The 150‐hour rule: does it improve CPA exam performance?

Abstract

The American Institute of Certified Public Accountants (AICPA) has established 150 semester hours as the minimum education requirement to qualify to take the CPA examination. This educational requirement is generally believed to impose additional potential costs on students, academic accounting departments, public accounting firms, and audit clients. Since a goal of the 150‐hour rule is to improve the overall quality of work performed by CPAs, it is worthwhile to examine whether an association exists between the number of semester hours of education and performance on the CPA exam. After controlling for SAT scores (verbal and quantitative), accounting credit hours, and enrollment in CPA coaching courses, this study found that first‐time candidates, on a national basis, having a minimum of 150‐semester hours of education performed better on the CPA exam. We interpret these results as indicating that there are benefits to students, CPA firms, and their audit clients from the higher education standard.