Before we get into the meat and potatoes of this article on Bloomberg Tax, I just want to call out the photo they used for the header. “Paraphernalia” got a chuckle out of me.
OK so everyone and your mother knows by now that public accounting firms are struggling with a talent shortage. Regardless of how you may feel personally about the word “talent,” the concept here is that firms have hours to bill and not enough people to eat them. It was an issue in the profession long before the term “Great Resignation” was dreamed up in the head of Texas A&M professor Anthony Klotz (his May 2021 interview with Bloomberg can be found here) and one that has indubitably kept many a partner, leader, and insurance discount peddler up at night. Here’s AICPA President, CEO, and minor league air hockey MVP Barry Melancon freaking out in 2015:
“It is critical that we’re producing enough CPAs to replace the retiring Baby Boomers and that the profession is continuing to meet the ever-changing needs of the U.S. capital markets,” Melancon said. “We’ve been looking into this issue in great detail and are considering a number of professionwide initiatives to complement our existing programs and ensure that qualified accounting graduates are earning their CPA license.”
There are many more instances of Barry panicking over the accountant shortage, but you and I have other shit to do today so we’ll skip compiling quotes and just say that this is something that has been on leaders’ minds for a long time.
So long in fact that we actually called the issue we’re about to discuss a whole five years ago. From The State of Accounting Recruitment and Talent Shortages in 2017 published here on Going Concern:
We find ourselves on the precipice of a potentially apocalyptic fan-meet-feces situation here: Too many jobs, not enough accountants to do them. Add in a mass retirement of Baby Boomers who stuck around far past their prime and a shortage of PhDs to teach accounting at the university level and what do you get? Popcorn. Popcorn is what you get. Just sit back and watch firms start handing out iPads and vacation days to new hires like Oprah gifting cars to her audience.
“If employers continue to struggle to find qualified accountants in the coming years, it will have real impacts on the health of the American economy,” said Steve Gunderson, president and CEO of Career Education Colleges and Universities (CECU) in 2016. Ya think? Accountants are the invisible machine keeping America’s economy afloat, kind of like how flowers just sit around being pretty and make bees do all the pollinating work. You guys are the bees, there are no pretty flowers without your hard work.
Oof. Still waiting for those iPads.
Back to the Bloomberg Tax article I was supposed to talk about five paragraphs ago. This terrible piece of news published Monday suggests that accounting’s mass exodus is affecting more than just accounting firm partners’ sleep schedules but financial statements themselves:
Accountants are leaving jobs in record numbers, at both corporations and audit firms, joining the broad swath of workers re-evaluating what they want from their careers. Some are leaving the profession entirely. Others may take advantage of a tight labor market to seek higher salaries and more flexible schedules.
In the rush to meet Securities and Exchange Commission filing deadlines, with more work piled on the shoulders of fewer people, important checks may be skipped, errors go unnoticed, and assumptions unchallenged.
“If you choose to file on time there is absolutely going to be an elevated risk that your financial statements will be materially misstated,” said Bruce Pounder, executive director of GAAP Lab, an advisory firm. “That’s not good for anybody.”
Worse, the peer pressure upon which the entire lower caste of public accounting is precariously built is no longer working to keep people at their firms during critical periods. Years ago, bright-eyed, as-yet-unjaded early-career accountants stuck around at least through busy season lest they leave their teams high and dry. Not anymore.
Hiring hasn’t kept pace with resignations, and staff are leaving even in the middle of financial reporting season—what once would have been taboo, said Wendy Cama, managing partner for audit and assurance services at Crowe LLP. “There’s just not enough people available.”
The article goes on to highlight Big 4 initiatives to recruit and retain staff, including $2 billion from EY to “raise pay and provide bonuses.” PwC brought on 2,000 new hires in tax and audit just in January. And Deloitte and KPMG are making investments in technology that they hope will replace some of the work previously assigned to flesh-and-blood human beings. Remember when they used to try to scare you by telling you robots were going to take over your jobs? Well now robots are taking the jobs you don’t want. LOL
As much as I’m sure we’re all enjoying firm leaders bugging out about this situation as they do extensive back-of-envelope calculations on how many pizza parties it will take to hold on to the staff they have, the current state of the profession is sadly affecting those who remain behind. Which in turn will lead to even more people leaving as already excessive workloads become unmanageable.
The rate of turnover now is nearly double what it would be in a typical year, and demand for accounting services has never been higher, said Gary Boomer, a strategist with Boomer Consulting Inc.
