It’s been a baffling time for a lot of small business owners in Billings, Montana. During the last two years, many of the top CPA firms in the area have had to fire their smaller clients to be able to continue to serve their larger, ‘bread-and-butter’ accounts. This phenomenon isn’t unique to Billings, either – it’s playing out across the United States during this same period.
There is a real nationwide shortage of certified public accountants (CPAs). Fewer new accountants are being trained and many accounting professionals are reaching retirement age. This shortage is having a negative impact on businesses, as they struggle to find qualified CPAs to fill open positions. The situation is only expected to get worse in the coming years, as the demand for CPAs continues to grow. Businesses will need to find innovative ways to attract and retain qualified CPAs.
The Nationwide CPA Shortage is Real
In the past two years, a staggering 17 percent drop has been reported in the number of U.S. accountants and auditors from its 2019 zenith, according to an article released by The Wall Street Journal in December 2022. Though part of this decrease is attributed to retiring Baby Boomers, employees across multiple age groups have exited the profession. Even as recruiters are struggling to fill up open positions with experienced professionals, many seasoned accountants are taking up jobs outside of finance and accounting and relocating towards roles involving technology such as AI, robotic process automation, and machine learning – 24% of participants stated this in a survey conducted by Deloitte.
COVID and The Great Resignation
The shortage of accountants has been followed closely by accounting experts and industry analysts for some time now. An October 2022 article by Drew Niehaus for CPA Journal, a leading industry publication, examines statistics around what appears to be a mass exodus from accounting in some detail. Citing AICPA’s 2021 Trends Report, Niehaus cites The Great Resignation – the pandemic-associated fleeing of millions of workers from their established jobs for reasons associated with quality of life, job satisfaction, and happiness with their terms of employment – as a catalyst which ignited a perfect storm in accountancy when taken in conjunction with a number of other key trends that have been happening industry-wide for some time.
Fewer New Accountants Are Being Trained
The Illinois CPA Society conducted a 2020 survey with 2,527 students, graduates, and accounting professionals ages 34 and younger to determine their desire to attain the CPA credential. Todd M. Shapiro, who retired from his post as president and CEO of the society three years later, wrote about this topic extensively in the report entitled A CPA Pipeline Report: Decoding the Decline. His research found that after age 22, an individual’s affinity for earning a CPA drastically diminishes; many respondents had no interest whatsoever. Furthermore, when young adults enter the workforce full-time it becomes increasingly difficult to find adequate time to pursue such a thorough certification given work and personal commitments.
How Are Accounting Firms Handling the Shortage?
In October 2022, a survey conducted by Robert Half consulting firm revealed that 78 percent of 2,175 hiring managers intended on increasing the use of contractors in early 2023 for roles related to accounting and finance. Furthermore, some major companies are allocating mundane tasks overseas; particularly in India, Argentina, and Brazil.
Yvonne Hinson, who is the CEO of the American Accounting Association and a certified public accountant, notes that offshore employees are often willing to complete tedious tasks that students may not find thrilling. She further states this option is also ultimately cheaper for employers. This approach may be short-sighted, though, as similar trends experienced in other sectors of the knowledge economy are laying bare the long-term consequences of the so-called ‘brain drain’ of our workforce to foreign economies.