I recognize that the article “CPA Exam Performance” (Stephen E. Rau, Brian M. Nagle, and K. Bryan Menk, September 2019, http://bit.ly/2NhwIvq) focused on the difference between graduate degrees and bachelor’s degrees (among other differentiators), but there was also some discussion about the 150-hour requirement and how it is being met. Not discussed were the needs of students and what would be most beneficial to them.

When I advise my students at Iona College about how to meet the 150-hour requirement, the first thing I look at is how many credits they will have when they complete their undergraduate requirements. Students with minors/dual degrees or who changed majors, for example, may graduate with 144 credits. Their decision options look very different from those of a student who will be graduating with 120 credits. Another consideration is whether they will seek employment in an industry where the employer may pay for the master’s degree. When an employer-paid graduate degree is a possibility, it may make sense to avail oneself of the opportunity.

When I recommend that students complete the graduate degree right after the undergraduate degree, I also suggest they consider doing the graduate degree in a field other than accounting. They are likely to need no more than two accounting courses at the graduate level (to finish the New York requirements for the CPA license, based on Iona’s undergraduate program), which can be taken as electives. Having an undergraduate degree in accounting and a graduate degree in another field will offer two career paths. In addition, some fields might be highly sought after—finance was the popular choice until recently; information systems and data analytics are now frequent choices—making an undergraduate accounting major with a graduate degree in one of them more desirable. Another consideration is that future job searches will put the students up against others who very likely would have a graduate degree. If you need to add 30 credits to get to 150, then using those credits toward an advanced degree makes a lot of sense.

I am not surprised that graduate students have a higher passing rate and higher average score than undergraduates. I advise students to take the exam as soon as they complete their undergraduate degree, to schedule exam dates before feeling ready, and not to worry about failing. Too many students wait until they feel well prepared, which only extends the amount of time between exams and reduces their chances to make significant headway before starting a full-time job with a CPA firm. (Most of my students defer their start date for a year to complete the 150 hours.) You are a CPA or you are not a CPA; there are no “CPAs who took the exam six times.”

The article compares faculty with a CPA versus faculty with a doctorate degree, but was there a variable for a third type—faculty with both a CPA and a doctorate? There is too much discussion of the dichotomy between whether faculty should be practitioners (i.e., master’s and CPA) or academics (PhD, no CPA). What isn’t often discussed is that practical experience is critical, but it can also be stale. Someone who retired 10 years ago has missed a lot of innovation and developments; someone who never worked in the field cannot relate to what is expected and what the profession expects of its graduates.

In the end, I think too much emphasis is placed on pass rates and average scores, rather than the simple question of whether the students pass the exam in a reasonable period. The data that exists on pass rates and average scores is useful, but not determinative. Students who wait until they are fully prepared and confident before taking sections of the exam run the risk of extending the amount of time it takes to complete all sections.

In addition, I think Jason L. Ackerman has a lot right in his column ”The Accounting Curriculum Needs a Complete Overhaul” (September 2019, http://bit.ly/346LRXe). But I take exception to his third recommendation, that “the CPA exam needs to be incorporated in the curriculum.” My approach is not to teach to the exam, but to the needs of the profession. I believe that understanding the needs of employers and what they are looking for in their accounting student hires is more important than early success on the CPA exam. Since the exam has moved away from being tested twice a year, there is no cachet on passing it on the first try. An education program geared to the exam will produce higher scores and faster exam completion, but programs geared to producing students who excel on the job will provide greater upward mobility.

Jeffry Haber, PhD, CPA. New Rochelle, N.Y.

The Authors Respond

Jeffry Haber raises some interesting points in his letter in response to our article. The main issue that he raises appears to be that we did not adequately address “the needs of the students and what would be most beneficial to them” while planning a path to complete 150 hours. While we agree that there are many factors to consider when advising students on how to best prepare for success on the CPA exam, our article was not intended to provide a comprehensive strategy for such advisement. Instead, the main points of our article were to illustrate the benefit of completing a graduate degree and examine the faculty credentials that contribute to CPA exam pass rates.

