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Accounting majors' perceptions regarding the 150-hour rule.

ABSTRACT: Most states now require students who sit for the Certified Public Accountant (CPA) examination to have 150 semester hours of college education. The 150-hour requirement is intended to, among other benefits, improve the preparation of students for the profession, increase their chances of success on the CPA exam, ensure a more wellrounded education for new entrants to the profession, and attract better students to the field of accounting. The purpose of this paper is to examine whether accounting majors' perceptions regarding this requirement match the anticipated benefits of the 150-hour rule, and whether they match the realities of what has occurred in localities where the rule has been in effect. Data were collected from 247 accounting majors via a questionnaire. The results indicate that, in most respects, students' perceptions align fairly well with the intentions and the realities of the 150-hour requirement. For example, most students indicate an interest in obtaining a Master of Business Administration (MBA) degree for their fifth year of education. This would be a more balanced education envisioned by the framers of the requirement. Most students feel that they should receive additional compensation for the added education. In contrast to the reality in most locations, they do not expect accounting firms to increase compensation for those with 150 hours of education. Although students generally were not in favor of the 150-hour rule, a majority indicated they would continue to pursue becoming a CPA despite the 150-hour requirement. Still, a substantial number of students indicated they would pursue the Certified Management Accountant (CMA) designation rather than pursuing the CPA.

Keywords: 150-hour rule; CPA exam; MBA; CMA; MA; perceptions.

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INTRODUCTION

Currently, 48 out of 54 licensing jurisdictions have passed legislation requiring 150 semester hours of college education in order to take the Certified Public Accountant (CPA) Exam. For many, this standard became effective in 2000. In addition, a rule passed in 1988 by the AICPA required 150 semester hours plus a baccalaureate or advanced degree for membership as of 2000. The third edition Uniform Accountancy Act also requires 150 hours in a baccalaureate or advanced degree that includes an accounting concentration (Read et al. 2001). The expected advantages of 150 hours of study include better preparation of accounting students for careers in public accounting, the ability to attract better students to the profession, an enhanced image for the profession, a more well-rounded education, and higher passing rates on the CPA exam (Novin and Tucker 1993; a more well-rounded education, and higher passing rates on the CPA exam (Novin and Tucker 1993; Bandy 1990; Sharp and Stephens 1994; Hollander and Spector 1997).

However, concerns have been raised that the increased educational requirements have led to a decrease in accounting enrollments. Although research has mostly upheld the benefits of the 150-hour requirement (Rankin and Cumming 1998; Donelan 1999; Cumming and Rankin 1999; Read et al. 2001), unless students understand those benefits and perceive the benefits to exceed their costs, the accounting profession may not succeed in attracting the best and the brightest. In fact, it may attract very few students at all (Miller 2003). To date, little research has attempted to delve into the perceptions of students about these issues. It is vital to understand students' viewpoints if accounting educators and professionals are to properly address their concerns.

The purpose of this study is to examine accounting majors' perceptions regarding the 150-hour rule, particularly in light of the original expectations surrounding the passage of the rule, and the results experienced in states with the rule already in place. The students in this study were accounting majors, enrolled in accounting courses in two schools located in a state where the 150-hour requirement had been passed but was not yet effective. Questionnaires were administered to nearly 250 accounting majors to assess their expectations about compensation for the additional 30 hours of education, the type of degree and courses they would prefer, whether they were in favor of the 150-hour rule, and the effect of the 150-hour rule on their career planning.

The findings of this study suggest students believed that they should receive a higher salary for the additional education required. Contrary to the realities of what has occurred in states with the rule in place (Somasundaram 1998; Cumming and Rankin 1999; Frieswick 2000), students expected that accounting firms probably would not increase their compensation. Interestingly, the majority of students indicated they would prefer a Master of Business Administration (MBA). The MBA is a broad degree that probably aligns better with the original motivation for the rule, although many schools are, in fact, offering a Master of Accountancy for the fifth year. In addition, 62 percent of the responding students indicated that they were not in favor of the 150-hour rule, consistent with research indicating that most stakeholders are now against the rule (Miller 2003). Approximately 60 percent of the responding accounting majors indicated they would continue to pursue a CPA despite the 150-hour rule. This is somewhat consistent with research findings that students are put off by their overall perception of the profession, but not entirely by the 150-hour rule (Frieswick 2000).

The remainder of this paper is organized as follows. First, literature on the 150-hour rule is reviewed. Next, the methods and results of the current study are described. Finally, the conclusions and limitations of the paper are discussed.

LITERATURE REVIEW AND DEVELOPMENT OF RESEARCH QUESTIONS

On August 1, 1983, Florida became the first state to implement the 150-hour education requirement for the CPA exam. Since then, it has been adopted by 45 states (and three more jurisdictions), and is a requirement for membership in the AICPA. The intention of the 150-hour requirement was to broaden the education of accounting students, better prepare them for the CPA exam and careers in public accounting, and enhance the image of the profession (Anderson 1988; Novin and Tucker 1993; Hollander and Spector 1997).

One argument in favor of the 150-hour rule was that additional education was needed for future CPAs to not only be aware of changes in accounting rules, but also to enhance their understanding of the increasingly sophisticated global business environment. That is, the broad range of knowledge and skills needed for success in the accounting profession, including problem-solving skills, technological skills, difficult technical issues, ethical issues, and matters of professional judgment was viewed as no longer attainable within a four-year baccalaureate education (Bandy 1990; Sharp and Stephens 1994).

