150 hours: a look back.
What the fifth year of education did to Florida--and what it will do to you.
The ship has sailed on the question of whether the 150-hour requirement is a good or a bad idea. Like it or not, the stipulation An agreement between attorneys that concerns business before a court and is designed to simplify or shorten litigation and save costs.
During the course of a civil lawsuit, criminal proceeding, or any other type of litigation, the opposing attorneys may come to an agreement is the law of the land in 45 states, and the remaining holdouts will probably join eventually. The adoption of this change to qualify to take the CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. exam has raised other questions: How will it affect the supply of accounting graduates, especially during the years immediately before and after implementation? Should firms continue to hire accounting graduates with four-year degrees and help them meet the additional education requirement, or should firms hire five-year graduates who have already met it? What can firms do to prepare for the changes implementing the rules will bring? Finally, what models are there to look to for answers? Florida was the first state to fully implement the 150-hour education requirement on August 1, 1983, so it provides an excellent opportunity to examine how public accounting firms and accounting students responded to the implementation. The details of Florida's experience may contain some lessons.
SURPLUS AND SHORTAGE
Under Florida law The jurisprudence of this state offers major differences from doctrines prevailing in the United States at either the federal level or that of the various states.
Homestead exemption from forced sale, the dangerous instrumentality doctrine, the right to privacy, and the Williams , candidates were required to apply for the CPA examination before August 1, 1983, to qualify to take the examination under pre-150-hour rules. Accounting students who otherwise would have graduated in 1984 accelerated completion of their program requirements to apply for and take the CPA examination in 1983. This created a surplus of four-year accounting graduates in 1983 followed by a dearth in 1984. William D. Pruitt, Jr., 1989-90 Florida Institute of CPAs The Florida Institute of CPAs (FICPA) is a professional membership organization representing over 19,000 CPAs and accounting professionals in Florida and beyond. The FICPA offers opportunities for professional development, knowledge-sharing, networking, community involvement, president and managing partner of Arthur Andersen's Miami office, recalled a particularly nasty insight: "I remember waking up in the middle of the night in 1983 and saying to myself, `We're not going to have anybody to hire in 1984.' And that's exactly what happened."
Three major factors contributed to this shortage:
* First, the acceleration already cited.
* Second, many four-year accounting students who graduated in 1984 enrolled in graduate programs to earn the 30 additional hours required before starting their careers in 1985 or later.
* Finally, in 1984 some four-year accounting graduates relocated re·lo·cate
v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates
To move to or establish in a new place: relocated the business.
v.intr. from Florida to states that did not have the additional education requirement.
The dimensions of the 1983 surplus and the 1984 shortage in Florida are shown in exhibits 1 and 2, pages 54 and 55. Exhibit 1, for example, shows a peak number (1,722) of four-year accounting degrees earned from nine Florida universities during the academic year 1982-83. This exhibit also indicates a substantially higher number (209) of accounting master's degrees master's degree
An academic degree conferred by a college or university upon those who complete at least one year of prescribed study beyond the bachelor's degree.
Noun 1. earned during the academic year 1985-86, compared with the number earned prior to that year. In addition, exhibit 2 shows a dramatically higher number (3,294) of Floridians taking the CPA examination for the first time during 1983, compared with the consistently lower numbers from 1979 to 1982 and the trough Trough
The stage of the economy's business cycle that marks the end of a period of declining business activity and the transition to expansion. of 54 first-time candidates during 1984. (In fact, the number of first-time CPA examination candidates in Florida plummeted from 2,306 in November 1983 to only 12 in May 1984.)
Exhibit 1: BAs and Mas from Nine Florida Universities(*) 1978-79 through 1993-94 Academic Number of Number of Year Accounting Bas Accounting/Tax Mas 1978-79 1,445 72 1979-80 1,475 84 1980-81 1,496 123 1981-82 1,344 126 1982-83 1,722 104 1983-84 1,309 129 1984-85 1,227 128 1985-86 1,227 209 1986-87 1,239 244 1987-88 1,254 221 1988-89 1,184 268 1989-90 1,391 290 1990-91 1,482 342 1991-92 1,549 373 1992-93 1,624 430 1993-94 1,542 399
(*) Florida Atlantic University “FAU” redirects here. For other uses, see FAU (disambiguation).
Florida Atlantic University, also referred to as FAU or Florida Atlantic, is a public, coeducational research university with its main campus in Boca Raton, Florida, United States. , Florida International University Florida International University, primarily at University Park, Miami; coeducational; chartered 1965, opened 1972. A research university, it has 18 colleges and schools and many specialized centers and institutes, including those in biomedical engineering, database , Florida State University Florida State University, at Tallahassee; coeducational; chartered 1851, opened 1857. Present name was adopted in 1947. Special research facilities include those in nuclear science and oceanography. , University of Central Florida “UCF” redirects here. For other uses, see UCF (disambiguation).
