By Sharon Lassar, PhD, CPA (Florida)
John J. Gilbert Professor and Director of the School of Accountancy, University of Denver
As much as I enjoy reading Going Concern, I find the article titled “Did the Anti-150 Hour Crowd Finally Beat the AICPA Into Submission? Looks That Way” troubling. Busy people might read only the title and believe that the “extra 30” is dying. It is not. Rather, the proposal is to eventually do away with ALL university-based education but keep a weakened 150-hour requirement until that day comes.
The National Pipeline Advisory Group has joined those who question the value of a university education. A college degree is not needed for many valued trades. Society needs plumbers, electricians, and just about every service provider imaginable. I am surprised that leaders of a profession that compares itself to lawyers and medical doctors are willing to eliminate the requirement for their future colleagues to have a university education.
The National Pipeline Advisory Group’s (NPAG) Draft Report proposes a three-step process to reduce the cost and time of education. Step one is referred to as a now concept. The second, a near-term concept. The third step, a next concept, is a competency-based licensure model. The proposal is to measure competencies rather than time going to college. The model “moves the discussion completely away from 90, 120, or 150 hours.” Individuals could gain competencies any way they like, including self-study. The model envisions people who do not have a four-year degree developing expertise through work experience. This sounds like an apprenticeship program commonly used by the trades.
The proposal would put the CPA on similar footing with the Association of Chartered Certified Accountants (ACCA) qualification. The ACCA is a professional organization, headquartered in London, that has over 250,000 members, and 526,000 future members, spread across 180 countries. The path to ACCA qualification is open to everyone; there are no academic entry requirements. Candidates complete a maximum of 13 exams, complete an Ethics and Professional Skills module, and have three years of practical work experience in a relevant role.
Similarly, members of the Institute of Chartered Accountants in England and Wales, do not have to go to university to become an ICAEW Chartered Accountant in the UK. ICAEW has 165,000 members in 147 countries.
Just because a candidate does not have to go to school does not mean they won’t choose to do so. What might the ability to pursue a CPA without a college education do to starting salaries, even for those who choose to go to school? In June 2023, the Financial Times reported that new graduates joining a Big Four firm in London might make as much as £35,000 or about $44,000.1 The 2023 graduates of our Master of Accountancy program started at over $70,000, most of them in Denver. The cost of living in London is higher. Is the profession pursuing a path that will result in even lower salaries? And does the AICPA want to be compared to the ACCA?
The NPAG Draft Report recommendations are based on six major themes that emerged from the data. Interestingly, none of the six are starting salaries. Page 21 of the report copies a chart from the Center for Audit Quality’s study that shows 61% of students who chose NOT to major in accounting cited the ability to earn a higher salary with a different major as reason. Only lack of interest scored higher with 70% of students reporting that reason for not majoring in accounting.
Starting salary is the return one earns on an investment in education. The NPAG cannot address starting salaries; instead, they try to address the investment in education. If you take the cost of education by the person receiving the education to zero, would starting salaries stay the same? I suggest not. As firms absorb the cost of education, it is the firms who are making the investment and they will recalculate their return. Firms already invest in training staff, and the value of the training is a reason they pay less starting salary than graduates can earn with other employers. As firm investment goes up, starting salaries should naturally decrease. If starting salaries in London are a predictor of where we are heading, is that where we want to go?
Wouldn’t firms pay students who choose to go to college more than those who enter a structured learning program with the firm straight out of high school? If that logic held, we would expect to see firms to pay CPA candidates who hold a graduate degree more than CPA candidates who obtain 150 hours with a collection of unrelated hours. We don’t see that.
The now solution proposed by NPAG is to point students to lower-cost, on-the-transcript learning options like one I have criticized before – the AICPA’s Experience, Learn and Earn (ELE) program. The near-term solution would move the extra 30 hours off-transcript by giving credit for on-the-job learning. Neither the now nor the near-term recommendations remove the extra-30 requirement.
1Junior auditors: Stunted salaries: Lex. (2023/06/19/, 2023 Jun 19). Financial Times Retrieved from https://du.idm.oclc.org/login?url=https://www.proquest.com/newspapers/junior-auditors-stunted-salaries/docview/2838872394/se-2
View all articles authored by Sharon Lassar published on Going Concern.
I agree.
It’s as though the anti-150 hour crowd are blindly supporting the cheapification of the accounting profession in the U.S. What the elimination of the 150-hour requirement would do is, as you pointed out, reduce starting salaries. The requirement, at least in part, was to bring starting salaries for CPAs closer to those of lawyers, medical doctors, etc.
I don’t see why eliminating this requirement would be in the profession’s best interest.
Accounting is the waste of a human mind.
“Firms already invest in training staff, and the value of the training is a reason they pay less starting salary than graduates can earn with other employers. As firm investment goes up, starting salaries should naturally decrease. If starting salaries in London are a predictor of where we are heading, is that where we want to go?”
Seems to me like the firms are hell-bent on investing less and less in training staff. Its seems like most partners at the firms have wet dreams thinking about getting rid of all their staff and outsourcing everything to AI and third-world sweat shops. Future of the profession be damned.
One of the problems with accounting education is the educators teaching the discipline. Many have little to no experience in the actual practice of accounting. Hard to teach others something you have never actually done or have been removed from for X amount years. Likewise, the current academic system is prejudicial against practitioners wanting to enter academia. No PhD — you will be relegated to lecturer position (hoping for contract renewal) with 1/2 the pay of the tenure track position of a person (lifetime employment) who has little no practice experience and whose research, most of the times, have little to no impact on the real world of accounting.