If additional education is required as adequate preparation for future CPAs, then the issue of what courses and degrees students will and/or should pursue to attain their 30 additional credits becomes important. The evidence to date on what students are actually doing to complete the 150 hours appears to indicate that students bound for public accounting are completing a Master of Accountancy degree or getting additional undergraduate credits. For example, in a recent survey of 500 CPA exam candidates, Donelan and Philipich (2001) report that 43 percent met the 150-hour requirement with only undergraduate credits, 35 percent earned a Master of Accountancy, and 22 percent pursued an MBA or another graduate program. For candidates employed in the Big 4, the numbers show a stronger emphasis on graduate degrees, and on the Master of Accountancy in particular: 28 percent used additional undergraduate credits, 53 percent completed a Master of Accountancy, and only 19 percent earned an MBA or other graduate degree. Similarly, a limited survey of undergraduate students facing the newly implemented 150-hour requirement in their state found that the majority planned to meet the 150-hour requirement through a Master of Accountancy degree (Rankin and Cumming 2001). However, Miller (2003) provides evidence that the demand for graduates with a Master of Accountancy degree appears to be waning relative to the supply.

There is mixed evidence about what degree established practitioners feel is most appropriate for the 150 hours. Albrecht and Sack (2000) survey corporate accountants and CPAs about what degree they would earn to prepare for their career if they were to start college over again, and find that 36 percent preferred the MBA degree versus only 5.9 percent who chose a Master of Accountancy. A Master in Information Technology was chosen by 21.3 percent and a law degree by 11.4 percent. These results seem to imply that learning more accounting was not as useful as obtaining a broader education via the MBA, but it is interesting that the second choice was the Master in Information Technology, which is a relatively narrow and specialized degree. The survey unfortunately did not include choices that would combine various types of undergraduate and graduate degrees, such as a nonaccounting major with a Master of Accountancy. It is also not clear whether these respondents would recommend their choices as the appropriate means for new entry-level accountants to complete their 150 hours, or if the respondents were focusing on perceived shortfalls in their own education as it affected their overall career.

With results somewhat consistent with Albrecht and Sack (2000), Renner and Tanner (2001) conduct a survey of CPAs in states with the 150-hour requirement in place. Given that their undergraduate degree was in accounting, the respondents selected a Master in Tax as the preferred means of achieving the additional 30 hours. The second choice was earning a second major in Management Information Systems, and earning a Master in Accountancy was the third choice. For survey respondents from corporate accounting, the Accounting and Management Information Systems double major was the top choice, followed by a MBA, and then by a Master in Accountancy.

Novin and Pearson (1989) survey practicing CPAs on the issue of the appropriate education specifically for entry-level public accountants, finding that, contrary to the implications of the Albrecht and Sack (2000) survey, these practitioners felt that 39 percent of the curriculum should be devoted to accounting, with an additional 25 percent devoted to other business areas. The participants in the Novin and Pearson (1989) study were also in favor of a curriculum that incorporated many nonaccounting learning objectives such as fostering communication skills, but appeared to prefer that those skills be learned within the context of accounting classes. Although the survey did not specifically ask what degrees should be earned, their preference for such a high percentage of accounting in the curriculum would probably only be possible through an undergraduate accounting degree followed by a graduate accounting degree.

There is not yet a great deal of evidence about which type of 150-hour combination of education has produced the most successful accountants, but most evidence indicates an improvement in the quality of new CPAs with 150 hours of education, particularly if they hold a graduate degree. In terms of their own satisfaction, recent CPA candidates employed in public accounting were most satisfied with their college's coverage of core competencies and core services of the CPA Vision if they had earned a Master of Accountancy. Candidates who worked in industry, government, and other organizations were most satisfied with their preparation in business fundamentals and broad business issues if they pursued an MBA Candidates who fulfilled the 150-hour rule with undergraduate credits were consistently less satisfied with their education than those who held a graduate degree (Donelan and Philipich 2001).

In other evidence about the relative success related to different degrees, managing partners indicated that turnover is lower among staff with advanced degrees, that personnel with advanced degrees are more likely to become partners, and that individuals with advanced degrees are more likely to have the communication skills, interpersonal skills, and business acumen needed to advance within the firm (Bandy 1990). In data more specifically related to the 150-hour requirement, new hires in Florida offices had the best overall comprehension test scores at Arthur Andersen's national training center of any Arthur Andersen offices in the world. This success rate was attributed to the fact that about 75 percent of these new hires had a Master in Accounting (Rankin and Cumming 1998). In Tennessee, 64 percent of surveyed CPAs thought that 150-hour graduates had a "broader base of accounting knowledge" (Donelan 1999). A survey of public accounting firms in Florida indicated that, while many (40 to 48 percent) of the respondents find no difference in the performance of new hires with four-year degrees versus five-year degrees, a significant number agreed that the five-year degree staff either performed better initially (21 percent) or over the long-term (29 percent) than the four-year degree new hires (Cumming and Rankin 1999). In order to understand how students themselves view the issue of what content and form the additional education should take, this study examines the following research question:

RQ1: Which degree and/or courses would students prefer to pursue for the additional 30 credit hours?