UCF is a member institution of the State University System of Florida. UCF was founded in 1963 as Florida Technological University with the goal of providing highly trained personnel to support the Kennedy , University of Florida University of Florida is the third-largest university in the United States, with 50,912 students (as of Fall 2006) and has the eighth-largest budget (nearly $1.9 billion per year). UF is home to 16 colleges and more than 150 research centers and institutes. , University of Miami This article is about the university in Coral Gables, Florida. For the university in Oxford, Ohio, see Miami University.
The University of Miami (also known as Miami of Florida, UM, or just The U , University of North Florida The University of North Florida (UNF) is a public university in Jacksonville, Florida. It currently has an enrollment of more than 16,000 students and employs over 500 full-time faculty. The current president is former Jacksonville mayor John Delaney. , University of South Florida
• • [ and University of West Florida
Source: MGT MGT Management
MGT Multi-Gigabit Transceiver
MGT Master Guide Table
MGT Midwestern Gas Transmission (gas pipeline company)
MGT Measured Gas Temperature
MGT Mobile Global Title
MGT Marine Gas Turbine
MGT Mobile Ground Terminal of America, Inc., 1996, pp. 2-8 and 2-10.
Exhibit 2: First-Time Candidate's Pass Rates, Florida CPA Examinations 1979-94 Number Number Percentage First-Time Passing Passing Year Candidates All Parts All Parts 1979 1,447 217 15.0% 1980 1,862 286 15.4% 1981 1,688 285 16.9% 1982 1,629 259 15.9% 1983 3,294 376 11.4% 1984 54 17 31.5% 1985 407 132 32.4% 1986 578 194 33.6% 1987 602 208 34.6% 1988 741 232 31.3% 1989 731 238 32.6% 1990 758 209 27.6% 1991 824 233 28.3% 1992 756 245 32.4% 1993 695 245 35.3% 1994 709 215 30.3%
Source: MGT of America, Inc., 1996.
FIRMS MOBILIZED TO FIND A SOLUTION
Doubling up. Some of Florida's public accounting firms addressed the 1983 surplus and the 1984 shortage by hiring a larger number of accounting graduates in both 1982 and 1983. Professor Henry R. Anderson, former chairman of Florida Institute of CPAs' 150-hour committee and former director of the school of accounting at the University of Central Florida, said, "Several firms anticipated the reaction of students to accelerate their programs and graduate before the effective date of the law, and firms doubled up on their hiring in 1982 and 1983."
Hiring arrangements. Many Florida firms hired four-year graduates for full-time positions and arranged to assist these entry-level personnel to complete the additional education requirement. Urban firms found such arrangements especially attractive because new hires had convenient access to evening graduate programs, for example. Firms could satisfy their demand for entry-level personnel and provide opportunity to hires to earn the 30 additional hours without the tuition, fees or overhead associated with a full-time fifth year of education.
Douglas A. Snowball snowball: see honeysuckle. , professor and former director of the school of accounting at the University of Florida, described the conditions that encouraged such arrangements:
"Because of financial factors, uncertainty about the permanence Permanence
law of the Medes and Persians
Darius’s execution ordinance; an immutable law. [O.T.: Daniel 6:8–9]
there always, as evilness with evil men. [O.T.: Jeremiah 13:23; Br. Lit. of the 150-hour requirement, and attractive offers in the wake of the post-1983 staffing shortage, many four-year graduates accepted accounting positions and entered part-time programs available in the larger cities."
Anderson, too, pointed out that "one of the key lessons learned from Florida's experience with the 150-hour requirement is that both CPA offices and students have a difficult time accepting the new educational requirements. Because CPA firms experience a shortage of entry-level personnel when students are confronted with additional courses and more costs, literally hundreds of `arrangements' develop between firms and students. The sad part about this is that the benefit is only short-term, and a large percentage of these students never return to school to complete their remaining courses and never take the CPA exam."
Thus, despite good intentions, these arrangements often failed. Snowball explained the reason: "It is difficult to do justice simultaneously to academic course work and a challenging professional position, especially when others are entering the firm with their educational requirements completed." Scheduling problems also resulted from the combination of overtime, out-of-town business assignments and evening or other part-time course work.
Georgia on their minds. Under one provision of Florida's licensing regulations, Florida may issue a reciprocal certificate (a license endorsement) to a CPA of another state if the applicant meets the requirements in effect in Florida. This provision enabled four-year accounting graduates from Florida to establish residency A duration of stay required by state and local laws that entitles a person to the legal protection and benefits provided by applicable statutes.
