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Response to Journal of Accountancy article, Feb. 10, 2023, ‘NASBA upholds 150-hour education requirement’

February 27, 2023  |  Linda Wedul, CAE

Response to Journal of Accountancy article, Feb. 10, 2023, ‘NASBA upholds 150-hour education requirement’

Editor’s note: This was submitted to the Journal of Accountancy and authored by Charles Esler, CPA, chair of the MNCPA board of directors, and Linda Wedul, CAE, MNCPA president and CEO.

A recent Journal of Accountancy article reported the Minnesota Society of CPAs introduced legislation to broaden the path to CPA licensure. This action was done with a great deal of thought and input from members working at CPA firms of all sizes and in business and industry. We believe we are closer to the AICPA and NASBA in finding solutions for this critical issue than the article leads readers to believe.

Demographic statistics show a CPA pipeline crisis that was known and predictable. In other words, it is a hard trend. In 2018, Dr. Nathan Grawe, a professor and economist at Carleton College, completed a demographic analysis that predicted a 15% decline in high school graduation sizes by 2025. This would lead to a decline in college enrollment and a decrease in potential accounting majors and CPA candidates. Pair that with the outflow of baby boomer CPAs via retirements, a predictable trend accelerated by the pandemic, and it’s not hard to see how we arrived at this point.

Further, an academic study published in 2019 by John Barrios from the University of Chicago Booth School of Business evaluated the impact of the 150-hour rule on quality in the profession. His study found a 15% reduction in first-time candidates when a state implemented the 150-college credit rule. This reduction came from both high- and low-ability candidates, which is based on passing or failing an exam. When this reduction in candidates is aggregated over 40 years, it further exacerbates the pipeline trends.

No time to wait

With these trends in mind, calls to evaluate CPA licensure have yet to be adequately addressed. 2018 was the time to anticipate and adapt. Five years later, the luxury of time is greatly reduced, and we are beginning to see how the direct users and benefactors of CPA services are negatively impacted.

The financial stability of communities, organizations and individuals are in peril because there are not enough CPAs. In the past year, the Minnesota Society of CPAs experienced sharp increases in calls from cities, school districts, individual clients and companies required to have an employee benefit plan audit, asking for help to find a CPA. Their prior CPA was either no longer practicing or let them go as a client.

The MNCPA board and staff discussed the 150-hour rule for years before voting unanimously to broaden the pathways to licensure in response to feedback from its members. In numerous discussions with those outside of Minnesota, it became evident that this is not a unique view and efforts are being expended elsewhere. There is a grassroots effort to respond to member concerns, a changing business and employment environment, and risks to the public. While certain communication and actions from national organizations appear to reflect an overwhelming desire to protect the status quo, there is room for agreement.

Considering substantial equivalency

The profession chose wisely to use the term substantial equivalency. Substantial, as defined by Merriam-Webster, means, “being largely but not wholly that which is specified.” This allows for some flexibility in an environment where 55 boards of accountancy are setting requirements for CPA licensure. Currently within rules, there are multiple variations in the requirements, yet they are considered substantially equivalent. One notable example is some states allow candidates to sit for the CPA exam after completing 120 college credits, but must complete 30 additional college credits for licensure, while others require 150 college credits before a candidate can sit for the exam and be licensed.

This 120/150 to sit for the exam option is not part of the Uniform Accountancy Act, yet it has been considered substantially equivalent. Now more than 40 states allow the option to sit for the exam with 120 credits and apply for licensure with 150 credits.

The Minnesota Society of CPAs introduced legislation to broaden the path to CPA licensure in Minnesota. All options require passing the CPA exam and an ethics exam. The options include:

  1. 150-college credit hours with one year of experience. This is the current requirement.
  2. 120-college credit hours with an accounting degree or equivalent with two years of accounting experience. This would be a new, additional pathway.
  3. 120-college credit hours with an accounting degree or equivalent, one year of experience and 120-continuing professional education credits within one year of licensure. This would be a new, additional pathway.

This is not lowering the bar; it is broadening the path. All candidates must pass the CPA exam, which is the unifying element among all the jurisdictions and passing the exam demonstrates competency to practice as a CPA.

Using additional work experience allows candidates to enter the workforce more quickly, creates an opportunity for additional professional training to become a successful CPA and reduces the cost to become a CPA. This also supports efforts to reach minority and first-generation college students.

We believe additional work experience is substantially equivalent to 30 college credits. Thirty semester college credits are approximately 1,350 hours, as defined by the United States Department of Education. This is well below a standard work year of 2,080 hours, which does not include overtime that is typical of an entry-level position.

Engagement, conversation imperative

Analysis from NASBA, the U.S. Bureau of Labor Statistics and the AICPA shows that 50% of college graduates with accounting degrees do not sit for the CPA exam. Another 17% sit for the exam and do not pass all four sections. Many of these candidates lose scores because they reach the 18-month window and lose a passing grade. Only 30% of accounting graduates pass the CPA exam.

There are thousands of individuals with accounting degrees working in public accounting with multiple years of experience who do not see value in taking additional college credits. If even a small portion of those accountants pursue CPA licensure, it benefits communities and organizations to which CPAs provide services.

It is a significant benefit to the public and the profession that CPAs are regulated. Regulations provide accountability and protect the public. Broadening the path to licensure is about adapting so the profession continues to provide the services communities and organizations of all sizes need to thrive. Introducing legislation creates an opportunity for stakeholders to engage in an open conversation to define substantial equivalency. These are important discussions, and we encourage CPAs to engage and be part of the dialogue. 

Learn more about this initiative

The MNCPA introduced legislation (HF 1749 and SF 1660) in February 2023 to consider broadening the pathways to CPA licensure. The legislation was advocated for and supported by the MNCPA board after years of discussion with members concerning the ongoing CPA pipeline concerns.

Learn more about broadening the pathways to CPA licensure.

Topics: Legislative & Government Affairs, Accounting & Auditing, Business & Industry, Staffing, Workplace Trends, Succession, Reputation

Linda Wedul, CAE

Linda Wedul is president and CEO of the MNCPA. She’s usually spotted at MNCPA events, introducing herself to members with a warm smile and memorable laugh. Mixed among the Footnotes, accounting journals, leadership books and three monitors in her office, you’d be surprised to see a dog kennel. Her unpaid job is volunteering as a foster family for service dogs in training through Can-Do-Canines. She and her husband have two adult children and live in Farmington. Linda can be reached at 952-885-5516 or

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