The 150-hour requirement for obtaining a CPA license has led to a 26 percent decline in entry of minority CPAs, a study published in the Journal of Accounting Research found.

That decline contrasts with a “significantly smaller” 14 percent decline in entry for nonminority CPAs, the study found. The authors—Andrew Sutherland of the Massachusetts Institute of Technology,  Matthias Uckert of the University of Amsterdam and Felix Vetter of the University of Mannheim—also found a 13 percent greater drop in minority than nonminority entry following enactment of the requirement.

The AICPA voted in 1988 to require all new CPAs to complete 150 credit hours of college education in 1988, according to Accounting Today. All states and territories had adopted the 150-hour rule by 2015.

The authors examined data from another study containing more than 8 million job postings from the Boston Globe, New York Times and Wall Street Journal to see whether the 150-hour rule influenced employers' perceptions of CPA quality. "We find no association between enactment and either the number of postings for accountants or employers’ preference for candidates with the extra year of study," the authors wrote.

"Most states did not require specific accounting or even business courses, leaving candidates free to choose the coursework they pursue to complete the extra 30 credit hours," the researchers also found. "Overall, our analyses of exam passing patterns, discipline records, and job postings find scant evidence of CPA quality benefits associated with the 150-hour rule."

In their conclusion, the authors wrote, "Using granular data, we cannot detect any improvement in CPA quality following the enactment of the additional educational requirements. In fact, our analyses of licensing exam passing patterns indicate a decline in high quality candidates that is concentrated in universities with large minority populations. Moreover, our analyses of disciplinary actions point to the 150-hour rule having a null, or if anything, weakly positive effect on professional misconduct. Last, we find no evidence that the 150-hour rule altered accountant employers’ perceptions of CPAs. Overall, our evidence suggests that licensing requirements can lead to lower minority participation in professional occupations and impede income mobility and employers’ efforts to diversify their workforces."

In a study based on a survey of attitudes among students, the Center for Audit Quality (CAQ) similarly found that the 150-hour requirement posed a significant barrier for Black and Hispanic students.

AICPA President and CEO Barry Melancon defended the importance of the 150-hour rule in allowing CPAs to practice across state lines during a Feb. 1 speech to the Accountants Club of America, according to Accounting Today. As Accounting Today reported earlier, Melancon said during his speech that an AICPA National Pipeline Advisory Group has been working on finding out why students are dropping out of the accounting field. It is also looking into ways to make the 150-hour CPA licensing requirement less costly and more flexible, as in one program at Tulane University in New Orleans.

The National Association of State Boards of Accountancy (NASBA) has established a task force that is reportedly looking into alternative pathways that are equivalent to the 150-hour requirement Accounting Today reported. According to NASBA Chair Stephanie Saunders, "This additional path, to be defined in greater detail, would include an education and experience component to measure a participant’s competency to be licensed as a CPA and would be considered equivalent to the current 150-hour pathway defined in the Uniform Accountancy Act. The development of a structured professional program would require legislative, and rules changes in some states and may impact interstate mobility in some states until all states have adopted the new equivalent path."