The effect of the 150 hour requirement on the national number of bachelor of accounting degrees awarded

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THE EFFECT OF THE 150-HOUR REQUIREMENT ON THE

NATIONAL NUMBER OF BACHELOR OF
ACCOUNTING DEGREES AWARDED

Troy Luh, B.B.A., M.Acc., M.S.V.S.

A Dissertation Presented to the Faculty of the Graduate
School o f Saint Louis University in Partial
Fulfillment o f the Requirements for the
Degree o f Doctor o f Philosophy
2003

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UMI Number: 3102911

Copyright 2003 by
Luh, Troy Vaun
All rights reserved.

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c Copyright by
Troy V. Luh
ALL RIGHTS RESERVED
2003

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THE EFFECT OF THE 150-HOUR REQUIREMENT ON THE
NATIONAL NUMBER OF BACHELOR OF
ACCOUNTING DEGREES AWARDED

Troy Luh, B.B.A., M.Acc., M.S.V.S.

A Digest Presented to the Faculty of the Graduate
School of Saint Louis University in Partial
Fulfillment of the Requirements for the
Degree of Doctor o f Philosophy
2003

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DIGEST

The purpose of this paper was to determine the effect of the 150-hour
requirement on the number of accounting graduates. Research indicates that there
has been a decline in the number of accounting graduates over the past 10 years.
Some accounting practitioners and educators believe that adoption of the 150hour requirement, which amounts to an additional year of coursework, has had a
substantial negative impact on the number of accounting graduates. This research
analyzed graduation data from accounting programs in states that had adopted the
150-hour requirement where three years of graduation data was available before
and after the adoption of the requirement.
This research also analyzed data from institutions that have not adopted
any legislation relating to the 150-hour requirement to determine if there is any
correlation between institutions in adopting and non-adopting states.
This research indicated, based on a two-tailed t-test, that there was a
significant difference in the three-year average number of accounting graduates
before and after the adoption o f the 150-hour requirement. However, further
analysis indicates that there was already a downward trend in adopting institutions
before the adoption o f the 150-hour requirement. The research also showed that
the percentage of accounting graduates remained at a relatively constant
percentage o f total business graduates over the eight-year period analyzed.

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2
There was also a significant correlation between the trend in the number of
accounting graduates from institutions in adopting states and institutions in non­
adopting states. In fact, in some cases the decline in accounting graduates was
more significant in institutions in non-adopting states. The total number of

accounting graduates from all reporting institutions nationwide (totaling more
than 1,500 institutions) also showed significant decline.
Other studies have indicated that the decline in interest in accounting
programs is related more to the students’ perception of accounting programs more
than the 150-hour requirement. More research needs to be done to determine
what factors affect a student's choice to enter the accounting profession.
There are already programs such as the American Institute o f Certified
Public Accounting’s Champion Program (AICPA), which encourages a student
membership and participation in AICPA sponsored events.

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COMMITTEE IN CHARGE OF CANDIDACY:
Professor Richard Breslin
Chairperson and Advisor
Associate Professor Gerard A. Fowler
Associate Professor Dorothy D. Miles

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DEDICATION

This dissertation is dedicated to my late mother Maureen J. Luh, whose
great sense o f humor and indomitable spirit will be with me always, and to my
father, Elbert G. Luh, Jr., for his honesty, integrity, and acceptance of whatever
path I chose. With love, to my wife, Katherine, my best friend and the most

beautiful person I know. Thank you for your patience, kindness, understanding,
and love. To my “guys,” Ryan, Matthew, and Keith, I love you to the end o f the
universe, and back.

