How the new 150 hour rule means grad school for prospective CPAs.

How the new 150 hour rule means grad school for prospective CPAs

BY :  Kay Easton | February 19, 2013

Certified Public Accountant (CPA) is the only licensed qualification in accounting.3 Es for a CPA: Education, examination, and experience Professionals are required to take and pass the Uniform CPA Examination to become a CPA. The three Es required for CPA licensure are:

  1. Education
  2. Examination
  3. Experience

Following is an explanation of the requirements to become a CPA, but candidates should always check with their state board of accountancy for specific information because requirements differ from state to state.

CPA education

Although a bachelor's degree normally takes 120 hours to complete, most states now require that CPAs have 150 hours for licensure. The American Institute of CPAs (AICPA) has attributed the increase in the number of hours to an increase in official accounting and auditing opinions and judgments; new tax laws and increased compliance with federal, state, and local regulations that require a greater knowledge base; and an increased need for highly technical accounting services and greater auditing efficiency.

Note that accounting professionals who received their CPA certification before the effective date of the 150 hour rule are not affected. Only four remaining states have future effective dates for the requirement: California (January 1, 2014), Colorado (January 1, 2015), and New Hampshire and Vermont (July 1, 2014).

Candidates for licensure should check that all colleges and universities they plan to attend and all programs and courses they plan to take are accredited.

Is a master's degree required?

Although it is possible to meet the 150 hour requirement at the undergraduate level or by taking graduate courses post-baccalaureate, AICPA recommends pursuing one of the following:

  • A master's degree in accounting such as a Master of Accountancy (MACC) or a Master of Science in Taxation (MST)
  • A Master of Business Administration (MBA) with an accounting concentration
  • A five-year integrated program that leads to a master's degree in accounting

Although none of the states currently require a master's degree, AICPA maintains that students with a graduate degree have a higher rate of success on the exam and have entry-level salaries 10 to 20 percent higher than those with only a bachelor's degree.

CPA examination

The following eight steps present an overview of the Uniform CPA Examination process:

  1. Exam prep: Options include self-directed review with DVDs, textbooks and online books, self study materials and practice exams, and online video lectures. Instructor-led online or classroom lectures are also available.
  2. Select test site: Contact the state board for exam details on where and when the test is offered.
  3. Submit exam application/pay fees: Each state has their own fee structure for taking and retaking the entire exam or individual sections.
  4. Submit academic transcripts: If required.
  5. Receive notice to schedule (NTS): Testing is available for two months in every quarter during the year. Most NTS are valid for 6 months.
  6. Take exam: Candidates do not have to take all sections at one time. All candidates are fingerprinted for identification before each exam.
  7. Exam graded: Exams are graded by AICPA, results are sent to the National Association of State Boards of Accountancy, which notifies the state board.
  8. Candidate notified: The state board notifies the candidate.

CPA examination: the details

In addition to an extensive knowledge of accounting and auditing, the examination seeks to evaluate how candidates organize material and ideas, how they develop and present evidence, and how proficient they are in business English and written communication. The exam takes 14 hours and is structured in four parts as follows:

  1. Auditing and Attestation: 4.5 hours, 60 percent multiple choice/40 percent simulations (Per AICPA, 2012 cumulative pass rate: 46.89 percent).
  2. Financial Accounting and Reporting: 2.5 hours, 60 percent multiple choice/40 percent simulations (2012 cumulative pass rate: 49.97 percent).
  3. Regulations: 3 hours, 60 percent multiple choice/40 percent simulations (2012 cumulative pass rate: 48.15 percent).
  4. Business Environment and Concepts: 2.5 hours, 85 percent multiple choice/15 percent written (2012 cumulative pass rate: 52.83).

Candidates can take one or more sections in each quarter but cannot retake a failed section in the same quarter in which they failed it. Credit is earned for each section the candidate passes and is valid for 18 months. Credit is lost if all sections are not passed within the 18 month period. Candidates can continue to retake the exam until they pass it.

International candidates

In August 2011, the Uniform CPA Examination was offered outside the U.S. for the first time. Candidates can take the exam, offered only in English, in Bahrain, Kuwait, Japan, Lebanon, and the United Arab Emirates; beginning in February 2012, residents of Brazil, Argentina, Venezuela, and Columbia can take the exam in Brazil. Updates to international locations are published at

CPA experience

Requirements for work experience vary radically from state to state. Some require experience to sit for the CPA exam, others require it only for certification and licensure. Many require the work experience to be under the direct supervision of a CPA. Some states will reduce the experience requirement if the candidate has a master's degree. The years of experience required also varies by state.


About the Author:

Kay Easton graduated from the State University of New York with a BA in English Literature. As a freelance and technical writer with more than 20 years experience, she writes articles for the Internet on a variety of topics.