The CPA pipeline: A giant drawback in want of even greater options

For a number of years, our trade has warned us concerning the shrinking CPA pipeline. We’ve seen loads of reviews and articles dissecting the issue, however not sufficient large, daring options to reverse a pattern that does not simply create labor shortages, however may undermine our whole accounting career. 

No single resolution will clear up the pipeline points. What’s wanted is a complete strategy that begins nicely earlier than potential CPAs enter school and continues by way of the beginning of their careers. Earlier than we describe the daring steps wanted to advance the career, it is necessary to recap how we acquired right here to ensure our options deal with the basis causes of the disaster we’re dealing with.

When addressing the CPA candidate pipeline, there are two main areas that have to be examined. The primary situation the career is experiencing is a decline within the variety of school college students graduating with a level in accounting. The second is that even amongst these college students who do choose accounting as a serious, many are deciding to not pursue the CPA designation. Each pipeline points have to be addressed concurrently to keep up the extent of professionalism and integrity that firms, shoppers and the general public have come to anticipate from accountants.

What’s inflicting the decline in accounting majors? 

In quite a few articles, agency representatives and lecturers recommend our career merely wants a picture marketing campaign. Whereas that may be useful, I imagine we have to go a lot additional and deal with the actual systemic points which might be turning younger individuals away from the foremost. The issues stopping potential candidates from selecting accounting as a serious are many, and embody:

• The 150-credit hour rule (a typical undergraduate diploma is just 120 hours);
• The price of an accounting schooling and alternative value of the extra yr in class;
• The perceived workload of accounting majors whereas in class;
• Low and stagnant beginning salaries;
• Different majors providing extra enticing and interesting jobs; and,
• The disparity between what accountants do at this time and what college students understand accountants as doing (i.e., the picture drawback).

What’s inflicting the decline in CPA candidates?

• The workload when beginning and busy season pressures;
• Lack of relevance to their profession targets;
• The time dedication and monetary prices to cross the examination;
• Not seeing relevance to their careers;
• Not seeing the preliminary worth or return on funding;
• Their employers or potential employers don’t require the CPA to advance;
• Different credentials or specialties are extra worthwhile to their careers; and,
• The extent of problem of the examination, together with concern of failing.

Fixes

Now that we established the basis causes of our pipeline drawback, let’s discover daring, actionable options to reverse this pattern at numerous factors alongside a CPA candidate’s journey.

1. Earlier than school: Highschool and center college. The first purpose for scholar engagement earlier than they enter the collegiate setting is to extend consciousness. We have to educate college students concerning the alternatives accessible within the subject earlier of their schooling course of by connecting accounting to their on a regular basis lives resembling budgeting for a purchase order or saving for faculty. For instance:

• Supply AP accounting programs at the highschool stage that concentrate on monetary planning and fraud detection, which have rapid relevancy and a “wow” issue given the high-profile scandals that make headlines.
• Dispel the parable that accountants have to be good at math.
• Interact center faculties and excessive faculties in a extra significant manner with packages pushed by state societies, the American Institute of CPAs and different skilled organizations. Present higher help and encouragement to college students by serving to them perceive the rewards of turning into a CPA.
• Deal with the entrepreneurial alternatives accessible to CPAs and spotlight how rapidly CPAs can develop into their very own bosses.

By specializing in engagement and early publicity, state societies, the AICPA and corporations of their native places of work may coordinate and set up Accounting Profession Days by inviting native faculties to satisfy accounting professionals who work in numerous fields (public accounting, non-public firms, governmental accounting, FBI brokers, enterprise house owners, and many others.). These profession days would broaden the notion of what an accountant is and supply early optimistic interactions to the scholars, much like agency management conferences, externships, elevate packages, and different collegiate alternatives geared in the direction of underclassmen.

2. Throughout school: College students in or contemplating accounting however not the CPA. As soon as college students enter school, the purpose ought to be to assist them navigate the schooling and utility course of related to the CPA examination and improve their likelihood of passing it. To realize this, we have to encourage college students to check for the examination earlier than they search full-time employment, beginning as soon as they end 120 hours in states the place that’s permissible (40 of the 55 jurisdictions enable candidates to take the CPA with 120 credit or much less). Based mostly upon the latest knowledge accessible, current school graduates have a 75% cross charge finishing all 4 components of the CPA Examination inside 140 days. The cross charges lower and for individuals who do cross, the time it takes to cross will increase drastically as a candidate will get farther away from commencement. 

State boards of accountancy, the AICPA and the Nationwide Affiliation of State Boards of Accountancy may make the CPA examination extra accessible by changing the 150-credit hour rule with an schooling requirement or an expanded work requirement, the place candidates may select between 30 further credit or a further yr of labor expertise. 

3. Employer-related: Candidates looking for or altering employment. Not one of the adjustments made in center college, highschool or in faculties will broaden the CPA pipeline if corporations and different employers do not make beginning positions extra enticing to graduating college students. Employers should improve beginning salaries and enhance advantages. Compensation is lagging different industries that solely require a four-year diploma and with out a prolonged or costly examination. In 2014, the common beginning wage for an accountant was about $54,000 (NACE 2013). The 2022 Wage Information from consulting agency Robert Half finds that the beginning wage at this time for an entry-level audit or assurance affiliate is between $50,500 (fiftieth percentile) to $58,000 (seventy fifth percentile). Accounting salaries have barely saved tempo with inflation whereas different fields of examine (finance, advertising and marketing, info programs, and many others.) have raised wages past merely value of dwelling changes.

Due to the pipeline points, there’s a scarcity of recent hires and skilled employees. In consequence, staff are being requested to work a number of busy seasons and longer hours, doubtlessly pushing extra CPA candidates out of the pipeline earlier than they end their examination. Companies want to handle these worker shortages by way of upskilling, automation, offshoring, larger pay, and providing extra work/life stability to their staff. Asking candidates to work longer hours for decrease pay whereas learning for the CPA examination will solely push out these candidates that schools entice. And after they go away, they’re unlikely to return again to the career.

What’s subsequent

The pipeline points could seem daunting, however the options are proper in entrance of us. We should begin educating college students early on the alternatives a profession in accounting gives and should do a greater job explaining the advantages, profession choices, and worth proposition of these college students acquiring their CPA. Employers should make positions extra enticing, financially and professionally. These actions have to be finished concurrently. No single coverage change or strategy will work by itself. We’d like a coordinated and expansive technique that elements within the factors alongside the profession path the place we lose individuals to reverse the pattern and shield the career so many people have discovered worthwhile. Failure at any level in potential candidates’ profession paths solely exacerbates our pipeline points. We can’t let custom stand in the best way of assembly new potential candidates the place they’re. In actual fact, the way forward for the career relies on it.