Another goal of the 150-hour rule was to attract better students into the accounting field (Anderson 1988; Novin and Tucker 1993). However, some practitioners and academics have been concerned that it will impose a large opportunity cost on students and lead to a shortage of quality students pursuing an accounting career (Bernard 1996; Shapiro 1995; Albrecht and Sack 2000; Frieswick 2000). In addition, not all students majoring in accounting may complete 150 hours. At the University of Florida, for example, approximately one third of the accounting majors complete only a four-year degree (Covaleski 2000). In Florida, the first state to adopt the 150-hour rule, the number of first-time candidates taking the CPA exam dropped after the rule was enacted (Cumming and Rankin 1999). From 1979 to 1982, Florida had a range of 1,447 to 1,862 first-time candidates for the CPA exam. In contrast, from 1985 to 1994, the number of first-time candidates never exceeded 824. (1)

In addition, the AICPA reported that the number of accounting degrees awarded in the 1998-99 school year was 20 percent below comparable numbers for 1995-96 (AICPA 1997, 1999). Moreover, the number of students enrolled in accounting programs was down 23 percent from 1995-96 to 1998-99. Although the total number of CPA exam candidates rose 8 percent from 1998 to 1999, it was still 12 percent below the all-time high in 1990 (Leathers 2000). Furthermore, the five jurisdictions that adopted the 150-hour rule in 1998 saw 72 percent fewer first-time candidates in 1999 compared with 1996. Recently, Miller (2003) reports that the number of bachelor's degrees in accounting dropped from 53,320 in 1992 to 37,885 in 2001.

However, while the overall number of accounting students and CPA exam candidates declined, the percentage of Florida's first-time candidates who passed the exam rose dramatically, from a range of 15 to 16.9 percent from 1979-1982 to a range of 27.6 to 35.3 percent from 1985-1994. In addition, the number of total licenses issued by Florida grew from an average of 1,147 for the fiveyear period before 1983 to an average of 1,304 for the 11-year period following 1983 (Cumming and Rankin 1999). In Tennessee, 15 percent of CPA exam candidates passed on their first try, versus 10 percent of candidates before the 150-hour rule (Donelan 1999). Furthermore, in a study of nearly 116,000 first-time candidates during the time period from 1996-98, Read et al. (2001) report that candidates with 150 hours had higher passing rates (21 percent) than those candidates with less than 150 hours (13 percent).

In addition, Ranking and Cumming (2001) survey accounting undergraduate students at a school in Ohio, just after the implementation of the 150-hour requirement. Although the number of accounting majors at that school dropped by about 20 percent with the inception of the 150-hour rule, they found that about 83 percent of those who did choose to major in accounting still planned to become CPAs. Moreover, Nelson et al. (2002) report that the percentage of seniors intending to take the CPA exam did not change significantly from 1995 to 2000. In order to assess the views of students regarding the impact of the 150-hour requirement on their majors and career paths, this study examines the following research question:

RQ2: What impact does the 150-hour rule have on students' career planning?

One of the other expectations about the 150-hour rule was that it would result in higher starting salaries for accountants. Of course, these higher salaries would come at the cost of a year of forgone income and another year of college education. Other issues are whether salaries are in fact higher and to what extent CPA firms will assist their employees with the costs of the additional year of college. Frieswick (2000) reports that accounting salaries rose 31 percent from 1995 to 2000. In addition, accounting firms are offering signing bonuses, PalmPilot[TM] PDAs, and laptop computers to attract new hires. In a survey of New York CPA firms, Acton and Davidson (1989) found that once the 150-hour requirement was implemented, the large firms planned to greatly increase their tuition assistance for part-time study, and also increase the use of leaves (unpaid) to complete the 150 hours on a full-time basis. In Florida, students often complete their fifth year during summers and less busy periods, while completing paid internships with the firms during the busy season (Cumming and Rankin 1999). In a small sample in Ohio, a majority of students reported that their employers offered no assistance, while a minority of students indicated that their employers supplied tuition assistance (Rankin and Cumming 2001).

On the issue of whether firms provided additional compensation to their new employees with 150 hours of education, most evidence points to a modest salary increase. For example, in Florida, 150-hour hires started at about $2,000 (8.3 percent) more than four-year hires (Donelan 1999; Rankin and Cumming 1998). Similarly, Hollander and Spector (1997) report that master's degree graduates receive about $2,000 more than undergraduates from accounting firms, and are more likely to be hired. However, one issue that is unclear is whether the difference in salary between master's degree graduates and bachelor's degree graduates is increasing or decreasing over time.

Boone and Coe (2002) document that 38 percent of the decline in the number of accounting graduates during the 1990s is related to the 150-hour requirement. However, the other 62 percent of the decline is unexplained. Boone and Coe (2002) suggest that future research explore other factors related to the decline in accounting graduates, such as noncompetitive compensation. Students in this study were questioned regarding their perceptions of the compensation benefits attached to the fifth year. The third research question follows:

RQ3: What compensation from accounting firms do students consider appropriate for the additional education required, and what compensation do they expect that firms will provide?

