FTC Comments on Washington State House of Representatives Certified Public Accountants (CPA) Education Requirements.

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The Federal Trade Commission staff has told the Washington State House of Representatives that raising the education requirement for Certified Public Accountants (CPA) from the present four-year, 120-hour degree obligation to a 150 credit-hour requirement could raise prices for consumers who need accounting services.

Responding to a request to comment on a rule adopted by the Washington State Board of Accountancy that would increase the educational qualifications for CPAs in the year 2000, the staff said that while there may be justification for changing the requirements to make them more stringent, "We conclude that such a requirement could increase prices for consumers of CPA services."

Currently, Washington State regulations require CPAs to have a bachelor's degree, which ordinarily involves 120 semester hours of credit, with a concentration in accounting courses. The requirement may be waived for those who complete an equivalency examination. The revision in question would raise the semester-hour requirement to 150 and eliminate the equivalency examination option.

In a letter signed by William J. Baer, Director of the FTC's Bureau of Competition, the Commission staff noted that "[e]ven if the quality of professionals' services increases as a result of mandatory entry requirements of licensing, higher prices may cause consumers to switch to lower cost alternatives or choose to forgo services completely. Therefore, quality of service actually received by consumers may decrease as the price and quality of professionals' services increase because some consumers become "do-it- yourselfers,"" the staff comment says.

The letter says that proponents of the 150 hour-requirement may argue that the additional coursework would enable a CPA to work more quickly, efficiently and accurately and thereby potentially benefit consumers. But it says that if increased skills are expected to result in such benefits, consideration should be given to specifying courses for inclusion in the increased hourly requirements that would directly contribute to those improvements.

These comments represent the views of the staff of the FTC, and not necessarily those of the Commission or any individual Commissioner.

Copies of the staff statement are available from the FTC's Public Reference Branch, Room 130, 6th Street and Pennsylvania Avenue, N.W., Washington, D.C. 20580; 202-326-2222; TTY for the hearing impaired 202-326- 2502. To find out the latest news as it is announced, call the FTC NewsPhone recording at 202-326-2710. FTC news releases and other materials also are available on the Internet at the FTC's World Wide Web site at: http://www.ftc.gov

(FTC File No. V960006)

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