Research Report

Every year, undergraduate accounting students around the country are faced with a similar decision: should they pursue the Certified Public Accountant (CPA) designation, or should they graduate with a bachelor’s degree and enter the workforce. There is an argument to be made for both sides; career potential is good regardless. The factor that causes the most discussion is the 150-hour requirement. This is something that the American Institute of Certified Public Accountants has pushed for over the years, with 38 of the 50 states implementing it as of 2009 (Duncan & Schmutte, 2006). Adding the time and money needed to obtain the extra education to the already substantial time requirement for studying and financial requirement of taking the test, it is understandable why the decision is not an easy one to make.

When seeking information regarding the requirements for obtaining the CPA designation and the fees associated with it, I consulted the Texas State Board of Public Accountancy’s website. In order to gain a better understanding of the job market of accountants (CPA and non-CPA), I conducted internet research using terms such as “bachelor’s accounting vs. CPA” and “accounting careers other than CPA.” Finally, I conducted an interview with Megan Davis, a CPA who works for Texas Tech University. She has been a family friend for ten years, and she is in a similar situation as me: married, husband continuing his education, and juggling family life, school, and work all at once.

I have assembled facts addressing my objectives: requirements to be eligible to take the exam, financial costs for studying for and taking the exam, time requirements for studying and career potential if I were to choose not to pursue the CPA.

· Texas implemented the 150-hour rule in 1998

· Implementation of the 150-hour rule in several states has reduced entry into the field

· Current Texas CPA-eligibility requirements:

· 150 college hours must be achieved

· 30 upper level accounting hours

· 24 upper level business hours

· 3 hour ethics class

· In addition to 150 hours:

· Must have good moral character (no criminal record)

· Hold a Bachelor’s degree (or higher)

· Take and pass all four parts of the CPA exam

· Qualifying work experience

· Current requirement is one year of full-time non-routine accounting work under direct supervision of a licensed CPA

· Pass an exam on the Board’s Rules of Professional Conduct

· Average pass rate (at least one part): 42.3% in the 1990s to 61.2% in 2000–2003

· Fees for the exam:

· $50 non-refundable fee for the Application of Intent

· $20 application fee for each of the four sections

· $743.20 total for the four sections (assuming only taken once)

· $50 for the issuance of the certificate upon completion

· $923.20 total

· Pricing for study material from Becker:

· $3315, Includes lectures; textbooks; multiple choice, simulation and practice exam software; study planning and review tools

· One year of graduate work (including tuition, room/board, books/supplies, transportation, and personal/misc. expenses) is estimated to cost $24,058.

Megan Davis, a CPA, had to take the various sections of the test a total of eleven times before passing all four of them. It took Megan a total of eight years to complete all requirements and pass all exams for CPA designation.

· CPAs are sometimes viewed as purely analytical and that they “know everything”.

· Becoming a partner or principal in a CPA firm is possible without obtaining a CPA.

· Turnover problems within public accounting firms indicated dissatisfaction among employees.

· Obtaining a Master’s degree while pursuing the academic credentials for CPA eligibility did not increase the rate of promotion, nor was it believed “that entry-level individuals with master’s degrees perform better than those with bachelor’s degrees.” Also, 38 states had enacted 150-hour requirements by 2009.

· While it is beneficial to obtain a CPA (package oneself as a commodity by obtaining the CPA regardless of career goals), growth in non-public accounting sectors has increased the demand for accounting graduates in many industries. CPA firms have also decreased their demand for CPAs.

My first consideration is the academic and testing requirements. When I graduate in December, I will have earned 149 credit hours. Due to requirements set by TSBPA, I will need twelve more upper level accounting hours and the three-hour ethics course. Secondly, I would need to either obtain an internship prior to taking the CPA exam, or start working on taking the exam prior to working in the industry. Assuming that I take the exam first, I would need to submit my application of intent in order for TSBPA to verify that all education requirements have been met. I would then have to apply for each of the four sections of the exam. Next, I would hopefully pass each section. Upon completion of the exam, I would obtain an internship with a qualified accounting firm.

