The AICPA Vision Project and the 150 Hour Education
Requirement: Consistency or Clash?
In the Spring of 1999, the American Institute of Certified
Public Accountants (AICPA) published a glossy fortyİsix page booklet
titled "Focus on the Horizon: CPA Vision 2011 and Beyond." It
is beyond the scope of this article to critically evaluate and analyze
this entire publication, but some points in the document that relate to
the education of entryİlevel accounting professionals of the future
will be considered.
In brief, the Vision Project may be summarized as saying: "Where
are we going in the next twelve years and how are we going to get there?"
Unfortunately, the framers of the Vision Project found nothing of substance
to quote in terms of articulation with one of its major predecessor projects"The
Plan to Bring the Profession to Excellence" in the late 1980s (alias
the Anderson Committee Report, AICPA, 1986).
Anderson Report and the Vision Project: Are they Consistent?
As many CPAs may recall, in 1988 the AICPA membership was purported to
have overwhelmingly adopted the six points outlined in the Anderson Committee
Report written to support "excellence in the profession." One
of these points was to require 150 semester hours of college education
to be earned before a person could take the examination to become a CPA.
While many of the suggestions in the Vision Project are quite thought
provoking, AICPA members should look beyond the glossy hype and solemnly
assess for themselves the types of changes that may allow firms to provide
the best service both existing and new clients in the future. One of these
assessments is to determine the need to hire entry-level accountants,
who hold the equivalent of masters degrees, to perform the various types
of assurance services provided to clients. The Vision Project completely
ignores the extended education mandate from the "Plan to Restructure
the Profession" which would bring the "Profession to Excellence."
Two of the eight critical "forces impacting the profession,"
identified in the Vision Project are "Market Value Shifts" and
the "Decline of new CPAs." The former refers to the decline
of the traditional services being provided by CPAs while the latter refers
to the "number of students and young people electing to joint the
CPA profession has dramatically declined."
Naturally, if fewer services that require CPA licensure (assurance services)
are being provided, then firms would seek to hire fewer CPA qualified
entrants. It is logical that firms would seek to hire persons with the
qualities needed to provide other types of non-CPA traditional financial
To stimulate the hiring of such persons, the AICPA and the National Association
of State Boards of Accountancy have jointly sponsored a model Uniform
Accountancy Act that contains provisions to permit CPA firms to admit
nonİCPA owners to hold up to fortyİnine percent of the equity
ownership in the accounting firm. This would allow CPA firms to compete
with other nonİCPA providers into different markets beyond traditional
One highly debatable twist contained in the Vision Project suggests that
the CPA Profession will project its traditional characteristics of integrity
and objectivity in caring for the "public interest" as traits
that nonİCPAs will also possess as they seek to open new markets
and types of technology services are developed for their clients. Many
feel this quantum leap of logic simply is not reasonable. While SEC Chief
Accountant Lynn Turner expressed frustration to the leaders of the profession
"over the kinds of auditor independence concerns" where the
SEC staff found cases of "clear-cut ethics rule violations"
by auditors (Accounting Today . June 7,20, 1999)
Lawrence Ponemon, PWC partner in charge of business ethics
advisory services, said part of the problem was "that firms are hiring
more non-CPAs who are 'not grounded in the ethics of our profession'."
Other speakers at the meeting expressed similar concerns that "changing
marketplace" pressures tempted auditors to cut corners.
If CPAs, who have to adhere to a strong code of professional conduct are
pressured into error, what type of conduct is to be expected from non-CPA
owners and associates whose obvious role is to generate profits in a highly
competitive and ever changing financial services market?
Consistency or Clash: Did the Capital Market for Accountants Really Require
The Vision Project identified "the decline of students and young
people electing to join the CPA profession" as a force impacting
the profession. Could anyone believe that this "decline of students"
was not totally foreseeable by anyone with a "Vision"?
In plain language, the author asserts that the dramatic "decline
of students and young people electing to join the CPA profession"
must be shared largely by actions attributable to both the American Institute
of Certified Public Accountants and by the largest accounting firms which
drive the humanİresource markets for the profession. First, the AICPA
must be viewed as having a total lack of vision given its failure to have
realized that the addition of at least twenty percent to THE CREDIT HOURS
NEEDED to sit for the CPA examination would drive persons away from the
CPA profession. Secondly, the quality of life and the level of compensation
for entryİlevel accountants provided by the largest accounting firms
does not compete favorably with other areas of business not even considering
other nonİbusiness professional options (e.g. law, engineering).
