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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.

PwC Would Appreciate It if the FASB, IASB Would Cool Their Jets on the Accounting Standards

Christ, guys! PricewaterhouseCoopers thinks it’s nice that you’re trying to turn the entire accounting world upside down since you decided the BSDs at the G-20 were serious about this June 2011 deadline.

But then you admitted that it can’t be done and it turns out they (or the SEC) don’t give a rat’s ass. For some reason, you’re still committed to getting the job done by the end of 2011 and PwC would like you take it easy.

For starters, everyone knows that the world is ending in 2012, so this is really a futile exercise. Secondly, you’re really not being rational about the whole thing. Your gusto is admirable but you’re looking like the kid that reminds the teacher to assign homework. KNOCK IT OFF:

PricewaterhouseCoopers Calls for Slowing Down Pace of Accounting Standard Setting

NEW YORK, July 8 /PRNewswire/ — PricewaterhouseCoopers, responding to the Financial Accounting Standards Board’s (FASB) and the International Accounting Standards Board’s (IASB) ambitious agenda to complete about a dozen new accounting standards (about half of which are major projects) by the end of 2011, said the current timeline is not sufficient to produce standards that meet the boards’ high thresholds for quality.

Mike Gallagher, PwC’s U.S. National Office Leader, said, “it is of utmost importance that adequate time be given to complete an effective, thorough analysis of the accounting, business and operational impacts of the proposals.” Gallagher added, “given the boards’ missions of issuing high quality standards, we believe the proposed timeline will need to be further extended to allow for appropriate due process.”

In a Point of View article released today, PwC said it fully supports an aggressive timeline and the goal of attaining a single set of high quality global standards. Yet, the firm also expressed significant concern that the current pace of standard setting does not provide enough time for companies to fully analyze the proposals and respond comprehensively. In the article, the firm’s leadership called upon standard setters to “reevaluate the current timeline and set more reasonable expectations.”

Explaining the firm’s concern about the ambitious timelines, Gallagher pointed out that “even the largest of companies won’t have the resource bandwidth to properly evaluate and respond to so many complex standards in such a limited period of time.”

The projects underway by the FASB and IASB to improve both U.S. generally accepted accounting principles and international financial reporting standards are part of a wider goal to converge U.S. and international standards in key areas.