Accounting firms in the US are being urged to revamp their business models to attract more young people after the number of people taking exams for the profession fell to the lowest level in at least 17 years.
The shortage of CPA candidates that has plagued the profession in recent years is worsening in 2022, dashing hopes for a quick rebound from the pandemic, new data from the American Institute of Certified Public Accountants shows.
The shortage of new entrants coincides with a wave of baby boomers retiring and threatens to cripple firms’ ability to perform the accounting, tax and auditing jobs that corporate and individual clients rely on.
According to a note in the AICPA’s annual report released this month, slightly more than 67,000 people will sit for the CPA exam in 2022, down from 72,000 in 2021 and below the agency’s forecast of 74,000. That’s the lowest level since records began for the modern test in 2006.
Details shared by the AICPA governing board suggest that even that number is popular with overseas candidates. The number of CPA exam modules taken by U.S. candidates fell more than 10% year-over-year.
The Institute of Management Accountants, which offers an alternative certification for those entering corporate finance, told the Financial Times that there were also 5% fewer candidates in the US last year.
“This is becoming a crisis, not just for accounting firms but for companies,” said Dennis Whitney, IMA senior vice president. “Accountants are the backbone of companies, not just for financial reporting. The purpose is also to help them make decisions.”
The AICPA said the number of new test takers increased in the early months of 2023, and it expects an overall increase of 10% this year, in part due to upcoming changes to the exam. But that still means numbers are 20% below the average for the past decade.
Wayne Berson, head of BDO USA, told the Financial Times earlier this month that his company plans to double its overseas staff and move more jobs overseas because of the shortage.
As college accounting programs have become less popular in the U.S., the pipeline for new candidates has dwindled. Starting salaries for graduates can also be at least a fifth higher in finance or technical fields, and these careers may not require such expensive professional qualifications.
“With the length of time it takes to become a partner, the length of time it takes to achieve financial success, the CPA firm’s financial model has become obsolete,” said Alan Whitman, who ran the accounting firm Baker until March. Tilly seven years.
“Companies need to work on making the industry more attractive in a number of ways, most importantly reimagining operating models and career development,” he said.
The AICPA said it was adding scholarships to help candidates and encouraging firms to offer competitive salaries. “Your generation is looking for a shorter ROI,” said AICPA Vice President Mike Decker.