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ACKNOWLEDGMENTS
There have been many people that have influenced me during my
professional and academic career. I have had many excellent teachers that have
helped shape my thoughts, ideas and teaching style. I would like to recognize a
few of them individually.
David Williams, a fellow graduate student that encouraged the idea of
completing a Ph.D.. Professor Richard Hammar at Evangel University who
encouraged his students to view learning as “Sutter’s Mill”, worth great riches.
Phillip Harsha, Ph.D., at Southwest Missouri State University for his leadership,
friendship and jump shot. Harvey Wallace, partner at Brown Smith Wallace,
L.L.C., for his great flexibility and understanding. Donna Beck Smith for her
encouragement and insightful edits. My father, Elbert G. Luh, Jr. and late
Mother, Maureen J. Luh, for encouraging me to do my best and accepting
whatever outcome.
Dorothy Miles, Ph.D., a member of my dissertation committee, whose
help included valuable technical expertise. Gerard Fowler, Ph.D., also on my
committee, for helping and counseling me during a large part o f this program. A
special thanks to Richard Breslin, Ph.D., the chair of my dissertation committee at
St. Louis University, who took an extra interest in my career and provided to me
extraordinary leadership and friendship.

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Finally. I would like to acknowledge my family. My three boys, who
energize me after a hard day o f work and school with many hugs and kisses. My
wife, Katherine, for her countless hours editing my paper, listening to my ideas,
and supporting my dream.

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TABLE OF CONTENTS
LIST OF TABLES.....................................................................................................ix
LIST OF FIGURES...................................................................................................xi
CHAPTER 1: HISTORY OF THE 150-HOUR REQUIREMENT.........................1
Introduction............................................................................................................1
Legislation............................................................................................................. 4
Rules......................................................................................................................5
The AICPA’s Desired Result............................................................................... 7
Decline in Accounting Graduates........................................................................9
Statement o f Hypothesis..................................................................................... 14
Research Questions............................................................................................. 14
CHAPTER 2: REVIEW OF RELATED LITERATURE...................................... 18
The 150-Hour Background.................................................................................18
Background......................................................................................................... 20
Other Developments...........................................................................................22

Accounting Enrollment Trends.......................................................................... 24
Specific Desired Attributes................................................................................ 30
Professional Demeanor.......................................................................................31
Problem Solving and Decision Making.............................................................32
Interaction........................................................................................................... 33
Leadership........................................................................................................... 34
Communication................................................................................................... 34
Project Management...........................................................................................35
Leverage Technology to Develop and Enhance Personal Competencies
36
Implementation o f Desired Skills Into Curriculum.......................................... 37
CHAPTER 3: RESEARCH METHODOLOGY....................................................39
Operational Definitions...................................................................................... 40
Participants.......................................................................................................... 41
Instruments.......................................................................................................... 42
Design................................................................................................................. 44
Procedure............................................................................................................ 47
Data Analysis......................................................................................................48
Summary............................................................................................................. 49
CHAPTER 4: RESEARCH FINDINGS AND ANALYSIS.................................51
Data Gathering.................................................................................................... 51
Research Question 1 ...........................................................................................51
Adopting Institutions.......................................................................................... 52
Research Qestion 2 .............................................................................................54
Non-Adopting Institutions................................................................................. 54
Research Question 3 ........................................................................................... 54

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Accounting Graduates Trend in Adopting Institutions.....................................56
Accounting Degrees by Adopting State.............................................................63
Research Question 4 .......................................................................................... 66
Total Bachelor’s Degrees Trend........................................................................66
Research Question 5 .......................................................................................... 75
Bachelor’s of Business Degrees Trend..............................................................77
Bachelor’s of Business Degrees by State...........................................................83
Research Question 6 ...........................................................................................87
Percentage Trend in Accounting Degrees to Total Degrees.............................87
Research Question 7 .......................................................................................... 92
Percentage Trend in Accounting Degrees to Total Business Degrees.............93
Research Question 8 .......................................................................................... 98
Comparison of Three-Year Average Before and After 150............................. 98
Two-Tailed t-test.................................................................................................99
Research Question 9 ......................................................................................... 110
Comparison of 3-Year Percentage of Total Graduates
Before and After 150........................................................................................ I l l
The Wilcoxon Signed Ranks Test.................................................................... 111
Research Question 1 0 ....................................................................................... 120
Comparison of Three-Year Percentage of Total Business Graduates
Before and After 150........................................................................................ 121
SPSS Tables.......................................................................................................122
Research Question 1 1 ....................................................................................... 130
Overall Trend in Accounting Graduates Over the Eight-Year Period........... 130
Research Question 1 2 ....................................................................................... 136
Total Undergraduate Degrees Trend................................................................ 136
Research Question 1 3 ....................................................................................... 138
Percentage of Accounting Graduates to Total Graduates