States have required state residency for a variety of rights, including the right to vote, the right to run for public office, the and sit for the CPA examination in neighboring neigh·bor
1. One who lives near or next to another.
2. A person, place, or thing adjacent to or located near another.
3. A fellow human.
4. Used as a form of familiar address.
v. Georgia or another non-150-hour state. Then they could return as CPAs, accept full-time positions with firms in Florida, complete Florida's additional education requirement and apply for CPA license endorsement in Florida upon successful completion of the 30 additional hours.
The increase in license endorsements that began in 1982 in Florida, shown in exhibit 3, page 56, was due to "Florida accounting students who sat for the CPA exam in Georgia and returned to Florida to qualify and eventually work in the profession" according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. MGT of America, a research company that did a study on behalf of the AICPA AICPA
See American Institute of Certified Public Accountants (AICPA). in 1996. An analysis of exhibit 3 shows that Florida averaged 463 license endorsements annually after 1983, compared with an average of 233 endorsements during the five-year period before 1983. This increase in endorsements also resulted in an increase in the annual number of total licenses issued by Florida since 1978. The figures in exhibit 3, for example, show that Florida averaged 1,147 total licenses annually for the five years before 1983, compared with an average of 1,304 total licenses issued for the 11-year period following implementation of the 150-hour law.
Exhibit 3: Florida CPA Licenses Issued, 1978-94 Number of Number of New Number of Total Year Licenses Endorsements Licenses 1978 692 129 821 1979 778 164 942 1980 881 250 1,131 1981 1,247 205 1,452 1982 974 416 1,390 1983 1,172 596 1,768 1984 1,179 441 1,620 1985 1,031 416 1,447 1986 897 510 1,407 1987 785 460 1,245 1988 735 403 1,138 1989 1,154 438 1,592 1990 695 408 1,103 1991 694 447 1,141 1992 844 495 1,339 1993 625 579 1,204 1994 618 492 1,110
Source: MGT of America, Inc., 1996.
Out-of-state hires. The additional education requirement created a disadvantage for Florida firms in recruiting from other states, and it intensified in·ten·si·fy
v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies
1. To make intense or more intense: competition among Florida firms for accounting graduates from the state's universities. Starting salaries of entry-level personnel in Florida increased, and firms began recruiting from the "full range of graduates from in-state accounting programs, instead of seeking only the elite top graduates," according to MGT. Although this problem will eventually go away as other states move to 150 hours, it will remain an issue for the next few years as each state moves at its own pace.
Larry Harris is currently the General Manager of the Milwaukee Bucks. He is the son of former National Basketball Association (NBA) coach, and current Dallas Mavericks Assistant Coach Del , director of human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. for Arthur Andersen's south Florida practice, described changes in out-of-state hiring practices, saying, "A decade ago our practice hired approximately half its recruits from out-of-state schools, especially from the Midwest and the North-east. Currently, the firm hires 75% to 80% of new recruits from in-state schools." He added that the 150-hour law put Florida "at a disadvantage in getting referrals from out of state. As a result, recruiting for Florida graduates is intense, so much so that only in New York New York, state, United States
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of State does the starting salary of an average staff accountant at AA surpass [the starting salary] in Florida."
Hire five-year graduates. Many of Florida's firms initially encouraged four-year accounting graduates to accept full-time positions in public accounting before completing the additional education requirement over several years, so the number of five-year accounting graduates increased only slightly during the first few years after 1983. However, staffing shortages diminished by 1990. Snowball noticed this, saying, "Our students increasingly tended to complete their CPA requirements before accepting permanent positions and were encouraged to do so by recruiters." Exhibit 1 shows a steady increase in the number of master's degrees earned at nine Florida universities, from 104 in academic year 1982-83 to nearly 400 by academic year 1993-94.
By the end of the 1980s, many Florida public accounting firms, especially the larger firms, met staffing needs by recruiting mostly five-year graduates. In 1988 Anderson observed the phenomenon and said, this "is the first year that Florida colleges The high emphasis Florida College places on its Christian heritage is expressed in its tradition of daily chapel services. All members of the board of directors and all faculty members are required to be active members in a Church of Christ. and universities are producing a sufficient number of qualified people to sit for the CPA exam to satisfy the demands of the Big Eight firms in the state; regional and local firm personnel demands [though] are still not being met." However, in an October 1991 Journal article, Scott T. Rhine, 1988-89 Florida Institute of CPAs president and partner in Schmidt, Raines, Trieste, Dickenson, Adams & Co. of Boca Raton Boca Raton (bō`kə rətōn`), city (1990 pop. 61,492), Palm Beach co., SE Fla., on the Atlantic; inc. 1925. Boca Raton is a popular resort and retirement community that experienced significant industrial development in the 1970s and 80s. , and John K. Simmons, professor of accounting at the University of Florida, noted, "The pipeline has refilled."
