To grow to be a CPA in the US, applicants will have to whole 150 semester credit score hours of training, which is 30 credit past the standard 120 credit score hours earned in a four-year undergraduate stage. In consequence, maximum CPAs finally end up spending 5 years in faculty as an alternative of 4. Even supposing this requirement has been in position for a number of a long time, its affect on aspiring CPAs continues to be being felt.
Because the choice of accounting majors, graduates and CPA applicants continues to say no each and every yr, some are wondering the knowledge of the present requirement. A motion is underway to undo it. The Minnesota CPA Society is lobbying in want of regulation that will create choice pathways, permitting applicants to exchange the 5th yr of training with further paintings enjoy, or paintings enjoy and CPE. Alternatively, the American Institute of CPAs and the Nationwide Affiliation of State Forums of Accountancy oppose this measure vociferously.
Within the ongoing debate over the 150-hour rule, it is necessary to weigh each the prices and advantages. That is prudent in any decision-making procedure, however specifically related to the accounting career, the place comparing prices and advantages is a basic concept.
The price-benefit concept of accounting dictates that the price of offering knowledge must now not surpass the advantages that customers derive from it. Subsequently, as we debate whether or not to stay or drop the 150-hour rule, we will have to imagine whether or not the price of further training outweighs the advantages that CPAs obtain from it.
Let’s imagine the fee. Many accounting scholars make a choice to procure the extra 30 semester credit score hours via a grasp of accounting stage, or “MAcc” for brief. I estimate the price of acquiring a MAcc to be somewhat greater than $100,000.
Here’s the breakdown:
- Tuition & charges. The schooling and costs for a one-year masters of accountancy at Arizona State College, to be had simplest to citizens, is $29,914. Let’s spherical that as much as $30,000. Whilst I could not simply to find information on-line at the moderate value of a grasp’s stage in accounting, this appears to be conventional of in-person choices in accordance with the primary few pages of Google effects.
- Room and board. Consistent with EducationData.org, the common value of room and board for a public four-year establishment in the US is roughly $11,557 consistent with yr. ASU suggests budgeting $12,507, however let’s spherical this to $12,000.
- Textbook and direction fabrics. Consistent with ASU, scholars must price range round $1,062 for books and provides for graduate research. For simplicity, we can spherical this to $1,000.
- Alternative value. That is the price of misplaced wages from now not running for 12 months. Consistent with Wage.com, the median wage for an Accountant I with out a enjoy is $59,503 nationally. Let’s spherical that to $60,000.
Subsequently, the overall value for a person to procure the extra 30 semester credit score hours via a masters in accounting is roughly $103,000: $30,000 for tuition, $12,000 for books and provides, $1,000 for charges, and $60,000 for dwelling bills.
The price of a MAcc for a unmarried scholar is reported above. However what quantity of money do all scholars spend each and every yr? Consistent with the AICPA’s 2021 Traits Document, 20,442 scholars finished a grasp’s of accounting program all over the 2019-2020 college yr.
Multiplying the $103,000 moderate value by means of the 20,442 scholars leads to a complete value of $2.1 billion consistent with yr. This determine does now not account for CPA applicants who make a choice choice paths to satisfy the 150-hour requirement.
$2.1 billion each and every yr is an important amount of cash. However what will we get for it? A 2019 learn about indicated that the 150-hour rule in reality decreases the choice of entrants to the career. Moreover, the learn about discovered “no distinction between 150-hour rule CPAs and the remaining” when it comes to high quality.
That is proper — there is not any proof to indicate that an extra yr of training results in extra certified CPAs or better-prepared CPAs for running in accounting companies. All to be had proof signifies that it makes no distinction. That is what makes the 150-hour rule specifically irritating: It incurs a value with out offering any advantages.
If we’re going to are living by means of our rules, we must get rid of it.