Businesses need accountants to accurately track, analyze and report financial information. In addition to providing tax expertise and making sure they comply with applicable laws and regulations, accountants help companies develop strategies and make decisions based on their financials. The problem is that there’s been an overall decline in the number of accountants in the U.S., as well as a decline in the number of Certified Public Accountants (CPA).
The accountant shortage does not come as a surprise. Over the last few years, industry warnings, reports, and surveys have all pointed to the same troubling fact – too many people are leaving the accounting profession while not enough are joining. What’s different is that we can no longer say the accountant and CPA shortage is down the road. It’s here now, and the impact is being felt throughout the business community and at accounting firms across the U.S.
How Bad is the Accountant Shortage?
The accountant and CPA shortage is acute. More than 300,000 accountants and auditors in the U.S. left their jobs at corporations and accounting firms over the past two years – an unprecedented number. Postings for accounting and audit jobs last year through November 30, reached 177,880, which is about 37,000 more than the previous year and the highest number of postings since 2008.[A]
The exodus of accounting professionals has been exacerbated by a steady decline in the number of college students pursuing an accounting major, as well as a decline of accountants going on to earn the CPA designation. Since the onset of the pandemic, the number of college students earning a bachelor’s or master’s degree in accounting has dropped by 4%. The number of graduates sitting for the Uniform CPA Examination has also dropped precipitously. In 2010, almost 50,000 candidates sat for the CPA exam, while in 2021 that number was down to about 32,000..[B]
The accountant shortage we’re experiencing today will only intensify as more baby boomers retire and fewer new professionals are available to take their place.
Accountant Shortage Leads to Higher Wages
As firms and businesses compete for an increasingly tight supply of accountants and CPAs, the law of supply and demand has kicked in. Over the last 12 months, our industry experienced a surge in pay rates caused by high demand for talent at the same time the candidate pipeline was narrowing. Accounting firms have been forced to share these higher labor costs with clients by instituting above average price increases.
To Address Accountant Shortage, Firms Innovate with Operational Teams
Proving the truism that adversity creates opportunity, many accounting firms have stepped up to the challenge by re-thinking how to deliver services to their clients. These firms have created operating teams designed to enhance the client experience while leveraging the skills of a broader pool of workers. This team approach allows firms to raise the bar when it comes to delivering customer service, while freeing up accountants and CPAs to focus on responsibilities only they are qualified to do. Operational teams can offer a wide variety of roles and support, such as client excellence administrator, project coordinators and schedulers, and true executive administrative support.
Long-Term Solutions for Accountant Shortage
The ultimate solution is to increase the number of college students who earn a degree in accounting and encourage more of them to pursue the CPA designation. We can achieve this by doing a better job of educating students about the opportunities an accounting career offers and the value proposition of obtaining a CPA certification. Among other changes, this will require employers to make positions more appealing, both financially and professionally.
Accountant Shortage Demands Bold Solutions
There’s no silver bullet to solve a problem that’s been years in the making. We need a coordinated and far-reaching strategy that can address issues as they arise over the span of an individual’s career, particularly at key points when the risk is greatest for someone to exit the industry. Only a concerted effort and bold solutions will reverse the trend and protect a profession that is so crucial to capitalism in America.
[B] 2021 Trends, A report on accounting education, the CPA exam and public accounting firms’ Hiring of recent graduates, AICPA 2022