How to fix the US accounting shortage

The numbers tell a stark story. According to the report, accounting degree completions fell 17% from 75,153 in 2017–2018 to 62,318 in 2021–2022. More alarmingly, the percentage of accounting graduates sitting for the CPA Exam for the first time has plummeted from a peak of 70% in 2010 to below 50% in recent years. These figures represent more than just a statistical blip; they signal a fundamental shift in the perception and appeal of the accounting profession.

At the heart of this exodus lies a perfect storm of challenges. The profession, once a beacon of stability, now struggles to compete with the siren song of Silicon Valley and the promise of work-life balance offered by other industries. Long hours, stressful busy seasons, and the perception of monotonous work have tarnished accounting’s image among the brightest young minds.

Moreover, the path to becoming a Certified Public Accountant (CPA) has become increasingly daunting. The requirement of 150 credit hours—effectively mandating a fifth year of study beyond a traditional bachelor’s degree—has created a significant barrier to entry. This additional time and cost burden disproportionately affects students from underrepresented backgrounds, further exacerbating the profession’s diversity problem.

The repercussions of this talent shortage extend far beyond the accounting firms themselves. Businesses across sectors report delays in financial reporting due to staffing constraints, a trend that could undermine investor confidence and market stability. As one Wall Street Journal headline starkly put it, “The Accountant Shortage Is Showing Up in Financial Statements.”

A stance on change

To address these multifaceted challenges, the National Pipeline Advisory Group (NPAG) has proposed a suite of reforms that would dramatically reshape the accounting landscape. Their recommendations span the entire pipeline, from middle school outreach programs to workplace culture overhauls in accounting firms.

One of the most radical proposals involves rethinking the education requirements for CPAs. The group suggests exploring competency-based models that focus on skills mastery rather than credit hours, potentially opening the door to alternative pathways for certification. This could include experiential learning programs delivered by employers, a move that would blur the lines between education and work experience.

Another key focus is on modernizing the academic experience. The report calls for a transformation of introductory accounting courses, shifting away from rote memorization of debits and credits to emphasize the strategic and analytical aspects of the profession. By incorporating more technology, real-world case studies, and exposure to practicing accountants, educators hope to ignite passion for the field early on.

The NPAG also recognizes the critical need to address diversity and inclusion within the profession. Their recommendations include targeted outreach programs, increased financial support for underrepresented students, and a concerted effort to showcase diverse role models within accounting.

Perhaps most ambitious is the call for a cultural revolution within accounting firms and finance departments. The report urges employers to prioritize work-life balance, increase starting salaries to compete with other industries, and provide clearer pathways for career advancement. This represents a significant departure from the traditional model of long hours and hierarchical progression that has long defined the profession.

As radical as some of these proposals may seem, they reflect a growing recognition that incremental changes will not suffice.

Overcoming hurdles of implementation

The implementation of these ambitious reforms, however, faces significant hurdles. The accounting profession, steeped in tradition and governed by a complex web of regulations, is not known for its agility. The proposed changes would require coordination among a diverse array of stakeholders, including state boards of accountancy, universities, professional associations, and firms of all sizes.

One of the most contentious issues is the potential impact on CPA mobility—the ability of licensed CPAs to practice across state lines without obtaining additional permits. The current system of substantial equivalency between states has been a cornerstone of the profession’s efficiency. Any changes to licensing requirements could disrupt this delicate balance, potentially creating a patchwork of standards that could hinder interstate practice.

Moreover, the suggested shift towards competency-based licensing models raises questions about quality control and public protection. Critics argue that moving away from standardized educational requirements could lead to inconsistencies in the skills and knowledge of newly minted CPAs. Proponents counter that a well-designed competency framework could actually enhance the rigor of the certification process by focusing on practical skills rather than academic credits.

The financial implications of these reforms are also significant. Increasing starting salaries to compete with other industries could squeeze the profit margins of accounting firms, particularly smaller practices that already operate on thin margins. Similarly, the development of new educational programs and technologies to support experiential learning will require substantial investment from both academic institutions and employers.

Despite these challenges, there is a growing consensus that the status quo is unsustainable. The profession’s stakeholders are increasingly aware that failure to act could lead to a critical shortage of qualified accountants, with far-reaching consequences for financial markets and corporate governance.

Some forward-thinking organisations are already taking steps to address the pipeline issue. For instance, the Florida Institute of CPAs has partnered with Nova Southeastern University and several accounting firms to offer a tuition-free fifth year of study for accounting students. This innovative program aims to reduce the financial burden of meeting the 150-hour requirement while providing students with valuable work experience.

Similarly, some large accounting firms are experimenting with alternative work models, including reduced busy season hours and increased flexibility, in an effort to improve work-life balance and attract younger talent. These initiatives, while still in their early stages, provide a glimpse of what a more employee-friendly accounting profession might look like.

The success of these reforms will ultimately depend on the profession’s ability to redefine itself in the public imagination. The NPAG report calls for a concerted effort to “tell a more compelling story” about accounting careers, emphasizing the profession’s role in driving business strategy, promoting sustainability, and safeguarding the public interest.

This rebranding effort faces an uphill battle against entrenched stereotypes of accountants as number-crunching drones. However, the rise of data analytics, artificial intelligence, and blockchain technology in finance offers an opportunity to reposition accounting as a cutting-edge, tech-savvy profession at the forefront of business innovation.

As the accounting world grapples with these existential questions, the broader business community watches with keen interest. The availability of skilled accountants is not merely an industry concern but a matter of economic importance. A thriving accounting profession is essential for maintaining the integrity of financial markets, facilitating efficient capital allocation, and ensuring corporate accountability.

The coming years will be critical in determining whether the accounting profession can successfully navigate this period of transformation. The proposals put forth by the NPAG represent a bold vision for the future of accounting. Whether this vision becomes reality will depend on the collective will of the profession’s leaders, educators, and practitioners to embrace change and reimagine what it means to be an accountant in the 21st cNPAG-Strategy-Reportentury.