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The 150-Hour Rule: A Case of Quantity Over Quality

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Ed. note: the following was submitted as a letter to the editor by William Hahn, CPA (Florida and Ohio). Comments are open.

One CPA candidate is able to meet the 150-hour requirement by using dual enrollment credits earned five years ago while still in high school. In contrast, a workplace associate is pursuing the needed additional 30 hours by obtaining a master’s degree at a cost of $30,000. The National Association of State Boards of Accountancy (NASBA) considers these to be equivalent college credit hours. Clearly, they are not.

While CPA firms continue to have difficulty finding and retaining qualified accountants, the NASBA continues to defend the 150-hour rule. They do so using the concept of substantial equivalency, which is defined in Section 23 of the Uniform Accountancy Act (UAA). This Act sets forth three pillars of equivalency. These are (1) pass the CPA exam, (2) work for one year under a licensed CPA, and (3) obtain 150-hours of education.

Quantity Over Quality?

For the third pillar of equivalency, the NASBA emphasizes the quantity of required college credit hours, but the quality of such credit hours is not explicitly considered.

To be sure, the language in most state laws includes phrasing such as “content as approved by the board.” The problem is, the several state boards do not audit individual college or university course concept coverage. In Florida, for example, the Board of Accountancy reviews colleges’ accounting major syllabi in order to gain insight into an institution’s stated course content coverage. However, there is no subsequent assessment of whether this content is actually being delivered in a classroom.

To a significant degree, state boards rely on regional accrediting commissions as a basis for assuming quality. And, to a lesser degree, they rely on private accreditation bodies such as the Association to Advance Collegiate Schools of Business (AACSB) or the Accreditation Council for Business Schools and Programs (ACBSP). While accreditation by these bodies provides some comfort in the area of educational quality, such comfort is tenuous.

Why? Because accreditors do not examine the depth of course content coverage in specific majors or programs. For the most part, accreditors assess the financial viability of an academic institution and the degree to which its mission is being pursued. If an approved course syllabus sets forth specific concepts to be covered, accreditors have no idea whether that content is actually being delivered to students. This undermines the soundness of the 150-hour third pillar.


Sadly, quality is under pressure at many tuition-dependent institutions. As budgets are stretched and cash flow constricted, academic standards are being relaxed in order to attract students. Institutions that shorten program length, that shorten class meeting time, and that reduce course content coverage all undermine quality.

The devolution of course content coverage is not readily apparent to those outside of academia. However, some are beginning to take notice. For example, writing in Business Insider, Ayelet Sheffey noted that “there can be a significant disparity between the quality of programs offered online and in person.”

I recently delivered an 8-week online finance course at a small, private university. I won’t do so again. That course covered only about 15% of the content coverage of a traditional 15-week course, did not require a textbook, and did not have synchronous student/instructor interaction. I believe this is an example of the quality disparity to which Sheffey is referring. One CPA candidate might take this online course while another takes the 15-week course. The NASBA counts them as equivalent.

To be sure, there are quality online programs at both large and small institutions. Penn State World Campus and Purdue Global Online are examples, just to name two. But the NASBA makes no distinction between courses taken at institutions that deliver quality courses and those that do not. This undermines the soundness of the 150-hour third pillar.

What Courses Count?

Once a student in Florida has both earned a bachelor’s degree and achieved the prescribed 30 accounting and 36 general business hours, the additional 30-hours needed for licensure, pursuant to Chapter 473.308 (3) of the Florida Statutes, simply need to be college credit. Indeed, such hours can be obtained in any subject matter area (e.g., coaching, theater, or basket weaving), or at any content level (high school dual enrollment, freshman, sophomore, etc.).

Most states accept credits in a manner similar to that of Florida. Accepting any and all college credit, no matter what the subject matter area, undermines the soundness of the 150-hour third pillar.

Summing It Up

Clearly, passing the CPA exam is a solid pillar of equivalency. Clearly, working under the mentoring of a licensed CPA is a solid pillar of equivalency. On the other hand, an additional 30 hours of college credit at any content level, and in any topic area, fails the equivalency test and undermines the soundness of the 150-hour third pillar.

Both the Minnesota Society of CPAs and the South Carolina Association of CPAs are proposing legislation that will allow a CPA licensure candidate to substitute workplace training for required college credit. If workplace training trumps college credit in terms of a CPA candidate’s professional development, then such training should be validated by the NASBA. Doing so will emphasize the quality of learning, rather than the quantity of college credit hours earned.

About the author:

Dr. William Hahn is a CPA with four years of audit experience with Ernst & Young, twenty years of CFO experience with NASDAQ traded banking organizations, and thirty years of teaching both accounting and finance in both undergraduate and graduate programs at higher education institutions. He has published over thirty articles in practitioner and academic journals, and is a coauthor of a textbook published by Pearson titled Forensic Accounting.

View more letters to the editor published here.

2 thoughts on “The 150-Hour Rule: A Case of Quantity Over Quality

  1. The 150 hour rule was a well-intentioned idea that failed. The goal was to create an additional barrier to entry for the accounting profession, thus increasing the prestige of the CPA license and the compensation for CPAs. But as the economy strengthened and kids could find easier jobs that paid more than accounting after graduation, the 150 hour rule contributed to the accountant shortage that allegedly exists right now.

    The 150 hour rule doesn’t do anything to increase the competency of CPAs or the quality of services they provide. As the author noted, preparing to pass CPA exam and on the job training are more significant ways that accountants develop the necessary skill set to perform their role in our economy. It’s hard to make an argument that the 150 hour rule is necessary anymore. It’s time to get rid of it.

  2. Moving to 150 hours and 1 year experience was a bad idea 15 odd years ago and it remains a bad idea today. We should raise the standard back to 120 hours and 2 years experience where it was. The AICPA’s resistance here is extremely disappointing.

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