Could a simple licensing change increase the number of CPAs by 15%?

The CPA profession finds itself at a crossroads.

For decades, earning a Certified Public Accountant license has required 150 semester hours of education, equivalent to five years of college education. But with a talent shortage looming, critics argue that the mandate has become an outdated barrier to recruiting new CPAs with no evidence that it improves their capabilities.

Momentum is building to replace the 150-hour rule with more flexible pathways to become a CPA. Dr. Sharon Lassar, director of the School of Accountancy at the University of Denver, leads the charge. 

Dr. Lassar joined me on an episode of The Accounting Podcast and made a compelling case for change. 

A damaging decline in CPA candidates

Dr. Lassar claims that the 150-hour rule has effectively reduced the number of CPA exam candidates without improving quality. 

She points to research by John Barrios showing the 150-hour requirement caused a 15% decline in CPA exam candidates. That equates today to roughly 10,000 fewer candidates per year at a time when accounting faces a growing talent shortage.

Why did the 150-hour rule lead to a reduction in CPAs? Because many students are deterred by the cost of the additional college credits. The Center For Audit Quality published a study in July that found, "The 150-hour rule is one of the most significant barriers to pursuing a degree in accounting."

Consider the story of Brittany Casey, 23, as told by The Wall Street Journal. Even though Casey is the former president of the University of Houston's student accounting society, she is not sure she'll pursue the CPA. While aware that the credential opens doors to higher-paying roles in accounting and finance, the cost of acquiring additional credits is prohibitive for her.

A reduction in supply with no measurable benefit

Barrios' peer-reviewed study also found that the 150-hour rule decreased the entry of both low- and high-quality candidates into the profession. In other words, there is no measurable difference in quality between CPAs with 120 semester credit hours, and those with 150.

Dr. Lassar agrees with this assessment of the 150-hour rule. "It erects a time barrier," she asserts. "I'm not saying a quality barrier. I'm not saying an intellectual barrier. I'm just saying a time barrier. And the reason I say it doesn't erect a quality barrier or an ability barrier is because that extra 30 hours is hollow. You can get those extra 30 hours in anything at any level."

The "extra 30 hours" Dr. Lassar refers to is the additional college credits required for CPA licensure. The 150-hour rule requires that individuals seeking a CPA license must have at least a bachelor's and an additional 30 credit hours beyond their undergraduate degree. 

About 20,000 CPAs per year meet this requirement by completing a master's of accountancy program. Tens of thousands more elect to complete a variety of individual courses. These courses are often of questionable quality and relevance because they can be in any subject.

The lack of data supporting the 150-hour rule

When the rule debuted in the 1980s, proponents claimed that extra education would produce CPAs with greater technical and soft skills. 

NASBA chair Rick Reisig recently argued that the 150-hour requirement was "revolutionary in the enhancement of the accounting profession" by "raising the stature of accounting to align with similar competing professions."

Dr. Lassar counters, "I would say show me data that supports that statement. I don't see any data that supports that statement. Do we have more respect than a CPA 30 years ago? I don't think so."

Let the market decide the value of a master's

Some defenders argue that loosening requirements could weaken the CPA pipeline by deemphasizing graduate accounting programs. But Dr. Lassar stresses high-quality master's degrees will do just fine. 

She says, "I'm not worried about losing enrollment if this rule were to change because I know that my faculty produces fabulous students with great career options because of the graduate education they receive along the way."

Advanced coursework builds expertise in financial accounting, auditing, tax, and information systems — advantages that will continue to be appealing to learners whether there is a mandate or not. This confidence reflects the rigorous specialized training in financial accounting, auditing, taxation, and information systems that schools like the University of Denver provide master's candidates.

Other master's programs may not fare well, but they are already struggling. Dr. Lassar says, "There are a lot of pretty poor master's degree programs out there, and those programs exist because of the extra 30-hour rule. Those programs are in danger, but quite frankly, they're shutting down now anyway because of lack of enrollment."

Navigating roadblocks to CPA mobility

The most significant barrier lies in mobility. Given that 55 state boards govern CPA licensing, changing education rules requires updating legislation across all jurisdictions — a decades-long process.

The AICPA insists dismantling the 150-hour rule could derail cross-state practice rights that took 30 years to cement.

Dr. Lassar argues it's easier to rescind requirements than implement them, stating: "To say it took 30 years to achieve mobility and it will take 30 years to go back is baloney, in my opinion, because it's a lot harder to build a wall than it is to tear one down."

She points to how rapid coordinated state action recently expanded the CPA exam window from 18 months to 30 months. This change occurred within a single year thanks to strong national leadership.

Plotting a new course for CPA licensing

Dr. Lassar advocates replacing the 150-hour rule with a "bachelor's degree plus two years' experience" pathway to sit for the CPA exam.

How can the profession overhaul licensing while protecting CPA mobility? First, national and state-level organizations need to put forward model legislative language and guidance for states to adopt. Dr. Lassar urges the AICPA and NASBA to survey members, and then propose specific solutions that state boards can implement.

She believes boards are eager for top-down recommendations from national groups. "I have been sitting through our board of accountancy meetings, and this is why I know how easy this would be if NASBA would take the leadership, because I witnessed the change in the rules to go from an 18-month window to a 30-month window [for CPA exam completion]. And if NASBA says it, the executive director of the board of accountancy is on board and the board members are on board."

The time is now for a careful re-evaluation

While the path forward remains challenging, one conclusion is clear: The 150-hour rule warrants further scrutiny. Rather than defending long-held stances, an evidence-based analysis could reveal more flexible requirements as the key to expanding access to the CPA license without compromising quality.

Dr. Lassar notes one immediate impact would be retaining more undergraduate accounting students through degree completion, rather than losing them to other majors.

With business needs rapidly shifting, it may be time for the accounting profession to be willing to do the same. More dynamic education pathways could expand access and opportunities if leaders open themselves to change. The data demands it.