The Accountant Shortage Threatens Capitalism’s Future

An article posted by Adrian Wooldridge in the November 1, 2022 issue of the Washington Post says that that we should pay attention to the cry that has been coming from America’s accountants for years: that the profession is suffering from a shortage of talent. Bloomberg Tax calculates that the number of accountants and auditors employed fell by 17% between 2019 and 2021.

The shortage seems to start with supply. In the US, for example, Wooldridge says that “fewer than 100,000 people take the Certified Public Accountant (CPA) exam each year — the sine qua non for entry into the profession — and about half of them fail. The number of CPA exam candidates decreased by 7% between 2017 and 2018 while the number of candidates who passed all four sections of the exam decreased by 6. University enrollment in accounting courses fell by 4% between 2016 and 2019.” According to Deloitte & Touche LLP, 82.4% of hiring managers for accounting and financial positions in public companies believe that recruitment is a “big challenge.”

Wooldridge says the shortage of supply is exacerbated by a combination of high turnover and growing demand. “Accountants have been leaving corporations and audit firms in record numbers, thanks to low morale and early retirement. Though the profession has long known that the retirement of the huge baby boom generation will produce a talent crunch, the crunch has been earlier and tighter than expected because of the Great Resignation. What better candidates could there be for early retirement than numerate people who had spent their lives working hard and watching their pension pots?”

Accountants also face more demands on both their skills and their time, he adds. “They routinely have to measure things that they’ve never measured before, not least the impact of carbon emissions on the environment, a job that the Security and Exchange Commission’s crackdown on greenwashing is making more demanding. The shift to working from home is confronting them with new problems such as valuing off-site offices while new regulations are forcing them to reassess the value of leased property.”

Why isn’t supply adjusting to meet demand? One answer, reluctantly conceded by accountants, is that accountants just aren’t cool. A painting of Cosimo de Medici shows him holding his bright and beautiful account books. Wooldridge says “it is hard to imagine Elon Musk posing for a similar portrait. Another answer is that initial salaries are relatively low given the profession’s demanding entry criteria (accountants need to acquire the equivalent of a master’s degree as well as passing a demanding professional examination) and its grueling work hours. To get the big rewards, you have to become a senior partner of one of the industry’s big four giants.”

Shaken by the persistent shortages, the profession is debating how to make itself more attractive.

For some answers, see The Accountant Shortage Threatens Capitalism’s Future - The Washington Post.