Along with the academic side comes the financial side. According to the Texas Tech Financial Aid department, the cost of the additional year of schooling would be $24,058. As stated on the TSBPA website, the cost of applying for and taking the CPA exam is $923.20, assuming that I was able to pass each section with one attempt. In order to prepare for the exam, I would use Becker, the program recommended by the Texas Tech Accounting faculty. Becker is an education program that assists in the study and preparation process. The study materials, which cost $3315, include lectures, textbooks, multiple choice, simulation and practice exam software, study planning and review tools. Based on these sources, it would cost approximately $28,000 for me to gain CPA certification.

Another consideration is the time that it would take to complete all of the requirements. While it is possible for the exam to be taken and passed with one attempt, the average pass rate is 61.2% (Duncan & Schmutte, 2006). According to Megan Davis, she attempted the various parts a total of eleven times. From beginning of college to receipt of her CPA certificate, Megan took eight years to complete everything. When considering the time taken to obtain the education credits, the financial burden placed on her family during that time from the continued education, cost of study materials, and cost of exams, and the lack of recognition and financial reimbursement from her company upon her earning the CPA designation, she believes that obtaining the certification would be most useful if one is wanting to pursue public accounting.

Lastly, I look at the career potential of a non-CPA accountant.

Following the implementation of the 150-hour rule in several states, the number of CPA exam candidates has decreased. For example, Texas (and some other states) implemented the 150-hour rule in 1998 (Carpenter & Hock, 2009). As shown in the following graph, there was a significant change in the number of people taking the test.

(Carpenter & Stephenson, 2006)

While one would think that a drop in CPA exam candidates would mean that the demand for CPAs would rise, there is evidence that CPA firms have also decreased their need for CPAs (Tinker & Koutsoumadi, 1997). There are still people who become partners or principals in CPA firms without being a CPA, along with several departments within those firms that hire non-CPAs (Levin, 2007).

According to Koreto (2001), CPAs have gained a reputation for being entirely analytical and thinking that they know everything. Despite this overall mentality, growth in many sectors of business has affected the number of accounting positions open in areas other than public accounting (Tinker & Koutsoumadi). Also, research has shown overall career potential is not increased by obtaining a Master’s degree, something which many newer CPAs have done in order to obtain all required education credits (Duncan & Schmutte, 2006). This, along with apparent dissatisfaction among employees in public accountancy (Moyes, Shao, & Newsome, 2008), has caused many accountants, both CPA-certified and not, to pursue careers in different industries.

Based on the information I have consulted, I could have a very successful career with or without becoming a CPA. There are several factors to consider: time, money, and overall career potential. The time and money elements are substantial. The overall career potential seems to be roughly the same, depending slightly based on the industry of choice.

Based on the information that I have gathered, I have decided not to pursue the CPA designation at this time. Especially while my husband is in school, our ability to continue to finance schooling for me is not feasible. Considering the amount of time it would take to study for and take the exam, I am postponing completion of the requirements indefinitely. However, this is the recommendation for myself based on my specific circumstances. Each individual should consider the facts before making a decision.

Becker: Professional Education. Achieving your CPA designation starts here. (n.d.). Retrieved from <http://www.becker.com/accounting/cpaexamreview/courses/CPA-Review/index.cfm>.

Carpenter, C., & Hock, C. (2009). The 150-hour requirement’s effect on the CPA exam. The CPA Journal, Retrieved from http://www.nysscpa.org/cpajournal/2008/608/essentials/p62.htm

Carpenter, C., & Stephenson, E.F. (2006). The 150-hour rule as a barrier to entering public accountancy. Journal of Labor Research, 27(1).

Davis, M. (2012, Nov 10). Interview by H Smith [Personal Interview]. Discuss your experience with obtaining your CPA designation.

Duncan, J., & Schmutte, J. (2006). Change in accounting programs: The impact of influences and constraints. The Accounting Educators' Journal, 16, 52-81.