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Literature Review

The 150-hour requirement causes accountants to take an additional 30 hours of schooling in order to be able to sit for the CPA exam. There is a 75% drop in first time candidates after the implementation of the requirement and it never bounces back to the level of candidates before the requirement. This literature review will explain why there has been decreasing CPAs and what factors are pushing potential CPAs away from the accounting profession.

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106 views3 pages

Literature Review

The 150-hour requirement causes accountants to take an additional 30 hours of schooling in order to be able to sit for the CPA exam. There is a 75% drop in first time candidates after the implementation of the requirement and it never bounces back to the level of candidates before the requirement. This literature review will explain why there has been decreasing CPAs and what factors are pushing potential CPAs away from the accounting profession.

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Lack of CPAs in the accounting profession

In this literature review there will be information on why there has been decreasing CPAs
and how the 150-hour requirement has effected this. Many of these articles focus on analyzing
the statistical evidence of the CPA exam pass rates and they also focus on what factors are
pushing potential CPAs away from the accounting profession. One writer said that the 150-hour
requirement acts as a barrier into the profession (Carpenter, 2006) and while many other writers
did not say that specifically they show through statistical analysis that they have reason to
believe that it is a main factor in the decline of CPA candidates (Boone, 2002; Carpenter, 2006;
Francisco, 2003; Schroeder, 2004) Another problem with the 150-hour requirement is it is not
meeting its main goals and it is not working how it was designed (Shafer, 2010). An author also
stated how the 150-hour program is an opportunity cost that outweighs the benefits (Francisco,
2003) and these ideas show truth with other articles. In this literature review the ideas and the
general conversation of both sides of how the 150-hour requirement effects the number of CPA
candidates will be explained.

The 150-Hour Requirement


The 150-hour requirement is the act that causes accountants to take an additional 30
hours of schooling in order to be able to sit for the CPA exam. The requirement has been found to
be 38% of the reason for driving people away from accounting (Boone, 2002). Many students
believe that the requirement is an additional large cost that many students are not willing to pay
(Carpenter, 2006) and this is a large part of the reason the 150-hour requirement is driving
students away from pursuing a CPA. The 150-hour requirement is not meeting its main goals
such as percentages and increasing the CPA image (Dresnack, 2005). A glaring issue with this
requirement is that there is a 75% drop in first time candidates after the implementation of the
requirement and it never bounces back to the level of candidates before the requirement
(Schroeder, 2004; Anderson, 1988). In order for the 150-hour requirement to work the
accounting curriculum needs to be reformed to suit the requirement (Nelson, 1989). Although it
is not working how it is supposed to, the 150-hour requirement could be considered and is
progress by the Webster definition (Elam, 1996). Women make up around half of the profession
and the enactment has driven women away by a large amount which does have a very large
effect on the supply but on the other hand now minorities are being attracted to this major more
so with the additional requirements but it does not fill the gap of the amount of women leaving
(Bierstaker, 2005).

The CPA Exam


The 150-hour requirement has not only effected the accounting major but more so the
number of people taking to CPA exam and becoming CPAs. Due to the extra 30 hours of
schooling many people are not willing to pursue many just become regular accountants instead

of CPAs (Williams, 1996). The majority of candidates taking the exam after the passage of the
requirement have no advanced degree and there is visible statistical improvement on the exam
and the scoring is promising (Shafer, 2003). The 150-hour requirement has strongly boosted
scores about 20% but the main problem is still the large decrease in people taking the exam.
While the requirement has increased pass rate there is also a side effect of 60% drop in number
of students sitting for the exam. The 150-hour requirement has negatively affected this
examination and its time has come and gone (Miller, 2003).

Conclusion
There are many scholars who have been researching this topic and many have found that
the 150-hour requirement negatively effects the accounting major in terms of the supply of CPAs
which has dropped drastically since the implementation. There have been many statistical studies
based on pass rates and the number of people sitting for the exam and whether the CPAs with the
150 hours of education are more competent that those without and many of the results have come
out against the 150-hour requirement. It seems as though it is the main problem with this
profession.
Although the 150-hour requirement seems very harmful to the profession of accounting
there is still a 62% reason of people who are not choosing this profession for unknown reasons
and it is unsolved as of now. This could be figured out by a very large scale survey with
questions asking specifically people who have diverted away from accounting.

Works Cited

Anderson, Henry R. "The 150-Hour Requirement: Florida's Experience." The CPA Journal 58.7
(1988): 56. ProQuest. Web. 23 Oct. 2015.
Bierstaker, James Lloyd, Martha A. Howe, and Inshik Seol. "The Effects of the 150-Credit-Hour
Requirement for the Certified Public Accountant (CPA) Exam on the Career Intentions of
Women and Minorities." Journal of Education for Business 81.2 (2005): 99-104. Web. 25 Oct.
2015.
Boone, Jeff P., and Teddy L. Coe. "The 150-Hour Requirement And Changes In The Supply Of
Accounting Undergraduates: Evidence From A Quasi-Experiment." Issues In Accounting
Education 17.3 (2002): 253-268. Business Source Premier. Web. 11 Oct. 2015.
Carpenter, Charles G., and E. Frank Stephenson. "The 150-hour Rule as a Barrier to Entering
Public Accountancy." Journal of Labor Research 27.1 (2006): 115-26. Web. 24 Oct. 2015.
Carpenter, Charles G., and Clayton A. Hock. "The 150-Hour Requirement's Effect On The CPA
Exam." CPA Journal 78.6 (2008): 62-64. Business Source Premier. Web. 7 Oct. 2015.

Dresnack, William H., and Jeffrey C. Strieter. "The Effectiveness Of The 150-Hour
Requirement." CPA Journal 75.4 (2005): 64-66. Business Source Premier. Web. 12 Oct. 2015.
Elam, Rick. "Is The 150-Hour Requirement Really Progress?." Issues In Accounting Education
11.1 (1996): 205-206. Business Source Premier. Web. 13 Oct. 2015.
Francisco, William H., Thomas G. Noland, and J. Ann Kelly. "Why Don't Students Major In
Accounting?" Southern Business Review 29.1 (2003): 37. Web. 25 Oct. 2015.
Miller, Paul B. W. "The Five-Year Program Debate Continues: An Updated Analysis Of The
Supply Of And Demand For Master's Degrees In Accounting." Issues In Accounting Education
18.2 (2003): 211. Business Source Premier. Web. 19 Oct. 2015.
Nelson, A. Tom. "The Human Resource Dilemma In Accounting." Journal Of Accountancy 168.2
(1989): 46-52. Business Source Premier. Web. 25 Oct. 2015.
Schroeder, Nicholas W., and Diana R. Franz. "Explaining The Decline In CPA Candidates." CPA
Journal 74.10 (2004): 62-66. Business Source Premier. Web. 25 Oct. 2015.
Shafer, William E., and J. Gregory Kunkel. "Are 150-Hour Accounting Programs Meeting Their
Intended Objectives?" Journal of Education for Business 77.2 (2010): 78-82. Web. 19 Oct. 2015.
Shafer, William E., et al. "Effects Of The 150-Hour Education Requirement." CPA Journal 73.1
(2003): 72. Business Source Premier. Web. 25 Oct. 2015.
Williams, Jan R. "Implications of 150-hour Certification Requirements for Academic Accounting
Programs." Journal of Accounting Education 14.2 (1996): 237-44. Web. 20 Oct. 2015.

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