Here we are again talking about the accountant shortage. Don’t blame me, blame WSJ. Mark Maurer at Wall Street Journal wrote today about a young man named Omer Khokhar who realized after six years in accounting that he was done. The article title: “Job Security Isn’t Enough to Keep Many Accountants From Quitting.” Ruh-oh.
The New York resident found accounting work monotonous, with little room for creativity or growth, and maximum salaries weren’t as high as he would have liked.
“The job security and the ability to have a comfortable life motivated me at first,” said Khokhar, who served as a senior accountant at two construction firms and senior auditor at an accounting firm. “But once I started, had some work and life experience, I realized there are better options out there.”
Khokhar earlier this year joined JPMorgan Chase as a treasury sales associate in its commercial real-estate banking division.
Then just for fun WSJ kicks the profession while it’s down and adds an organized list of downsides of a career in accounting recognized for years by students, academics, Xitter users, and washed-up accounting blogs:
The 30-year-old isn’t alone in his discontent with the industry. Accountants have long been viewed by people in the profession as underpaid and undervalued compared with positions in tech and banking. Now the foot soldiers of the profession are leaving the field in droves. Accountants cite low salaries, mundane tasks, burnout and the threat of new technology like generative AI as reasons for considering other industries.
Up until now, most accountant shortage discussion has been focused on students choosing other fields, CPA exam numbers lower than they’ve been in almost two decades, and boomers retiring from accounting en masse. That last one was the first sign a shortage was coming down the road, mentioned here by the Illinois CPA Society back in 2017:
An impending mass exodus of CPAs over the next 15 years is the most obvious contributor to shrinking CPA numbers. The AICPA often cites that the large pool of retiring Baby Boomers will leave a gaping hole in the supply of experienced CPAs.”
Statistics from the AICPA suggest that 75 percent of current CPAs will retire in the next 15 years, leaving a huge vacuum in the industry.
The AICPA cited that figure in this 2015 exposure draft [PDF] about adding a “retired” CPA designation to the Uniform Accountancy Act. Perhaps there are earlier mentions of the boomer exodus, I don’t feel like digging them up. All that to say, it was no big surprise there would be a vacuum to fill yet it’s only in the last two or so years the hand-wringing began.
Here’s what’s concerning and what makes this particular accountant shortage article different from the thousand others that have come before it. WSJ backs up Omar’s anecdote with hard evidence from Live Data that shows existing accountants are dipping out at the level where they really know their stuff and making their way to other fields. So the dry pipeline isn’t the only problem, there’s a building knowledge vacuum too.
Former accountants have largely moved to nonaccounting roles in finance, as well as working as financial analysts or in business operations, human resources and banking, according to employment data provider Live Data Technologies.
A greater percentage of accountants are leaving the profession later in their careers now than in years past. About 82% of workers who exited accounting this year through Sept. 1 had at least six years’ experience, up from 77% and 71% in full years 2022 and 2021 respectively, Live Data said.
The average tenure and age of accountants are increasing, meaning that any given exit is likely to be someone with a longer tenure, said Jason Saltzman, director of growth at Live Data.
The article also mentions a 28-year-old sole practitioner who’s getting out because “the work is often tedious and he doesn’t feel as if he’s making a difference in his clients’ lives,” a 33-year-old tax accountant who says “she feels overworked year-round,” and a 32-year-old senior accountant with her CPA who’s thinking of going to nursing school “because that career likely would yield more meaningful work and potentially a better work-life balance.” Said the sole practitioner, who graduated in 2019, “There are good things about the profession. It’s just that some of the negatives are so negative sometimes, it’s hard to always dwell on the positive.” We tried dwelling on the positive once, traffic plummeted.
It wasn’t even a year ago that WSJ wrote about the shortage and got a quote from someone at Robert Half who suggested a recession would fix the talent problem right up:
In a downturn, students tend to gravitate toward degrees in accounting and finance because they are considered more stable career paths than, for example, marketing and communications.