PROS AND CONS pros and cons
the advantages and disadvantages of a situation [Latin pro for + con(tra) against]
The experiences of firms in Florida can prepare you for the types of changes your state may experience, specifically for the impact of a five-year degree on starting salaries, technical competence technical competence,
n the ability of the practitioner, during the treatment phase of dental care and with respect to those procedures combining psychomotor and cognitive skills, consistently to provide services at a professionally acceptable level. , work performance, staff retention and the expense of the fifth year of education.
Firms will have to pay more to get more. On the basis of its survey of 1,009 Florida CPA examination candidates, MGT said that public accounting firms paid new hires with five-year degrees about $2,000 (8.3%) more per year than those with four-year degrees. Other firms cited higher salary differentials for five- and four-year graduates. In 1990 Snowball said the average starting salaries in the preceding two years "were 16.5% higher for five-year graduates than for four-year graduates."
To obtain the firms' perspectives on the impact of the 150-hour law, MGT surveyed Florida public accounting firms. A total of 156 firms, mostly local firms with one office, responded. MGT's results suggested that costs "may be offset by a more productive entry-level accountant." MGT also reported that "initially the $2,000 additional salary plus associated overhead costs overhead costs
see fixed costs. to a firm are usually distributed through a relatively high percentage of billable time for entry level staff. This would tend to minimize increased charges to clients."
Doing better. The CPA examination measures technical competence. It is noteworthy that Florida's CPA examination pass rate for first-time candidates increased with implementation of the 150-hour requirement and remains significantly higher than the corresponding national pass rates. Exhibit 2 shows that the average pass rate of Florida's first-time candidates increased from 15% before 1983 to over 30% after the law's implementation. By comparison, the national CPA examination pass rates for first-time candidates overall and for those first-time candidates holding advanced degrees are about 16% and 27%, respectively.
Albert Lopez, partner in charge of human resources and recruiting for BDO BDO Big Day Out (Australian music festival)
BDO Banco de Oro (Philippines)
BDO British Darts Organisation
BDO Block Development Officer
BDO Big Dumb Object Seidman's Miami office, reported in 1994 an even higher first-time CPA exam pass rate of 80% for its new hires. "This allows the firm to be able to give them more responsibility sooner," Lopez said.
Arthur Andersen's Harris recently noted another indicator of higher technical competence for Florida's five-year graduates. "We are seeing a higher quality of entry-level staff at AA's Florida practices. Among entry-level staff receiving instruction at AA's training center in St. Charles, Illinois St. Charles is a city in Kane and DuPage counties of Illinois, United States, and is roughly 40 miles west of Chicago on Illinois Route 64. According to a 2004 census estimate, the city has a total population of 32,134. , new hires from the Florida offices have the best overall scores on tests that measure comprehension comprehension
Act of or capacity for grasping with the intellect. The term is most often used in connection with tests of reading skills and language abilities, though other abilities (e.g., mathematical reasoning) may also be examined. . Part of the reason for their high success rate may be that 75% to 80% of AA's new hires in the state have a master's degree in accounting."
MGT's survey showed that 40% to 48% of the respondents In the context of marketing research, a representative sample drawn from a larger population of people from whom information is collected and used to develop or confirm marketing strategy. believed new hires with five-year degrees performed no differently from those with four-year degrees. These results also revealed that a smaller, significant number of practitioners thought that new staff with five-year degrees compared with those with four-year degrees performed better right away (21%), performed better in the long term (29%), and advanced more quickly within the firm (31%).
Mary Kay Mary Kay is a brand of skin care and color cosmetics sold by Mary Kay Inc. Mary Kay World Headquarters is located in the Dallas suburb of Addison, Texas. Mary Kay Ash (d. November 22, 2001) founded Mary Kay Inc. on Friday, September 13, 1963. Vona, principal in management consulting Noun 1. management consulting - a service industry that provides advice to those in charge of running a business
service industry - an industry that provides services rather than tangible objects services and former director of human resources for PricewaterhouseCoopers in Florida, believes that five-year accounting graduates from Florida schools are "very well-rounded professionals" and "seem more savvy." In addition, she said, "The new hires are much more computer literate computer literacy
The ability to operate a computer and to understand the language used in working with a specific system or systems.
computer literate adj. and better prepared to work as part of a team and make group presentations." On a practical level, though, Vona does not know for sure if the advances make training new hires any easier--in the end, the firm has had to devote the same amount of time and effort to training.