“I’m worried about the firms and their shortages,” Boomer said. “It only puts more pressure on the people that are there.”
I recommend reading the entire article in full as it is a brilliant snapshot of the profession’s talent trouble in full gory detail. Jokes and sass aside, this is getting legitimately dire; it’s not an exaggeration to say the effects of The Great Accountant Shortage of 2022 are only beginning to be felt and have consequences far beyond the audit rooms and firm cubicles WFH desks of America.
People have the leverage, not firms. If firms want to fix the problem permanently you need to completely alter the economics of the way you do business. It’s like any other industry, everyone has a price!
Why makes you leaving your bed and family members to work? Money
Continue underpay, continue losing talents
The problem with this profession is the economics are broken. Companies treat audit and tax work as a commodity. If a firm tries to increase fees to keep up with these rising salary costs these companies will look around and will have no trouble finding a smaller firm willing to do the work for much less. The fee increases don’t keep up with the rising costs, so the wages stay stagnant. With stagnant wages, fewer people want to choose this as a profession when they see lawyers, finance, and tech professionals making starting salaries that are 2-3x higher. You’re going to start seeing a lot more quality issues in the profession with everyone stretched this thin.
Spot on. And honestly, between the pandemic and now firms being stretched way too thin (more than ever) its the perfect opportunity to either commit fraud and odds are it won’t get picked up on or unwind a fraud for the same reasons.
Maybe you should share your premise with all the CPAs over the age 50 that can’t find jobs as bookkeepers because of rampid Age Discrimination by Employers and Gen Xers. Also, blame the AICPA for working so hard to relax the rules for firm Partnership to be non-CPAs along with forcing our profession to have to get a 5th year of Accounting education to qualify for the CPA instead of worrying about the all important experience. Sorry, but the wounds are self-inflicted and enhanced by the insurance brokerage firm that goes by the name of AICPA.
The impact of the fifth year requirement can’t be overlooked. I was part of the campus recruiting team for a Big 4 firm a few years after that requirement was implemented, and we could not fill our interview schedule because the students weren’t signing up. The interview slots for finance-related jobs were wait-listed. Students told us they could find jobs for similar pay without the fifth-year requirement in Finance or go into private industry accounting/tax jobs.
AICPA needs to re-think their position on requiring the extra academic credits. We are now seeing the impact of years of fewer graduates entering the accounting profession
And so many people have no problems spending considerable amounts of money and time getting educated to become lawyers or doctors. It’s not the fifth year that’s the major problem–accounting has an image, money, and too much overwork for little money problem that cannot be overlooked.
As an aside, I – a CPA – decided to go to law school. I wish I would have done this sooner and don’t mind spending the time and money away from an accounting career to do so. Moreover, there is at least one other CPA in my class who chose to go the same route. After speaking, we both decided that it was a great move and enjoy law school despite all its ups and downs. .
Just curious, what’s your plan after law school? I imagine you’ll have a lot of options. Anything in particular you’re looking to do?
Hi Adrienne! Nice to get a response from the blog creator. As for my plans after law school, I plan on working in some area of corporate law but am also open to other areas of law as well.
I agree. I just retired from Forensic Auditing in the federal government, and I have applied to numerous remote jobs for which I am qualified, but no one gives me a call, or even an email. It is pretty easy to tell from my resume that I am in my sixties. Age discrimination is a big factor in our society – that is why I worked for the government for 36 years – no mandatory retirement.
> CPAs over the age 50 that can’t find jobs as bookkeepers because of
> rampid [sic] Age Discrimination by Employers and Gen Xers.
Ummmm, Gen Xers are now in their 50s. LOL at your logic.
Gen Exers are over 50. The boom ended in 1964. The first Gen Exers are turning 60 in 2 years. The “youngest” Gen Exer is over 40 at this point.
Jaded viewpoint biased toward workers with unfiltered mocking of employers as of they shoulder all the blame. Shame on the entitled believing author of this article and those who by their support demonstrate confirmation bias the author craves.
1) Not really a coherent statement….
2) $5 dollar meaningless buzzwords….
3) Defending the employer and blaming the employees….
Everyone, I found the partner in the group.
If you CHOOSE to file on time??? I worked in SEC reporting in both public accounting and at a public company for 30 years, and I don’t recall ever CHOOSING to file on time. We filed on time, every time, because those are the rules.
The issue is the Big 4 have a seriously bad reputation for over working their graduate trainees. When you can go and work in more attractive firms, say Google or Fintech, and have the talent to do so, what are you going to do?
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