Looking to hire an accountant for your organization? Good luck. The declining number of people entering and staying in the accounting field is posing a significant challenge for public and private organizations.
More than 300,000 U.S. accountants and auditors left their jobs in the past two years— a 17 percent decline in employed accountants and auditors from a 2019 peak, according to The Wall Street Journal in a December 2022 article.
Retiring Baby Boomers account for part of this exodus. But the U.S. Bureau of Labor Statistics (BLS) reports that accountants in the 25-to-34-year-old age range and midcareer professionals ages 45 to 54 are also leaving the profession.
Recruiters say that while they struggle to find accountants to deal with increasing workloads, many experienced accountants are moving into jobs in finance and technology. Deloitte found that nearly one-fourth of respondents to a recent poll said it is a challenge finding people with finance and accounting knowledge who have tech skills in areas such as artificial intelligence, robotic process automation and machine learning.
The BLS also reports that job openings for accountants and auditors are projected to grow by 6 percent from 2021 to 2031—about 136,400 openings each year. Many of those openings will likely be the result of workers retiring or transferring to different occupations, the BLS says.
"Globalization, a growing economy and a complex tax and regulatory environment are expected to continue leading the strong demand for accountants and auditors," according to the BLS. "As more companies go public, there will be a greater need for public accountants to handle the legally required financial documentation."
Hiring managers will have to be creative because the sector's weak talent pipeline isn't sufficient for current and projected needs.
Businesses have been worrying about the decreasing number of accountants "as early as the aughts," says McRae "Mac" C. Banks, dean of the Bryan School of Business and Economics at the University of North Carolina at Greensboro. "It's not new, but [the decline is] accelerating … for a number of reasons," he says. "As long as a lot of people weren't retiring, it wasn't a big deal."
But now there is a significant problem with the talent pipeline. The number of students graduating with an accounting degree in the U.S. has dropped steadily, from 56,715 in 2015-2017 to 52,481 in 2019-2020, according to the 2021 Trends Report from the Association of International Certified Professional Accountants (AICPA).
Experts say multiple factors have led to today's expanding and unmet need for accountants.
Long hours. Accounting has an image problem, Banks says. "One part of that problem is the long-held perception—and probably the reality until recently—about the significant number of hours one has to spend as an associate in an accounting firm [to make partner], compared to the number of hours if one is working at an Amazon or a Walmart doing analytics."
Back in the day, "it was not uncommon for [accountants] to be in the office at 6, 7 in the morning and not leave until 7, 8, 9 [o'clock] at night," Banks recalls. Younger generations don't want to put in those long hours.
"We saw this with Millennials, and it's true with Generation Z as well; they put a different premium on work and their lives outside of work than the Baby Boomer generation did, and most other generations did," Banks says. "That's something firms have been fast to respond to."
Lure of better pay. The average annual salary for a financial accountant was $56,320 as of January 2022, according to Accounting.com. Specialization can increase that figure: Forensic accountants earn $70,490 on average, and senior accountants with a bachelor's degree in finance average $74,000.
"We're hearing that employees are leaving public accounting firms for two main reasons: the lower pay in public accounting for those just graduating and [to find a] better work/life balance," says Yvonne Hinson, a certified public accountant (CPA) and CEO of the American Accounting Association, a professional group of accountants in academia.
"The firms have increased pay recently, and that is helping some," says Hinson, noting that her organization has observed some significant salary increases over the past year. "However, starting pay is still not up to the amount many graduates in other areas of business are receiving after four years of college.
"Anecdotally, we are hearing that [public accountants] are going into companies and nonprofits when they leave public accounting," Hinson adds. "We are also hearing that many accounting majors are now deciding to forgo the public accounting route and go straight into business and industry for the work/life balance."
Some accounting students use their degrees to demonstrate their understanding of income statements and balance sheets to prospective employers, Banks says, "but they're really aiming for a leadership track position that can get them into a General Electric, Lockheed Martin."
Need for new skill sets. Employers are turning to nonaccounting graduates to fill the gap in required skills—especially as they relate to technology needs. That was the case in 2019, Hinson noted in a report at the time, when she was an academic in residence at Association of International Certified Professional Accountants (AICPA).