in Non-Adopting States..................................................................................... 144
Research Question 1 4 ....................................................................................... 144
Business Degrees Trend in Non-Adopting States............................................149
Research Question 1 5 ....................................................................................... 155
Percentage of Accounting Degrees to Business Degrees
in Non-Adopting States..................................................................................... 155
Research Question 1 6 ....................................................................................... 160
Correlation of Accounting Graduates in Adopting
and Non-Adopting States.................................................................................. 161
Research Question 1 7 ....................................................................................... 165
Correlation o f Business Graduates in Adopting and Non-Adopting States... 167
Research Question 1 8 ....................................................................................... 167
National Accounting Graduates Trend Over the Eight-Year Period............. 167
CHAPTER 5: SUMMARY AND CONCLUSIONS............................................171
Summary............................................................................................................171
Recommendations..............................................................................................178

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BIBLIOGRAPHY................................................................................................... 181
VITA AUCTORIS.................................................................................................. 187

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LIST OF TABLES
Table 1:

States That Have Adopted the 150-Hour Requirement from June
1994 through April 1997................................................................. 53

Table 2:

States That Have Not Enacted Any Legislation for the 150-Hour
Requirement.....................................................................................55

Table 3:

Total Accounting Bachelor’s Degrees from Adopting
Institutions 1991-92 to 1998-99...................................................... 57

Table 4:

Total Number of Bachelor’s o f Accounting Degrees Conferred by
State in Alabama, Louisiana, Mississippi and Utah from 1992
to 1999............................................................................................. 64

Table 5:

Total Bachelor’s Degrees for Adopting Institutions, 1991-92
To 1998-99....................................................................................... 68

Table 6:

Total Number of Bachelor’s Degrees Conferred in Alabama,
Louisiana, Mississippi and Utah from 1992 to 1999..................... 74

Table 7:

Total Business Degrees for Adopting Institutions, 1991-92
to 1998-99........................................................................................ 78

Table 8:

Total Number of Bachelor's of Business Degrees Conferred in
Alabama, Louisiana, Mississippi and Utah from 1992 to 1999.....85

Table 9:

Percentage of Bachelor of Accounting Degrees for Adopting
Universities as a Percentage o f Total Institutional Degrees
1991-92 to 1998-99..........................................................................88

Table 10:

Percentage of Accounting Degrees as a Percentage of Total
Business Degrees for Adopting Institutions, 1991-92
to 1998-99 ........................................................................................ 94

Table 11:

Three-Year Average Number of Bachelor’s o f Accounting Degrees
Before and After Adoption of 150-Hour Requirement for
Adopting States.............................................................................. 100

Table 12:

Comparison of Three-Year Average Number of Accounting
Graduates Before Adoption o f the 150-Hour Requirement to
Three-Year After the 150-Hour Requirement............................... 106

Table 13:

Three-Year Average Percentage o f Bachelor’s o f Accounting
Degrees to Total Undergraduate Degrees Conferred Before and
After Adoption of the 150-Hour Rule for Adopting Institutions. 112

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Table 14:

Comparison of the Three-Year Average Percentage of Accounting
Graduates to Total Undergraduates Before the Adoption o f the
150-Hour Requirement to the Three-Year Average Percentage
After the Adoption of the 150-Hour Requirement Based on
Wilcoxon Signed Ranks Test......................................................... 117

