Survey: Time Investment Trumps Cost in Student Hurdles to CPA

Research by the Pennsylvania Institute of CPAs (PICPA) shows that the time students must devote to earning the 150 credit hours required for CPA licensure is a bigger barrier than the cost.

Through a 2023 survey of 763 business administration students and accounting majors enrolled at U.S. colleges and universities across 47 states, PICPA also found that it’s possible to change students’ minds about becoming a CPA but reducing the educational requirement to 120 hours is not among the top five reasons.

Much of the debate around the 150-hour issue is focused on reducing the number of required credit hours or lowering the costs, but the report says it’s possible that modifying the education requirement will not “drive as much transformation of the pipeline as some have suggested.” PICPA CEO Jen Cryder added, in an interview, “It’s definitely a piece of the puzzle but it’s only one piece.”

The survey was designed to better understand students’ perceptions of the accounting profession and the roadblocks they see to becoming a CPA. The white paper, released in December 2023, also outlines actions firms can take to address the unprecedented pipeline challenges driven by lower U.S. birth rates, falling college enrollment, fewer U.S. students earning accounting degrees, shrinking numbers sitting for the CPA Exam, the high cost of college tuition, and the perception that other majors are more interesting and rewarding, the research showed.

The ROI on Students’ Time

The time needed to become a CPA was cited most often as a disincentive by both business administration students and accounting majors. “Students are savvy,” the report said. “They are calculating the return on their time invested and seeing that it represents a bigger burden than the return on their dollars invested – especially when they can find creative ways to pay for the cost of education.”

Non-white respondents, who made up 52% of the respondents, cited their second most popular reason for foregoing the CPA, at 43.3%, as “the cost to prepare for and take the CPA Exam is not worth the financial investment.”

The cost of higher education, CPA course preparation and the exam itself can be a burden, especially on diverse students. Cryder said a review course can cost $5,000 and fees for each of the four exam sections can amount to several hundred dollars. (Costs vary by state.) While firms oftentimes will cover those costs, it’s not a guarantee. The research showed that more than 73% of the surveyed students relied on some form of external financial support and that increased scholarships could help.

“The educational requirement for licensure has almost nothing to do with the choice of majoring in accounting because they’re completely separate issues,” Cryder said. “Then, once we look at licensure, it’s really the time that people are putting in and then the return that they’re getting on that once they go into the profession.” While firms have made strides in offering higher starting salaries over the last few years, they must go further, she said.

Turning the Tide

Accounting majors could change their minds about becoming a CPA, the research shows. In addition to better work-life balance and higher starting pay, they are looking for higher long-term earning potential and more opportunities for career advancement. “While the 150-credit-hour-requirement hurdle matters, business model changes will likely have a bigger effect on calling back these students,” the report said.

Work-life balance came out as the top factor among accounting majors. “If they had written off CPA licensure, that’s the No. 1 thing that would change their minds,” Cryder said. “We’ve got to listen to that data – it’s speaking loudly.”

The survey shows that the profession can control some of the factors that are turning students away from accounting as a whole and earning their CPA specifically.

  1. Understand that there are two pipelines of professionals and build unique solutions for each. The first is the pipeline of high school students who become accounting majors. The second is the pipeline of accounting majors who become CPA candidates. Cryder called this one of the most surprising outcomes of the survey. “Until you really pick apart the pieces you can’t really effectively build solutions.” More than 44% of business administration majors indicated that they chose their major before college enrollment; one-third of accounting majors made their choice then too. “That was one of the real ‘aha’ moments that emerged for us in the research.”
  2. Focus on building awareness of the profession and the accounting major in high schools with the right messages delivered the right ways. Cryder says the profession must appeal to high school students emotionally, not just intellectually, and on platforms they use, such as TikTok, YouTube, Instagram and Snapchat. “They care so much about the impact that their work can have, and our profession has an incredible story to tell here. CPAs power trust, growth and opportunity. I think that we can tell that story unlike any other profession.”
  3. Maximize the return on time investment by changing firm business models and creating expedited pathways to licensure. “A different accounting firm business model and buying down the time/cost variable may work to encourage students that becoming accounting majors and working toward the CPA license is worthwhile,” the report said. Cryder noted that PICPA started a pilot program this year that would cut the time to reach 150 credit hours. High school students can earn three college credits from the University of Pittsburgh for passing an introduction to financial accounting class. Next year, Cryder plans to scale it across the state and add an introduction to managerial accounting class for another three credits. In addition, firms offering additional exam scholarships and time off to study could put CPA licensure within reach.

Perceptions About the Accounting Profession

The research reflects that students are choosing accounting majors for three reasons, with nearly 80% saying “accounting will allow me to pursue a meaningful and impactful work,” followed closely by “accounting will provide me with a stable career,” and “accounting will lead me to a career in demand.”

The survey cited the most common reasons why business administration students did not select accounting as a major. The most No. 1 reason, at 21.2%, was that they were advised against majoring in accounting by friends, family or classmates. The second most frequent response was “other majors are more unappealing” at 18.3%, and “day-to-day work too difficult” was the third most common response at 14.7%.

“Firms need to focus on making it a place people want to start their careers and spend their careers because there’s so much in their control,” Cryder said. “That really comes out in the data.”

This article originally appeared in the January 2024 edition of INSIDE Public Accounting Monthly. To subscribe, click here.


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