The Plight of the Community College Graduate Entering the CPA Pipeline

While many in the profession have expressed concern about the current 150-hour model’s effect on the shrinking pipeline to the profession, less attention has been paid to the challenges some students face in simply obtaining a diploma. This article takes a closer look at the predicament many community college students face when they try to transfer to a senior college to finish a degree in accounting that eventually leads to licensure as a CPA. A more streamlined process across public institutions in New York State (models for which have been used elsewhere) could lead to an increased number of potential CPAs, drawn from a more diverse pool of students, into the talent pipeline.

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Little attention has been given to early entry into the profession through the community college pathway and the costly obstacles that community college students face as they attempt to enter the CPA pipeline. While much has been written about the burden of obtaining 150 credits to attain the CPA license after passing the exam, less focus has been on the challenges that many students face reaching that point.

Recent initiatives have highlighted the alternatives to the current 150-hour model. A recent survey conducted by the California State Board of Accountancy of 7,921 accounting professionals found that 89% preferred the 120-credit education plus experience model for licensure. (https://tinyurl.com/3e74vbsa). Work-for-credit programs have been implemented in New Jersey between firms and senior colleges to alleviate some tuition costs for the 30 credits required beyond the bachelor’s degree, with support from the New Jersey State Board of Accountancy. Examples include Saint Peter’s University and Price-waterhouseCoopers Work for Credit program, whereby students can earn 30 credits through a paid internship (https://tinyurl.com/2ckzcpak) as well as a similar program between Seton Hall University and Withum (https://tinyurl.com/bdzxwzp8). In addition, the AICPA/National Association of State Boards of Accountancy (NASBA) Experience, Learn, and Earn Program, recently piloted with Tulane University, also helps to reduce the cost of these extra credits. Even more recently, the AICPA and NASBA issued a proposal that would enable licensure after passing the CPA exam with a bachelor’s degree, via a competency-based pathway (one year experience), as an alternative to the traditional 150 credit pathways (https://tinyurl.com/y8uxkmbn).

The New York State Board for Public Accountancy (NYSBPA) maintains that it is “in the best interest of the profession, exam candidates, and future licensure applicants to maintain uniformity among the State Boards on the education rules.” These discussions often assume, however, that the additional 30 credits beyond the bachelor’s degree are the sole educational cost barrier to entering the profession. The National Pipeline Advisory Group (NPAG) is an independent advisory group that convened in July 2023 in response to an AICPA council resolution aimed at developing a national strategy to address accounting talent issues (https://accountingpipeline.org/npag-report). Concerning community colleges, NPAG states:

NPAG’s pipeline survey found that 47% of students believed that creating or enhancing programs and resources to aid in the transition from community college to four-year accounting degree programs would effectively address pipeline concerns. Advising resources are just one aspect of this transition. What is truly needed is transparency regarding the cost of this transition, starting at the onset of an associate degree. NPAG advocates for widely shared successful articulation agreements, which are typically shared only among institutional administrators. Making these agreements available to incoming community college students could help mitigate potential cost shocks associated with transferring and enable students to plan strategic pathways to minimize those costs. Such strategies might include understanding transfer policies and grade point average requirements to receive equivalent course credit at a four-year institution for accounting courses taken at a community college.

In addition to summarizing New York State (NYS) education requirements for licensure and the impact on the education path for community college students, this article examines the transfer policies imposed by the City University of New York (CUNY) and the State University of New York (SUNY) four-year colleges on community college students seeking admission and progression in the accounting major. The evidence shows that transfer policies within the NYS university systems impose a significant financial penalty on community college students who primarily choose a community college pathway to minimize the education cost associated with becoming a CPA. These restrictive policies create financial barriers for candidates who show an early interest in pursuing an accounting degree, discouraging their entry into the profession.

NYS 150E Education Requirements and Evolution Exam First Passing Rates

The CPA Evolution exam content is delineated in the 2024 AICPA Blueprints (https://tinyurl.com/mrymxj4m). The first Evolution exam was administered in January 2024. It included a required core [Financial Accounting and Reporting (FAR), Auditing and Attestation (AUD), and Taxation and Regulation (REG)] for all candidates and a required choice of discipline [Business Analysis and Reporting (BAR), Information Systems and Controls (ISC), or Tax Compliance and Planning (TCP)]. Data recently published by the AICPA show that REG and TCP have significantly higher pass rates compared to their respective co-core and co-disciplines (https://tinyurl.com/3fzaud4f). This seeming success in the regulation and taxation content may be attributed to an opportunity for seasoned tax professionals to leverage deep practical knowledge in passing 50% of the CPA exam. The NYSBPA also noted the high pass rates for REG and TCP exams and attributed the success to a closer connection between the TCP content and the REG content. The NYSBPA fully expects the TCP pass rates to revert to the mean and encourages candidates to select the discipline that is aligned with their career path (https://tinyurl.com/yp3juecc).

