September 24, 2022

Illinois Will Soon Let You Sit for the CPA Exam With 120 Units, Should All States?

“What are they gonna do, stop requiring 150 units? THAT’S CRAZY.” That’s what a stakeholder told me recently when we spoke about the accountant shortage and the growing gap between students getting accounting degrees and recent graduates sitting for the CPA exam. Fewer people are pursuing accounting degrees and the ones that are have been less and less interested in taking the CPA exam as time goes on. But as they say, the genie can’t be put back into the bottle. 150 hours is the rule and accounting is nothing if not a pile of rules.

Why aren’t people willing to pursue the CPA despite the numerous hurdles placed in their way as has been tradition since the dawn of time? Well there’s a Reddit thread today on the shortage and the future of the profession that gives us a little insight. Here are a few choice comments:

You need another year of college and then have to study for another 6-12 months for the CPA exam. That’s a lot of investment time to start out at like $60K (not sure what starting wages are but it was $50K for me 6 1/2 years ago).

Working on the CPA in public is hell. Even working in industry job 40 hours a week and then trying to study 12 a week is a lot. I couldn’t do 50+ hour weeks and study and not lose my mind all for a little more pay.

The hours and pay are the biggest factors. Also throw in 150 hour cpa requirements. Lot of barriers to entry for low pay, just the promise you might land a decent job later down the road.

As you can see, these comments highlight the three biggest issues getting in the way of more CPAs in the pipe: low starting pay, too many hours making it too difficult to study for the exam while working in public, and the fifth year of education. The 150-hour rule has been discussed here regularly (see: The 150-Hour Rule is Kinda Bullsh*t, Says Guy and 4 Reasons Why the Profession Is Struggling to Convince Students to Become CPAs, #4 Will Not Shock You) and it’s no secret that the pay sucks, not a single one of these factors should be a surprise to anyone.

In Illinois, they’re taking a unique step to mitigate at least one of those factors: bumping the requirement to sit for the exam down to 120 units. Effective January 1, 2023, you only need 120 to sit. You still need 150 for licensure but it lets you get the exam out of the way before you have to worry about it.

The so-called two-tier requirement — 120 units to sit, 150 for licensure — is fairly common across the 55 CPA exam jurisdictions and nearly all of them require 150 units for licensure. Illinois isn’t doing anything revolutionary here, just delaying the fifth year requirement which isn’t actually a fifth year requirement at all but rather a strong suggestion that one should pursue a graduate degree or at least a handful of relevant units beyond those required to graduate with a B.A. You’ll notice AICPA guidance doesn’t even mention underwater basket weaving:

To obtain 150 semester hours of education, students do not necessarily have to get a master’s degree. They can meet the requirement at the undergraduate level or get a bachelor’s degree and take some courses at the graduate level. Students can also choose any of the following:

  • Combine an undergraduate accounting degree with a master’s degree at the same school or at a different one;

  • Combine an undergraduate degree in some other discipline with a master’s in accounting or an MBA with a concentration in accounting;

  • Enroll in an integrated five-year professional accounting school or program leading to a master’s degree in accounting.

The AICPA gives a list of reasons why the 150-hour rule is needed at all, among them are significant increases in official accounting and auditing pronouncements and the proliferation of new tax laws, increased complexity due to regulation and technology, and perhaps the most ironic of all given current shortages, the staffing needs of accounting firms and other employers of CPAs are changing rapidly and the demand for a large quantity of people to perform many routine auditing tasks is rapidly diminishing. Is the 150-hour rule accomplishing this? That’s a discussion for another day.

If the shortage gets any worse we’re going to have to start pulling crazy ideas out like getting rid of the 150 completely. Or making 70 a passing score. Or just don’t require anything at all and let anyone with a GED sit for the exam. Uh, yeah, softening some requirements without getting rid of them completely is probably a saner idea.

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5 Comments

  1. Louisiana went back to 120 hrs to sit, 150 for licensure some years ago. It is very helpful because we all know that the CPA exam covers the undergraduate content, not anything from any Masters program. So you’re more likely to pass before you have forgotten everything by sitting through the additional year or two for the Masters. I get my students to graduate with 150 and 4 years by taking 18 hours of semester and getting them to double major in accounting and finance or accounting and business analytics.

  2. Yes, rigorous exam. But it is not addressing the root cause: low pay and crazy hours for the profession when one can make a better living in other industry/profession.

  3. I think it makes perfect sense to reduce the credit hours to a regular bachelor degree level. Most people will only take one *new* accounting course as part of their extended study whether it be an MBA or other. So the actual increase in accounting knowledge that typically results from the extra 30h is minimal. Reducing the certification requirement but not making the certification dramatically easier to obtain makes the most sense imo.

  4. The 150 is straight BS. If you pass the pain in the ass exam, you should be given the credential. What is the difference between accounting in the undergraduate lever and Masters? Larger projects. There is no real value other than seeing if a person is willing to sit through the shit. Besides, if it was a legitimate requirement, they would pull the licenses of anyone else who licensed prior to the requirements and make them get a master’s.

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