We hope that you are doing well in these extraordinary times. As you know, you now have the option to choose pass/fail as a grading option for most of your courses this semester. We want to provide you some important information regarding pass/fail grades and the accounting profession.
If you are planning to go into the field of accounting, you probably should not exercise the pass/fail option for your accounting and other business courses. This is because some state boards of accountancy (including Colorado’s Board) set certain minimum course letter grade requirements for education that is required in order to become licensed as a CPA. More detail follows.
Most accounting majors will seek to become licensed as a CPA. Getting a CPA license requires passing the CPA exam as well as meeting other requirements such as education and work experience. Even though the CPA exam is the same for all 50 states (and other US jurisdictions such as Washington, D.C. and Puerto Rico), the education requirements are set separately by each state. In general, there are substantial differences across states with respect to education requirements. Some characteristics of these educational requirements are:
- Some states’ requirements are very detailed, others more general.
- Most states require:
- 150 total credit hours and at least a bachelor’s degree.
- A certain minimum number of accounting course credit hours (Colorado is 33).
- A certain minimum number of business (other than accounting) course credit hours (Colorado is 27).
- Most states have other requirements, such as specific courses that must be included in the above (such as ethics and auditing), a particular number of “upper division” credits, and, relevant here, minimum course grade requirements. Also, some states simply set maximums on the number of pass/fail credit hours that they accept.
- Any state’s rules can change at any time, and they frequently do. The general trend is that when they do change, they become “tougher” rather than easier. For example, in 2015 the minimum accounting credit hours went from 27 to 33 for Colorado and Colorado first adopted a minimum course grade requirement for accounting courses.
Minimum course grade requirements.
Some states set minimum course grade requirements and some do not (in other words, the course will count so long as you get the minimum grade). Or, a state might set minimum grade requirements for some courses but not for others.
Currently, Colorado sets a minimum grade of “C” (“C-“ is not high enough) for the required accounting courses. Colorado does not currently have minimum course grade requirements for the required “business” credit hours or for the other credit hours needed to get to 150 total credit hours. And if you do have accounting credits with a passing grade of “C-“ or lower, the credits will count towards the 150 credit hours even though they won’t be counted as “accounting” credits.
How a pass/fail grade could affect you.
At the University of Colorado, when the pass/fail option is selected, any grade submitted by the instructor of “D-“ or higher results in an official grade of “pass” showing up on the transcript. The Colorado Board will not count accounting courses with a grade of “pass” because there is no assurance that the underlying grade was “C“ or higher. (Note that there is an exception (at least with respect to the Colorado Board) for the Leeds ACCT 6000 internship course because that course is graded pass/fail only.)
Students hoping to join the BAM Accounting or Taxation programs will be required to earn at least a B- in each of ACCT 3220, 3230, 3440, and 3320, with a 3.0 average across the four. Even if the Pass/Fail option is elected by students in these courses, we will be reviewing the underlying letter grade reported when making admission decisions.
A few other comments.
Even if you now plan, for example, to move to Chicago upon graduation, and thus look at the requirements for Illinois, and conclude that selecting pass/fail would not be an issue for you, keep in mind that:
- State rules can change at any time and frequently do.
- The rules that will apply to you are the rules in effect when you apply to a state board, which might be several years from now, at which point the rules might have changed from what they are now.
- Life plans often change and, despite your certainty today that you’ll be living in Illinois, you might end up in California instead, and thus applying under completely different rules.
- Most states, including Colorado, count the Accounting Mods, BCOR 2203 and BCOR 2303 as accounting courses, thus for Colorado, the “C or better” requirement applies to those courses as well.
We (accounting faculty and advisors at Leeds) cannot advise you on the pass/fail implications or risks for you in your specific situation, as the risks are specific to your individual situation (and more importantly, to your situation in the future, which cannot be known today), the state(s) that you might eventually apply to, etc. Even though under this temporary policy the letter grades will be reported and available for internal use at Leeds, state boards of accountancy base their evaluations on official transcripts which will only show a “P” for a passed course.
For multiple reasons it will not be possible for Leeds to individually communicate those internally-reported letter grades to state boards of accountancy in the future. In other words, you will not be able to have someone at Leeds write to a board of accountancy to explain that the letter grade behind the “P” on your transcript was a “B-,” or whatever grade applies. A board of accountancy will make its determination solely from what appears on the official transcript.
You also might think that a state board would relax its requirements or make exceptions because of the extraordinary circumstances associated with the COVID-19 pandemic. However, you cannot assume this will happen. Because a state board’s job is to ensure that persons licensed as CPAs are competent to work as CPAs, it is unlikely that requirements will be eased due to the COVID-19 pandemic.
The rules for a specific state can be found by going to that state’s board of accountancy, but be aware that for many states the information on the rules is difficult to de-cipher, and as stated above, those rules could change by the time that they apply to you.
Conclusion and Recommendations.
If there is even a possibility that you might seek to become licensed as a CPA or apply for a graduate program in accounting/taxation, you should not elect pass/fail for any of your accounting or business courses. There are simply too many unknown factors looking forward. As for your other courses to meet the general 150 total credit hour requirement, there is probably less risk of it becoming as issue, but you nonetheless might run into problems.
Leeds Accounting Faculty