And yeah, that is what happens when the economy gets bad. We observed it in 2008 and the tough years that followed. Predictable patterns based on past experience can’t be counted on though, as Surgent VP Liz Kolar explained in this guest post she did for us last month: CPA Exam Changes and Pipeline Woes Are a Perfect Storm of Problems For the Profession. With a huge CPA exam change just a few months away, CPA review companies should be seeing a large number of people rushing to get the exam over with before the change. They aren’t. Here’s Liz:
Unless you’ve been living under a rock, you’re likely aware that the accounting profession is experiencing two simultaneous massive shocks.
These shocks (of our own making) are the collapse of the CPA candidate pipeline and launch of the CPA Evolution, the largest change to the CPA exam since the exam went digital nearly 20 years ago. Of course, exam computerization came after current partners had to walk uphill in the snow both ways to make it to and from the client site. Cue the violins.
Many of the discussions about these shocks have come in a vacuum, mentioning either the pipeline collapse or CPA Evolution, but the two are as connected as they’ve ever been. I’ve seen several major changes to the CPA exam throughout my career as a practicing accountant, university professor and exam prep instructor: 1994 – the exam was shortened from 19.5 hours to 15.5 hours; 2004 – the exam went from a paper and pencil exam to a computerized exam; 2011 – the first Computer-Based Testing Evolution (CBT-e) was enacted and the task-based simulation format was introduced; 2017 – higher order skill testing was introduced; and 2018 – Excel was added as a tool, along with a new user experience. Now, we’re facing the CPA Evolution’s arrival in 2024. Typically, each major change is accompanied by a tsunami of candidates rushing to test before the change takes effect and is followed by a drought of candidates signing up to test immediately after the new exam changes go live. We’re seeing more of a ripple than a tsunami this year and could be in for a massive drought in 2024 and 2025.
So that’s where we’re at. Job security isn’t keeping people in the profession and a big scary CPA exam change isn’t compelling graduates to flock to the current exam. Can’t wait to see the 2023 AICPA Trends report.
Job Security Isn’t Enough to Keep Many Accountants From Quitting [WSJ]
So when does this translate into higher pay?
That’s the neat part, it won’t.
Preach!!!
Auditing has always been an awfully boring and time-consuming job. Tax work is deadline-based and intense. There has never been enough reward for the long hours and boredom of repetitive work. The money isn’t there either. I have worked as CPA since 1978 in public accounting. It’s always sucked. Only now, rescued from salaried work by Medicare and Social Security, working part-time, do I enjoy this job.
“the work is often tedious and he doesn’t feel as if he’s making a difference in his clients’ lives,”
As an accountant for a CPA firm, I couldn’t agree more with this quote!
I’ve applied for many audit roles…even seeing PA roles open for a year with 1 applicant, doesn’t stop these crooked partners from having the guts to reject candidates looking to come back.
Now? This has been going on for at least 2-3 years. It’s always been a thing to jump to industry from public accounting if the money and/or life balance is too good to pass up for many. But yes, completely new job, has been an increasing draw for those leaving accounting all together, especially for those who have more than 20 years to go to retirement age.
There is a growing shortage in industry also, which is often putting more pressure on those there. And with a shortage in many fields outside accounting too, there are often opportunities for younger accountants to go into other fields with their proven work ethic and ability to learn new things on the fly or with minimal training.
As the lack of staffing puts more pressure on current accountants, the number of those looking into other careers will likely increase, and it may be a bit of a snowball effect.
The slower the profession moves to truly remove obstacles and put in place real incentives to increase pipeline, the worse this is going to get. Its far from over.
The pay for accountants is a joke when you consider the working hours and knowledge base required to do the work. I echo the guy who has worked since 1978 (1977 for me) who has been saved by social security and Medicare. CPA’s are looked at by clients as advanced bookkeepers. The AICPA does nothing to move the profession along. Steered my kids away from it years ago.