Gatekeeper of the accounting business: Why the 150-hour CPA requirement should evolve

Turning into a Licensed Public Accountant is not any small feat. The CPA examination is likely one of the most demanding skilled exams within the U.S., with a notoriously low passing price. Including to the problem is the 150-hour training requirement, equal to a five-year diploma program. When it was launched in 1983, the extra training made sense. Curiosity in accounting was booming, and the academic requirement ensured that solely probably the most certified had been coming into the sphere. However does this requirement nonetheless maintain up right now?

A system rooted prior to now

This decades-old rule was first launched in Florida to lift the requirements and credibility of the career, and the opposite 49 states adopted go well with over time. In the present day, the additional 12 months of training — with its important time dedication and value — is popping potential CPAs away, particularly after they can pursue various careers with only a four-year diploma. The Bureau of Labor Statistics tasks that we’ll want round 126,500 new accountants and auditors yearly for the following decade to maintain tempo with the rising variety of companies and keep the financial system’s well being, however the U.S. at present produces about 65,305 accounting graduates yearly. 

Moreover, researchers from MIT Sloan discovered that including a fifth 12 months of training has but to enhance the standard of CPAs. The accounting career shares an analogous sentiment. The truth is, in line with Intuit QuickBooks’ 2024 Accountant Tech survey, practically all (98%) accountants agree that various pathways to CPA licensure can put together upcoming accountants as successfully as or extra successfully than the normal 150-hour pathway. As a substitute, the 150-hour requirement has led to a major 26% drop in minority entrants into the career. In essence, we’re simply making it tougher for gifted individuals to enter the sphere, which does not promote range or profit the business.

As contemporary expertise struggles to interrupt into the business, seasoned CPA-certified accountants are exiting simply as noticeably. In response to the Worldwide Federation of Accountants, over 300,000 U.S. accountants and auditors left their jobs between 2020 and 2022, resulting in a 17% decline in registered CPAs. As school enrollment in accounting packages declines and companies proceed to face extreme staffing shortages, what as soon as raised the bar within the business has turn out to be a stumbling block. 

Rethinking the CPA path

It is time to reevaluate the 150-hour rule and contemplate whether or not a further 12 months of training is important to turn out to be a CPA. As a substitute, the business ought to contemplate substituting sensible work expertise. This strategy might mix 4 years of school training with two years of related, hands-on accounting expertise. One other consideration: enable anybody with a bachelor’s diploma to take the CPA examination, no matter their discipline of research. If they’ll move one of the vital difficult skilled exams within the nation, their main shouldn’t be a barrier to entry. 

To additional streamline the career and adapt to fashionable work practices, we must always advocate for computerized mobility of CPA licenses throughout all states. Simply as a driver’s license issued in a single state permits you to drive wherever within the nation, a CPA license ought to grant the flexibility to follow in any state with out further hurdles.

These options might open the door to a broader vary of candidates, together with those that can’t afford 5 years of school or come from completely different academic backgrounds.

Adapting to fashionable instances

Lastly, we should embrace innovation and developments in expertise. As training evolves, so ought to our strategy to CPA licensing. For instance, now we have coding bootcamps that flip individuals into software program builders in months, so why not have the identical for accounting? These fast-track packages might present targeted, sensible coaching and permit individuals to enter the accounting career extra rapidly and conveniently with out sacrificing the mandatory expertise and curriculum wanted for achievement. 

We’re already seeing related packages in motion, like Intuit Quickbooks’ ProAdvisor program, which affords newbie to superior coaching packages that assist people earn Persevering with Skilled Training credit. By adopting and increasing an analogous coaching mannequin for CPA certification, we will uphold excessive requirements and make the trail to changing into a CPA extra accessible and adaptable for these within the career.

Whereas the creation of the 150-hour CPA requirement was well-intentioned, the wants of the accounting business have advanced. With so many companies counting on CPAs to handle their funds, it is time to rethink this requirement to draw and retain the expertise wanted to drive the financial system ahead.