That said, we feel compelled to address some of the issues raised by Haber. For example, he points out that students who have changed majors or who pursue dual degrees graduate with close to 150 undergraduate credits, and that their cost-benefit analysis for pursuing a graduate degree is likely to be quite different than students who graduate with only 120 credits. We have observed the same at our school, and in fact we stated that the majority of our best students have 150 credits or are close enough to 150 credits at the completion of their undergraduate degree that it makes little economic sense to pursue a graduate degree (p. 46).

Haber mentions that some students will seek employment in an industry where the employer will pay for a graduate degree, and that these students should consider deferring graduate school so that they will not bear the cost of the advanced degree. We agree with this in concept; however, the vast majority of our students who want to become CPAs are taking their first professional position with a public accounting firm. These firms typically do not pay for graduate school and by our observation rarely extend offers to candidates who will not be “CPA ready” when they start their new positions. In addition, many companies that once paid for graduate school have discontinued this practice as a cost-cutting measure. Therefore, opportunities for students to complete the CPA education requirements with a graduate degree paid for by an employer have become increasingly limited.

Haber also indicates that students should consider a graduate degree in an area other than accounting in order to broaden their career opportunities. We couldn’t agree more, and in fact we advise our students to consider graduate options in areas that will complement their undergraduate accounting degree. For many students, however, a master’s in accountancy is still the degree of choice, as it will further prepare them for the CPA exam and provide a curriculum that will benefit them in their professional career for many years.

Similar to Haber, we too advise students who plan to attend graduate school to begin taking sections of the CPA exam as soon as they complete their undergraduate degree. This will help them to complete all four sections as quickly as possible and provide the greatest likelihood of completing the exam before they begin their first full-time position. That said, there is a strategy to the order in which students take each of the sections of the exam. For example, given they would have just completed the auditing course in the spring of their senior year, we recommend they take that section of the exam first. We also encourage them to defer other sections such as Financial Accounting and Reporting and Business Environment and Concepts based on the timing of the related curriculum within the graduate degree. Of course, this strategy greatly depends on the graduate program the student plans to attend and must be customized accordingly.

Regarding faculty credentials, Haber indicates there was too much discussion around the dichotomy of accounting faculty with either a CPA or PhD. We did not intend to promote this dichotomy but were simply responding to prior articles that did in fact argue for the benefits of one credential over the other. We strongly believe that both credentials are beneficial and, in fact, complementary. And while it is true that a CPA faculty member’s practical experience may become “stale” over time, this problem may be mitigated by CPE. In addition, many accounting faculty members (both CPAs and PhDs) provide consulting services or serve on executive boards, further enriching the experiences that they can share in the classroom.

Finally, Haber states that his “approach is not to teach to the exam but to the needs of the profession.” While we do not advocate teaching to the exam, accounting students should graduate with the ability to pass the exam. We believe that an education that prepares students for success on the CPA exam is not mutually exclusive from one that prepares students for success in, and addresses the needs of, the profession. As such, our curriculum is heavily influenced by the AICPA’s “Uniform CPA Exam Blueprints.” In addition, our faculty members maintain an ongoing dialogue with accounting firm recruiters and our advisory board (whose members are accomplished practicing accountants) to maintain our currency to the changing demands of the profession. In so doing, we hope to better prepare our graduates for success on the CPA exam at the earliest point possible and to develop skills that make them invaluable to their employers in the accounting profession.

As stated above, we agree that there are many factors students must consider while weighing their options for completing the CPA education requirements; however, our article was never intended to be an exhaustive list of these factors. Our purpose was to illustrate the benefit of completing a graduate degree and examine the faculty credentials that contribute to CPA exam pass rates.

Stephen E. Rau, PhD. Pittsburgh, Pa.
Brian M. Nagle, PhD, CPA (Inactive). Pittsburgh, Pa.