Table 15:

Three-Year Average Percentage o f Bachelor’s o f Accounting
Degrees to Total Undergraduate Business Degrees Before and
After Adoption of 150-Hour Requirement................................... 122

Table 16:

Comparison of the Three-Year Average Percentage of Accounting
Graduates to Total Business Undergraduates Before the Adoption
of the 150-Hour Requirement to the Three-Year Average After the
Adoption of the 150-Hour Requirement Based on Wilcoxon
Signed Ranks Test...........................................................................127

Table 17:

Bachelor’s of Accounting Degrees in Non-Adopting States,
1991-92 to 1998-99.........................................................................132

Table 18:

Total Institutional Bachelor’s Degrees in Non-Adopting States,
1991-92 to 1998-99.........................................................................140

Table 19:

Percentage of Bachelor’s o f Accounting Degrees as a Percentage
of Total Institutional Degrees for Non-Adopting States,
1991-92 to 1998-99.........................................................................145

Table 20:

Total Bachelor’s o f Business Degrees in Non-Adopting States,
1991-92 to 1998-99.........................................................................151

Table 21:

Percentage o f Bachelor’s of Accounting Degrees as a Percentage
of Total Business Degrees for Non-Adopting States,
1991-92 to 1998-99.........................................................................156

Table 22:

Comparison of Trend in Accounting Graduates in Adopting States
and Non-Adopting States for the Eight Academic Year Period
1991-92 through 1998-99 ............................................................. 164

Table 23:

Comparison of Trend in Business Undergraduates in Adopting
and Non-Adopting States for the Eight Academic Year
Period 1991-92 through 1998-99 ..................................................166

Table 24:

Total Number of Accounting Degrees Conferred for All Reporting
Colleges and Universities from Academic Years Ending
1992 to 1999...................................................................................170

x

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LIST OF FIGURES
Figure 1:

Total Accounting Degrees in Adopting States................... 67

Figure 2:

Total Bachelor's Degrees in Adopting States.....................76

Figure 3:

Total Bachelor’s of Business Degrees
in Adopting States...............................................................84

Figure 4:

Total Number of Accounting Degrees
in Non-Adopting States...................................................... 137

Figure 5:

Total Number of Bachelor’s Degrees
in Non-Adopting States...................................................... 139

Figure 6:

Total Number of Business Degrees
in Non-Adopting States..................................................... 150

Figure 7:

Comparison o f Accounting Degrees Awarded
in Adopting and Non-Adopting Institutions....................163

Figure 8:

Comparison of Undergraduate Business Degrees Awarded
In Adopting and Non-Adopting Institutions.....................168

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CHAPTER 1: HISTORY OF THE 150-HOUR REQUIREMENT

Introduction
As businesses become more and more complex, the need for reliable
record keeping and disclosure becomes vital. It is especially important for the
information to be accurate when a company’s financial information will be used
and relied upon by third parties. Much of the financial information o f a company
is communicated in the form of financial statements. Financial statements are the
principal means through which financial information is communicated to those
inside and outside of a company (Kieso, Weygandt, and Warfield, 2001).
Individuals with an accounting degree or an accounting background typically
prepare the financial statements and are referred to as accountants. In addition to
the preparation of financial statements, accountants perform a variety of activities
for businesses.
According to the U.S. Department of Labor, public accountants perform a
wide range of accounting, auditing, tax, and consulting activities for their clients,
who may be corporations, governments, nonprofit organizations, or individuals
(Bureau of Labor Statistics, 2002-03). For example, some public accountants
specialize in tax matters, such as advising companies o f the tax advantages and

disadvantages o f certain business decisions and preparing individual income tax
returns. Others offer advice in areas such as compensation or employee healthcare
benefits, the design of accounting and data-processing systems, and the selection
o f controls to safeguard assets. These types of work are considered consulting