"This is still the case," Hinson says. "Public accounting firms continue to hire a large percentage of nonaccounting majors, as their business models have changed [due to technology]. They're hiring engineers and other types of [college] majors because what they're doing is different, and how they're doing it is different. That leads to different needs [when hiring]."
In the Deloitte poll, nearly one-fourth of respondents said one of their challenges is finding people with finance and accounting knowledge who also have tech skills in areas such as AI, robotic process automation and machine learning.
However, Hinson notes, "Accounting majors are now coming out with more and more technology skills, as accounting programs have integrated more and more data analytics into their courses and program."
New nonaccounting graduates hired into accounting and finance functions increased in 2020 by 10 percentage points, according to the 2021 Trends Report from AICPA. It found that 57.3 percent of new graduate hires were accounting graduates, and 42.7 percent were nonaccounting graduates.
Lack of diversity. Accounting is not known as a diverse field, and that can discourage some people from sticking with the profession. "When they can't look up to the partner and see themselves" reflected in those positions, "it's hard [to stay]," Hinson says of young accountants.
There are resources available to help employers broaden their search for candidates, including the annual Accounting Pipeline Diversity Symposium, which offers best practices for finding a diverse candidate pool, along with a free toolkit.
Stephanie Kelly, chief people officer globally for the London-based IRIS Software Group, says that to counter unconscious bias, her company removes information (such as names) from job applications that could influence a hiring manager and tailors job requirements to better create a diverse and inclusive workforce. IRIS also uses "returnships" to recruit people who have been out of the workforce for more than two years and pairs them with an "onboarding buddy" to help ease their transition.
All certified public accountants (CPAs) are accountants, but not all accountants are CPAs. The number of individuals entering the workforce with that credential is decreasing.
The pandemic has played a part in the decline because it spurred short-term closings and various restrictions at CPA testing centers, according to the American Institute of Certified Public Accountants' (AICPA's) 2021 Trends Report. The report states that the number of new exam candidates fell by less than 0.5 percent between 2018 and 2019 but decreased by 17 percent between 2019 and 2020, followed by a 6 percent increase between 2020 and 2021.
The computer-based test from AICPA that is required to earn a CPA designation has three written tasks, 276 multiple-choice questions and 28 task-based simulations. Candidates have up to four hours to complete each of the four sections of the exam, which may be taken in more than one sitting. Most states require licensure candidates to pass all sections of the exam. On average, most candidates will spend about $300 on exam fees.
But before candidates can even sit for the exam, they must overcome a long-recognized barrier to the CPA talent pipeline: the credit-hour requirement to take the exam. Most undergraduate programs require 120 credits to graduate, but individuals sitting for the exam typically must have 150 credit hours. That's the equivalent of one additional year in school.
"Not only do students need to obtain those additional credits, which are really expensive, but they also have to enter the workforce a year later," losing a year's pay, points out Becky Burke, EY Americas assurance talent leader.
In 2021, the Illinois CPA Society published A CPA Pipeline Report: Decoding the Decline based on a 2020 survey the society conducted with 2,527 students, graduates and accounting professionals ages 34 and younger—both CPAs and non-CPAs—to gauge their interest in pursuing the credential.
Todd M. Shapiro, who retired in 2023 as president and CEO of the society, writes in the introduction to the report, "The likelihood of becoming a CPA drops dramatically after age 22; many respondents do not have an interest in pursuing a credential at all." That's an age when individuals are entering the workforce, and the challenges of work and personal time commitments "begin to play more significant factors in deciding whether to earn the CPA credential or not," Shapiro adds.
In addition, "[a]ccounting, auditing and tax preparation are the words most associated with the CPA credential, further narrowing the credential's scope and attractiveness," Shapiro writes. The survey found that a higher-than-average salary was not a top factor in deciding to become a CPA. Instead, career advancement opportunities, followed by greater marketability, were top reasons for pursuing the credential.
