Relatively few CPA firms are able to find enough employees to fill their ranks and are resorting to strategies like hiring workers abroad, raising starting salaries, offering fully remote jobs, and hiring staff who haven't graduated college, according to a new survey.
The survey, from alliantTalent, an affiliate of the tax advisory firm alliantgroup, used research firm CensusWide to poll 250 top CPA firm leaders in the country. Less than 1% of the respondents indicated they are able to find the staff they need in the U.S and are forced to turn to these other strategies to fill the talent gap.
The survey found that 27% of the CPA firm leaders polled report that former staff moved outside the industry for higher pay. A 56% majority of CPA firm leaders expect to have to increase starting salaries by 11% or more, with an average increase of 14% reported. At the far end of the scale, 18% of CPA firms anticipate increasing starting salaries by 21 to 40%.
Desperate for solutions, the CPA firms surveyed in the U.S. are either considering, planning or are already implementing a number of strategies: 75% are employing workers without the extra graduation requirement; 74% are offering fully remote roles and 79% are integrating more technology to execute baseline work.
The survey results are in line with outside data. The Bureau of Labor Statistics estimated that 300,000 accountants and auditors have quit their jobs in the past two years. The American Institute of CPAs
"This has been going on now for two decades," said alliantTalent CEO Jim Brady, who worked for over 30 years at Deloitte and Grant Thornton. "The shortage of U.S. CPA talent started in the early 2000s, and a variety of consequences converged in the same decade, in no particular order."
He cited factors such as the consolidation of the Big Five accounting firms into the Big Four in the wake of the accounting scandals of the early 2000s and passage of the Sarbanes-Oxley Act in 2002.
"The number of CPAs a dozen or 15 years ago was well over a million, and today, it's 860,000," he said. "The number of accounting graduates has been decreasing 1 to 2% a year for the last 15 years. And the baby boom generation that I'm a part of is retiring en masse. The demand side has escalated for decades, but the supply has not just flattened out, it's actually declined. There's no real silver bullet for the situation we're in."
He blamed rules like the 150-hour requirement for a CPA license as one factor that might need to change to attract more young people to join the profession.
"In many states, that extra 30 hours is not even mandatory to be in accounting, auditing or tax," said Brady. "It's a little bit of a barrier to pay an extra $50,0000, $60,000 or $70,000 to get that fifth year, especially if it's not even a deep accounting and auditing professional curriculum. The 150-hour rule is not great for enhancing the profession and increasing the numbers."
To attract more young people to the profession, he suggests accountants should do more to highlight it during high school career days and by offering more internships to college students.
"During senior year in high school, when we had a career day, I can remember a policeman, a fireman and a professional baseball player coming out, but the CPA wasn't there," said Brady. "In college, we've historically had internships during senior year. Ten years ago, we moved that to junior year. Maybe we need to move it to freshman year. We as a profession need to talk up our profession with enthusiasm earlier in the life of aspiring students, maybe even with college students enrolling into a business school."
Compensation is another factor, but he doesn't believe it's as simple as that.
"Compensation always can be a part of the equation," said Brady. "That being said, we've had the Employee Cost Index for 20-something years, and we would always give CPAs compensation increases three or four times the rate of inflation." And yet, there were declines anyway in the number of people entering the profession over the past two decades.
He believes the accounting profession needs to promote its attractive facets more to young people.
"It can be played up as a phenomenal profession," said Brady. "Whether you're in audit, tax or advisory, you're out at different clients all the time. You're not sitting behind one desk in one office. You can have clients in all different industries: transportation, retail, real estate, construction, financial services. Just the whole corporate world can be your oyster. You're not getting in the car in the morning and driving to the same parking spot and having the same office. It's such a dynamic career, and people need to bring enthusiasm when they talk about the dynamics of being a CPA, going out and winning work, going on campus and recruiting, convincing those freshmen, talking up the profession to freshmen at Wake Forest University, Rutgers, USC, the University of Texas or Chicago. Just to be out in the profession can be so exhilarating. It's a people business. You've got to play that up more."
Another way to alleviate the talent shortage is by recruiting overseas. The majority of the U.S. CPA firms polled in the survey are no longer dissuaded from using international talent based on what were previously cited objections.
"This all started two decades ago," Brady recalled. "Deloitte was first. I went to India with my family and ran the Deloitte audit and advisory operation in Hyderabad from 2008 to 2012. Then in 2010 all the big firms jumped in. I helped BDO in 2019 set up their operations in Bangalore as a consultant. Now, in the last three years, the top 500 CPA firms have been looking at virtual offshore operations."
AlliantTalent is helping provide accountants internationally, as Brady did for Deloitte, BDO and Grant Thornton. "We put together a practice of a couple hundred people in audit, a couple hundred in tax, and over 100 in advisory and client accounting services," he said. "What we're furnishing is CPA talent, chartered accountants, hired and trained in Hyderabad, India, back to the U.S. We have almost 100 firms that are an extension of the team, and that model is starting to take off. There's just not enough accounting graduates out of college. It's 20 to 30% short of what's needed. The Big Four will get their share, but there's not much left for the rest of the profession, and the baby boomers are retiring. With the breadth and depth of chartered accountancy talent in India especially, but also in the Philippines, Vietnam and other places around the world, I would say 80 to 90% of the firms that I talk to are looking at ways to expand or even just maintain their talent footprint, or else they're going have to give up clients. And firms just don't want to do that. So many firms aren't growing anymore. If you don't have the people, you can't go out and try to win new tax work and new audit clients."
