“In 1989, the AICPA membership voted to recommend that states require candidates to complete 150 hours credit hours to sit for the CPA exam. Florida was the first state to adopt the 150-hour requirement, in 1983, before the AICPA’s recommendation.”
The CPA Journal of The NYSSCPAs in June 2008.
I listened to some accounting professors on a private listserv discuss the following question:
“What is the impact of the 150 hour requirement on accounting education, career choices for graduates and the public accounting firm business model?”
The Big 4 firms are delaying new hire start dates. What’s the best use of that time? Will passing the CPA exam quickly give you an advantage if some offers are rescinded or the firm continues to cut experienced staff? How can an undergrad with a <150 hour degree get the extra hours once you start working eighty hour weeks? Accounting is still touted in the media as a safe career. How does a career-changer with a non-business undergraduate, or an undergraduate without the currently required number of hours of eligibility for the CPA, meet the requirements cost effectively?
Undergraduate accounting programs that provide <150 hours total and/or fewer than the required number of accounting courses leave students with an expensive choice – enroll in a Masters of Accounting program or take a fifth year in an undergraduate program to qualify for the CPA exam.
Schools have stepped up their marketing of graduate programs. But students and new graduates are disappointed in the small value-add from a Masters in Accountancy program, in particular if they were enticed to attend a “top” program at a new school. Students perceive the Masters in Accountancy programs as just another way for schools to get more of their money. The additional loan burden is daunting. Unless they plan to pursue a PhD, are there any other immediate career or financial benefits from a master’s degree other than enough hours to qualify for the CPA exam?
What were the historical and practical reasons for the shift from 120 hours to 150 hours as a requirement for eligibility for the CPA in some states? Retired Professor Bob Jensen tells me:
It was always in the minds of some backers of the 150 hour requirement that it was the first step toward having “independent” schools of accountancy, three-year graduate programs alongside law schools. The goal would be to drop all or most undergraduate accounting course for students who wanted CPA careers. This is why the pay is usually less than what graduates think they should be paid. In most instances it’s probably more than they are yet able to really “earn.”
Professor Amy Dunbar at the University of Connecticut says:
Degree programs are reducing hours due to other pressures. Our accounting degree is 120 hours at UConn, so if students want our specialized courses they enter our MSA program. In addition, because we do not have room for a second tax class at the undergrad level, we offer a business entities taxation class at the MSA level.
Professor Linda Marquis at Northern Kentucky University says:
We serve a “plain vanilla” undergraduate accounting program and push the graduate level as a way to define your career path – MACC if the student wants public/financial accounting and MBA (with perhaps a specialty in finance or info systems) for others. It’s a win/win for students and programs.
But is it?
Will CPA candidacy eventually be limited to students who have the time and money to pursue graduate study? What’s the impact on “hard-enough as it is” diversity initiatives in the public accounting firms?
Since it now takes more of both time and money for students to be eligible to become CPAs, public accounting firms are supplementing the staff with more interns and non-certified graduates for a longer period of time. What’s the impact on “professionalism” when more of the staff are pre-certified and maybe even pre-degree? What is the impact on audit quality? And what happens when the plaintiffs win the lawsuits regarding overtime for non-certified audit firm associates, in particular against PwC in California?
Accounting professionals will see themselves squeezed as the recession continues, jobs continue to be cut by the firms, and the Big 4 leverage model is threatened by litigation and regulatory pressures.
I am being squeezed by the fact I cant get Attest Activity.
The article above references a Master of Accountancy degree as having a benefit in pursuing a PhD. This is incorrect. A PhD in Accounting is a research degree with a strong emphasis on quantitative analysis. It is a sad irony that very few undergraduate and MS Accountancy programs incorporate the rigorous quantitative background (math through linear algebra and real analysis) that is necessary to make a person an attractive applicant to respectable Accounting PhD programs.
As a result of this, many Accounting PhDs have pure science undergraduate degrees and are qualified to write outstanding analytical papers, but would not be able to close the books of a lemonade stand. Yet they are the ones “training” the next generation of CPA’s.
But I digress…
One of my professors in my Masters program complained about the 150 hour standard. Interestingly, he said that it wasn’t CPAs pushing the new 150 hour standards, but university lobbyists, who saw an opportunity to require an extra year of school. Of course, the AICPA supported the measure, because it created another barrier of entry into the profession, which artificially added value to those already licensed as CPAs.
I personally believe that MACC programs are more or less CPA exam prep programs, that cost about 20 times a Becker course… No B4 firm places any real value on the degree.
In Texas, there are now four community colleges approved by the state where somebody who already has a B.A. can take the extra 30 hours. Although the state requires a certain number of the hours to be upper level, the community colleges have a list of 1000- and 2000-level courses that are approved to count. Not bad when those classes run $130/course versus $1-3k at a four-year school. Then again, you don’t get the M.S. degree.
As far as accounting undergrad and grad programs not providing adequate prep for accounting PhD programs, they should not. The PhD program is at least as much math and econ as accounting. Moreover, I have seen no evidence of any accounting research contributing anything worthwhile to society. It’s way too weird and abstract.
I have never really understood the value of the MACC with the exception of obtaining the additional semester hours that are required and being able to network your way into the big 4 if you attend a smaller undergraduate institution which is not recruited by the Big 4.
With that said, I got a Masters in Tax to complete the remainder of my requirement, which was probably much more expensive than a MACC but gave me more specialized information that I could actually use.
I am glad that Community Colleges have also caught onto to this as well to give students the cheaper option to fulfill the requirements.