Although the 150-hour requirement has been adopted by most states, there continues to be controversy about whether it is, on balance, a good idea for the accounting field. As outlined above, the requirement is consistent with favorable effects such as the improvement in passing scores on the CPA exam, the increased capabilities of new hires, and modestly higher salaries for new hires with 150 hours as compared to those with four-year degrees. But it has also been associated with less favorable outcomes, such as the increased cost for students pursuing a career in accounting, and the reduction in the pool of accounting majors (Bernard 1996; Shapiro 1995; Albrecht and Sack 2000; Frieswick 2000). Some states have refused to pass the requirement, while one state (Colorado) passed but then rescinded the requirement. In Florida, the state having the most experience with the requirement, serious discussions have occurred as to whether to rescind the requirement. A survey of practitioners, accounting students, and college accounting department chairpersons found that all groups responded negatively to the 150-hour requirement (Hiltebeitel et al. 1994). In addition, while 81 percent of accounting professionals rated the CPA designation worth the extra schooling, only 47 percent of college students did so (Frieswick 2000). On the other hand, Nelson et al. (2002) report that a majority of seniors at Federation Schools of Accountancy (76 percent) believe five or more years of education should be required to become licensed as a CPA. In the final research question, this study examines the viewpoints of accounting majors regarding their overall opinion on the 150-hour rule:

RQ4: Are students generally in favor of the 150-hour requirement?

METHODS

A questionnaire (see the Appendix) was developed to determine how closely the perceptions of students align with the intended benefits of the 150-hour rule, and also how closely they track reality in states where the requirement has already been implemented. The questionnaire was used to collect data from 247 accounting majors at one private business college and one public university in the Northeast, in a state where the 150-hour requirement was passed but not yet in effect. (2,3) Both large international accounting firms and smaller regional accounting firms typically hire students from each of these schools.

Questionnaires were distributed in accounting classes. Students were told that the purpose of the survey was to gather their perceptions regarding the 150-hour rule. The response rate was nearly 100 percent. The demographic data for the participating students is shown in Table 1, which gives the data for the total sample, as well as a breakdown by school. Both genders were represented about evenly in the survey responses. (4) For the overall sample, approximately 60 percent of the students were white, and 40 percent were minorities. (5) In the total sample, about 15 percent of the students were between the ages of 18 and 20; with about 28 percent between 21 and 23; 21 percent between 24 and 26; 15 percent between 27 and 29; and the remainder 30 or over. (6) About 37 percent of the students were juniors, 45 percent were seniors, and the remainder were either graduate students or students who were not fully matriculated. (7) All of the students had accounting as their major or concentration.

RESULTS

Research Question 1

The first research question asked which degree and which courses students would prefer to pursue for the additional 30 credit hours. Results for this research question are shown in Table 2. The majority of the responding students (62 percent) indicated they would prefer an MBA degree. These results are consistent with several surveys eliciting the views of practitioners (Albrecht and Sack 2000; Renner and Tanner 2001) that a MBA is preferable to a Master of Accountancy (MA). However, they conflict with data reported by Donelan and Philipich (2001) showing that students are actually more likely to meet the 150-hour requirement via a Master of Accountancy rather than an MBA, perhaps because it is more difficult to obtain an MBA in five years. This anomaly may also be the result of the lack of knowledge of surveyed undergraduate students regarding degrees other than the well-known MBA.

These findings may be of interest to accounting educators who are considering how to revamp their curricula in response to the 150-hour rule. Based on the views of students and practitioners, an MBA may be the most desirable outcome for meeting the enhanced education requirement, but based on the actual actions of accounting students, the MA appears to be the preferred option. Students may tend to choose the MA, despite their avowed preference for the MBA, because the MBA often requires more courses and time to complete. However, Miller (2003) suggests that the supply of MA students has far outstripped the demand. Thus, to the extent that schools can create a "fast-track" MBA option for accounting majors in their fifth year, it may be desirable for both students and employers.

The responses of the surveyed students regarding which type of courses they would prefer to take to complete the 30 additional hours (i.e., their first choice) were also analyzed. A majority (66.1 percent) indicated that their first preference was to take more accounting courses, while 18.8 percent preferred to take additional (nonaccounting) business courses. The results are consistent with the results of Novin et al. (1997), which show that practicing CPAs prefer the curriculum for entry-level public accountants to be heavily weighted with accounting courses and business courses.

Interestingly, the responses of the public school students differed significantly from those of the private school students on this question (Chi-square = 18.416; p = 0.001). The public school students strongly favored taking more accounting courses (78 percent, versus 58 percent of private school students choosing accounting courses first), while the private school students were more likely to choose nonaccounting business courses (26.8 percent of private school students choose this, versus just 6.3 percent of public school respondents). These results are possibly due to differences in career expectations for the two groups, but our survey results did not provide evidence of this, and further research is needed to clarify these differing viewpoints. It is also interesting that the public school students strongly preferred more accounting courses, which appears somewhat inconsistent with their indication that they would prefer an MBA, since an MBA would be less likely to provide many additional accounting courses.

To further explore these students' preferences about additional education to fulfill the 150 hours, we also asked which accounting courses they would be most interested in taking. The students' first choice was most often financial accounting (28.4 percent), followed by tax (25.9 percent). These results appear to be somewhat consistent with an orientation toward public accounting for these accounting majors.

