Richard Jones’ Post

A decades-old rule requirement that accountants complete 150 college credit hours preceded a much starker decline in the number of licensed minority CPAs than that seen in the overall CPA population, according to a recent study from researchers at MIT Sloan School of Management. The study found there was 26% decline in new minority CPAs and a 13% to 14% decline in new non-minority CPAs, according to Andrew Sutherland, an associate professor of accounting at the MIT Sloan and one of the study's authors. #accounting #dei #cpas https://lnkd.in/e-s_VZXA

A decades-old rule requirement that accountants complete 150 college credit hours (five years) as part of the requirements to become licensed — up from 120 hours (four years) — preceded a much starker decline in the number of licensed Black and Hispanic certified public accountants than that seen in the overall CPA population, according to a recent study. On average, during the 1986-2019 period reviewed when all states implemented the 150-hour rule, there was a 26% decline in new minority CPAs and a 13% to 14% decline in new non-minority CPAs, according to Andrew Sutherland, an associate professor of accounting at the MIT Sloan School of Management and one of the authors of “Occupational Licensing and Minority Participation in Professional Labor Markets.” “Licensing in many professions involves costly general education requirements,’ the study states. “Even if such education requirements are developed and enforced in a race-neutral way, they can have disparate effects depending on individuals’ ability to afford college and forego income.” I am CPA/CGA and went through very rigid standards to get my CPA/CGA license including taking 8 courses along with achieving the experience requirement.

This short article examines the decline in CPA exam candidates and unveils some implications of the 150-Hour Rule. #accounting #accountingjobs #employment #jobs https://lnkd.in/gmYC_CvN

“It becomes so critical in the coming months to see where are the states going, each individually, and if we don’t all stay substantially equivalent, how far off are we? As states assess the potential changes to CPA licensure laws, new paths for aspiring CPAs are emerging. CEO, Jennifer Cryder is at the forefront of these discussions. She recently met with The Wall Street Journal reporter, Mark Maurer, to discuss the potential changes to CPA licensure, emphasize the many factors at play, such as the need to preserve mobility of CPAs, and more on the PICPA’s stance towards this critical topic. Check out the full article here: https://lnkd.in/eDzUdf-f

Below is a link to an article that discusses how a pilot program that was developed to offer a flexible and affordable way for CPA candidates to complete additional credits required for the CPA license has received early positive reviews. The program addresses issues with the cost of the fifth year of college being a barrier for potential CPA candidates, and ability for CPA firms to attract and retain new CPA professionals. https://lnkd.in/gkxXYkNe

Earlier this year I had the opportunity to participate in a University Commencement ceremony. One of the most memorable moments for me was hearing the University President articulate the value of their institution was best reflected in not who they keep out, but in the intentionality and inclusiveness of who they bring in. In this environment, it was a stark and honest observation that addresses much of the conversation surrounding higher education today. In a similar vein, this forthcoming research on Occupational Licensing and Minority Participation in Professional Labor Markets from the Journal of Accounting Research lays out a research-based analysis of the impact of the policy effort requiring 150 hours of education to become licensed as a CPA related to access and quality. It worthwhile read for anyone interested at all in strengthening the profession of accountancy for the future. Of note, the research finds a "13% greater entry decline following the 150 hours of education requirement’s enactment for minority than non-minority CPA candidates. Its analysis of parental income and financial aid availability point to a socio-economic status channel explaining the differential entry declines. Studying exam passing patterns, professional misconduct, and job postings it finds a deterioration, or at best, no change in CPA quality following enactment." Another important input into addressing the barriers related to cost and access that impede the protection of the public interest. #CPAs The Ohio Society of CPAs Felix Vetter Matthias Uckert Andrew Sutherland

Relying on publicly available CPA license data, how many CPAs earned their license each year from 1986 to 2019. It was recorded a 14% overall decline in new CPAs entering the field following a given state’s 150-hour rule enactment. But the results were starkest for Black and Hispanic populations: Following the rule’s enactment, entry among minorities dropped by 26% compared with nonminorities. With shortage of accountants, we need to do better job in our profession to attract more minorities.

The number of minority CPA's have not been on pace with the population as long as I have been involved in accounting which is 4 decades. One major barrier is the 150 hour requirement for people to sit and pass the CPA exam. Had this been in place when I graduated there is a real good possibility I would not have taken that additional year of education. I wrote many years ago that African Americans were about 3% of total CPA's in this country. Recent numbers have not changed significantly in this regard. If accounting is the language of business, then more minority members, particularly African Americans, need to be seen by people in CPA and accounting executive positions. Since this is Black History Month and we just celebrated the late Martin Luther King's Birthday, one of the main things he pushed for was economic equality. A way to get there is reducing barriers to enter the CPA profession by eliminating this requirement, which has not proven to increase the level of professionalism among CPA's in general. Please give your thoughts on the 150 hour requirement and minority exclusion from the CPA profession in the comments. #cpa #cpaexam #accountant #accounting #cpas

Over my career as an accountant, one of the major items i have been concerned about is the lack of minority CPA's in the profession. I wrote an article over 30 years ago stating that African Americans were less than 5% of all CPA's in the country. While i do not have the current number, the percentage has not increased significantly during this time. If accounting is the language of business, one way to level the playing field so to speak is an increase in this percentage. Removing barriers such as the 150 hour requirement would help in that regard because minority accountants are less likely to complete the fifth year of study. There is a real good chance I personally would not have done this in my career. Since studies have now shown this fifth year has not proven to increase the professionalism of new accountants it is time to seriously consider removing this requirement. There already is an overall shortage of new CPA's that is growing each year. Work experience and continuing professional education will probably achieve the same if not better outcomes in promoting the profession. If barriers can be removed, this is a step to reducing the shortage. It is definitely an issue that needs to be considered ASAP before the accounting shortage becomes even worse. #CPA #cpas #blackaccountants #cpaexam #minorityaccountants

In short, the 150-hour rule to becoming a CPA: (1) discourages and prevents minority students from becoming CPAs at a disproportionately higher rate relative to white peers, (2) keeps the best candidates out of accounting and in other majors and (3) doesn’t improve the quality of work performed by CPAs. The 150-hour rule is all costs, both financial and human capital, and no benefit. It appears incongruent to support diversity efforts in accounting and support keeping the 150-hour rule - they are in direct conflict with each other. The profession is worse off as long as the rule remains in place. “The authors recorded a 14% overall decline in new CPAs entering the field following a given state’s 150-hour rule enactment. But the results were starkest for Black and Hispanic populations: Following the rule’s enactment, entry among minorities dropped by 26% compared with nonminorities. Notably, the additional requirements didn’t appear to improve CPA service quality. In fact, there was a decrease in the share of candidates passing the notoriously grueling #cpa exam on the first attempt. Moreover, the decrease was greatest for students from universities with more minorities and less financial aid. Sutherland said he suspects that the rule deterred many of the best candidates from entering accounting.” https://lnkd.in/dAik4iVt