I realized the other day while halfway through typing out a rambling sentence that barely had anything to do with accounting in a separate post that I’ve written about the profession’s pipeline problem several times over the last few months but hadn’t ever really defined it. I’d reference back to things here and there but there wasn’t a single page here dedicated to explaining what the pipeline problem is and — most importantly — why anyone currently or soon-to-be in the accounting profession should care. So let’s fix that.
A 2016 Accounting Today article called the dearth of new CPAs one of the biggest issues facing the accounting profession. In other words, not enough people want to be CPAs anymore, and that’s a big, big problem.
Wrote Dan Hood:
This is a problem that seems tailor-made for buck-passing, involving, as it does, a range of factors that would seem to be beyond the scope of any individual, from the explosion of job opportunities that are adjacent to accounting (and thus draw away potential CPAs) to the differences in the way Millennials look at their careers, to the many hurdles would-be CPAs have to cross. Surely this is a job for academia, regulators and the leaders of the profession at state societies and the American Institute of CPAs, not for the average practitioner?
The article goes on to reference an August 2016 Illinois CPA Society report entitled “Pipeline Disruption” [download the report here] which cites “companies that don’t value the credential; advisory services at firms that don’t require a CPA; the 150-hour education requirement; and the complexity and format of the exam itself” as reasons why new CPA numbers are down. The Powers That Be have been concerned for years that people aren’t sitting for the CPA exam like they used to, despite accounting graduate numbers higher than they’d ever been.
The initial buzz about a pipeline problem back in the day focused mostly on a related but somewhat different issue: the profession’s very noticeable, very Caucasian nature. Phrased less delicately: the accounting profession has long suffered from a lack of diversity, especially further up the ladder; new-hire diversity is only slightly better than that of higher ranks.
From the August 2014 Journal of Accountancy article ‘A pipeline problem for diversity‘:
Despite decades of intensive efforts, the accounting profession has not reached its diversity goals. African-Americans and Hispanics made up 13.1% and 16.9%, respectively, of the U.S. population in 2012, according to U.S. Census data, but secured just 4% and 6% of the new hires in 2011–12 at CPA firms, AICPA data show.
As if these two issues weren’t enough, there was another threatening factor breathing down the necks of profession leaders: the Boomer problem. And no, I don’t mean the HR problem when Boomer colleagues start posting mildly inappropriate big nose cartoons in the team group chat. I mean the retirements. In 2017, Boomers made up 47% of total AICPA membership. A few years ago, the AICPA estimated that 75% of its members would be eligible for retirement by 2020. This, of course, would leave a huge vacuum the likes of which the profession had never had to plug before.
Again, maybe if this was the only major talent problem facing the profession it would be manageable. But it wasn’t.
We are also dealing with an accounting professor shortage, which falls into the Boomer problem category somewhat; however, it deserves its own mention as it is a unique problem that hurts the profession at large and not just the accounting firms that have to step up their hiring game. The AICPA has been throwing money at the problem, but as with everything else in this perfect storm, it’s an uphill battle to convince people to go down this path and cash can only go so far.
These multiple issues have contributed to the pipeline problem but ultimately it boils down to the terminal uncoolness of accounting. And I don’t mean simply a PR problem, I mean the entire thing is just not cool to outsiders. When college students are considering their options, accounting just doesn’t stand out as attractive; not to students looking to get rich and not to students looking for fulfillment in their work. Money is cool. A life outside of work is cool. Working for a brag-worthy tech company is cool. The accounting profession struggles to deliver on any of these things individually much less as a package, hence other career tracks luring students away. This isn’t to say that accounting is bad, rather the profession has done a poor job of explaining to students why it is not.
As the 2014 Journal of Accountancy diversity article explained:
Misperception about accounting as a career is one reason for the disparity. Studies suggest that young people, including underrepresented minorities, hold the profession in relatively low regard, do not understand what accountants do, and do not appreciate the career opportunities the profession offers. It turns out that this lack of esteem is widely shared by parents and educators, the two groups with the biggest influence on young people’s academic and career choices.
Why should you care about any of this? One could ask why should you care about anything but that kind of existentialism is above my pay grade. This matters because it can directly impact your salary, your workload, and your opportunities. Perhaps you like the pipeline problem, because you think kids these days complain too much and are weak because they can’t work 55 hours a week and sit for the CPA exam in six months like you did back in Byzantine times. That’s fine and all, just know that those of you flaunting “back in my day I worked 90-hour busy season weeks and didn’t see my family for half the year” like some twisted badge of honor are part of the reason why students take one look at the profession and nope out of there. It doesn’t make someone lazy to see that and run the other way, it makes someone sane.
If we’re lucky, the robots taking over your jobs will coincide nicely with the critical staffing shortages and we’ll be able to automate most of the work away. You better hope so anyway, otherwise you’re in for a hell of a reality check that will make you pine for the good old days when you had to work “only” 90 hours a week.