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 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 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, 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 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 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 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 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, Florida International University, Florida State University, University of Central Florida, University of Florida, University of Miami, University of North Florida, University of South Florida and University of West Florida. …