The leaders of a US accounting profession have signaled they could cut the education requirements for becoming an accountant, amid growing alarm about a shortage of new recruits.
The American Institute of Certified Public Accountants on Tuesday dropped its opposition to calls to reduce the amount of university education needed to qualify as a CPA. That is currently set at the equivalent of five years, one year longer than a typical bachelor’s degree in the US. The declaration is a watershed moment in what had become an increasingly tense struggle between the professional body and reformers.
Calls for reform have been growing louder as the number of US students taking accounting courses and going on to sit professional exams has fallen, leaving some accounting firms struggling to hire replacements for the baby boomers who are retiring.
An AICPA advisory group that included representatives from large and small firms said on Tuesday that the profession needed to “address the cost and time of education” as a priority for fixing the shortage. It called for “a competency-based licensure model not tied to university credit hours”, among other reforms. The AICPA, in turn, expressed “directional support” for the group’s recommendations. “While expanding approaches to CPA licensure alone will not solve the accounting talent problem, we believe our licensure process does need to acknowledge changing market conditions,” the AICPA said.
There’s been an emerging trend of accounting firms turning away work due to staff shortages. These are painful issues for accounting firms and, more importantly, their prospective clients.
Why Are Accountants Not Taking On More Work?
Especially for smaller but growing businesses, the value of having a professional accountant working with them cannot be disputed. In a multi-country survey last year, about 8 in 10 businesses agreed that accountants help them reduce the impact of inflation. Accountants help businesses ensure they do not pay more than their fair share of taxes. More businesses are looking to hire professional accountants, but nearly 1 in 2 businesses don’t get to work with the accountant of their choice. Why?
The American Institute of Certified Public Accountants (AICPA) estimated that about 75% of CPAs would have reached retirement eligibility by 2020. According to a Wall Street Journal report, more than 300,000 accountants quit their jobs between 2019 and 2021. The enrollment of new students looking to major in accounting has been steadily decreasing for the past six years.
No wonder accounting firms find hiring new staff and retaining existing employees exceedingly challenging. To respond to the market reality of staffing shortage, accountants are turning away new work.
Even after making this hard choice, they are hitting burnout. They are finding it challenging to maintain a work-life balance. Firms are increasing the salaries of their staff in a bid to retain them. This is because of an acute and ongoing talent shortage.
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