The Future of Accounting: Exploring the Industry's Pipeline Problem

By WebCE
Jun 19, 2023

The Future of Accounting: Exploring the Industry Pipeline Problem

The accounting industry is facing a significant problem: the new talent pipeline into the industry simply isn’t flowing. There are simply not enough people joining the accounting ranks to keep up with demand. While resignations spiked during the pandemic, the bigger problem is the aging workforce. The Controllers Council reported that nearly three-quarters of all CPAs are now past retirement age. As Baby Boomers cycle out of the workforce, the industry requires an influx of new professionals. However, that’s not happening.

The American Institute of Certified Public Accountants (AICPA) notes declines in students graduating with accounting degrees and the number of people taking and passing public accounting exams. From a high of 50,000 exam candidates in 2010, as few as 32,000 took the exam annually in 2021—a 10-year low. With fewer CPA-certified accountants, the compliance risk also escalates for organizations.

In response, there have been some controversial suggestions made, such as lowering the bar for entry to encourage more participation — but what might that do to the quality of the practice going forward? Others recommend more practical changes and are adopting more aggressive approaches to entice students to enter accounting.

Here are some of the efforts the industry is undertaking to expose students to accounting as an attractive career option.

Introduce Accounting into STEM Curriculum

Can accounting be included in the STEM (Science, Technology, Engineering, Mathematics) curriculum in high schools?

Several state CPA organizations, such as the Texas Society of CPAs and the Pennsylvania Institute of CPAs have advocated including accounting in STEM programs, which would allow broader exposure to the field and make accounting fundamentals part of graduation requirements for students.

Considering how popular and ubiquitous STEM programs are across the country, this would allow the profession to reach an entirely new pool of potential professionals. Legislation was introduced in the U.S. Senate in 2021 to promote career awareness in accounting as part of STEM programs nationally, but so far has not made it out of committee.

Create New Accounting Credentials

The CPA Exam and its 150-hour requirement simply scare some people away from the profession. Why not change the requirements? Bill Dresnack, associate professor at the Rochester Institute of Technology, has proposed splitting the CPA credential in two: the Associate in Public Accounting, earned after two years of college; and the Paraprofessional in Public Accounting, earned after four years. Dresnack’s plan also allows students who earn these certifications to skip parts of the CPA exam. Dresnack calls his approach a “shorter benchmark,” but one that he says recognizes not all who enter accounting become CPAs.

However, in their report “Decoding the Decline: A CPA Pipeline Report” the Illinois CPA Society found those who did not complete the requirements failed to see the value of becoming a CPA. In other words, it wasn’t just the requirements, but the return on investment.

Highlight Career Stability

One attempt to address the return on investment problem is to make the position more attractive. After all, amid current downsizing and layoffs in various industries, inflationary periods, and uncertain job markets, accounting represents a stable career choice. With a growing need and median pay of $77,250 according to the U.S. Bureau of Labor Statistics, accounting should be an attractive — and lucrative — career path.

Organizations and firms have also launched more aggressive outreach programs, including social media campaigns to spark interest and grow pipelines. An increased attendance at career fairs has also become a popular approach to getting the word out and enticing new recruits.

Showcase Accounting Beyond the Numbers

Exposing students to how accounting impacts society beyond the numbers is also gaining traction. For example, showcasing how accounting can play a crucial role in sustainability and environmental consciousness in business. Connecting how accounting impacts real life makes a significant difference in sparking interest. This requires getting beyond abstract concepts and focusing on how accounting affects key business decisions and investments as well as the role accountants play in emerging industries. In many cases, it requires breaking down traditional stereotypes. Many students think CPAs only do taxes, while we know that it’s just one component of the job.

Another area of increased attention is the impact of artificial intelligence (AI) in the accounting field. AI and automation are reducing the number of tedious tasks that accountants must do, freeing them up to focus on high-level, more rewarding work. This provides an opportunity to attack the perception that accounting is boring. In fact, AI in accounting is on the cutting edge, reducing rote tasks and encouraging more creative thinking. This makes work more impactful and strategic, allowing CPAs to play an even greater role in organizational decision-making.

At the same time, this is providing opportunities for students studying AI and data analytics to consider working in the field—a natural overlap with STEM pursuits. While this doesn’t directly solve the pipeline problem for accountants, it could attract more students by highlighting how high-tech an accounting career can be.

Actively Pursue Diversity and Inclusion

As demographic and societal shifts have made the population more diverse, accounting has traditionally lagged. The Illinois CPA Society recently published an in-depth study of the barriers to diversity within the profession. Of the firms surveyed, 58% admitted their environment was not diverse in representation among leadership or peers, creating a significant barrier to success. Another 38% said their workplace was not inclusive. This lack of diversity and inclusiveness has traditionally discouraged some students from pursuing careers in accounting. That needs to change to increase accounting pipelines for the future.

While greater exposure to accounting careers in high school can help, programs such as the Mary T. Washington Wylie Internship Preparation Program are actively targeting minority college students to secure accounting internships and help students find their first job. The program provides access to training, resources, and mentors to better prepare students for success and helps connect employers with qualified minority candidates for paid internship positions.

Increase Focus on Retention

Firms are also focusing more on retention strategies to keep top performers, including:

  • Remote work and hybrid arrangements to introduce more flexibility into scheduling, especially during off-peak periods
  • Increased compensation, including more frequent salary reviews, benchmarking, and retention bonuses
  • Evolving benefits programs to offer more mental health and wellness benefits
  • Emphasis on promoting a better work-life balance and paid time off (PTO)
  • Formal career-path planning to show accelerated pathways and earning potential

Some firms are also treating CPA continuing professional education (CPE) and online CPE for accountants as more than just a requirement for maintaining an active license, offering additional benefits or compensation for CPA CPE and online CPE courses as employees earn their accounting continuing education.

Solving the Accounting Pipeline Problem

Solving the accounting pipeline problem will not be easy or quick. Even what the core problems are and which direction to take solve them remains hotly debated. Solving this problem, though, is vital for the profession and for finance, generally, and may very well require more than one solution. Amidst the uncertain, one thing is certain: it will take proactive measures by industry associations, accounting firms, and accounting professionals alike to educate and attract a new generation of accountants.