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2
services. Some of these services require the accountant to issue an independent
report. Some specialize in forensic accounting—investigating possible
wrongdoing and fraud. Still others audit clients' financial statements and report to
investors and authorities that the statements have been correctly prepared and
reported. Public accountants, many of whom are CPAs, generally have their own
businesses or work for public accounting firms (Bureau of Labor Statistics, 200203). There has been much negative publicity recently over public accounting
firms offering auditing and consulting services to the same clients. Critics claim
that the monetary reliance on other services hinders independence, which is
magnified when accounting irregularities are uncovered.
A specific set of skills is required in order to be successful in the
accounting profession. These skills are acquired though advanced training, college
education, and experience in the field. Most colleges and universities have, in
their business curriculum, an accounting degree program. The traditional
bachelor of accounting program requires approximately 120 to 12S college credit
hours, which includes roughly 30 credit hours in accounting (College, 2000).
Most accounting graduates take the Uniform Certified Public Accountant (CPA)
Exam soon after graduation. When all four sections o f the exam are passed with a
minimum score of 75%, candidates are awarded a certificate designating them as a
certified public accountant (How, 2002). The next step taken by most CPAs is to

obtain a license to practice public accounting from the AICPA. In order to receive
a license to practice public accounting after the exam has been passed, most states
require two years of apprenticeship under the direction o f a licensed CPA

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(MSCPA, 1999). Accountants are not allowed to present themselves to the public
as a CPA unless they have a current license to practice in their resident state. The
CPA license is considered one of the most prestigious credentials in the
accounting field (Morrow, 2001), (Helton, 2002). In fact, all companies that sell
their stock to the public must have their financial statements audited by a licensed
CPA (Kieso et al., 2001). Most CPAs are members o f state or national
organizations of CPAs.
There are many prominent accounting organizations in the United States.
The most influential accounting organization in the United States is considered
the American Institute of Certified Public Accountants (AICPA) (Peck, 1999).
The AICPA is a national organization of CPAs from every state in the union.
Most CPAs are members of the AICPA. The members o f the AICPA elect the
members o f the Financial Accounting Standards Board (FASB). The FASB
consists of seven members and is responsible for the development of public
accounting principles and is considered the most influential accounting body in
the world (Stice, Stice, and Diamond, 2002). The FASB is considered the
“Supreme Court” of accounting (Levy, 2001).
To become a member of the AICPA, one must be a CPA. Over the past 10
years, the AICPA has changed the requirements that qualify a candidate to take
the CPA exam. In the past, only a four-year bachelor’s degree in accounting,
which consists of approximately 120 to 125 credit hours, was required to qualify
to take the CPA exam. The AICPA has since mandated approximately 25 to 30

additional credit hours to qualify to take the CPA exam and become a member of

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the AICPA. Because of the AICPA's overreaching influence, most states have
adopted this policy and subsequently passed legislation requiring 150 credit hours.
The AICPA does not specify what particular courses comprise the additional
hours (Donelan. Philipich, 2001), (Frequently. 1999). They do, however, give
some guidance as to the specific desired skills with the ultimate goal o f creating a
well-rounded professional (Byrd, 1996) (Albin and Crockett, 1991).
The AICPA stipulates that the 150 hours of course work must include at
least 60 semester hours in business, with no less than 27 hours in accounting
beyond the introductory course or courses (FSA, 1996). Those accounting courses
must also include at least one auditing course, and at least 18 semester hours must
be upper division courses (MSCPA, 1999).

