The Center for Audit Quality — the AICPA-affiliated “nonpartisan public policy organization serving as the voice of U.S. public company auditors and matters related to the audits of public companies” — has released a 63-page report entitled Increasing Diversity in the Accounting Profession Pipeline that tackles the historically under-reported and totally mysterious issue of why students are not pursuing accounting, particularly students of diverse backgrounds.
This deep dive was inspired by earlier research on student perceptions and attitudes toward accounting, especially attitudes among Black and Hispanic high school and college students [PDF of those findings here]. This quote included in that report is so important to the research it appears twice in the PDF so I’m including it here too:
The earlier research better defined the profession’s image problem and inspired the CAQ to take a deep dive into “students’ perceptions of and experiences with accounting to develop a clearer understanding of what can be done to further diversify the accounting talent pool.” So here we are at round two and this is what the CAQ found.
The research demonstrated a missed opportunity amongst a sizeable number of students, with four in ten non-accounting business undergraduate students reporting they considered accounting. Broken out by demographics, even higher rates of Black and Hispanic students say they considered accounting before choosing a different field of study. Asked about their experiences with introductory accounting courses, only 1 in 3 non-accounting majors who considered accounting said the content was interesting or engaging. Consistent with our prior research, the lukewarm reception indicates a need for increased classroom engagement on accounting across a sizeable number of students who are still in the process of deciding their major.
Other themes emerged among students who ultimately chose not to pursue accounting. Chief amongst their reasons was a lack of passion, followed by higher starting salaries for other majors and not wanting to pursue the additional academic hours necessary to become a CPA (i.e., the 150 credit hour requirement).
Let’s break down a few points by topic.
Reasons for Not Choosing Accounting as a Major
When discussing the profession’s diversity problem, the old white guys at the top almost always get some blame but as you can see below “Don’t see people like me represented in profession” is actually way down on the list of reasons why students don’t choose accounting as a major. At the top of the list: lack of interest/passion in accounting, other majors pay better, the 150 hour rule sucks, lack of math skills (wtf), and being unable to afford 150 hours.
Shout-out to the peers who pursued accounting making sure everyone knows how miserable and full of regret they are. Keep preaching the good news, kids.
A breakout quote from a recent graduate who identifies as Black/Hispanic explains a well-known problem with accounting education:
“…it wasn’t taught to make it more engaging or make you more interested….it’s almost like they were trying to do it to see who they could eliminate…the classrooms were so big, and it was just going slide by slide almost and it was not engaging.”
Another Blow to the 150 Hour Rule
As literally everyone knows but only some are willing to compromise on, the intentional barrier to entry that is the 150 hour rule is doing too good a job of keeping people out of the profession. Too good a job.
While the research showed the 150 credit hour requirement is a barrier across the board, it is more conspicuous for Black and Hispanic nonaccounting students, and in particular those students who considered accounting but opted out, meaning that these students looked into accounting as a major but ultimately went elsewhere due to the additional credit hour requirement. These students perceive the rule as an expensive, time-consuming requirement to advance their future career. To be sure, these students see the CPA license as a valuable certification, but they don’t view it as worthwhile to pursue.
Only a quarter of those students who considered accounting said they don’t want to take the CPA exam but half said they don’t want to pursue 150 hours which suggests that allowing for a second pathway requiring just 120 hours of education like the proposal in Minnesota might successfully bolster dwindling CPA candidate numbers. In fact, the research showed that most students favorably view the CPA credential; 82 percent of accounting majors report the CPA license would be extremely valuable or very valuable for their career goals, 77 percent of accounting majors who are not planning to, or are unsure about pursuing the CPA license, also reported they see value in the credential.
Major Obstacles to Becoming a CPA
All demographics report the time required to study for the CPA exam as a top obstacle but costs of additional education and CPA exam prep rank highest among Black and Hispanic accounting majors.
Chief barriers cited by those not pursuing the CPA were the beliefs they do not need the credential, and that CPAs have a poor work/life balance. The time/cost of the 150 credit hours and low starting salaries also were noted. In the qualitative research phase amongst recent accounting graduates, the top obstacles to pursuing CPA licensure were the time required to study for the exam as well as the rigor of the exam content. Of those recent accounting graduates who reported having already attained their CPA or are planning to pursue licensure, these factors were confirmed in the quantitative phase.
However, for those recent graduates who have yet to complete the 150 credit hour requirement, the cost and time associated with obtaining the 150 hours are the biggest factors. While employers offer numerous supports to recent accounting graduates to help with attaining CPA licensure – such as structured study groups, study materials, flexible work hours, and covering exam costs – fewer respondents reported taking advantage of these benefits.
This under-utilization of resources continues, despite accounting graduates perceiving these programs and support as useful. Early career professionals reported coverage of exam costs, flexible or reduced hours to study, and structured study groups as resources most useful. For Black graduates, an employer-sponsored mentorship program is at the top of the list as the most helpful support in pursuing CPA licensure.
What is the takeaway? The profession has ample evidence that the 150 hour rule is a hindrance to all students but especially those from diverse backgrounds. The question is what is it going to do with that information? That’s less a question and more of an accusation.
Full report below:
Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities [CAQ and Edge Research, July 2023]
I have worked as an auditor in public accounting for over 30 years at multiple firms. The perception by students that CPAs don’t have balance often times comes from their own personal observations. They know CPA’s and they generally know two things about them; 1. They are usually good with money/saving and 2. They work a lot. As a profession we can’t change that perception unless we change the reality. The first step to recovery is to admit you have a problem.
The bar to entry should be reasonably high to maintain the integrity and high qualify of professional advisors. It should not be lowered to meet diversity quotas or to increase numbers in general. Having said that, the current model is not attractive for the younger workforce who have different motivators and value a different life path than previous generations. Certainly more can be done to educate students about the value of an accounting degree, but the industry in general needs to evaluate the age-old model and figure out how to make it more appealing for generations to come.