Research Question 2

The second research question asked about the effect of the 150-hour rule on students' career planning. Results for this question are shown in Table 3. When asked if they were considering taking the CPA exam in the future, 59.8 percent said yes. The survey instrument pointed out that there was no 150-hour requirement for the CMA, and asked two more questions to assess their intentions when that option was included. If given just the two options (CPA or CMA), respondents still preferred the CPA to the CMA (62 percent to 38 percent), but public school students were significantly (Chi-square = 9.642; p = 0.002) more likely to be interested in the CMA than private school students (50.5 percent to 30.6 percent).

When we asked a summary question giving them additional options such as not pursuing either the CMA or the CPA, most students still strongly preferred the CPA (59.5 percent), while 19.8 percent indicated they would consider pursuing a CMA instead. About 10.5 percent indicated they would not pursue either designation, and 4.6 percent said they would consider changing their major from accounting to something else. Consistent with previous results, the CMA was a more popular option for public school students (26.4 percent) than private school students (15.8 percent), a marginally significant difference (Chi-square = 8.2; p = 0.09).

Across the three questions assessing their career intentions, the participating accounting majors were remarkably consistent in their responses, with close to 60 percent clearly interested in pursuing the CPA, and about 11 percent clearly not interested. As with results from other states, this study finds that many accounting students do not appear to be deterred from taking the CPA exam by the 150-hour requirement, but some accounting majors also indicated they were considering other options including the CMA exam or neither the CPA or CMA.

Research Question 3

The third research question asked about appropriate compensation from accounting firms for the additional education required by the 150-hour rule. Results for this question are shown in Table 4. The majority of the responding students (78 percent) indicated that they believed that more salary was most important, and about 15 percent indicated faster promotion was more important. However, when asked what compensation for the additional education they actually expected to receive from the accounting firms, about half of the students (52 percent) expected that accounting firms would not compensate them at all, while 32.5 percent expected to receive a higher salary, and 15 percent expected faster promotion. Public school students were significantly (Chi-square = 13.025; p = 0.005) more optimistic than private school students that they would receive more salary (45.6 percent versus 24.3 percent). Taken together, these results suggest that many students feel they will not be compensated appropriately for the additional education required for the CPA exam. These results may be of interest to CPA firms, which either need to better educate students about the type of improved compensation they will receive for their increased education, or consider enhancing compensation to draw more students into the profession (Albrecht and Sack 2000).

Research Question 4

The fourth research question asked students if they were generally in favor of the 150-hour requirement for the CPA exam. The majority of the respondents (62.3 percent) indicated that they were not (see Table 5). Further insight into students' disagreement with the 150-hour requirement is available from responses to an open-ended question asking what, in their opinion, is the most negative effect of the 150-hour requirement. Private school respondents and public school respondents had significantly different viewpoints about this issue (Chi-square = 27.396; p = 0.000). The most frequent response from the private school students (42 percent) was that the rule would discourage students from pursuing a career in accounting or as a CPA. Public school subjects' most frequent response (32 percent) was that the time spent in an additional year of school was the primary negative impact. For both groups, the second most frequent response (noted by 26 percent of private school participants and 28 percent of public school participants) concerned the high monetary cost to students. Interestingly, about 10 percent of both groups thought that the rule's emphasis on more book knowledge to the detriment of work experience was its major drawback.

In response to an open-ended question asking what they thought was the most positive impact of the 150-hour requirement, about 60 percent of the responding students mentioned the acquisition of either a better accounting background or a better general knowledge base. Thus, the students acknowledge the potential effectiveness of the 150-hour rule. However, they appear to feel that the costs are too great, or, given their pessimism over receiving additional compensation (RQ3), they perhaps feel that the costs are not borne by the party receiving much of the benefit. However, a limitation of this finding is that students may be biased in their responses, given the additional cost to them of completing the extra coursework.

CONCLUSIONS

The purpose of this study is to examine accounting majors' perceptions regarding the 150-hour rule and, in particular, to assess those perceptions in light of the intentions of the rule and its consequences in states that have already adopted it. The findings of this study indicate most accounting majors were not in favor of the 150-hour rule. This sentiment is consistent with research indicating that most stakeholders (students, employers, and accounting faculty) are now against the rule (Miller 2003), but that many indicators imply an improvement in new CPAs with 150-hours of education, particularly if they hold graduate degrees (Read et al. 2001).

While many of the accounting majors indicated that they would continue to pursue a CPA despite the 150-hour rule, substantial numbers (particularly of the public school participants) indicated that they would pursue the CMA. The students felt that they deserved higher salaries for the additional education required, but, contrary to the realities of what has occurred in states with the rule in place (Somasundaram 1998; Cumming and Rankin 1999; Frieswick 2000), these accounting majors expected that accounting firms probably would not increase their pay.

With regard to the degree they would most prefer to earn in fulfillment of the 150 hours, most students indicated they would prefer a Master of Business Administration (MBA). Interestingly, this broader degree probably aligns better with the original motivation for the rule to provide a more balanced education for accounting students. However, many schools are in fact offering a Master of Accountancy (MA) for the fifth year.