Legislation
Because accounting is a constantly changing profession, statutes requiring
150 semester hours of education to become a Certified Public Accountant must be
flexible enough to allow variety in the content of accounting programs. The
statutes must indicate that eligibility to apply for the CPA Examination includes a
condition for completion of 150 hours o f course work, with at least a
baccalaureate degree and a concentration in accounting. The following language is
recommended for the statute:
The education requirement for a certificate, which must be met before an
applicant is eligible to apply for the examination prescribed in, shall be as
follows: After the expiration o f the year period immediately following the
effective date of this Act, at least 150 semester hours of college education

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5
including a baccalaureate or higher degree conferred by a college or
university acceptable to the Board, the total educational program to
include an accounting concentration or equivalent as determined by Board
rule to be appropriate (AICPA/NASBA, 1999).

Rules
A candidate will be deemed to have met the education requirement if, as
part of the 150 semester hours of education, he or she has met any one o f the
following four conditions (AICPA/NASBA, 1999).
1. Earned a graduate degree with a concentration in accounting from an
accounting program or department that is accredited (level three accreditation)
by an accrediting agency recognized by the Board.
2. Earned a graduate degree from a business school or college o f business that is
accredited (level two accreditation) by an accrediting agency recognized by
the Board and completed at least 24 semester hours in accounting at the
undergraduate level or 15 semester hours at the graduate level, or an
equivalent combination thereof, including courses covering the subjects of
financial accounting, auditing, taxation, and management accounting.
3. Earned a baccalaureate degree from a business school or college of business
that is accredited (level two accreditation) by an accrediting agency recognized
by the Board and completed 24 semester hours in accounting at the
undergraduate or graduate level, including courses covering the subjects of
financial accounting, auditing, taxation, and management accounting; and

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6
completed at least 24 semester hours in business courses (other than
accounting courses) at the undergraduate or graduate level.
4. Earned a baccalaureate or higher degree from an accredited educational
institution (level one accreditation) including:
a. At least 24 semester hours of accounting at the upper division or graduate
level, including courses covering the subjects of financial accounting,
auditing, taxation, and management accounting (an upper division course
is normally defined as a course taken at the junior or senior level. In
accounting, this would normally be all courses taken beyond the
elementary level.); and
b. At least 24 semester hours in business courses (other than accounting
courses) at the undergraduate or graduate level (AICPA/NASBA, 1999).
The requirement does not apply to CPAs who received their certification
in advance of the effective date of the change in the education requirement in their
state. For AICPA membership, the requirement is applicable to any candidate that
takes the CPA exam and applies for membership after the year 2000 (AICPA,
1999), (Dennis, 2000). The AICPA education proposal does not require that the
candidate complete a master's degree to meet the requirement. It can be met in a
variety of ways, including extra hours at the graduate level without a master's
degree. None of the states that have passed the 150-hour rule demand a master’s
degree (AICPA, 1999), (College o f Business Administration, 2000).

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7
The AlCPA’s Desired Result

The AICPA expects entrants who complete the requirement to be more
knowledgeable, efficient and work with less supervision (AICPA, 2002) (AICPA
mission. 2000). They also anticipate that both time and staff size will be reduced
to offset increases in client expenditures.
They are also hopeful that the requirement will attract a higher caliber
student to accounting because it brings CPAs in line with other professions, such
as medicine and law, which require additional education. Studies indicate that the
top high school students are increasingly selecting careers that require graduate
training. Also, the contention is that students completing the requirement will be
able to advance more rapidly in their firms due to an increased education base.
College educators and professional practitioners began realizing several
years ago that accounting graduates needed a new set of skills. In fact, in 1997 a
committee was formed called the Education Research Committee, which issued a
report detailing the necessary skills for the new graduate entering the field of
accounting (Baril, Chain, Cunningham, Fordham, Gardner, Pierre, Wolcott,
1997). The Committee was made up of college professors and accounting
practitioners from all over the country. The Committee conducted interviews with
31 accounting practitioners with extensive experience evaluating entry-level
accountants. They concluded that one of the major weaknesses o f accounting
graduates is that they often lack the ability to think critically (AICPA Education
Research Committee, 1997). The Committee specifically listed the following nine

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