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Is There Really a Shortage of Entry Level Accountants?

a retailer experiencing supply issues

There is if you believe this post by Buffalo Business First (subscription, sorry):

Freed Maxick CPAs P.C. is the region’s largest accounting firm. It has continued to hire new graduates every year since the recession, but lately there seems to be a “talent shortage” for entry-level positions, said recruiting director Shawn Frier.

“People are just not going into the accounting field …”

As previously stated, it’s a subscription site so we can’t even read the end of that sentence, which could have been “…to stay in public accounting for more than two years” or “…to put up with crap from the likes of us.” No offense, Freed Maxick, I hear you guys are lovely (although I do have some doubts about your choice of Facebook cover photos sometimes).

With the bazillions of articles out there about how awesome accounting is, record numbers of people sitting for the CPA exam and 3% or so unemployment in accounting, you’d really think there would be a huge pile-up of marginal entry-level candidates desperate for work and not enough positions to stuff their warm bodies into.

Firms have always competed for top talent or there wouldn’t be recruiting events and seminars for recruiters with such advice as “treat ’em like pampered pets.” You may recall the Crain’s piece last year about the firm throwing around steak dinners and Becker courses to lure new talent, Aronson making it rain with iPads or even the cringe-worthy display of Price Is Right generosity by Plante Moran. This is old news.

So where, exactly, is the disconnect? There should be tons of accounting grads drooling for jobs right now and plenty of jobs to go around, no?

The AICPA’s 2011 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report showed record numbers of accounting students and graduates but also hinted that demand for new talent eventually could outpace supply:

All told, 226,108 students were enrolled in undergraduate or graduate accounting programs during the 2009-2010 academic year, 6 percent more than in 2007-2008, the last time the AICPA conducted its survey. A record 68,639 students graduated with accounting degrees in 2010. Nearly 4 in 10 accounting graduates hired last year by CPA firms had master’s degrees, compared with 26 percent in 2008. By contrast, 43 percent of graduates hired had bachelor’s degrees, down from 56 percent in 2008.

Unfortunately, many accounting programs are currently rejecting qualified applicants, which the AICPA guesses is likely on the rise due to poor economic conditions at universities and the shortage of academically qualified professors. In the report above, the AICPA reported thirteen percent of AACSB accredited business programs each rejected 165 qualified students on average, up from 6% in 2009.

According to the just released 2013 Salary Guide by Robert Half, tchotchkes and cheap gift cards aren’t enough to get the top talent:

Public accounting firms are hiring again in response to increased demand from businesses for accounting, audit, and tax services. Firms of all sizes are looking to expand practice areas and pursue new market segments. Demand is especially strong for audit and tax professionals. Specialty areas seeing more hiring activity include IT audit, business valuation, and forensic accounting. Firms generally seek candidates with at least three to five years of experience, but recruiting of entry-level professionals is not uncommon.

Although accounting firms have a growing demand for staff, they’re competing for talent with businesses that have a renewed interest in adding people with some of the same sought-after skills. Accounting firms are improving compensation as a result, but may need to further enhance their efforts, both to attract new talent and retain experienced accountants who may be tempted to consider more lucrative or lifestyle-friendly opportunities in private industry.

So apparently this means the old school is retiring far faster than it can be replaced, despite record numbers of accounting grads and CPA exam candidates. If the situation really is that dire, I would not be surprised to see CPA exam pass rates hovering closer to 60% in the next few years. Let’s just hope the bottom never falls out of this thing and Congress keeps writing up bad legislation that will keep all of you very busy for years to come.