Critical Accountant Shortage
The accounting profession’s staffing shortage has finally reached critical status after nearly a decade of declining accounting graduates. A drop in CPA exam candidates and an aging workforce in existing firms are both attributed to crisis-level shortages. The critical status was made obvious in a recent CPA Trendlines survey that revealed over 42% of accounting firms nationwide were turning away work due to staffing shortages. What’s further is another 24% said they were approaching burnout.
According to the AICPA 2021 "Trends Report," the number of first-time CPA exam candidates decreased by 33% between 2016 and 2021, from 48,004 to 32,188. The report also reveals that accounting graduates at both the bachelor's and master's levels have trended downward in the 2019-2020 academic year. These declines are not only a national trend; many universities, particularly private institutions, have experienced even more substantial decreases in accounting majors. For example, James Madison University reported a 34% decrease in accounting majors over four years, from 2015 to 2019.
The impending enrollment cliff, anticipated to begin in 2025 due to declining birth rates, is expected to further exacerbate the situation by reducing the number of traditional college-age students. Additionally, the AICPA has stated that approximately 75% of its members are nearing retirement age, further compounding the problem.
Several reasons have been cited for the declining interest in accounting, including:
- The 150-hour requirement is perceived as a barrier to entry.
- Accounting is seen as boring and lacks diversity.
- Compensation for accounting graduates is lower compared to other majors like finance and technology.
- The accounting major is considered too specialized.
- The cost of education is too high, and overall enrollment in higher education is declining.
While some of these issues have been long-standing, such as the negative stereotypes associated with the accounting profession, others are more recent. The 150-hour requirement, in particular, has been identified as a significant factor contributing to the decline in accounting majors.
The AICPA and NASBA have been discussing the 150-hour rule and working with states to reach a consensus on alternatives such as allowing students to receive a 30-credit master's after their 120-credit bachelor's to help alleviate the 150-hour rule as an expensive stand-alone hurdle. The key will be attracting students back to the profession to start filling the graduate pipeline.
While CPAs might be rapidly declining, the enrolled agent certification isn’t suffering as much. However, the overall shortage is putting pressure on nearly everyone this filing season. Only 27% of firms in the CPA Trendlines survey said they would happily take new clients. Taxes in particular become a tough area to staff with Congress making on average 400 changes a year to the tax code.
So what can firms do?
If you know you’re going to look to hire this year, start sooner than you need to. It may take longer to fill a role than you initially anticipated. Also consider how your practice is going to combat some of the roadblocks like burnout, long schedules, and lower salaries than competing fields. If you’re not prepared to address these candidate concerns you will be starting already behind your competition.
If you want a leg up on creative strategies, join us for our next TaxTalk on April 18th with guest speaker Michelle LeBlanc of Evolved HRX. Michelle, is an experienced accounting firm HR manager, will share creative strategies to help manage burnout and stress amongst your team to promote a healthier more productive work environment.
Click here to register.
Christine Gervais
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.