The debate over the 150-hour rule used to feel academic. Important, but distant from the daily reality of running an accounting organization. That’s no longer true. More than 20 states, including California, New York, Illinois, Texas, Ohio, and Virginia, have now formally adopted or are in the process of implementing a 120-hour pathway (120 credit hours plus two years of supervised experience) as an alternative to the traditional 150-hour requirement. What started as a policy conversation is now a structural reality every accounting leader has to plan around.
Most of the coverage on this shift has focused on the legislative mechanics: which states have signed on, what AICPA and NASBA changed in the Uniform Accountancy Act, how mobility and substantial equivalency will hold up across state lines. That’s necessary groundwork. But as someone who has to actually build and staff an accounting team inside a high-growth, tech-enabled business, I think the more urgent question is getting less airtime: what does this do to how we hire, develop, and retain talent?
Why the old model broke down
The 150-hour rule made sense when it was adopted: accounting was contending with expanding tax codes, new international standards, and a push for parity with other credentialed professions like law and medicine. But the cost of that fifth year, plus a year of delayed full-time earnings, has become a real barrier at exactly the moment the profession can least afford one. Accounting enrollments and CPA exam candidates have both declined meaningfully in recent years, and a majority of finance leaders report real difficulty attracting and retaining qualified talent.
The research is also less conclusive than the rule’s defenders assumed. A landmark study found no measurable difference in labor-market quality outcomes, career longevity, or writing proficiency for 150-hour CPAs. That doesn’t mean the fifth year was worthless, but it does undercut the assumption that more classroom time was doing the work everyone assumed it was.
The 120-hour pathway reframes the trade: instead of a fifth year in a classroom, candidates spend a second year in supervised practice. From where I sit, that’s not a lowering of standards—it’s a bet that contextual, hands-on experience produces stronger operational judgment than an additional year of elective coursework. In high-growth environments, especially, understanding how revenue actually flows through systems, how controls interact with automation, and how regulatory expectations evolve in practice is worth more than an extra semester of theory.
Two kinds of CPA, one talent pool
Reform isn’t simple, though. Mobility is the real friction point. Some states have adopted the 120-hour pathway; others still require 150 hours for substantial equivalency. A CPA who qualified via 120 hours in one state may hit real limitations leading an audit in a state that hasn’t aligned its reciprocity rules yet. For multi-state and remote-first organizations, that means managing two effective populations—CPAs with broad mobility under the traditional standard, and CPAs licensed under newer pathways with narrower portability—and building hiring and staffing plans that account for both.
There’s a parallel shift happening in job design that I think is underdiscussed: more roles in FP&A, treasury, and revenue operations are being posted as “CPA preferred” rather than “CPA required.” That’s not the profession devaluing the credential. It’s hiring managers recognizing that rigid credential filters, in a tight talent market, often extend time-to-fill without a demonstrable gain in performance for many operational finance roles. The license still matters enormously for certain functions. It’s just no longer the only signal worth hiring on.
Where this leaves hiring managers
If the technical barrier to entry is shifting, competition among firms and finance teams increasingly comes down to culture and capability rather than credentials alone. A few things I’d put in front of any accounting leader thinking through this right now:
- Hire for curiosity, not just coursework: As automation absorbs more routine work, the value of an accountant increasingly lives in asking why the numbers look the way they do, not in how many credit hours they logged. Look for candidates with a track record of digging into problems rather than executing procedures.
- Treat AI and automation literacy as non-negotiable: Understanding how automated outputs are validated (and where bias or error can creep in) is becoming as fundamental as understanding a general ledger. Candidates who can speak to this credibly are increasingly differentiated, regardless of licensure path. Leading the future of AI in finance is vital.
- Compete with a tech-first culture: The cohort entering the workforce a year earlier under the 120-hour pathway won’t stay in roles that feel like digital paper-pushing. That’s not a small concern. In Tipalti’s global finance outlook research report, finance professionals confirmed that they spend an average of 11 hours a week on manual AP tasks alone. That adds up to nearly 72 workdays a year on low-value work. Firms that have already automated that layer are signaling something real to early-career talent about where their time and judgment will actually be spent.
The shift to the 120-hour pathway doesn’t lower the bar for the profession. It moves the bar—from time spent in a classroom to time spent doing the work, under supervision, inside a real organization. What determines whether that produces stronger accountants isn’t the pathway itself. It’s whether firms and finance teams are deliberate about what they do with that extra year: how they structure supervision, what they let early-career staff actually touch, and whether they’re building an environment where curiosity and technical fluency are rewarded as much as the credential on the wall.
ABOUT THE AUTHOR:
Paul Henderson is Chief Accounting Officer at Tipalti, an agentic-AI platform for finance operations. He previously served as Vice President, Controller at ForgeRock.
Photo credit: Image created using Microsoft Copilot
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Tags: 120-hour pathway, 150-hour rule, Accounting, CPAs, Firm Management, Hiring, Payroll, Staffing