This study has several important implications for accounting education and practice. First, many schools have developed (MA) programs in response to the 150-hour rule, and a majority of the students taking the CPA exam have completed their 150-hour requirement via a (MA). However, the perceptions of students and practitioners are nevertheless that a MBA may be more desirable. In addition, Miller (2003) suggests the supply of MA graduates substantially outweighs the demand for them. Therefore, universities should consider whether a MBA is the best option for students who are pursuing a CPA. Second, although students feel they should receive additional compensation from accounting firms for a fifth year of education, many of them also think it is unlikely they will get it. This suggests firms should improve compensation for students with 150 semester hours, and better educate students about the added benefits they will receive for their additional education. Third, although many students indicated they would pursue a CPA regardless of the 150-hour requirement, substantial numbers of students also indicated they might pursue a CMA, and some accounting students would consider changing their major entirely, rather than pursuing a CPA. This finding suggests that the number of candidates for the CMA examination may increase in the coming years in reaction to the 150-hour rule, which is a potential area for future research. In addition, consistent with prior research, this finding suggests that accounting enrollments are likely to decrease in response to the 150-hour requirement in those states where it has been recently adopted (Frieswick 2000; Miller 2003).

One limitation of this study is that all students were surveyed in one northeastern state where the 150-hour requirement had been recently adopted, but had not yet taken effect. However, the results of this study are consistent with, and extend, the results of research in other states. Future research could further examine students' perceptions in states where the 150-hour requirement is already in effect. In addition, future research could explore in more depth whether students' reactions to the 150-hour rule differ due to gender, ethnicity, age, or other demographic variables. These results may be important to the accounting profession, since the AICPA has been seeking ways to improve the diversity of CPAs (Carroll 1997; Hollander and Spector 1997).

APPENDIX

Thank you for participating in this project. Please answer all the questions below. All information will be kept confidential and will be used for statistical purposes only.

1. Are you considering taking the CPA exam in the future?

No Possibly Yes

2. Are you familiar with the 150-hour requirement for CPAs?

No Yes

Effective July 1, 2002, students must fulfill a 150-hour requirement to take the CPA exam in the Commonwealth of Massachusetts. (More than 35 states have already adopted the requirement, which is effective as early as the year 2000.) In other words, students will need an additional 30 credit hours (i.e., approximately one more year in college) to sit for the CPA exam. The ultimate goal of the 150-hour requirement is for accounting professionals to have a more complete, well-rounded education. Please answer the following questions.

3. For the additional 30 credit hours, what courses would you be interested in taking? (Please rank them, 1 being the most interested.)

_____________ more accounting courses

_____________ more non-accounting business courses (specify ___________________)

_____________ more non-business courses (specify __________________________)

_____________ more written communication courses

_____________ more oral communication courses

4. If you want to take more accounting courses, which accounting courses would you be interested in taking? (Please rank them, 1 being the most interested.)

_____________ Financial Accounting

_____________ Managerial Accounting

_____________ Tax

_____________ Accounting Information Systems

_____________ Auditing

_____________ No preference

5. For the additional 30 credit hours, which degree would you prefer to get, if possible? (Please rank them, 1 being the most preferred.)

_____________ MBA

_____________ M.S.

_____________ Graduate Certificate

_____________ B.S. with special designation

_____________ No preference

6. What should accounting firms do to compensate for the additional year that you have to spend in college? (Please rank them, 1 being the most important.)

_____________ more salary

_____________ faster promotion

_____________ do nothing

_____________ other (specify ________________________________________________________)

7. In your opinion, what will accounting firms actually do to compensate for the additional year that you have to spend in college? (Please rank them, 1 being the most probable.)

_____________ more salary

_____________ faster promotion

_____________ do nothing

_____________ other (specify ________________________________________________________)

8. What, do you think, will be the most positive impact of the 150-hour requirement? (Name one.)

9. What, do you think, will be the most negative impact of the 150-hour requirement? (Name one.)

10. What will be the major concern(s) if you must stay one more year in college to fulfill the 150-hour requirement?

11. In general, do you think the 150-hour requirement will enhance the quality of CPAs?

1 2 3 4 5 6 7

definitely not definitely

12. In general, are you in favor of the 150-hour requirement as a pre-requisite for taking the CPA exam?

Yes No

Why?

13. Unlike the CPA exam, the CMA (Certificate of Management Accountant) exam does not require 150 hours. Would you be more interested in taking the CMA exam than the CPA exam, and graduate with 120 credit hours?

Yes No

14. Do you think that the CMA should have the same 150-hour requirement as the CPA?

Yes No

15. What will be the major impact of the 150-hour requirement on your career planning? (Circle one.)

a. I will pursue the CPA anyway.

b. I will consider CMA rather than CPA and graduate with 120 credit hours.

c. I will not pursue either CMA or CPA.

d. I will consider other majors/concentrations than accounting (specify ______)

e. Other (specify _________________________________________

16. Gender: female male

17. Ethnic Group: White African American Asian American

Hispanic Other (specify ___________________________)

18. Age: 18-20 21-23 24-26 27-29 30 or over

19. Class Standing: Fr. So. Jr. Sr. Other (specify ______)

20. Are you a foreign student with an F-1 visa? Yes No

21. Is accounting your current major/concentration?

Yes No

If no, are you considering accounting as your future major/concentration?

