Previously, the requirement included 30 credits in accounting and 30 in other business courses. This reduction in required courses was designed to allow universities and CPA candidates to tailor educational programs toward individual and professional needs. Schools have struggled to create a five-year program that would accomplish these goals. The traditional path consists of obtaining a Masters in Accounting or Taxation. Programs vary among colleges with many adding concentrations such as forensics, audit or data analytics.
In many cases, those programs do not address the original concern about lack of needed non-business courses. Many students have opted to take the additional courses outside of a masters program by taking additional courses each semester or during the summer.
Those courses have not always been part of an organized plan of education that would address the concerns which brought about the law change.
Abadie, Diamond, and Hainmueller , advise using the placebo test to construct p values for the synthetic control results, so these are also included for the Florida CPA candidate estimation.
These values, displayed in the right-hand panel of figure 1. Taken together, the p -value analysis, the placebo test, and the pre-treatment fit for the data suggest that Florida is the best candidate for the synthetic control analysis among the states that had a change in policy throughout this period. We include the same analysis for New Hampshire because of an interesting pre-treatment bump in candidates and post-treatment drop in candidates.
The states for which we could obtain synthetic control results and which had at least three years of pre-treatment data are included in the appendix. We include both the placebo tests and the synthetic estimates for each of these states.
Further, for both Florida and New Hampshire we follow Abadie, Diamond, and Hainmueller in estimating a second placebo simulation only using states that have similar or better fit with the pre-treatment prediction. We do this by limiting the states in the placebo sample to states with pre-treatment root mean square prediction error RMSPE less than or equal to the treated units New Hampshire and Florida.
When we use even the 2x threshold, the sample of placebos does not change for New Hampshire. These limited RMSPE placebo results are available upon request for treatments contained in the appendix. Table 5 includes the states used to construct the synthetic Florida and the estimated values of the predictors used in this estimation compared to the actual numbers in Florida.
Figure 2, 2. Information on the policy change was publicly available years before the policy actually went into place, as the state of New Hampshire sent a revised exam and licensing requirement document to CPAs and CPA candidates dated December 8, , which outlines the change and corresponds to the jump in the number of candidates NASBA This helps to explain the observed increase in candidates just before and the drastic fall right after the policy was in place see figure 2.
If this information is not released in all states, it might explain why this same candidate reaction is not observed in Delaware see the appendix —a state which had the same increase in education requirement. If the pre-policy-change information is only available in some states, the corresponding reactions will introduce more noise into the data, which might be why the positive coefficient for the pre-policy-change variable is not significant in table 3. Even with this surge in candidates prior to the change, the post-policy divergence between the predicted synthetic New Hampshire candidates and the actual first-time candidates shows a number much lower than anticipated.
As the education requirement increases, it is associated with reductions in the pool of first-time candidates. Both the Florida and New Hampshire synthetic control results are consistent with the regression results in table 3 and table 4. Figure 1. Table 6 presents the states used in the construction of the New Hampshire synthetic estimation and the values for the predictors used in this estimation.
Additional synthetic control results are presented in the appendix for both pass rates and the pool of first-time candidates.
Results pertaining to pass rates suggest that the policy changes had no discernable impact on pass rates, similar to the table 4 results. The appendix results should be interpreted with caution, however, as the pre-treatment fit and the placebo tests for these states do not appear to support their use in a synthetic control estimation. Education requirements to obtain occupational licenses are common across the United States. Proponents argue that these requirements improve the performance and preparedness of the licensee to practice his or her occupation.
The education requirements for obtaining a CPA license differ across states and over time. Over the past two decades, many states have moved to require CPA candidates to obtain credit hours of education to obtain a license and sit for the CPA exam. Recently there has been a movement to split the exam requirement from the licensing requirement. Our results suggest that this reduction in the education requirement to take the exam is associated with a roughly 25 percent increase in the number of first-time candidates attempting the exam.
The results also suggest this loosening of the education requirement led to no change in exam pass rates or scores. This provides evidence that the hour education requirement acts as a barrier to entry and suggests that the additional educational requirement does not enhance candidate quality, though the latter finding should be treated with caution because of potential issues arising from using aggregated data.
Allen, Arthur, and Angela M. Anderson, D. Barrios, John M. Blair, Peter Q. Boone, Jeff P. Carpenter, Charles G. Frank Stephenson. Carroll, Sidney L. Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago Press. Hall, Joshua C. Halvorsen, Robert, and Raymond Palmquist.
Hotz, V. Joseph, and Mo Xiao. Jacob, John, and Dennis Murray. Jackson, Robert E. Kleiner, Morris M. The Case of Dentistry. Autor, — Law, Marc T. Leland, Hayne E. Meehan, Brian. Meehan, Brian, and Bruce L. Draft, July New Hampshire Exam and Certification Requirements.
December 8, Soileau, Jared S. Usrey, and Thomas Z. Timmons, Edward J. Thornton, Robert J. Accessed The study reveals three key findings: Reducing the education requirement from hours to hours is associated with a roughly 25 percent increase in the number of first-time candidates attempting the exam. The hour education requirement acts chiefly as a barrier to entry rather than enhancing the quality of CPAs.
Resources Download PDF. Consumers and Workers? How to Reform Occupational Licensing. Focuses Regulation State and Local Policy. Introduction With nearly one-third of US jobs now requiring a government-granted license Kleiner and Krueger , it is not surprising that research has increasingly focused on the effects of licensing requirements.
Gain access to the Academic Resource Database, educator webinars and more to support you in building the CPA pipeline. Already have an account? Sign In. Toggle navigation. Keep me logged in. Visit Faculty Home Page Search. Get involved with your community college While community colleges may be best known for their classes a la carte, some community colleges offer a specialized curriculum to prepare students for the CPA Exam including reaching the hour requirement.
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