For a number of years, our trade has warned us concerning the shrinking CPA pipeline. We’ve seen loads of experiences and articles dissecting the issue, however not sufficient large, daring options to reverse a development that does not simply create labor shortages, however might undermine our total accounting career.
No single resolution will remedy the pipeline points. What’s wanted is a complete method that begins effectively earlier than potential CPAs enter school and continues by way of the beginning of their careers. Earlier than we describe the daring steps wanted to advance the career, it is necessary to recap how we acquired right here to ensure our options handle the basis causes of the disaster we’re going through.
When addressing the CPA candidate pipeline, there are two main areas that have to be examined. The primary problem the career is experiencing is a decline within the variety of school college students graduating with a level in accounting. The second is that even amongst these college students who do choose accounting as a serious, many are deciding to not pursue the CPA designation. Each pipeline points should be addressed concurrently to take care of the extent of professionalism and integrity that firms, shoppers and the general public have come to anticipate from accountants.
What’s inflicting the decline in accounting majors?
In quite a few articles, agency representatives and teachers recommend our career merely wants a picture marketing campaign. Whereas that might be useful, I imagine we have to go a lot additional and handle the true systemic points which are turning younger folks away from the main. The issues stopping potential candidates from selecting accounting as a serious are many, and embrace:
- The 150-credit hour rule (an ordinary undergraduate diploma is just 120 hours);
- The price of an accounting training and alternative price of the extra 12 months at school;
- The perceived workload of accounting majors whereas at school;
- Low and stagnant beginning salaries;
- Different majors providing extra enticing and interesting jobs; and,
- The disparity between what accountants do at this time and what college students understand accountants as doing (i.e., the picture downside).
What’s inflicting the decline in CPA candidates?
- The workload when beginning and busy season pressures;
- Lack of relevance to their profession objectives;
- The time dedication and monetary prices to move the examination;
- Not seeing relevance to their careers;
- Not seeing the preliminary worth or return on funding;
- Their employers or potential employers don’t require the CPA to advance;
- Different credentials or specialties are extra worthwhile to their careers; and,
- The extent of problem of the examination, together with worry of failing.
Now that we established the basis causes of our pipeline downside, let’s discover daring, actionable options to reverse this development at numerous factors alongside a CPA candidate’s journey.
1. Earlier than school: Highschool and center college. The first objective for scholar engagement earlier than they enter the collegiate atmosphere is to extend consciousness. We have to educate college students concerning the alternatives out there within the discipline earlier of their training course of by connecting accounting to their on a regular basis lives corresponding to budgeting for a purchase order or saving for faculty. For instance:
- Supply AP accounting programs at the highschool degree that concentrate on monetary planning and fraud detection, which have quick relevancy and a “wow” issue given the high-profile scandals that make headlines.
- Dispel the parable that accountants should be good at math.
- Interact center colleges and excessive colleges in a extra significant manner with applications pushed by state societies, the American Institute of CPAs and different skilled organizations. Present better help and encouragement to college students by serving to them perceive the rewards of turning into a CPA.
- Deal with the entrepreneurial alternatives out there to CPAs and spotlight how rapidly CPAs can develop into their very own bosses.
By way of specializing in engagement and early publicity, state societies, the AICPA and corporations of their native places of work might coordinate and set up Accounting Profession Days by inviting native colleges to fulfill accounting professionals who work in numerous fields (public accounting, personal firms, governmental accounting, FBI brokers, enterprise house owners, and so forth.). These profession days would broaden the notion of what an accountant is and supply early optimistic interactions to the scholars, much like agency management conferences, externships, elevate applications, and different collegiate alternatives geared in direction of underclassmen.
2. Throughout school: College students in or contemplating accounting however not the CPA. As soon as college students enter school, the objective must be to assist them navigate the training and utility course of related to the CPA examination and improve their likelihood of passing it. To attain this, we have to encourage college students to review for the examination earlier than they search full-time employment, beginning as soon as they end 120 hours in states the place that’s permissible (40 of the 55 jurisdictions enable candidates to take the CPA with 120 credit or much less). Primarily based upon the newest information out there, current school graduates have a 75% move price finishing all 4 elements of the CPA Examination inside 140 days. The move charges lower and for individuals who do move, the time it takes to move will increase drastically as a candidate will get farther away from commencement.
State boards of accountancy, the AICPA and the Nationwide Affiliation of State Boards of Accountancy might make the CPA examination extra accessible by changing the 150-credit hour rule with an training requirement or an expanded work requirement, the place candidates might select between 30 further credit or an extra 12 months of labor expertise.
3. Employer-related: Candidates in search of or altering employment. Not one of the modifications made in center college, highschool or in schools will broaden the CPA pipeline if corporations and different employers do not make beginning positions extra enticing to graduating college students. Employers should enhance beginning salaries and enhance advantages. Compensation is lagging different industries that solely require a four-year diploma and with no prolonged or costly examination. In 2014, the common beginning wage for an accountant was about $54,000 (NACE 2013). The 2022 Wage Information from consulting agency Robert Half finds that the beginning wage at this time for an entry-level audit or assurance affiliate is between $50,500 (fiftieth percentile) to $58,000 (seventy fifth percentile). Accounting salaries have barely stored tempo with inflation whereas different fields of research (finance, advertising, data techniques, and so forth.) have raised wages past merely price of residing changes.
Due to the pipeline points, there’s a scarcity of recent hires and skilled employees. Because of this, workers are being requested to work a number of busy seasons and longer hours, doubtlessly pushing extra CPA candidates out of the pipeline earlier than they end their examination. Corporations want to deal with these worker shortages by way of upskilling, automation, offshoring, greater pay, and providing extra work/life steadiness to their workers. Asking candidates to work longer hours for decrease pay whereas learning for the CPA examination will solely push out these candidates that faculties entice. And once they go away, they’re unlikely to return again to the career.
The pipeline points could seem daunting, however the options are proper in entrance of us. We should begin educating college students early on the alternatives a profession in accounting supplies and should do a greater job explaining the advantages, profession choices, and worth proposition of these college students acquiring their CPA. Employers should make positions extra enticing, financially and professionally. These actions should be performed concurrently. No single coverage change or method will work by itself. We want a coordinated and expansive technique that elements within the factors alongside the profession path the place we lose folks to reverse the development and shield the career so many people have discovered worthwhile. Failure at any level in potential candidates’ profession paths solely exacerbates our pipeline points. We can’t let custom stand in the best way of assembly new potential candidates the place they’re. The truth is, the way forward for the career will depend on it.