Yes No
TABLE 1 Student Demographic Data

                            Private         Public         Total
                       Freq.  Percent  Freq.  Percent  Freq.  Percent

Gender
  Female                75     50.0     54     55.7    129     52.2
  Male                  74     49.3     43     44.3    117     47.4
  Missing                1      0.7      0      0.0      1      0.4
    Total              150    100.0     97    100.0    247    100.0
(Not significant)
Ethnic Group
  White                115     76.7     31     32.0    146     59.1
  African American       5      3.3     11     11.3     16      6.5
  Asian American        17     11.3     40     41.2     57     23.1
  Hispanic               1      0.7      2      2.1      3      1.2
  Other                 10      6.7     11     11.3     21      8.5
  Missing                2      1.3      2      2.1      4      1.6
    Total              150    100.0     97    100.0    247    100.0
(Chi-square = 51.112;
  p = 0.0001)
Age
  18-20                 35     23.3      3      3.1     38     15.4
  21-23                 50     33.3     18     18.6     68     27.5
  24-26                 22     14.7     30     30.9     52     21.1
  27-29                 14      9.3     23     23.7     37     15.0
  30 or over            28     18.7     22     22.7     50     20.2
  Missing                1      0.7      1      1.0      2      0.8
    Total              150    100.0     97    100.0    247    100.0
(Chi-square = 36.383;
  p = 0.0001)
Class Standing
  Junior                61     40.7     31     32.0     92     37.4
  Senior                54     36.0     58     59.8    112     45.1
  Other                 35     23.3      8      8.2     43     17.5
    Total              150    100.0     97    100.0    247    100.0
(Chi-square = 16.255;
  p = 0.0001)

TABLE 2 Research Question 1 Results

Survey Question:
For an additional 30 credit hours, which degree would you prefer to get,
if possible (the most interested)?

                             Private          Public           Total
                        Freq.  Percent   Freq.  Percent*  Freq.  Percent

MBA                      90     60.4      62     64.6     152     62.0
MA                       33     22.1      12     12.5      45     18.4
Graduate Certificate     12      8.1      11     11.5      23      9.4
B.S., special
  designation             4      2.7       7      7.3      11      4.5
No preference            10      6.7       4      4.2      14      5.7
 Total                  149    100.0      96    100.1     245    100.0
(Chi-square = 7.266;
  p = 0.122)

Survey Question: For an additional 30 credit hours, what additional
                 courses would you be interested in taking? Results are
                 displayed for the most interested (ranked first).

                             Private          Public           Total
                        Freq.  Percent   Freq.  Percent   Freq.  Percent

Accounting               87     58.4      75     78.1     162     66.1
Nonaccounting Business   40     26.8       6      6.3      46     18.8
Non-Business              8      5.4       4      4.2      12      4.9
Written Communication     7      4.7       3      3.1      10      4.1
Oral Communication        7      4.7       8      8.3      15      6.1
 Total                  149    100.0      96    100.0     245    100.0
(Chi-square = 18.416;
  p=0.001)

Survey Question: If you want to take more accounting courses, which
                 accounting courses would you be interested in taking?
                 Results are displayed for the most interested (ranked
                 first).

                             Private          Public           Total
                        Freq.  Percent*  Freq.  Percent   Freq.  Percent

Financial Accounting     36     24.7      33     34.0      69     28.4
Managerial Accounting    15     10.3      15     15.5      30     12.3
Tax                      41     28.1      22     22.7      63     25.9
Accounting Information
  Systems                27     18.5       8      8.2      35     14.4
Auditing                 15     10.3       9      9.3      24      9.9
No Preference            12      8.2      10     10.3      22      9.1
 Total                  146    100.1      97    100.0     243    100.0
(Chi-square = 8.314;
  p = 0.140)

* Columns may not sum to 100 percent due to rounding.

TABLE 3 Research Question 2 Results

Survey Question: Are you considering taking the CPA exam in the future?

                        Private         Public          Total
                       Freq.  Percent  Freq.  Percent  Freq.  Percent
Yes                     97      65.1    50      51.6   147     59.8
Possibly                45      30.2    37      38.1    82     33.3
No                       7       4.7    10      10.3    17      6.9
Total                  149     100.0    97     100.0   246    100.0
(Chi-square = 6.253;
p = 0.106)

Survey Question: Unlike the CPA exam, the CMA (Certified Management
                 Accountant) exam does not require 150 hours. Would you
                 be more interested in taking the CMA exam than the CPA
                 exam, and graduate with 120 credit hours?

                         Private        Public          Total
                       Freq.  Percent  Freq.  Percent  Freq.  Percent
Yes                     44      30.6    48      50.5    92      38.5
No                     100      69.4    47      49.5   147      61.5
Total                  144     100.0    95     100.0   239     100.0
(Chi-square = 9.642;
p = 0.002)

Survey Question: What will be the major impact of the 150-hour
                 requirement on your career planning?

                         Private         Public           Total
                       Freq.  Percent*  Freq.  Percent*  Freq.  Percent*
Pursue CPA anyway       96      65.8     45      49.5     141     59.5
Consider the CMA
instead                 23      15.8     24      26.4      47     19.8
Not pursue CMA or CPA   12       8.2     13      14.3      25     10.5
Consider other majors    6       4.1      5       5.5      11      4.6
Other                    9       6.2      4       4.4      13      5.5
 Total                 146     100.1     91     100.1     237     99.9
(Chi-square = 8.2;
p = 0.085)

*Columns may not sum to 100 percent due to rounding.

TABLE 4 Research Question 3 Results

Survey Question: What should accounting firms do to compensate you for
                 the additional year that you have to spend in college
                 (the most important)?

