“The main purpose of CSOs/SSOs – for any licensure examination –
is to ensure that the testing of entry-level knowledge and skills that
are important to the protection of the public interest is consistent
across examination administrations. This means that the Uniform
CPA Examination CSOs/SSOs are used to determine what kinds of
questions should be included on the CPA Examination so that every
version of the examination reflects the required distribution and balance
of knowledge and skill components.”
PROTECTION OF THE PUBLIC INTEREST???
The AICPA says, “A score of 75 indicates examination performance reflecting a level of knowledge and skills that is sufficient for the protection of the public.” “The protection of the public” statement is for public consumption. Most people are naïve enough to buy this cover story. The CPA exams are about the self-interest of the AICPA. Economists call this type of behavior “rent-seeking.”
“Rent seeking is the term used by economists when referring to actions taken by individuals and groups seeking to use the political process to plunder the wealth of others (Rowley, Tollison, & Tullock).” Rent-seeking behavior is the idea that government licensure of professions is necessary to protect the public. Milton Friedman, 1976 Nobel prize winner in economics, wrote his PhD dissertation at Columbia in the 1940’s on rent-seeking behavior. He refuted the constantly repeated mantra of rent-seeking behavior. Milton Friedman’s works provide empirical evidence that licensure is nothing more than a mechanism used by members of a profession to raise the entry costs, and thus keep wages and profits artificially high. Rent-seeking behavior improves the welfare of someone at the expense of the welfare of someone else (Baker, Morris, Barnett).
Now I understand why the CPA license requirements went up from 120 hours to 150 semester hours! Accounting majors who graduate with 120 hours are not “qualified” to sit for the CPA exam. Voila! Fewer CPAs translate into higher fees.
The sole purpose of the CPA exams is to keep us from being CPAs. We are all weeds that the AICPA would like to pull (rent seeking behavior). We are not being tested on how smart we are. We are being tested on our perseverance. Additionally, the very tight time constraints on the exams have nothing to do with one’s knowledge of the subject. It is just another device to eliminate CPA candidates.
References
Baker, R., Morris, D. & Barnett, J. (2001). How a free market creates wealth. Verasage Institute.
Rowley, C. K., Tollison, R. D., & Tullock, G. (1988). The Political Economy of Rent-Seeking. Boston: Kluwer Publishers.
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