How The Accounting Profession Wrecked Itself And Made A Legal Career Preferable To A CPA

The Legal Watchdog, Accounting: How to Wreck (and Rescue) a Profession:

In my earlier life, becoming a CPA was, in a sense, easy.  To be sure, the two-day exam itself was very tough.  Unlike state bar exams which sometimes have an 80% first-time pass rate, the November 1996 CPA exam, for example, had a 17% pass rate for first-time test takers.  But the process of becoming a CPA was very simple.  Just get a B.S. or B.B.A. in accounting, sign up for and pass the CPA exam, and then wait for your certificate to arrive in the U.S. mail. ...

Today, there are many articles about the declining number of CPAs and, especially, of accounting majors in the CPA pipeline.  The latest such article is here, in today’s WSJ (subscription required).  That article’s title indicates its proposed solution to the problem: How can we make accounting cool?  And there are many articles like this one, angsting about how to replenish the numbers within the profession.  But I doubt people are now avoiding accounting because it’s un-cool.  It has always been un-cool (which, in some circles, can be cool).

It is true that some might avoid accounting because, unlike many areas of study, it is serious and difficult.  I’m not just comparing it with frivolous majors such as sexuality studies, puppetry, video games, and grievance studies.  Unlike law, for example, accounting involves numbers and sometimes actually requires you to arrive at the “right” answer.  And even in the areas of accounting that require judgment—and there are many—not all opinions are equally valid. Nonsensical and disorganized babbling—I’m thinking of some prosecutors as I write this—won’t earn you a passing mark in an accounting class or on the CPA exam.  But just as with its lack of coolness, accounting’s rigor is also nothing new.  As the great Arthur Andersen said long ago, accountants must “think straight, talk straight.”

Given that its un-coolness and rigor has not changed, my hypothesis is that the number of accountants and would-be accountants in the pipeline has dwindled because of what the profession has done to itself since I became a CPA.  Today, instead of the difficult, but short and straightforward, path of earning a B.S. or B.B.A. in accounting and then passing the CPA exam, the profession has erected numerous costly and time-consuming barriers to entry.  Here are the hoops that a prospective CPA may have to jump through, depending on the state: ...

In sum, today the CPA certificate is no longer a glittering prize at the end of a very rigorous but short and clear path, as it once was.  Rather, the path is now lengthy and winding, and the prize is not even visible, let alone glittering, from the starting block.  Further, even if you win the prize many years down the road, the fun only then begins, as keeping it may require your hard-earned money and valuable time in the form of ongoing, mandatory CPE. ...

I wonder: how many people have passed on the accounting profession for the legal profession?  Instead of (A) going to school for five years, taking a CPA exam with a 17% pass rate, and then hoping to find qualifying employment for two years before taking a second exam (ethics) to become certified & licensed, you (B) take a soft major and graduate in three years, go to law school—maybe even one that has a two-year JD program (see, e.g., here)—and then take a bar exam where average pass rates often break the 80% mark. ...

As an attorney, I have to complete 30 CLE credits every two years.  On the other hand, CPAs may have to complete as many as 120 CPE credits every three years (e.g., IL) or 80 CPE credits every two years (e.g., WI).  On an annual basis, that's 15 credits for the lawyer and 40 for the CPA.  Given that, and given the accelerated path available to would-be lawyers (i.e., completing a less demanding college degree in three years and completing law school in two years), the law option might be even more attractive than the CPA option—particularly for those interested in tax.