Concurrently, while candidates were rushing to take advantage of sitting for the final pre-evolution CPA exam, the NYS Education Department (NYSED) in January 2023 presented the revised education regulations for licensure, known as the “150E” requirements (https://tinyurl.com/mss79na9). On September 28, 2022, the NYSED notified registered li-censure programs (Part 52.13 of the Commissioner’s Regulations) of the education requirements for the 150E regulations. In that notification, existing licensure programs were provided with detailed forms that supported program compliance with the amended content of 150E regulations. NYSED requires that all licensure programs meet the 150E professional accountancy and general business content areas set forth by NYSED, effective August 1, 2027 (https://tinyurl.com/yp3juecc). As of this writing, seven institutions (four SUNY and three private) have registered their 150E programs with the NYSED. (The number of institutions was determined by the authors from the NYSED Inventory of Registered Programs (via https://www2.nysed.gov/heds/IRPSL1.html) and does not include institutions that currently have 150E programs under review by the NYSED. Institutions may register multiple degrees that meet 150E regulations; for example, the seven institutions have registered eleven 150E programs in total.)

The 150E Requirements for Licensure in New York

In summary, 150 hours of education for CPA licensure in NYS requires a minimum of 33 semester hours in the professional accounting content area and a minimum of 36 hours in the general business content area. The 150E requirements made significant changes to the professional accountancy core content. These changes include the addition of accounting information systems as a required content area (formerly optional). In addition, taxation is now required at the upper division level (formerly acceptable at the lower division level). The required five core areas, or fifteen credits, are as follows:

• ▪ Financial accounting and reporting;
• ▪ Cost or managerial accounting;
• ▪ Taxation;
• ▪ Audit and attestation services;
• ▪ Accounting information systems.

The remainder of the accounting requirement (18 credits) may include, but is not limited to, the following: fraud examination, internal controls and risk assessment, accounting ethics, and accounting data analytics, as well as any prerequisites for the required five core areas.

NYSED requirements beyond the course content for the required core areas include that cost or managerial accounting may be either a lower or upper-division course; whereas, one course in each of the remaining four required core areas (financial accounting and reporting, taxation, audit and attestation services, and accounting information systems) must be upper-division courses. Lower division is typically interpreted to mean the first two years of a student’s college career; upper division is beyond the first two years, including graduate studies (https://tinyurl.com/n7shaeur). The remaining examples of accounting content areas and the thirty-six credits in business courses may be lower or upper-division courses.

From a community college perspective, the only course that will satisfy the core accounting required area is cost or managerial accounting, assuming the course is offered at the community college. Therefore, it is expected that all remaining accounting courses taken at community college will be classified as part of the eighteen credits outside the required core. Furthermore, certain requirements were removed from the 150E regulations, including the requirements to include either as stand-alone courses or integrated within courses in topics that included business or accounting communications, ethics and professional responsibility, and accounting research. Some of these topics or courses may still be included in community college programs and thus be denied credit or treated as elective credit.

These requirements for the accounting core may lead a community college student to limit accounting courses to accounting principles and cost or managerial accounting. Their focus might shift to business content courses, as that pathway could provide more effective and favorable course transfer policies. The resulting inability to include more robust accounting coursework in an associate’s degree program would mean that community colleges might only offer generic AS in Business programs. The result would be that students interested in accounting might be unable to pursue accounting as a major at the community college level.

The Education Costs for Community College Students

Current tuition costs for NYS residents at CUNY and SUNY community colleges are $9,600 and $10,580, respectively, for an associate degree, which typically requires 60-64 credits (https://cuny.edu/financial-aid/tuition-and-college-costs; https://suny.edu/smarttrack/tuition-and-fees). If a candidate receives equivalent credit for all courses taken at a community college when transferring to a CUNY or SUNY senior college, the additional cost to complete a bachelor’s degree in accounting would be $13,860 and $14,140, respectively. Thus, the total cost of the community college pathway to complete a bachelor’s degree would be $23,460 for CUNY and $24,720 for SUNY. Further costs for the additional 30 credits would also be incurred to meet licensure requirements.

Based on recent four-year tuition rates for NYS residents at CUNY and SUNY senior colleges—$27,720 and $28,280, respectively—the community college pathway results in savings of $4,260 and $3,560, respectively. This savings is approximately equivalent to the cost of a full-time semester at a CUNY or SUNY senior college.

