In Pursuit of Profit
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Recruiters play a unique role in the hiring process for accountants and other financial personnel. We are tasked with fulfilling a hiring manager's requirements and are also deeply in touch with the reality of the candidate market. Often there is a gap between the two that we must navigate.
In finance and accounting recruiting, one request we frequently receive is that candidates hold active CPA licenses. This requirement has come from all industries, all size companies, and all positions from staff accountants to CFOs.
Understandably, most companies desire the best person for their position for various reasons – from wanting the most intelligent person to wanting someone to do their taxes to just wanting someone more trustworthy. But do you need a CPA on your accounting team?
To answer this question, we first need to understand more about who is behind those three letters "CPA."
Who Gets a CPA License?
CPAs are no longer your pocket protector-wearing, green visor-donning, anti-social number crunchers who love doing taxes. So, who gets a CPA license these days? Over the past 30 years, data shows most people with a CPA license started their career in public accounting, making sense because it is literally in the name Certified Public Accountant. Whereas a much lower percentage of CPAs began their career in corporate accounting. What is it about the public accounting atmosphere that breeds so many more CPAs?
Why Does Someone Get a CPA License?
There are many reasons to put oneself through the grueling and expensive task of passing the CPA exam. However, people's motivations mostly fall into two buckets: a desire for exclusivity and a path toward career advancement.
Prestige and respect for one's peers are top of the list. The public accounting environment is increasingly competitive to enter. Sophomores and Juniors in college routinely compete for internships at top firms with the hopes of securing a full-time job offer before graduating. These firms expect that a CPA license is required to progress up the ladder, and some firms require a license to make the level of Manager. If someone has worked that hard to get into the firm, the least they can do is get their CPA license to keep up because they are already committed to the process. Accountants are also very competitive by nature. When most first-year accountants are studying for the exam, it creates an "everyone else is doing it" mentality, and nobody at that level wants to be the odd one out.
Of course, professionals who went the Corporate Accounting route are not devoid of seeking prestige or respect from their peers. Receiving their license distinguishes them from the rest of their peers, setting them up nicely for the rest of their careers.
Regardless of where someone started their career, people are also motivated to get their CPA license by career security. Those simple three letters after one's name stand out on a resume – they impress employers. If you have ever hired an accountant, there is no doubt you have opened a resume, seen those letters, and felt a little shot of adrenaline. They stand out precisely because the CPA exam is known for being difficult to pass, requiring that someone possess the dedication and broad technical accounting proficiency to pass the four tests.
Beyond standing out to potential employers, CPAs get paid more over time. Studies show that CPAs earn 10-15% more over their career than non-CPAs. How's that for career security?!
The motivation for getting a CPA is clear, but what does a CPA license mean about the accountant's accounting skills?
What Does a CPA License Mean?
It is helpful to break down the actual steps needed to become a CPA. Someone takes five years' worth of college credits, studies across broad accounting topics, takes and passes four individual tests (sometimes more if they failed any sections), then works with and gets signed off by a current CPA.
Once earned, those three letters tell you that, indeed, the person is a hard worker, a good test-taker, and very likely credible. But what does it say about their Accounting skills? Are they skilled at reconciliations? Do they love SEC reporting? Is their passion manufacturing job costing, or are they an expert at SaaS company revenue recognition? These three letters cannot tell us because they are a generalized statement about a person.
The CPA title attached to a candidate does not show expertise in any specific industry's accounting practices. Whether coming from a public accounting or corporate accounting background, obtaining a license offers general traits of credibility, hard-work, and broad accounting knowledge about a candidate.
But does a hiring manager need a CPA for their specific position? To decide if you need a CPA, ask yourself what you are truly seeking in a candidate and create the role around those needs.
Do You Need to Hire a CPA?
There are many reasons a company may want a CPA. Knowing that your new accountant has their license provides a certain level of general assurance about their credibility and know-how. This can help a company seeking to operate without much oversight of their accountant and, therefore, they're able to trust that their hire knows what they are doing in a hands-off environment. Also, external stakeholders like banks, PE firms, or VC firms may want assurance that the person handling a company's books is credible. This is a valid reason to seek a CPA, but certainly not the only way to assure a candidate's credibility.
A CPA may have the technical accounting acumen a company is seeking. Many public accounting firms handle complex technical accounting issues for their clients. They also are leaders in interpreting and implementing the most recent accounting literature. Suppose a company has complex accounting issues related to their industry, product/service type, service or distribution location(s), or specific investments held. In that case, it will be very beneficial to seek someone who knows that specific topic. Often this will be a CPA because of the exposure professionals in public accounting get to these topics.
Most companies need an accountant who possesses a deep knowledge of the specific accounting intricacies of their industry. Whether it is manufacturing, real estate, financial services, or tech, someone must be hired with a certain baseline of industry knowledge on day one. However, this may not be a CPA. It is a myth that CPAs automatically come with higher levels of industry-specific knowledge. The CPA is a general test, and most CPAs who come from public accounting gain experience across multiple client industries in their tenure. In this case, a company is better off focusing on finding a candidate with deep industry accounting experience than focusing on a CPA license as a required qualification.
Some companies want to hire a CPA. The reasons can vary, but often companies are looking to "level up" their Accounting department with someone of a higher caliber. It is valuable to ask a hiring manager, "Do you need a CPA for your role?" and then have a conversation from there. A significant first step towards making that perfect hire is understanding where they lie on the spectrum of want versus need.
Find out what it takes to manage an accountant effectively to set yourself up for success even before hiring someone into the role.
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About the Author
Quinn Finnigan actively sought out the recruiting industry in 2015, seeking to redefine his career success definition. He has served Puget Sound-based middle market companies to fill Accounting and Finance positions through contingent placements for over five years.
A proud alumnus of The University of Portland, he received his undergraduate degree in Accounting. He began his career at Deloitte in the audit practice for three years before taking a "quarter-life crisis" break to live and play in Maui.
Quinn actively sought out the recruiting industry in 2015 to redefine his definition of career success and has been serving Puget Sound-based middle market companies to fill Accounting and Finance positions through contingent placements for over five years.
Having found his passion and expertise, he dramatically enjoys serving Pacific Northwest-based organizations with ASP and CFO Selections.
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