CRITICAL ACCOUNTANT SHORTAGE:

Based on information provided by “Tax Practice News” the accounting profession’s staffing shortage has finally reached critical status after nearly a decade of declining accounting graduates. A drop in CPA exam candidates and an aging workforce in existing firms are both attributed to crisis-level shortages. The critical status was made obvious in a recent CPA Trendlines survey that revealed over 42% of accounting firms nationwide were turning away work due to staffing shortages. What’s further is another 24% said they were approaching burnout.

According to the AICPA 2021 "Trends Report," the number of first-time CPA exam candidates decreased by 33% between 2016 and 2021, from 48,004 to 32,188. The report also reveals that accounting graduates at both the bachelor's and master's levels have trended downward in the 2019-2020 academic year. These declines are not only a national trend; many universities, particularly private institutions, have experienced even more substantial decreases in accounting majors. For example, James Madison University reported a 34% decrease in accounting majors over four years, from 2015 to 2019.

The impending enrollment cliff, anticipated to begin in 2025 due to declining birth rates, is expected to further exacerbate the situation by reducing the number of traditional college-age students. Additionally, the AICPA has stated that approximately 75% of its members are nearing retirement age, further compounding the problem.

Several reasons have been cited for the declining interest in accounting, including:

1. The 150-hour requirement is perceived as a barrier to entry.
2. Accounting is seen as boring and lacks diversity.
3. Compensation for accounting graduates is lower compared to other majors like finance and technology.
4. The accounting major is considered too specialized.
5. The cost of education is too high, and overall enrollment in higher education is declining.

While some of these issues have been long-standing, such as the negative stereotypes associated with the accounting profession, others are more recent. The 150-hour requirement, in particular, has been identified as a significant factor contributing to the decline in accounting majors.