Historically speaking, the CPA Profession "capital market" has
sought to hire persons with advanced degrees in a one to ten ratio (+/_)
since 1971 (AICPA, 1998). Basically, the profession has not felt that
the benefits derived from the additional education was worth the very
modest incremental cost (about 10%) paid to obtain advanced degree holders.
In fact, one of the national recruiting partners from the Big Five firms
told an audience of accounting chairpersons that the 150 law "is
a solution to a problem that has already passed." (February, 1997)
In short, the "market shifts" described in the Vision Project
have absolutely no consistency or validity as it pertains to the human
resource needs of the CPA Profession.
WHAT CONSTITUENCIES ARE AFFECTED BY THE 150-HOUR LAW?
Numerous parties may be adversely affected by the 150İhour education
requirement. In this segment, each of the affected groups will be identified
The most obvious party affected are the students of accountancy. Generally
speaking, most of them will be required to stay in school another full
year. This may cause them to lose a full year of earnings (as compared
to four year graduates not subject to the law). Also, many will incur
a fifth year of additional tuition and textbook cost with little stateİsupported
scholarship funds available. Additionally, if the fifth year results in
the receipt of a graduate degree, tuition is usually greater for graduate
level studies. Thus, both students and their families (parents or spouses)
will find themselves paying more and waiting longer for the accounting
graduate to make their entrance into the profession.
Since its inception, the author felt this extended education requirement
would have potentially negative longİrun ramifications for the profession.
When the Anderson Committee identified the 150İhour requirement as
one of the points to "bring the profession to excellence", it
was apparent that the adoption of this proposal would cause a fragmentation
in the profession. Essentially, the smaller CPA firms would not be able
to afford the more highly educated and the more costly entrants to the
profession. Unfortunately, the smallİ and mediumİsized firms
did not discern this bias until late in this decade when it was too late
to change the tide of the AICPA sponsored accountancy laws sweeping the
nation (Pat Terry, Insight, Illinois Society of CPAs, May, 1999).
Blackman Kallick, a Chicago firm of 180 professionals, is quoted as extending
the "hiring season" for entryİlevel people into the tax
season. Another solution is to hire paraprofessionals "with analytical
skills who did not earn a college degree." Smaller CPA firms like
Diel & Forguson (Chicago, 1999) may suffer disproportionate recruiting
problems due to the 150İhour rule. The managing partners in large
regional firms in Cleveland addressed the 150İhour law hiring dilemma
in different ways: one firm merged with a national firm as their middleİmarket
unit while another firm is still struggling to find CPA qualified staff
for the 1999İ2000 busy season.
In 1999, one of the Big Five firms reported that it will hire 5,000 persons
İ only 1,500 will be for the accounting and audit department. Only
300 (20%) of the 1,500 new hires will hold advanced degrees! (WSJ, 1999).
Plainly stated, on the eve of the implementation of the 150 hour law in
more than 15 of the 54 jurisdictions where the law is in effect in 1999,
one of the world's largest firms will seek to hire less than six percent
of their entryİlevel staff with credential sufficient to meet the
150 hourİlaw requirement! Clearly the "market" for Accounting,
Auditing, and Tax services doe not want or feel the need to hire 150 hour
graduates as we approach the new millennium!
Businesses and Society
If the accounting firms are required to hire more highly educated entryİlevel
personnel and pay higher salaries for these persons, it is logical to
expect the cost of services in increase for both businesses as well as
individual clients. Even to date, little evidence has been provided that
the fifth year of required education for accountants will ensure improved
quality or greater efficiency of client services. If this is not the case,
then it is reasonable to expect that the higher costs of these personnel
will be passed along to the consuming public in terms of higher prices.
If education requirements the CPAs are expanded, it is logical to expect
educational institutions will have to address the needs of the profession.
Many of the nations larger public stateİowned universities will have
little problem in addressing the 150İhour education requirement.
