial burden to pursue a degree in tax, with the aim of opening doors to minority students. “I don’t think we could have asked for better outcomes from our collaboration with Deloitte,” added Larry Kalbers, associate dean and R. Chad Dreier Chair in Accounting Ethics.

These initiatives are important to meet diversity and inclusion goals. CPA firms need to take the lead and develop similar programs across the country that can provide incentives 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.

I believe that the 120/150-hour model may be the answer to reduce (or even 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. Firms should consider offering loans to pay for the extra education, which would be forgivable if the recipient remains with the firm for some set period (i.e., five years). The firm would then have ample time to convince accounting graduates to remain with the firm, build their careers, and address the retention challenge.


Benefits of the 120/150-Hour Requirement

The 120/150 model has the following benefits as compared to the 120-hour requirement:

  • It enables accounting students to enter the workplace after graduating with a bachelor’s degree or completing 120 units of education, depending on state requirements.
  • The additional 30 units may increase the likelihood of being hired by accounting firms, especially if students complete finance and information technology courses.
  • The 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.
  • The ability to earn an income right away, rather than delay it until the completion of the extra units, mitigates the additional costs to complete the 30 units.

Cost of Additional Education

The cost of the additional education required to meet the 150-hour requirement is a barrier to entry that the authors believe needs to be addressed. Four-year colleges may not provide financial aid for a fifth year, so potential candidates incur additional costs to become licensed CPAs. These costs can sometimes be mitigated if an employer helps to pay for the credits, or if pursuing a master’s degree and applying under the Free Application for Federal Aid (FAFSA).

The average cost of a college education has been increasing over time, with the notable exception of the Covid years. According to the National Center for Education Statistics (NCES), between the years of 2010/11 and 2020/21, the cost of an undergraduate degree increased by 11% at public institutions and 19% at private non-profit institutions (

I believe that CPA firms should step up to the plate and provide financial aid through more paid internships, paying for all or part of graduate degree to meet the additional 30 hours, or through the kinds of initiatives discussed above. The firms should look beyond the pipeline issues and support additional education in subjects such as technology, information systems, and finance. They should lobby state boards of accountancy to broaden their requirements to be a licensed CPA so that students learn merging skills (e.g., machine learning, AI) that will be integral to their long-term success as accounting professionals. Learning additional non-accounting subject matter is good for students as they would broaden their skill set to be successful in the business world.

A version of this posting appears in an article in the September/October issue of The CPA Journal.

Blog posted by Steven Mintz, PhD on October 24, 2023. Find out more about Steve’s professional activities on his website ( You can sign up for his newsletter and connect on LinkedIn (