One of Minnesota’s Largest Accounting Firms Can Totally Get Behind the Alternative Pathway to CPA Licensure

In a LinkedIn post published March 3, CLA CEO Jen Leary — who graduated wayyyy back when only 120 units were required — threw her support behind Minnesota Society of CPAs’ initiative to add a second pathway that would allow CPA licensure at 120 units and two years of experience. It may not seem like a huge deal for one person to say “yeah, that doesn’t sound like a terrible idea” in a LinkedIn post but considering the heat Minnesota has gotten from The Powers That Be for dissing 150, it is actually a deal of epic proportions. I’m being dramatic. It’s big. The leader of a top ten firm just stuck her neck out and went against the official stance of both the AICPA and NASBA, and she wasn’t just speaking for herself. CLA is one of the largest firms in Minnesota and it “applauds Minnesota for being an advocate for collaboration and change and taking the necessary steps to address the inadequacies in the current system,” she said.

She writes:

Over the past 12 months, I have met countless motivated, hardworking individuals that are interested in pursuing a career in accounting. However, many of those same candidates expressed their frustration as they struggle with the financial commitment of obtaining 150 credit hours to become a certified public accountant (CPA).

Many students are eager to enter the workforce full time and make a living. Some of the most inspiring students we meet with are working 30 to 40 hours a week on top of their academic courseload to make ends meet.

They continually share that any dollar invested in education needs to have a clear value proposition. The goal for many is to complete necessary coursework and start working at the earliest opportunity, nothing more.

The value proposition is something I wrote about last year, back before the Wall Street Journal gave a shit about the accountant shortage. Allow me to resurrect that paragraph:

The accounting profession has a critical value proposition problem — it has consistently failed year after year to demonstrate that it offers enough perks to make up for the downsides. The profession asks students to commit five years of their life plus however long it takes to study for a difficult professional licensing exam oh and also you’re going to be doing 70 hour weeks in a good week while living with four roommates for the first couple years but don’t worry, one day you’ll make some good scratch. You just have to get through a very unpleasant gauntlet first. If you express any discomfort about this process, you’re labeled a punk who can’t hack it in public by people who also can’t hack it because no one can but they do it anyway and say nothing because their university professor told them if they don’t shut up and take it they’ll be marked unemployable for the remainder of their career.

Back to Jen and her LinkedIn post. She says that the Minnesota initiative is “opens [a] much-needed pathway to licensure and that the “conversation and remedy is years in the making.” 👏👏

Minnesota has argued, and Jen seems to agree, that whether a person has 120 or 150 units, it doesn’t matter as long as they can pass the CPA exam. In other words, the exam is perfectly sufficient as a barrier to entry to keep out the riff-raff. As anyone who has taken it knows (and though I never took it, I sat through hundreds upon hundreds of hours of CPA review class and served as therapist to many CPA exam candidates over the years so I can say with confidence I have a general idea), it requires you to know a little bit about a lot of things and just getting through the entire process is a test by itself. Licensing bodies oversee the application process and can purge “undesirables” before they get that far. So enough bouncers already exist without the profession needing 30 arbitrary college units to really really weed people out.

Critics of the legislation argue that adjustments to the credit requirement may impact the quality of accounting candidates entering the profession. However, there is no empirical evidence to suggest that the 150-hour requirement has elevated our profession. In reality, we’ve experienced a shortage of talent that continues to accelerate. Before the current rule was implemented, the industry welcomed top talent that currently comprises far-reaching leadership positions with crucial experience navigating the country’s biggest economic crises. I can see a clear plan where this legacy and standard of work can continue without the additional 30-hour course requirement.

In reality, the uniform CPA exam is our mechanism to provide talent with the technical acumen to serve in today’s world. Just as this exam has continuously evolved, so must our certification process.

She references the lack of empirical evidence to suggest that the 150 hour rule has elevated the profession. Not only is there little to no evidence, there is evidence that the 150 hour rule decreases CPA candidates, and we’ve known this for a while. See: “Occupational licensing and accounting quality: Evidence from the 150-hour rule” by John Barrios, a professor at the University of Chicago Booth School of Business. He found a 15% reduction in first-time CPA exam candidates after the 150-credit requirement was implemented, a decline that aggregates over multiple years. AND he found that the 150 rule did not actually improve the quality of talent. So not only did it function a little too well as a barrier to entry, it did not lead to better CPAs like it was supposed to. Which, duh. But boy do we have some expert basket weavers in the profession.

“I myself graduated from college when you needed only 120 credit hours plus work experience. As someone who could not afford another day of college after graduation, I can honestly say I wouldn’t be in my current role if the 150-hour requirement was enacted when I was working on my CPA certification,” writes Jen.

“Minnesota’s proposal marks tremendous progress in attempting to remove a barrier to entry by broadening the pathways and increasing accessibility to the accounting profession. To tackle declining numbers of new talent and be sustainable well into the future, we need to double or even triple the number of students who choose accounting as a major and stick with it through graduation and beyond. Broadening the pathway to become a CPA has the potential to increase the number of CPAs overall and encourage hard working, diverse talent to join the profession.”

“Our hope is that, with the exemplary action taken by Minnesota, this legislation can spur a national dialogue that challenges the current licensure requirements and empowers the accounting profession to look inward at how it welcomes and fosters prospective talent.”

I will say this. From where I am sitting and from feedback I have received from readers, lurkers, and other citizens of the CPA peanut gallery, the AICPA’s stance on Minnesota’s proposal does not vibe with the general consensus. All the comments I saw on Jen’s post are also in agreement that something must be done, and maybe offering an alternative to 150 units is a good start. It is my hope that more stakeholders, leaders, and educators will speak up and share their views publicly as Jen has. Even if they disagree.

If you have an opinion on alternative pathways to CPA licensure please feel free to reach out and weigh in, your viewpoints are important and better inform our coverage on this topic. Remember also to contact your state board of accountancy and let your voice be heard. They don’t read Going Concern comments. At least I hope not.

Earlier:
The Accountant Shortage Isn’t Bad Enough For NASBA to Entertain Dropping the 150 Hour Requirement
Minnesota Throws TPTB the Finger and Introduces Legislation to Offer an Alternate Pathway to CPA Licensure
The Beef Between the AICPA and Minnesota Over the 150 Hour Rule Heats Up
MNCPA to Educators: “We Do Not Need New CPAs Who Have Additional College Credits; We Need More CPAs, Period.”