By transferring to a CUNY or SUNY senior college, community college students can save $4,260 and $3,560 in tuition, respectively. These savings are calculated based on the total cost to complete a bachelor’s degree: $13,860 at CUNY and $14,140 at SUNY, and includes the tuition costs of attending a community college, which are $9,600 at CUNY and $10,580 at SUNY. This is significantly lower than the total four-year tuition of $27,720 at CUNY and $28,280 at SUNY. These tuition savings assume that all courses completed at a community college are granted equivalent credit as if they had been taken at the senior college level. However, the transfer process in NYS varies among CUNY and SUNY senior colleges. (The mapping of courses transferred between CUNY and SUNY schools can be found at https://explorer.cuny.edu/ and https://suny.edu/attend/get-started/transfer-students/course-equivalencies, respectively.) The transferability of courses between community and senior colleges is generally governed by articulation agreements, which are contracts between academic institutions that specify how community college courses are treated at a senior college, or through a transfer policy approved by the faculty and administration of the senior colleges. Treatments, also known as mapping, typically include equivalent credit, elective credit, or denial of credit. An analysis of course mapping reveals two main issues: denial of credit and the treatment of courses as electives or substitutions rather than as equivalent credits.

For example, a community college intermediate accounting course might be treated as elective credit instead of being recognized as equivalent credit, requiring the student to retake it as a required course at the senior college level. A detailed transcript review would reveal that the same course received credit twice—once as a required course and once as an elective. An inconsistent system-wide transfer policy that classifies “required core classes” as elective credits can save community college students money while pursuing their bachelor’s degrees because the course mapping is applied to the bachelor’s degree (only if there are elective credits available in the bachelor’s program). But such an approach comes at the cost of losing valuable elective credits that could have been used for courses aligned with a CPA exam discipline.

In addition, classifying repeated courses as elective credit bears the risk of credit denial during the transcript reviews that occur in the Notice to Sit (NTS) or during CPA license reviews. (The July 24, 2024, minutes of the NYSBPA reported that NASBA’s 150 education reviews will be discontinued; NASBA will now provide a 120-education review to sit for the exam only; see https://tinyurl.com/ynjf9m6n.) While some may argue that repeating a course enhances learning at the senior college, it is important to note that college credit cannot be awarded twice for the same course (see, e.g., https://tinyurl.com/yxr7c386, https://tinyurl.com/2p856yz8). In such cases, candidates are then required to enroll in additional courses to compensate for the credits lost due to duplication. The authors’ analysis indicates that an intermediate accounting course taken at a community college is often denied credit or treated as elective credit by the CUNY and SUNY senior colleges. In some cases, when a student completes two intermediate accounting courses at a community college, they may receive equivalent credit for one course but be denied credit for the second. The second intermediate accounting course would be repeated at the senior college.

Additional barriers faced by community college students in the transfer process include challenges in meeting independently determined senior college requirements, such as minimum GPA thresholds for both admission requirements and specific courses. Failure to meet these GPA requirements for courses taken at the community college often results in further credit denial, forcing a transfer student to retake required courses at the senior college that were also required at the community college level. The denial of credit could further delay a community college student’s completion of a bachelor’s degree beyond the expected two remaining years, adding to the burden of a senior college’s higher tuition costs.

The outright denial of credit may be seen as a more transparent approach in terms of projecting future tuition costs needed to complete a bachelor’s degree; however, it also carries the risk of discouraging students from pursuing a degree in accountancy altogether. An alternative would be for a student to consider transferring to a private university; however, transfer policies for private universities are often difficult to verify consistently, as many lack transfer information portals like those available for CUNY and SUNY. In addition, transferring to private universities entails higher tuition costs compared to CUNY and SUNY, even if these institutions have more accommodating transfer policies. Denying credit and inconsistently treating identical required courses for both associate and bachelor’s degrees lead to higher tuition expenses for community college students compared to those who enrolled in a four-year accounting program at a CUNY or SUNY senior college from the beginning.

Community College Data: Degrees, Students, and Transfer Costs

A Worrying Trend

The AICPA 2021 Trends report was the last report that included community college degrees completed in its analysis (http://www.nysscpa.org/2021-trends). That report was the first to use IPEDS data since the AICPA started reporting trends in 2009. Notably, the report indicated a 30% decline in accounting associate degrees completed, dropping to 11,625 over 26 years starting from 1994/95, across all community colleges that participated in the federal student aid program. Notably, CUNY and SUNY community college degrees completed in 2019 account for 10% of the total degrees completed as reported in the AICPA 2021 Trends report. While the AICPA 2021 Trends report shows a 36% overall decline in degrees completed from 2012 to 2019, however, CUNY and SUNY community colleges saw a much smaller decline of 8.6% during the same period. Based on that data, NYS community colleges seem to perform better than their counterparts outside of New York State.

