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It’s Official: 120 Units is All You Need to Sit For the CPA Exam in Illinois

a good dog

Ed. note: I couldn’t find a good image to go with this post so I’m using this dog. Dogs are always good.

According to the AICPA, a traditional four-year undergraduate program is not adequate for obtaining the requisite knowledge and skills to become a CPA. The reasons offered for this center around the increasing complexity of public accounting practice; there are more rules and regulations, the knowledge base has greatly expanded, the CPA’s toolkit is expected to be more varied than it ever has been.

No one is really arguing these points. On paper it makes sense. Practice is infinitely more complex than it was back when the 150 hour rule was widely adopted. The issue at hand is how exactly does an arbitrary requirement of 30 extra units make for better CPAs when a good chunk of those people take completely unrelated courses in basket weaving and gardening to meet it? Just how good at basket weaving do we need our public accountants to be?

For a fun read, check out this paper on accountant quality that demonstrates increases in licensing requirements restrict the supply of entrants and do little to improve quality in the labor market. More on that here.

With the accountant shortage in full swing and a desperate AICPA reaching down to preschools to expose young people to the joys of accounting (OK, not quite preschool yet), the 150 hour rule is inevitably getting some attention. Long considered a barrier to entry (which is good or bad depending on who you ask), it makes sense that we consider the barriers put in place to prevent access to the profession when asking ourselves why interest in the profession is waning. Referring back to the paper I linked above, the 150 hour rule doesn’t just keep out the riff-raff as intended, it seems to be doing a great job of keeping out high quality individuals who would make awesome CPAs as well [see PDF]. Expect this unintended consequence to be up for much debate in the coming years should the pipeline problem worsen which is why I’m even bringing it up.

One state that has been fully aware of the 150 hour rule’s unintended scaring away of quality candidates is Illinois. There’s some good news on that front though. As of this past Sunday, you can sit for the CPA exam in the state of Illinois with 120 units (you still need 150 to sit be licensed, cue The Price Is Right losing horn sound here). Here’s the press release we received earlier today:

Effective Jan. 1, 2023, prospective certified public accountants in Illinois will only need to present proof of having 120 eligible semester credit hours, versus 150, and a baccalaureate degree to apply to sit for the Uniform CPA Exam, the universal exam all certified public accountant (CPA) candidates must pass to earn the distinguished CPA credential. Individuals passing the exam will still need 150 semester credit hours to become licensed.

The Illinois CPA Society (ICPAS)—one of the largest state CPA societies in the nation—advocated alongside the Illinois Board of Examiners (ILBOE) to reduce the credit-hour requirement for testing eligibility from 150 semester credit hours to 120. In 2021, the Illinois House and Senate unanimously passed ICPAS-sponsored legislation to amend the Illinois Public Accounting Act to allow this change. While earning 150 semester credit hours remains a key education requirement to become a licensed CPA in the state, ICPAS hopes that requiring fewer credit hours to initially sit for the CPA exam will help make becoming a CPA both more appealing and accessible to a broader candidate pool, particularly among accounting students, graduates, and young professionals.

“Earning the CPA credential is one of the most notable ways to establish your professional identity and exhibit a high level of competence in the accounting and finance profession,” says Todd Shapiro, ICPAS president and CEO. “Yet, despite strong market demand for the specialized services CPAs are entrusted to provide, we’ve been witnessing a nationwide decline in new CPAs. It’s our hope that this rule change will help alleviate some of the time and financial barriers associated with becoming a CPA and, ultimately, strengthen the CPA pipeline.”

Speaking of the pipeline, the Illinois CPA Society has been hard at work analyzing — therefore hopefully addressing — the problem. Their report Decoding the Decline is worth a read for anyone who might want to better understand the various factors at play. Might as well stick this video here while I’m at it:

CEO Video Series: Putting Destination CPA Back on Accounting Students’ Radar from Illinois CPA Society on Vimeo.

Reducing the sit requirement to 120 units isn’t quite as powerful as killing the 150 hour rule completely but it’s a good step in the right direction. Keep in mind that changes like these are legislative. Just as the 150 hour rule became law jurisdiction by jurisdiction all those years ago, so does a softening of requirements take time, effort, and good old fashioned government paper-pushing.

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  1. One state that has been fully aware of the 150 hour rule’s unintended scaring away of quality candidates is Illinois. There’s some good news on that front though. As of this past Sunday, you can sit for the CPA exam in the state of Illinois with 120 units (you still need 150 to sit, cue The Price Is Right losing horn sound here). Here’s the press release we received earlier today:

    Awesome write up AG as always. Just found a typo I think. You still need 150 to become licensed, not to sit. Anyway, good stuff. I look forward to reading GC daily.

  2. I was in the last class in IL (Y2K) to sit for the 120 hour exam. Twenty-two years of anecdotal evidence would indicate that the 150 hour rule most certainly did not notably increase graduates’ skills–unless, perhaps, they did a second internship.

  3. This move, which was also made in neighboring Indiana, where I live, is absolutely ridiculous. The Illinois rules for licensure still heavily favor a master’s degree in accounting and still require additional courses over and above those required for a bachelor’s degree in accounting. Illinois is effectively saying that people can take the exam and THEN finish their accounting education. That’s kind of like giving a final exam at the beginning of the semester, and THEN teaching the material. According to the AICPA, Exam pass rates were generally less than 50% in 2022. People with master’s degrees in accounting, such as graduates of the MSA program at Purdue University, where I teach, pass the exam at a rate closer to 90%. It seems as though Illinois, Indiana, and the over 20 other states that have passed similarly stupid laws are just trying to squeeze more money out of CPA candidates by LOWERING pass rates so people have to keep paying to retake the exam.

    1. Lowering pass rates isn’t a cash grab, it’s meant to increase the number of potential CPA’s in an industry where the fifth year doesn’t produce a significant increase in compensation. If there is a cash grab, it’s to increase the dues from an increase in CPA’s. I doubt the pass rate increased much since the 150 rule went into effect–at least not significantly after adjusting for the fact that all four parts were no longer taken in two days. I think earning the masters degree after obtaining the CPA is the correct route. Once a CPA has some real experience, then they can determine with greater confidence what they want to master in. How good is a MST just out of school when they’ve only prepared entry level returns during their internship(s)? Imagine getting an MST before working full-timie only to realize you don’t like tax and moving to audit or private? I’ve seen it happen too often.

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