Retention. As stated earlier, many new hires dropped out of public accounting early on and never came back. But what about longer-term retention rates--did the change have any effect on these? The MGT survey showed that the 150-hour requirement did not significantly change staff retention levels. However, two Florida practitioners expressed conflicting views on this issue: BDO Seidman's Lopez said, "Retention rates have improved at BDO since passage of the 150-hour law, because fewer staff accountants leave after a few years to return to school for additional education." In contrast, partner Charles Gund, Jr., reported no noticeable change in retention rates at his firm--Saltmarsh, Cleaveland & Gund in Pensacola--among new hires that graduated from Florida accounting programs.
Fifth-year costs, internships and scholarships. To help students finance their fifth year of education and satisfy the firms' seasonal staffing needs, Florida universities developed innovative programs that allow students to work during the busy season and go to school at other times. The University of Central Florida, for example, established an internship internship /in·tern·ship/ (in´tern-ship) the position or term of service of an intern in a hospital.
n the course work or practicum conducted in a professional dental clinic. program as part of its fifth-year degree programs in accounting, taxation and business administration. Anderson said that during winter or summer, students take jobs as full-time employees in Orlando-area CPA firms and industries. Each student earns a monthly salary, and participating firms sponsor a special scholarship for each intern intern /in·tern/ (in´tern) a medical graduate serving in a hospital preparatory to being licensed to practice medicine.
in·tern or in·terne
n. . The key advantages of such programs are:
* Public accounting firms get additional staff during their busy season, and students receive money to help finance their fifth year of education.
* Students complete the 150-hour requirement to qualify for the CPA examination and are available to start full-time positions before their second busy season at a firm.
* Students get a "value-added" master's degree--they and their firms will find this adds up to more over the years than just a mere accumulation of 30 additional hours.
Although 45 states have passed the 150-requirement so far, the new rule has not been widely implemented. It doesn't take effect in Illinois until 2001, New Jersey until 2000 and New York until 2009. California hasn't even passed it. Many firms have not yet felt the short-term effects, and no one knows what the long-term effects will be. But Florida's transition can offer insights. Go to www.aicpa.org/ states/uaa/150chart.htm. Find your state. Find your neighboring states. Start making personnel plans. Being prepared can help you weather the possible short-term staffing problems.
* MOST STATES HAVE ADOPTED THE 150-HOUR requirement. But as the new rules take effect, firms may notice unintended effects on recruitment and other firm management issues.
* FLORIDA WAS THE FIRST STATE TO ADOPT the 150-hour rule and consequently makes a good case study for other states.
* MANY STUDENTS ACCELERATED their graduation Graduation is the action of receiving or conferring an academic degree or the associated ceremony. The date of event is often called degree day. The event itself is also called commencement, convocation or invocation. dates to beat the new rule, leading to a brief surplus and subsequent shortage.
* FIRMS FOUND IT DIFFICULT TO RECRUIT from outside the state because out-of-state CPAs were unwilling to meet the more stringent requirements.
* FIRMS TRIED TO SMOOTH THE TRANSITION by having students complete extra educational requirements while working full-time, but such arrangements proved problematic.
* FLORIDA FIRMS MET THE CHALLENGE by hiring recruits with five-year degrees and helping them with internship positions during the busy season.
* IN THE END, FLORIDA HAS BETTER-EDUCATED entry-level personnel, able to get up to speed more quickly; starting salaries have risen accordingly.
JOHN CUMMING John Cumming (born 1807 in Fintray (Aberdeenshire); died 1881) was a Scottish clergyman.
He was appointed to the National Scottish Church in Covent Garden in 1832.
Cumming predicted Judgement Day for some time between 1848 and 1867. , CPA, PhD, is professor of accountancy and chairman, and LARRY J. RANKIN, CPA, PhD, is associate professor of accountancy, both at Miami University Miami University, main campus at Oxford, Ohio; coeducational; state supported; chartered 1809, opened 1824. The library has extensive collections in literature and American history, including the William Holmes McGuffey Library and Museum and the Edgar W. , Oxford, Ohio Oxford is a college town located in the southwestern portion of the U.S. state of Ohio in northwestern Butler County in Oxford Township, originally called the College Township. The population was 21,943 at the 2000 census (approximately 16,000 students are included in this figure). . Cumming's e-mail address See Internet address.
e-mail address - electronic mail address is email@example.com. Rankin's e-mail address is firstname.lastname@example.org.