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Why the 120/150 Rule Matters and Why It Should Be Changed

Unless you are in one of the handful of states that allow you to sit for the CPA exam with 120 units, either you went the overachiever route and got a Masters in Accounting or you did what any good slacker would do and took an extra 30 units in crap like basket weaving and German to fulfill your state’s 150 unit requirement. If you are in the second group, you probably forgot most of what you learned in advanced accounting by the time you got those extra 30 units in electives. That sort of story is exactly why the 120/150 rule matters and why the industry needs to look at its effectiveness. Can you really protect the public interest any better if it takes you three tries to get through the CPA exam because you have been taking night school French to meet your state’s 150 rule while working in public to pay off your student loans?


The Maryland Association of CPAs supports the 120 rule for future CPAs in Maryland as it allows for accountants to sit for the exam when their college experience is still fresh in their minds. No one is suggesting we do away with the 150 rule (though don’t tell California that) but instituting the 120 rule around the country means releasing our accountants from a burdensome and, frankly, silly rule that dictates they must have a Masters level education before sitting for an entry level exam. Does that make sense to anyone?

A few years back, the Virginia Board of Accountancy realized that the 150 rule was actually making them lose CPA exam candidates, who were taking the exam in other states with less stringent requirements. Remember, because the exam is a uniform examination, you can take any other state’s exam in your state if you meet that state’s requirements (residency in the state being a big one but many states allow out-of-staters to sit for their exam). Said the Virginia Society of CPAs before the rule was approved by the governor, “the Commonwealth doesn’t want to lose its valuable CPA candidates and wants to retain those Exam takers. In addition, reducing the requirement would have a positive impact on Virginia’s budget.” In May of 2009, Governor Tim Kaine signed emergency legislation allowing Virginia CPA exam candidates to sit for the exam with just 120 hours.

NASBA issued a draft in 2008 that stated “we have found no evidence of detriment to the public interest in those states allowing candidates to sit for the CPA examination at less than 150 hours of education and later fulfilling the 150 hours.”

We agree. We also feel the 150 rule is a bit arbitrary and silly (see reference to basket weaving classes above, please let us know what bullshit courses you took to meet your jurisdiction’s 150 rule in the comments) but will save that discussion for another day.

We sincerely hope the boards of accountancy are listening.

So Your Firm Is Going to Pay For You to Take the CPA Exam: Four Things To Remember

Have a question on the CPA Exam? What section is easiest? How should I study for Regulation? Are pants mandatory at the testing site? Shoot us an email with your query.

Not only do you have a job (congrats!) but you have a job that is willing to pay for you to take the CPA exam. Awesome! But before you load up on review materials, be sure you know what your employer expects and understand that there are situations where you can be held liable for materials if you don’t live up to your employer’s expectations.


This is Business – First of all, though you can’t claim a deduction, reimbursement of your CPA exam expenses (education, exam fees, etc) is treated as a business expense, just like any other training. If you’re desperate to get someone to help out with review course or exam fees, try selling this point to your employer.

Make the Most of Time You Have Now – If you’re in the Big 4 or anywhere down to the middle, chances are your review course fees are covered and your performance on the exam might be rewarded with a bonus. Don’t blow this! It’s easier for you to study and pass exams before you are loaded down with responsibilities and managers are much more lenient with first years looking for time off than they are if you’re in your 4th consecutive year of failing FAR. Take this seriously and realize that your firm will probably only pay once; blow it and you’re going to have to come up with retake fees on your own.

This Isn’t 2006 – Several years ago, firms would happily pay $3,000 and up for overpriced review courses with all the bells and whistles but since belts have been tightened, some are reluctant to cough up a chunk of cash without a guaranteed return on their investment. Look at this subsidy not as a gift but as additional income. Would you blow $3,000 of your own income on something and then never use it?

Ask Your Firms Lots of Questions – If your firm does not already have an agreement with a review course but is willing to pay your fees, ask lots of questions upfront and find out if you can invoice for repeats or supplemental products if you need them. One of the larger firms has a “we’ll pay for anything once” rule meaning they will only cut one check, regardless of whether it’s for $2 or $2,000. Other firms have strict rules about what you can order and when you can start (think government agencies). Regardless of how your firm works, ask about what is covered and what is expected in return.

In this economy, you can’t afford to blow a free review course and discounted or all-expense-paid trips to Prometric.

Adrienne Gonzalez is the founder of Jr. Deputy Accountant, a former CPA wrangler and a Going Concern contributor . You can see more of her posts here and all posts on the CPA Exam here.