The Certified Public Accountant designation is at a crossroads: Our profession can broaden accessibility and ascension at all levels of the talent pipeline–or risk perpetuating the ills caused by a shrinking workforce.
Nationwide, the combination of a shortage of accountants (particularly CPAs), persistent pipeline challenges, and underrepresentation is having ripple effects on industries and capital markets at all levels. Yet, key decision-makers persist in upholding rules that seemed adequate decades ago–but now represent hurdles that result in low interest among Black and African American professionals–and a persistently low representation, with less than 2% of CPA accountants identifying as Black.
The 150-college credit hour eligibility requirement for the certified public accountant (CPA) designation originated in the late 1980s. At the time the decision was made to add the additional 30 credit hours, equity and the impact that both additional student loans/costs and income opportunity loss would have on Black and African American communities were not taken into account. In addition to an absence of a sustainable income gain once the CPA licensure is obtained, these factors create a barrier to entry for many people who may wish to enter the profession–particularly Black professionals.
To ensure a thriving, vibrant, engaged pipeline of would-be CPAs, particularly Black CPAs, we must assess skills, understanding, and maturity through multiple pathways, in addition to a rigorous examination process that certifies candidates’ knowledge, which is key for mobility.
How we got here
In 1988, the American Institute of Certified Public Accountants (AICPA) recommended that state boards of accounting require 150 college credits as a prerequisite to earning the CPA designation. Every state and the District of Columbia adopted the 150-hour rule by the early 2000s, effectively mandating a graduate degree, or a bachelor’s degree plus an additional 30 credit hours, to become a CPA. It is worth noting that the additional 30 credit hours are not mandated in a specific field of study. Any college credits will do.
AICPA leaders have described the rule as a “purposeful hurdle” intended to elevate the profession. Instead, it has become a structural barrier that many believe, and recent research supports, makes it difficult to attract skilled talent.
It is important to recognize that the rule was implemented in a period that lacked a comprehensive equity perspective or adequate consideration for the probable unintended consequences of higher educational expenses and time commitments on communities facing disproportionate student loan burdens and an increased urgency to earn.
The sobering reality is that only 2% of CPAs are Black–and this number has remained stagnant for the past 25 years since the profession first started measuring the racial and ethnic demographics of CPAs.
The 150-hour rule should partly account for this phenomenon. The additional 30 credit hours is equivalent to an extra year of school at an average price tag of $14,000,a burdensome cost for many people.
According to a recent joint study by Lumina and Gallup, 81% of adults aged 18 to 24 who have never enrolled in postsecondary education cite the cost of a degree or credential program as the most important factor. Separate research finds that Black students often incur greater costs for getting their degrees: Black college graduates, on average, owe $25,000 more than white college graduates. Additionally, Black students are more likely to have a full-time job or significant family caregiving and wage-earning responsibilities, the Lumina and Gallup study found.
It is worth noting that in most states, the 30 credit hours are not necessary to sit for the rigorous exam, which has a passing rate of below 50%. One may pass the very hard exam (and we advocate for it to remain rigorous and tough) yet not receive the CPA designation until the 30-credit hour requirement (again, in any field that may tickle one’s fancy) has been satisfied. Furthermore, there is conflicting evidence that the extra 30 credit hours alone contribute to higher CPA exam pass rates.
We shouldn’t make the 150-hour rule the bar for becoming a CPA–the CPA exam is already the bar. If we really want to expand the pipeline, we need to understand the unique challenges Black professionals and other underrepresented groups face, especially as it relates to the loss of income, the financial cost of the extra 30 credit hours, and the idealistic notion that someone can simultaneously go to work, attend school, and study for a CPA exam that rightfully should stay hard because it represents public trust.
Instead, we must reassess these longstanding beliefs and adapt industry standards to meet the moment. And that means finding new pathways to CPA licensure.
Opening the doors to more CPAs
When we talk about creating more pathways to a CPA license, we’re not making the argument to loosen standards. Rather, we want the industry to account for the multiple paths available to prepare accountants to become CPAs.
The profession and licensing boards must recognize that there are more ways to achieve excellence. The 150-hour rule is an arbitrary number untethered from mastering accounting principles. There is a promising proposal in the Minnesota legislature that would allow candidates to pursue CPA eligibility through two alternative routes by leveraging work-study programs and continuing education requirements. More states should push back against the 150-hour rule with similar creativity. While the proposed legislature is driven by the intention of enhancing the profession’s recruitment efforts, the AICPA expresses concerns. They argue that reducing the education requirement would disrupt mobility for CPAs and licensed firms in Minnesota, impose unnecessary burdens on cross-state practice and careers, and complicate regulatory oversight. Nonetheless, it is crucial to explore creative solutions and find a balance that addresses both the need for professional development and the potential for inclusivity and accessibility within accounting.
We also should look to other industries as models. Black professionals account for 7% of the tech workforce, a figure that has steadily grown in recent years. That’s because the industry doesn’t just focus on credentials–it also focuses on skills. You can have a bachelor’s degree to get a tech job, or you could go through a technical school, accelerated training program, coding boot camp, or even an apprenticeship program that combines educational coursework with paid on-the-job training.
Tech is appealing to a broader swath of interested candidates thanks to the absence of additional educational hurdles, the potential for high income, and the perception of better work-life integration. Meanwhile, the accountant pipeline crunch is getting worse–and the number of Black accountants hasn’t grown.
One must wonder if the 150-hour rule has indeed succeeded in elevating the accounting profession. Many talks are being held about “bringing the shine back” in accounting, with a tendency to compare accountants with lawyers and doctors, who, by the way, count respectively 5.5% and 4% Black representation
Additionally, the impact of artificial intelligence (AI) on the industry cannot be overlooked. A.I. has the potential to revolutionize various sectors, including accounting, and presents both opportunities and challenges for Black professionals. While A.I.-driven technologies can contribute to automation and efficiency, there is a need to ensure that the benefits of these advancements are accessible to individuals from all backgrounds.
Even in highly regulated professions like law, to which the accounting profession often compares itself, a postgraduate degree isn’t always required. California, Vermont, Virginia, and Washington allow individuals to take the bar exam without going to law school as long as they’ve completed a legal apprenticeship and/or have passed a statewide exam (California).
Rather than create more structural barriers to entering accounting, we need to look to these innovative models as examples of how we can make the profession more accessible. Additional pathways towards CPA licensure should allow for students to earn while they learn in a working environment, thus making licensure more feasible for Black students for whom educational costs are a major barrier.
Creating new pathways for licensure also shouldn’t affect mobility. As Jen Leary, CEO of CliftonLarsonAllen, states: “We are aware of the mobility challenges that are ahead, and we believe that through the power of collaboration across key stakeholders, we can work together to design a path forward.”
We want to see a vibrant talent pipeline in accounting because we understand the unique opportunities the profession affords Black Business Leaders. Accounting is a meaningful, respectful, and noble profession that offers reliable employment and economic mobility. But for professionals of all backgrounds to access these opportunities, we must remove unnecessary barriers to entry into the profession. The 150-hour rule is one of them–and it’s well past time we changed it.
Guylaine Saint Juste is the president and CEO of the National Association of Black Accountants, Inc. (NABA).
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