Accounting Education at a Crossroads

• In the U.S., many state governments are passing legislation to relax the “150-hour rule” that requires CPA candidates to pursue advanced education, as one way to address a talent shortage in accounting.
• Even so, advanced education might become more essential as rapid AI adoption pushes entry-level roles in the field toward supervisory responsibilities once reserved for more experienced staff.
• Master’s-level accounting programs provide the advanced skills, critical thinking, and preparation needed for success in an increasingly AI-accelerated profession.

 
The Master’s in Accounting degree is dead. Long live the Master’s in Accounting degree.

As accountants look at emerging trends in their field, many are debating the role that graduate accounting degree programs have in preparing students to become certified public accountants (CPAs). Graduate education in accounting, like the public accounting profession, is at a crossroads.

On the one hand, state legislatures in the U.S. are hoping to address a growing personnel shortage by easing the long-standing rule that requires CPA candidates to receive 150 hours of additional education beyond the bachelor’s degree. The hope is that more undergraduate students will major in accounting if they know they can begin their careers without master’s degrees.

On the other hand, accounting firms are rapidly adopting artificial intelligence (AI), shifting entry-level roles from a focus on basic tasks to higher-level supervisory and managerial responsibilities. That means that more employers will expect master’s-level talent in their new hires.

The collision of these two forces will likely lead to turbulence for master’s-level accounting programs. Ultimately, however, it is also likely to increase the degree’s importance among students, even as fewer of them are formally required to pursue it.

Moving From Education to Experience

The 150-hour rule was originally designed to ensure that accountants could keep up with increasingly complex regulations and that they had a deep foundation in accounting, business, and ethics. For the last two decades, most CPA candidates have fulfilled the requirement by completing a fifth year of school or a master’s degree.

But in recent years, as senior accountants have retired and fewer students have entered the field, the profession has become increasingly short-staffed. In response, states are reconsidering the 150-credit-hour mandate. To date, nearly 20 states have passed new legislation allowing candidates to substitute an extra year of work experience for the additional schooling. Experts predict that most states will follow suit by 2027.

As AI takes on more entry-level tasks, more employers will expect master’s-level talent in their new hires.

For many undergraduate students, the change offers financial relief. It allows them to avoid taking on more student loans after graduation; they can enter the workforce and begin earning salaries immediately.

For employers, the shift may help fill critical vacancies more quickly. Indeed, given the shortage of accounting talent, several firms are advising students to pursue whatever pathway allows them to earn the CPA qualification sooner.

But these legislative changes pose risks. As the use of AI becomes more prevalent, the profession should be leaning into more education, not less.

Accounting for the Effects of AI

Firms are already preparing for a near future in which AI performs much of the repetitive, data-heavy work that has traditionally occupied first-year associates. Instead of reconciling accounts or performing audit tests, new hires will increasingly be responsible for reviewing AI outputs rather than creating the outputs themselves. They also will be overseeing offshore talent, exercising professional judgment, and providing higher-level insights to clients.

These are precisely the skills many top graduate accounting programs focus on developing. As Jenn Kosar, PwC’s AI assurance leader, told Business Insider, “People are going to walk in the door almost instantaneously becoming reviewers and supervisors.” Within three years, she predicts entry-level accountants will effectively be performing work once typical of third- or fourth-year staff.

This shift requires new employees to demonstrate critical thinking, professional skepticism, negotiation skills, and the ability to assess the reliability of AI-generated results.

In other words, the profession is not eliminating early-career jobs. AI is accelerating them.

For example, AI can be used to analyze sales contracts with customers to identify unusual terms or changes that warrant further scrutiny by auditors. Auditors then need to use critical thinking and professional judgment to determine whether the anomalies identified by AI are benign issues or require further testing or client inquiries. Auditors also need to write effective prompts to train AI to identify the type of content they would define as abnormal.

Students coming directly from undergraduate programs may not be prepared to assume such new entry-level responsibilities. This reality creates a sink-or-swim environment for graduates, many of whom have just completed four-year degree programs and often are still taking the CPA exam. These graduates make a stressful entrance into work and have an increased chance of experiencing early burnout.

Thinking Like Managers, Not Apprentices

The tradition that new hires spend their “apprenticeship years” grinding through transactions is quickly being replaced with the expectation that even junior staff can think like managers. That is precisely the kind of thinking that students learn in master’s programs and that differentiates accountants in the AI era.

Master’s programs emphasize complex tax planning, data analytics, and ethics—all areas where human involvement remains essential. They provide structured opportunities for students to develop professional skepticism, as well as soft skills such as communication and leadership.

The accounting profession is not eliminating early-career jobs. AI is accelerating them.

Moreover, common graduate-level courses in financial statement analysis, accounting theory, and taxes and business strategy teach students to look at a firm’s performance and financial condition from the perspective of various parties, including creditors, investors, customers, suppliers, and the government. For example, master’s-level courses in taxes and business strategy often teach students to consider tax planning tradeoffs for all parties involved in a transaction before determining the optimal solution.

This is not an ability that the CPA exam is likely to assess, but it is precisely the kind of ability that will remain important to clients. This will be true even as AI makes tax and audit processes more efficient.

Master’s programs give students more time to develop higher-level skills and a deeper understanding of the profession’s heightened expectations, while allowing them space to complete their licensure exams before starting work. In other words, far from being rendered obsolete, master’s programs are becoming more valuable than ever.

Weighing the Master’s Advantage

Moving forward, students will have to weigh the short-term benefits of skipping graduate school against the long-term professional advantages of deeper training. Undergraduate accounting programs tend to focus primarily on developing a student’s understanding of financial accounting and tax rules—necessary, but no longer sufficient for success.

Universities must adapt their messaging, emphasizing the relevance of master’s programs in preparing students for supervisory roles from the jump. Students need to know that master’s-level education will give them time to develop their professional skepticism and critical thinking—and that those who avail themselves of the opportunity for more training will likely have a significant advantage in the early stages of their careers.

The evolution in the role of new accounting staff is not limited to the U.S. The deployment of AI for audit and tax services, along with the increasing prevalence of outsourcing by public accounting firms, will impact new accounting hires around the world. The demand for advanced training is likely to increase for aspiring accountants worldwide, regardless of a country’s job market or licensing requirements.

One thing is clear: A return to mandatory educational requirements is not the answer. Greater flexibility for students is certainly preferable, but both faculty and recruiters from prospective employers need to make students aware that although the CPA credential will soon require fewer credit hours to achieve, the job itself demands more today than it did before the rise of AI.

It’s no longer enough for schools to attract students to their Master’s in Accounting programs by promoting that their courses help students fulfill the educational requirements for CPA licensing. They instead must clearly articulate that students will acquire many higher-level skills from these programs—skills that employers will expect them to apply from the first day on the job.