They will simply piggyİback their existing MBA or Masters of Accountancy
programs on to their 4İyear undergraduate program for accountancy
The more critical problems will be addressed by schools that offer strictly
fourİyear undergraduate programs and by the private colleges where
tuition costs for the advanced degrees they offer change rather dramatically
when compared to undergraduate tuition costs. For institutions in the
former group, articulation agreements with larger state universities for
the acceptability of transfer credits into graduate programs so the 150İhour
requirement may be completed at another state institution without loss
of credits is the most logical solution.
Private institutions face quite a different challenge. For institutions
that are primarily four year programs, an extended undergraduate curriculum
may be the best solution. For schools such as John Carroll University,
who have a substantial partİtime MBA program in place, we spent nearly
two years in meetings with corporations, accounting firms, students, and
other parts of the University, studying the needs of our various constituencies.
We decided to focus upon the flexibility of programs we could provide
while developing partnerships for formalized internships with the larger
accounting firms in greater Cleveland area. The result was a program that
provided three exit points for students to begin their professional careers
in accounting. The first exist point was at the end of four years with
a program modified to meet the needs of persons going into corporate or
nonİprofit accounting; the second exit point was for persons who
wanted to enter the CPA Profession by meeting the letter of the law (150
semester hours) without investing the time or incurring the costs of a
The last group of students would receive both an undergraduate and a graduate
degree after just five years and three months (BSBA/MBA). Furthermore,
participants in this program would likely receive departmental generated
scholarships to offset the cost of graduate tuition for the fifth year
of education. With help from the development office, accountancy faculty
members worked diligently to raise an endowment for fifthİyear scholarships.
Regardless of these efforts, we still expect to lose a substantial (although
not critical) percentage of our enrollment in the accountancy program
to finance, logistics, and management technology and information systems.
From a national standpoint, these programs tend to compensate entryİlevel
persons with bachelor degrees equal to those salaries offered to persons
with graduate degrees in accounting. If this trend continues, even fewer
of the "best and brightest" will enter the accounting profession
unless accounting firms consciously make an effort to improve the "quality
of life" in the profession.
Conclusion: Where Does the CPA Profession Go From Here?
It should be apparent that the "CPA Profession" must "wise
up" rather quickly in terms of both compensation and the quality
of life. If it does not, we may be looking at trying to educate "dumb
and dumber" to accept underpaying jobs that require longer hours
and provide employees with diminished selfİesteem.
After the class of 1999 enters the profession and pulls the entryİlevel
wagon for two years they will no doubt leave it soon unless conditions
change because they will see the 150 hour class of 2001 graduates enter
the profession with little or no advantage for their additional studies.
The profession must realistically make major changes in the quality of
life for persons at all levels within the firm while finding ways to expand
the scope of services without compromising either ethical or quality standards.
The Vision Project does not provide the solution to this dilemma that
all members, as well as our new accountants face. Unfortunately, the leadership
of the accounting profession has historically been reactionary not progressive.
This means that the pseudoİmarket driven hiring practices will likely
not begin to function if it ever does until the year 2003 or beyond. And
that may be just about too late for the "CPA Profession" to
survive. The infamous words uttered by Michael Douglas in the movie Wall
"Greed is Good" may be the kiss of death for the CPA Profession.
As Generation X arrives upon the scene with a set of values and priorities
that differ significantly from the aging Baby Boom generation, an effort
must be made by the CPA Profession to balance the quality of life for
the profession with the rewards of providing a diversified menu of services
with quality, while maintaining the traditional standard of integrity
in the process. Utopia or Santa Claus? Pick one.
Roland L. Madison, CPA, Ph.D. is the KPMG LLP (Peat Marwick) Professor
of Accountancy at John Carroll University, Cleveland, Ohio. Dr. Madison
has published over eighty articles and papers in professional journals.
He is a member of two professional boards and serves on the professional
ethics committee for the Ohio Society of CPAs and the national ethics
committee of the Institute of Management Accountants. Dr. Madison is a
consultant to the CMA examination and served as a senior grader of the
CMA examination for ten years. He is a past president of the 4,400 member
Cleveland Chapter of the Ohio Society of CPAs. He was the 1997 recipient
of the Ohio Outstanding Educator Award. Dr. Madison is a previous contributor
to Management Accounting, the National Public Accountant, Practical Accountant,
and the New Accountant among others.