In Pursuit of Profit
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The Association of International Certified Professional Accountants (AICPA) publishes an annual report detailing accounting program enrollment and graduate hiring trends. In their most recent report, they provided data on a problem that the accounting industry has been facing for the last decade. The problem is that fewer people are choosing accounting as a career. Our conversations with colleagues have yielded the same kind of feedback. It seems that fewer people (even those majoring in accounting) are going into accounting these days upon graduation. The AICPA backs this observation with data showing that from 2019-2020 the number of accounting graduates dropped by 2.8% at the undergraduate level and 8.4% at the graduate level. Furthermore, the hiring of new accounting graduates in 2020 decreased by 10%.
A chart: Trends in accounting degree completions - bachelor's and master's 1994-2020
Not surprisingly, the number of CPAs has declined in response. From 2019-2020 there was a 17% decrease in the number of CPA candidates nationally, and from 2020-2021 there was another 6% decrease. An in terms of CPA certifications, there was an 11% decrease in CPA exam candidates that passed their fourth test from 2019-2020 and a 5.5% decline from 2020-2021.
The problem has gotten serious enough that AICPA has begun providing resources on how university faculty can combat declining enrollment as well as supporting earlier education initiatives aimed at K-12 students to promote an interest in accounting from a younger age. And these efforts may be starting to work. Data from that same study indicates that 58% of bachelor’s and master’s accounting programs expect to see enrollment remain the same or increase for the coming academic year. If this proves to be correct, it could finally reverse the downward trend in accounting degrees. We can all agree that is great news!
However, there is no guarantee that accounting degrees will ever come back to the level where they once were. And even if they do, it’s going to take time to get there. So, what do fewer accounting degrees right now mean for the future of accounting?
Reinventing the Role
The main contention we’re hearing among graduates that are choosing to get accounting degrees and then go onto other careers or seasoned accounting professionals that are choosing to leave the industry is that the work-life balance is not in line with what they want for their futures. The long hours and sometimes exhaustive demands have always been a trademark of the industry, but in the wake of the pandemic, people are more aware of the kind of work-life balance they want and they are more likely to go where they think they can get it.
If an employer can provide the kinds of concessions that today’s professionals are looking for (a hybrid work option, increased vacation time, not expecting employees to answer emails over the weekends, etc.) they are more likely to attract and retain staff. For some companies these kinds of changes may not be feasible, but for some reframing expectations for the role may open the door to a wider talent pool.
Overcoming Hiring Challenges
With fewer people pursuing a career in accounting there are fewer resources to draw on when companies need accounting help. Gone are the days of having a whole line of fresh faced accounting majors applying for your newly posted staff accounting role. However, as resources have dwindled the importance of accounting has not (and will not) diminish. Therefore, companies are going to need to get more creative with their hiring.
The biggest trend we are seeing right now is hiring professionals from adjacent industries like finance, mathematics, economics, and supply chain and providing the educational opportunities and training to set them up for success in the role. The goal here is to find likeminded individuals with the kind of work ethic necessary to be effective not only in the role that needs filling today, but also the ones that will need filling tomorrow (like senior accountants, accounting managers, and controllers) to grow the accounting profession as a whole.
The Rise of Fractional Work
Companies that are unwilling to compromise on the level of experience they are looking for or unable to wait for an employee to be fully trained in the skills needed to succeed are turning to fractional work engagements.
For those not familiar with the term, “fractional” work refers to hiring a third-party company to provide accounting services. It is also referred to as outsourced accounting, but unlike traditional outsourcing, which often involves handing over all of your accounting functions for another company to do on your behalf, fractional accounting is more customizable. Fractional accountants can:
This flexibility has made fractional accountants a widely popular choice over the last few years, with many companies using fractional accounting services in a wide variety of use case scenarios as their needs evolve. Fractional accounting services offer incredible value because companies can get access to highly experienced domestic accounting talent at a fraction of the cost of hiring internally (since they do not need to pay for benefits, payroll taxes, bonuses, or any other in-house employee costs).
Giving Back is Critical
Regardless of what you do to fill your open accounting role, the industry message right now is clear: it’s all hands on deck. We all need to pitch in draw more people into accounting. Whether that means doing something collectively like joining a community of accountants or volunteering your time with an education initiative for young people or doing something personally like mentoring a new accountant or starting conversations with your peers about the types of opportunities that are available, more people pouring into our profession can help to reverse the trend of a shrinking talent pool over the long-term.
When you are looking for fractional accounting services or need help hiring an accountant, let us know. We offer a wide range fractional accounting services to fit your unique needs as well as contingent recruiting services to help you find your next accountant, accounting manager, or controller. Contact us today to find out more about how we can help you overcome today’s hiring challenges.