That “Other” Golden Rule: 120/150

In November 2008, NASBA released its behemoth of a draft re-examining the importance of the 150 hour education rule required by 48 states to be considered a living, breathing Certified Public Accountant. More specifically, NASBA worked to address the 120/150 connundrum; should CPA exam candidates be allowed to sit for the CPA exam with 30 hours less than required for licensure?

The AICPA summed up concerns best in its official response to the draft: The public that must be protected is diverse and heavily relies on the competence, integrity and maturity of CPAs.

In our ever-changing world, the question becomes have we reached such a critical shortage of qualified CPA exam candidates that it becomes reasonable for state boards to allow candidates with just a Bachelor’s degree and, therefore, minimal real-world accounting experience to sit for the exam?

The AICPA insists that now is not the time to be relaxing requirements; what with SOX and the implications that clean-up had on the industry (the echo of which can still be felt today and, arguably, will be felt again as we move to adopt IFRS).

And why should CPAs be any different than, say, doctors or lawyers who are required to jump through a series of hoops in pursuit of their licenses in order to prove they are up-to-snuff?

A large part of “proving yourself” involves experience; therefore the 120 rule arguably circumvents this control and shuffles a new breed of CPA exam candidate right into the mouth of the beast.

The Illinois Board of Examiners argues that while the CPA exam has evolved to test not only knowledge but skills (those simulations you love so much? That’s why they’re there.), allowing candidates with 120 hours of educational experience would in fact achieve the opposite effect, pointing out that most educators agree that skills-based experience is received at the graduate level of study.

The Kentucky State Society of CPAs, however, takes a different approach.

They site money, and more specifically, their own state economy as a huge motivator in their adoption of the 120 rule, pointing out that they are still insistant that the current requirement of 150 hours for licensure stay in place. Referring to the large costs associated with training and recruiting qualified accounting staff for their state’s firms, KSCPA insists that the CPA exam itself is test enough of a candidate’s potential for aptitude.

The Idaho Society of CPAs lists 17 state boards which now allow candidates to sit for the exam with 120 educational hours. Note that all of these also require 150 hours for licensure; only 6 state boards have no such rule in place.

The fact is, it’s difficult to measure the professional aptitude of CPAs who were allowed to sit and subsequently were licensed under the 120/150 rule in comparison to those who sit for and are licensed under the traditional 150 hour rule.

From Roger CPA Review’s perspective, perhaps a more stringent requirement will help increase CPA exam pass rates (who wouldn’t like to see that?), though it may also block candidates who might otherwise try their hand at accounting.

The reality remains that the choice to become an accountant is a personal one that requires planning, education, experience, a complicated skill set, and a strong personal ethic.

There is no “magic” trait that a future CPA possesses, some strange birthmark coded in their DNA that singles them out for a lifetime of financial reports and audits. Their success in the accounting industry is based on multiple factors, only one of which is how many hours of classes they’ve sat through.

Even if a candidate has 150 hours under his or her belt, how can the Board of Examiners even know if they paid attention in class?

NASBA’s 120/150 draft is open for comment through December 31st, 2008. Interested parties may submit their comments by contacting Lisa Axisa.

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