The May 14, 2024, AICPA Statement on the NPAG Report stated, in part: “A sustainable pipeline of talent will require … making education highly engaging, supportive and accessible to a range of students” (https://tinyurl.com/2ffjsmcs). With a significant decline in community college enrollment and the high costs associated with transferring, individuals planning to move to a four-year institution might question the value of beginning their accounting studies at the community college level. Many students do not have the option of starting directly at a four-year institution, however, due to the more flexible admissions policies offered by community colleges. In addition, by devaluing community college students, the system stratifies the students into the haves (traditional four-year students) and the have-nots (community college and non-traditional students).

The NYS Excelsior Scholarship offers certain New York residents the opportunity to attend undergraduate programs at CUNY or SUNY institutions at no cost (https://tinyurl.com/5xvz2rb7). There are two 150-hour, all-undergraduate CPA licensure-qualifying programs at CUNY schools and three at SUNY schools. These programs may be eligible for five years of funding under the Excelsior Scholarship (note that nine private schools have 150-hour undergraduate licensure programs and none meet the 150E requirements). This pathway could be an ideal option for students who are admitted directly into one of these programs, provided they qualify for the Excelsior Scholarship and meet the related requirements throughout the five years of the program.

The Excelsior Scholarship has its limitations, which include full-time status and a post-graduate residency requirements. There is still a strong need for many students to start at a community college, both for economic and admissions purposes. A cost-conscious community college student evaluating the current transfer policy of accounting programs between community colleges and four-year CUNY and SUNY schools could easily be steered away from pursuing accounting. If prospective accounting majors opt for a generic business major instead, this choice could have significant pipeline implications, potentially resulting in the absence of a distinct accounting major identity at community colleges.

Would community college students be inclined to study accounting if transfer policies to senior colleges were more flexible? Or, like the absence of community college data in most recent AICPA Trends reports, would the absence of accounting associate degrees result in further declines in the pipeline? The authors believe that unless administrators and faculty take action to address the costly transfer policies, accounting enrollments will continue to decline.

What Can Be Done

Jurisdiction-wide efforts can also minimize inconsistencies in transfer policies. For example, Florida and California each have statewide articulation agreements. In Florida, students who have earned an AA or AS degree are guaranteed admission to one of Florida’s twelve public state universities (https://tinyurl.com/cy2ucunh). This agreement, however, does not guarantee admission to the student’s top choice. For example, while the University of Florida will accept all credits from the AA or AS degrees, a student must have a minimum 3.0 GPA for admission (though the average admitted GPA is 3.5), a minimum B average in both introduction to financial accounting and introduction to managerial accounting, and must pass a financial and managerial accounting competency exam. Failure to meet these requirements will prevent a community college student from entering the major (https://tinyurl.com/29shmtyp).

Florida’s statewide course numbering system facilitates smooth transfer policies between the state’s community colleges and universities. Under Florida law, courses with similar content taught by faculty with similar credentials are assigned the same course prefix and number. This policy ensures minimum discrepancies when students transfer their credits to other institutions. Florida’s CPA license requires all accounting major courses, other than two introductory courses, to be completed at the upper division level. Therefore, it is rare to see a community college in Florida offer an accounting AS degree.

California has a similar policy. California students who complete their AA or AS at a California community college are guaranteed admission into the California State University System. While students are guaranteed admission to the system, they are not guaranteed admission to a specific university (see https://tinyurl.com/bdz4y8ct).

NPAG has stated: “Working together and moving swiftly, the profession can tackle its talent shortage. Stake-holders must choose coordination over duplication and find areas where they can cooperate and not compete.” There is no single solution that will quickly change the trajectory of the pipeline; all stakeholders must contribute. At a minimum, stakeholders in the public college system should consider cooperative efforts to reduce inconsistencies and duplications in current transfer policies, aiming to limit additional tuition costs at senior colleges. Overall, streamlining transfer policies between community colleges and senior colleges should result in a more robust and diverse CPA pipeline.

Lastly, until transfer policies are revised to minimize costs, the responsibility for understanding the transfer process and related costs will largely fall on students entering the community college system, especially if the Excelsior Scholarship or direct admission to a four-year institution is not feasible. Understanding the potential transfer costs should be an essential discussion academic advisors have with their students at the beginning of a program. Students need to proactively explore transfer options, and academic administrators must be knowledgeable enough to guide students toward cost-effective pathways to pursue a CPA license.