While the Masters degree doesn’t matter much with regard to B4 or public in general, it does hold some sway in industry – not a ton, but it definately helps.
@4 – wasn’t it an accounting research paper (out of Iowa I think) that uncovered the entire options backdating scandal?
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@4 Where did you find a list of those approved classes? I have looked on the state board website for approved classes, but could not find them. Thanks
This is one of the most helpful threads I’ve seen on GC – thanks everyone. I’m considering a PhD someday, and I have noticed that the MAcc doesn’t seem to change much as far as your B4 career, so glad I’m glad I got my extra classes at a CC.
Francine,
Nice post. I agree 100%.
I’m a professor. At my previous school, we had students who pursued a masters degree, and those who stayed for a 5th year of UG work. Generally speaking, the ones advancing to a MAcc did so because they got an assistantship, which provided 100% tuition. Those not going to a MAcc year continued as UGs, and paid UG tuition (50% of grad tuition). I think they made a rational decision.
There is some value to a MAcc. It is a credential, but one that only provides a market place premium of a couple of thousand dollars per year. The research is dated, but those with a MAcc tend to rise faster and further. Also, the paper chase process does get students thinking a little differently.
But is that difference worth it? I’m glad I got a MA in accounting, many years ago, but then I went on to Ph.D. Mostly, I think a MAcc is value added (not as much as most professors think) but very very pricey.
Dave Albrecht
I wouldn’t even call them CPA prep courses. I already had the 150, but I wanted to get a MS “just because.” Luckily, one of my teachers was kind enough to inform me that the MS program would not help me in any way with regards to the CPA. WTF is Accounting Theory? Give me a break, this stuff is so far from relevant its not even funny. I started taking the CPA this summer and passed it in October while taking 12 hrs towards the MAcc. If this school wasn’t dirt cheap, or if I had a job that I intended to stay at more than a year, I would not continue with the program next semester. It is absolutely, unquestionably, a complete waste of time, energy, and money. The sad thing is, I’ve discussed this ad nauseam with peers at various schools of varying prestige, and the answer is always the same. It’s not worth anything because every one knows it is a joke of a Masters degree, (apparently) regardless of school. Unfortunately, I’ll probably have to shell out $$ again in a few years for an MFIN or MBA or something.
You wont learn Jack in School.
What about a masters in accounting if you have few to no courses? What about if its from a school like Boston College, UNC or USC?
Awesome photoshop on Belushi. They took the bar! The whole fucking bar!
I graduated from an MPAc program and am happy that I went that route over just a bachelors. The pay at a big4 firm (mine anyway) is only a few thousand more, but I feel like I learned more in that last year than I did at any other time. It prepared me to completely destroy the CPA exam and I am at the front of my start group. I can also say that I have a masters :)
I did a MACC at OSU and it was not tailored to provide CPA credits at all, however it really developed me, I did fantastically well in comparison with other associates all through my early promotion. I do not regret going to the MACC at all. I had a scholarship that covered most of my costs.
Master’s programs work better for people who are changing careers and need to get started in accounting. I was in this category. I had to take some extra pre-requisites, but this allowed me to be eligible to take the CPA exam while I was still in graduate school.
The recommendation I always heard for accounting undergraduates or others who only needed a certain number of college credit hours was to take the extra classes at community college. Of course, it depends on the state’s rules.
I agree with those who say that the graduate coursework is essentially a CPA review course. I don’t feel that my graduate study prepared me any better for accounting work than my peers who only had the bachelor’s. I think if I’d had a master’s in taxation it might have been different.
Agree with 18
While researching MACC programs, I discovered that some schools are making a concerted effort to offer very innovative MACC curricula. For instance Portland State University, the University of Akron, the University of Baltimore, and the College of William & Mary all offer a MACC curriculum that emphasizes financial analysis. In other words the curriculum is based on advanced courses primarily in accounting and finance. Some other schools are offering MACC programs with a focus on Forensic Accounting i.e Duquesne University and Georgia Southern University. If and when all these programs achieve notoriety and success, you will see many other schools follow their path. It’s fair to say that most MACC programs are really not worth paying for. I do not have a Master’s degree, however it doesn’t take a genius to realize that most of the MACC programs currently available are just cash cows! Because the job market is very competitive, I do recommend people to go for a MACC if they can afford it. Money can be an issue but there is a number of schools out there that will give out assistantships provided that you have an undergrad GPA over 2.75
and a GMAT score over 500. What this means is you might have to go to school out of state. No pain no gain! An alternative to getting a MACC is to get a dual undergraduate degree in Accounting and Finance/Econmics/MIS/Management… your choice.
If students start choosing innovative MACC programs over the vanilla type ones, universities around the country will work proactively to ensure that they are offering a good value proposition to their students!
Virgnia now allows to sit for the exam wtih 120, just doesn’t award the license until 150 credits are reached. The legislation was passed a temporary measure, but it is reasonably expected to be made permanent. Google Virginia Board of Accountancy.
I graduated with a B.A. in econ from an ivy league, and unfortunately did not take a single accounting class (none were even offered).
Thus, I’ve been taking all my accounting coursework at the local community college to qualify for the CPA exams. At $100 a credit, it’s a real bargain. Were I an accounting student hat was missing the extra 30 hours of coursework, this is definitely the route I would take.
I graduated with a B.A. in econ from an ivy league, and unfortunately did not take a single accounting class (none were even offered).
Thus, I’ve been taking all my accounting coursework at the local community college to qualify for the CPA exams. At $100 a credit, it’s a real bargain. Were I an accounting student hat was missing the extra 30 hours of coursework, this is definitely the route I would take.