The Accounting Dilemma: A Shrinking Workforce and Its Wide-Reaching Impacts

The American Institute of Certified Public Accountants (AICPA) has revealed a concerning trend: a considerable decline in students obtaining accounting degrees. In the 2021-22 academic year, only about 65,000 students earned bachelor’s or master’s degrees in the discipline, an 18% decrease from a decade ago. Even more worrying is that fewer of these graduates will become CPAs. In 2022, just 30,000 persons took the CPA exam, a decrease from almost 50,000 in 2010.

Several reasons contribute to the drop in interest among young people. For starters, the conventional image of accountants as tedious number crunchers discourages many people from entering the field. This stigma is especially offensive to Generation Z, who are driven to jobs that provide excitement, meaning, and a sense of accomplishment. Unlike past generations, who prized employment security and stability, today’s young professionals are more likely to pursue occupations that reflect their ideals and passions, even if they are less financially secure.

The CPA shortage is more than just an inconvenience
The shortage of CPAs is more than just an inconvenience for people who are waiting for their tax returns. It has the potential to cause considerable disruption in the financial environment. Companies have already started to feel the effects. For example, Advance Auto Parts claimed accounting staff turnover as a rationale for requesting an extension from the Securities and Exchange Commission due to “material weakness” in its financial reporting. Similarly, Tupperware faced filing delays due to “significant attrition” and “skill set gaps” in its accounting department.

The shortage of accountants is having a ripple effect throughout the sector. With fewer professionals available, existing accountants’ workload increases, resulting in burnout and additional attrition. This vicious loop may increase the shortfall, putting further strain on enterprises that rely on accurate and timely financial reporting.

Why Accounting Is Not Attracting New Talent
One of the primary causes of the accountant shortage is a perceived lack of glamour in the field. While accounting provides various job opportunities, from forensic accounting with the FBI to audits for Fortune 500 businesses, the stigma of the boring accountant persists. Even the AICPA attempted to counteract this image with a film titled “Accounting: It’s Not What You Think.”

However, potential accountants are put off by more than simply stereotypes. The process of becoming a CPA is both difficult and costly. Candidates must complete 150 credit hours, which generally entails earning a master’s degree, and then pass four gruelling CPA tests within 18 months. The financial and time investment required to obtain CPA certification is significant, and many students choose higher-paying finance careers right out of college instead.

Entry-level accountants, even at famous organisations, frequently earn less than their peers in other finance jobs. For example, junior investment bankers can earn over $100,000 in base pay plus bonuses, whereas a first-year audit associate at a Big Four accounting firm may earn roughly $72,000. This wage disparity makes it difficult for accounting companies to attract top people, especially when other finance positions provide more immediate cash advantages.

Moving Markets

Addressing the Shortage: A Multifaceted Approach
Experts agree that raising compensation is an important first step to alleviate the accountant shortage. Higher remuneration would attract fresh talent and help keep existing professionals who might otherwise quit due to exhaustion or discontent with their jobs.

In addition to increasing wages, several organisations are looking into alternative paths to CPA certification. For example, Ernst & Young (EY) has launched the Career Path Accelerator program as an alternative to the typical master’s degree requirement. Similarly, PricewaterhouseCoopers (PwC) has collaborated with institutions to develop work-for-credit programs that give students hands-on experience while earning college credit.

Academia can help reverse the trend. Accounting educators are challenged to make curricula more entertaining and relevant to modern pupils. This could involve incorporating technology and real-world applications into the curriculum and ensuring that introductory accounting sessions emphasise the field’s numerous employment options.

The Long Game: Why Accounting Still Matters
Despite the current obstacles, accounting is still a valuable profession with long-term advantages. Accounting abilities are useful in almost every business, from internet behemoths like Google and Apple to traditional banking institutions. For students who are unsure of their long-term career ambitions, an accounting background provides a diverse foundation that can lead to various chances later in life.

As the need for accountants continues to outstrip supply, those who choose to enter the sector will certainly find themselves in great demand, with several prospects for career advancement and professional development.

To summarise, while the accounting profession confronts considerable issues in attracting new talent, it remains a critical component of the financial system. By addressing salary, workload, and education issues, the industry can start to reverse the current shortfall and ensure that the next generation of accountants is prepared to face tomorrow’s difficulties.

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