People often talk about the “150-hour rule” when it comes to the US CPA exam qualification.
What is it, does it apply to you, and what to do if you don’t have enough credits?
Let’s start with a bit of the background. Unlike most other accounting professional qualifications around the world, the US CPA title is granted by the 55 US jurisdictions instead of one centralized agency at the federal level.
As you can imagine, the exam requirements can be quite different and this has caused confusion among candidates and regulators.
In the last 10 years, two accounting associations, the AICPA and NASBA worked hard to standardize the requirements across the states. They came up with a general rule known as the “3E”s: Education, Exam and Experience.
Within the Education criteria:
Since July 2015, all states have adopted the 150 credit hour rule for their full license.
150 credit hours is equivalent to 5 years of higher education. It can be accumulated in different ways:
If you enroll in an accounting program in a US university, the school makes sure you get enough credit hours and meet the requirement of its state. However, if you are:
You might need something extra to get qualified for the exam.
Here is a check list:
All state boards ask for a minimum number of accounting and business courses. Some states have general requirements, while others request specific courses e.g. US GAAS course in the case of Colorado.
If you need to make up for courses anyway, make sure the new courses cover whatever is required here.
Roughly half of the state boards allow candidates to sit for the exam with 120 credit hours only. They can fulfill the rest of the requirements (30 credit hours) after passing the exam.
In this case, you can choose to take the CPA exam first, but bear in mind that extra courses are mandatory to get the license.
Most states are fine with online courses as long as the school is regionally accredited. In other words, if your school is not regionally accredited, e.g. it operates outside of the US, there are some risks.
There are correspondence courses outside of the US that have been counted in the past. I can’t give you a general answer as everyone’s case is different, but you can check with your state board directly by emailing them your own personal situation and see if they can give you a specific answer.
Diplomas are defined differently in different countries. The rule of thumb is that courses shown in an official transcript by regionally accredited educational institutions are accepted.
You will only know for sure if you request a report from the foreign credential evaluation agencies.
This is a common misconception among international candidates. The degree requirement (4-year bachelor degree or above) is separate from the 150-hour rule.
Even if you have 200+ credit hours, if you don’t have a 4 years or more of higher education, I am afraid you cannot get qualified.
The vast majority of state boards have stopped issuing CPA certificates. International candidates can stop thinking about this as the few remaining two-tier states strictly require social security number.
If you don’t want to fulfill the 150 credit hours and experience requirement, Guam has an inactive license for accounting majors with 120 credit hours only. Please find out beforehand the restriction and resulting implication of getting this license.
Lastly, I would like to point out the additional benefits if you spend the time getting this done:
For most of the top CPA firms, their new tax and audit staff are required to meet the educational requirement for licensure BEFORE they start. If you have aspirations of working for a Big 4, national, or large regional firm, then you need your 150 credit hours before the interviews.
Many recruiters want to know whether you are “ready” to get the license (i.e. fulfill all requirements except the experience) before giving out the offer.
Getting the full 150 credit hours for the CPA exam is the big trend — you may still find ways to get around it, but I no longer recommend readers doing that. Besides fulfilling the exam and licensing requirement, complying to the 150-hour rule can also help you get jobs in CPA firms.
If you have a 4-year degree, getting the extra 30 credit hours is a hassle, but definitely doable. Here are some suggestions to get it done:
1. For US candidates, take courses in local community colleges or through CLEP. This is the most affordable way.
2. Take accounting, auditing and taxation courses designed to fulfill the CPA exam requirements e.g. UNA program in collaboration with CPAexcel.
If you have questions, feel free to drop a note in the comment section below.
I am the author of How to Pass The CPA Exam (published by Wiley), and I also passed all 4 sections of the CPA Exam on my first try. Additionally, I have led webinars, such as for the Institute of Management Accountants, authored featured articles on websites like Going Concern and AccountingWeb, and I'm also the CFO for the charity New Sight. Finally, I have created other accounting certification websites to help mentor non-CPA candidates. I have already mentored thousands of CPA, CMA, CIA, EA, and CFA candidates, and I can help you too!