                         Private         Public          Total
                       Freq.  Percent  Freq.  Percent  Freq.  Percent*
More salary            117     78.5     73     76.0    190      77.6
Faster promotion        20     13.4     17     17.7     37      15.1
Do nothing               4      2.7      4      4.2      8       3.3
Other                    8      5.4      2      2.1     10       4.1
 Total                 149    100.0     96    100.0    245     100.1
(Chi-square = 2.693;
p = 0.441)

Survey Question: In your opinion, what will accounting firms actually do
                 to compensate you for the additional year that you have
                 to spend in college (the most probable)?

                          Private         Public          Total
                       Freq.  Percent  Freq.  Percent  Freq.  Percent*
More salary             36      24.3    42      45.6    78      32.5
Faster promotion        22      14.9    14      15.2    36      12.6
Do nothing              85      57.4    34      37.0   119      52.2
Other                    5       3.4     2       2.2     7       3.8
 Total                 148     100.0    92     100.0   240     100.1
(Chi-square = 13.025;
p = 0.005)

*Columns may not sum to 100 percent due to rounding.

TABLE 5 Research Question 4 Results

Survey Question: In general, are you in favor of the 150-hour
                 requirement as a prerequisite for taking the CPA exam?

                        Private         Public          Total
                      Freq.  Percent  Freq.   Percent  Freq.  Percent
Yes                    52     37.4     35     38.0     87     37.7
No                     87     62.6     57     62.0    144     62.3
 Total                139    100.0     92    100.0    231    100.0
(Chi-square = 0.009;
p = 0.923)

Survey Question: What, do you think, will be the most negative impact
                 of the 150-hour requirement?

                                      Private          Public
                                    Freq.  Percent*  Freq.  Percent
More years will be spent in school   24     17.0      24     32.4
Discourage students from pursuing
accounting                           59     41.8      10     13.5
 profession or CPA
Increase the student debt            37     26.2      21     28.4
No work experience and more book
knowledge                            16     11.3       7      9.5
Other                                 5      3.5      12     16.2
 Total                              141     99.8      74    100.0
(Chi-square = 27.396; p = 0.000)

Survey Question: What, do you think, will be the most positive impact
                 of the 150-hour requirement?

                                    Private         Public
                                  Freq.  Percent*  Freq.  Percent*
Better accounting knowledge        43      30.1     30     35.7
Improve the quality of the CPAs    20      14.0      6      7.1
Better preparation for CPA exam    17      11.9     12     14.3
Bring more tuition to colleges      3       2.1      5      6.0
Well-versed and knowledgeable
students/employees                 48      33.6     15     17.9
More pay (salary)                   2       1.4      1      1.2
Fewer CPAs                          5       3.5      1      1.2
Higher degree/recognition           1       0.7      3      3.6
Other                               4       2.8     11     13.1
 Total                            143     100.1     84    100.1
(Chi-square = 21.914, p = 0.005)

*Columns may not sum to 100 percent due to rounding.


We thank the students who participated in this study, and Jean C. Bedard for her helpful comments and suggestions.

Data Availability: Data are available upon request.

(1) Florida had an all-time high of 3,294 first-time candidates in 1983 and an all-time low of 54 first-time candidates in 1984.

(2) There are significant differences between the public and private schools for the ethnic group (Chi-square = 51.1; p = 0.0001), class standing (Chi-square = 16.26; p = 0.0001), and age (Chi-square = 36.4; p = 0.0001) of the participants. For that reason, all data for the two schools are shown separately.

(3) The 150-hour rule subsequently took effect in the state after the data were collected.

(4) Female students were more interested in the CMA exam (46.8 percent versus 29.5 percent, Chi-square = 8.2; p = 0.02) and less interested in a graduate certificate (5.5 percent versus 13.8 percent, Chi-square = 35.4; p = 0.0001) than male students. No other significant differences existed based on gender for the research questions examined.

(5) Non-minority students were more pessimistic that accounting firms would do nothing to compensate them for the additional year of education (66.7 percent versus 23.4 percent, Chi-square = 47.5; p = 0.0001), were less likely to desire faster promotion in return for the additional 30 credits of education (10.3 percent versus 20.0 percent, Chi-square 17.5; p = 0.01), and were less likely to be interested in the CMA exam (27.5 percent versus 55.3 percent, Chi-square 18.6; p = 0.0001) than minority students. No other significant differences existed based on ethnicity for the research questions examined.

(6) In response to the first research question about what courses they would prefer to take to earn the additional hours, the students' responses were significantly different based on their class standing (Chi-Square = 33.8; p = 0.00). Seniors were more interested in financial accounting and tax courses, while juniors were more interested in managerial and AIS courses. No other significant differences existed based on class standing.

(7) Students in different age groups responded with significant difference (Chi-Square = 27.0; p = 0.04) to only one question, RQ1, about which degree they would prefer. Those in the 27-29 age group were more interested in pursuing a Graduate Certificate than other age groups, and were less interested in the MBA. Students in the 21-23 age group were more interested in the MBA, and less interested in an MA degree.

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James L. Bierstaker is an Associate Professor at Villanova University,* Martha Howe is a Senior Lecturer at Bentley College, and Inshik Seol is an Assistant Professor at Clark University.

*James Bierstaker's writing and research for this article were done while he was at the University of Massachusetts Boston.
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Date:May 1, 2004
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