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.