There also was a strong correlation between individuals working, or preferring to work, in public accounting and those deciding to pursue a CPA. But only 27 percent of all respondents saw themselves spending most of their careers in public accounting.
Investing in the Next Generation
To ease the path to certification, some organizations offer CPA licensure assistance. EY's Career Path Accelerator program, launched in 2021, provides selected undergraduate accounting majors who are doing internships with an opportunity to earn 10, 15 or 20 college credits to sit for the licensure exam. There are costs associated with obtaining the necessary number of credits. The 20-credit option, for example, is the most expensive at $2,500. To help alleviate this burden, EY's foundation has awarded more than $440,000 in financial aid to students, according to Burke.
"I think it's breaking down barriers, allowing students to get a jump-start in their career," Burke says, pointing out that 54 percent of EY's 100-plus interns who have completed the accelerator program are from racially or ethnically diverse populations, and 48 percent who have completed it are women. It's also been a good way to market EY. "One student said the reason they chose [the EY internship] is because of this program," Burke says, adding that nearly 95 percent of EY's interns have joined the firm as full-time U.S. employees.
Elsewhere, professional services firm KPMG launched CPA Kickstart, a two-month, 40-hours-a-week program, in summer 2022 at 35 of its offices to give new hires time to focus on the CPA exam.
"Auditors are constrained without their CPA," says Becky Sproul, KPMG audit talent and culture leader, in a statement about the program. "And studying nights and weekends can be a difficult, frustrating experience." —K.G.
What Organizations Are Doing
To expand the available workforce, more than three-fourths (78 percent) of 2,175 hiring managers said in Nov. 2022 that they would likely increase their use of contract workers in the first half of 2023 to fill positions in accounting and finance, according to a survey from consulting firm Robert Half. Additionally, some larger firms are offshoring repetitive work to company centers in countries such as India, Argentina and Brazil, Hinson says. She points to one Big 4 accounting firm that uses teams of employees in those countries to handle tasks such as entering basic tax information.
"These repetitive tasks—that our students don't want to do because it makes the job boring—[those workers] are happy to do," Hinson says. "And it's cheaper there."
Employers are also trying to cultivate new hires. "Because there is such a shortage of talent, most big firms are recruiting for raw talent … and [giving] them what they need to succeed in their profession," says Kelly. This can include sponsoring students through their university studies.
Organizations need to create a deeper engagement with students, Banks says, including outreach programs at the middle and high school levels "to help educate students there about what accounting is and what the prospects are."
McRae "Mac" C. Banks
For example, U.S. accounting firm CliftonLarsonAllen LLP is partnering with Future Business Leaders of America to offer a paid summer internship program for 16-to-18-year-old high school students. Students receive real-world experience in accounting, tax, wealth management, digital and consulting services at 15 of the firm's 120-plus U.S. locations.
"Firms are beginning to hire for part-time jobs and internships after completing Accounting 101 and Accounting 102," Banks says. "If those people they hire perform well, they will not only keep them on, but also pay for their tuition or part of their tuition as an additional [retention] incentive."
To cultivate a larger presence at colleges and universities, Banks recommends that employers embrace multiple tactics, including:
- Speaking to university business classes.
- Offering input on curriculum content to meet changing skill sets.
- Serving as an advisor to student organizations.
- Offering free coffee at recruiting tables set up in campus coffee shops.
To increase its appeal as a prospective employer, IRIS offers qualified staffers flexibility—including the opportunity to work up to four weeks in any country. "We are inundated with people who want to spend short amounts of time with their laptop somewhere else in the world," says Kelly, so IRIS will sponsor their visa and handle the necessary paperwork for them to do so.
IRIS's accountants may also work a condensed workweek—four, 10-hour days—and employees with four years or more of tenure may qualify for three-month sabbaticals.
Ultimately, employers will need to do their part to widen the talent pipeline—for instance, by funding grants that support financial accounting education at high schools, partnering with higher education institutions on curriculum development, having more of a presence on campuses and upskilling new and current employees. They also need to realize the importance prospective employees place on work/life balance and compensation.
Kathy Gurchiek is an editor who covers students and emerging professionals for SHRM's HR News.
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