Only 1% of U.S. Accounting firms can find staff

The U.S. Accounting Industry is Facing a Talent Crunch!  

Shocking? I’ll take you into a more shocking imagination. Imagine walking into an accounting firm and seeing more empty desks than busy professionals. 

Horrible; Yes? In Low Spirits; that’s becoming a reality. The U.S. Accounting Industry is on shaky ground facing a significant shortage of accountants in U.S. firms, particularly a shortage of CPAs in U.S. firms.

The past few years have brought an extreme mass exodus in the accounting world. We’re not telling this, but various surveys are! As the Numbers Tell a Story

1. According to the WSJ, over the course of the past two years, a staggering 300,000+ accountants and auditors have voluntarily resigned from their roles in the U.S.

2.The U.S. Bureau of Labor Statistics, projects an annual vacancy of around 136,400 accounting and auditing jobs from 2021 to 2031, exacerbating the accounting talent shortage. Simply saying, that's a lot of positions to fill, and right now, there aren't enough accountants to go around.

3.The shortage of accountants in the U.S. Firms can be attributed to the significant wave of Baby Boomer retirements, As per RITA (Retirement Industry Trust Association), around 10,000 Baby Boomers turn 65 with each passing day. 47% have already retired, and around 75% of the CPA workforce had reached retirement age in 2020. It is combined with the insufficient influx of younger individuals. Particularly from Generation Z, pursuing accounting studies and engaging in the CPA Exam, has created an undeniable void.

4.The staffing shortage has hit accounting and finance departments the hardest, affecting various industries and particularly smaller privately-owned enterprises. This trend is expected to worsen as time goes on, and the accountant shortage in U.S. firms becomes even more acute. 

5.This accounting talent shortage repercussions resonate across various industries and company sizes, with a more pronounced impact on smaller privately owned enterprises, a trend that is predicted to exacerbate as time progresses. 

 Why is this happening?

As per the May 2021 Bureau of Labor Statistics report, the total count of Accountants and Auditors stood at 1,318,550. By 2022, the National Association of State Boards of Accountancy (NASBA) recorded an active licensed CPA count of 665,612. However, both statistics have notably plummeted.

1. The Decline in Accounting Graduates:

Reflecting data from the 2021 AICPA Trends Report for the years 2019-2020, the number of students completing bachelor's or master's degrees in accounting amounted to 72,923. Declining enrollment in accounting programs has directly impacted the number of graduates, contributing to this decrease.

This figure exhibits a downward trend when juxtaposed against the preceding five years, during which the annual tally of accounting graduates fluctuated between 76,000 and 79,000.

The statistics of NASBA are more devastating as they show a significant decrease in the number of accounting graduates taking the C.P.A. exams in recent years. This clearly shows an upcoming shortage of CPA in U.S. Firms. What could be the reason? Low salaries, tedious tasks, burnout, or the threat of new technology? Well! Whatever it is, it really creates a concern. 

2. Shortage of Accountants in U.S. Firms:

In the past, most U.S. jurisdictions mandated only 120 hours of higher education (akin to a bachelor's degree) for CPA aspirants. However, the extended requirement of 150 credit hours—equivalent to a master's degree—appears to discourage students from pursuing the CPA qualification, primarily due to the associated cost of over $20,000  (for a Master’s degree). This seems to be the main reason for the accountant shortage in U.S. firms.

CPA exam candidates also face significant financial and educational barriers, which further deter potential accountants from entering the profession. Furthermore, candidates must invest over 300 hours in CPA exam preparation, which, on average, maintains a pass rate of 50%. Considering these factors, more students are diverting their attention toward alternative certifications like Master of Business Administration (MBA), Certified Internal Auditor (CIA), and Certified Management Accountant (CMA). 

3. Unappealing Salary Packages:

According to Robert Half's 2024 Salary Guide, an average starting salary for an Audit Associate in public accounting is $60,150. Considering a workload that often involves 70-hour weeks during peak periods and 45-hour weeks during regular periods, the hourly wage averages around $21.50—falling short even of what a DoorDasher earns for a dinner delivery. Ahhh! Another reason for the accounting talent shortage. 

Salaries see minimal improvements as individuals progress to more senior positions, with Senior positions averaging around $72,000 and even Managers, who undergo strenuous busy seasons, barely crossing the $100,000 threshold.

4. Accounting Software:

The prevalence of cloud-based small business accounting software has streamlined many of the time-intensive aspects of bookkeeping. QuickBooks Online, with a 62% global market share in the small business accounting software industry, has seen greater uptake compared to Xero, with 2.3 million members worldwide. The majority of QuickBooks' users are based in the U.S. 

5. Accounting Just isn’t Cool:

The accounting profession gets a bit of a bad rep, primarily because it’s seen as a ‘boring job’. From being labeled as ‘bean counters’ to ‘number crunchers’, there’s nothing sexy about being an accountant.  One more reason included in the accounting talent shortage. Before, accounting was a noteworthy and reliable profession if you were good at math. However, with advances in science and technology, there are much more appealing professions for capable mathematicians. As ‘uncool’ as accounting may be, it's still a very needed aspect of any business, and firms will need to find a way to fill the gap. 

6. Exploring alternative career paths:

More CPAs are venturing into more engaging and financially rewarding domains, such as risk management, buy-side financial analysis, corporate finance, forensic accounting, corporate banking, and fund management. This leads to a CPA shortage in U.S. firms.

How Accounting Firms are Addressing the Shortage of Accountants in U.S. firms?

Addressing the CPA shortage in U.S. firms, the industry is actively implementing strategies aimed at drawing a larger pool of individuals into the profession. Addressing the scarcity of accountants, the industry is actively implementing strategies aimed at drawing a larger pool of individuals into the profession. These efforts encompass a range of initiatives, including adopting remote work policies, integrating automation and advanced technology, and a focused drive toward enhanced diversity in recruitment.  

The National Pipeline Advisory Group, formed by the AICPA, plays a crucial role in addressing the talent shortage in the accounting profession. This group consists of various accounting stakeholders who collaborate to develop strategies based on insights from technology, surveys, and national forums, aiming to address the anticipated competition for talent in the coming years.

Moreover, academic institutions are undergoing a transformation of their curricula to render accounting more alluring to students. This transformation involves the introduction of courses encompassing topics such as environmental, social, and governance concerns, data analytics, and sector-specific accounting disciplines.

In order to expand the available talent pool, a significant 78 percent of 2,175 hiring managers surveyed in November 2022 expressed their intent to elevate their utilization of contract workers within the initial half of 2023. This approach aims to fill vacancies within the accounting and finance sectors, as indicated by a survey conducted by the consulting firm Robert Half. 

Furthermore, prominent larger enterprises are also embracing the approach of offshoring routine tasks to company centers situated in countries such as India, the Philippines, and Brazil. This strategic move serves to bolster the available workforce. Notably, the "Big 4" accounting firms have capitalized on this approach, establishing captive centers in India and other international destinations to leverage this advantageous workforce expansion technique.

U.S. Accounting & CPA Firms Outsourcing to India

The shortage of CPA in U.S. firms as well as accountants is not going to reduce any time soon, and outsourcing accounting, tax, and auditing work to India looks like the most viable solution.   

A reliable outsourcing provider grants you access to a comprehensive accounting team, negating the necessity of independent hiring. Offshore staffing services encompass various tasks including coding daily transactions, processing accounts payable and receivable, managing payroll, drafting management financial reports, and other duties tailored to client requirements. Many accounting firms view outsourcing just to cut costs; however, there’s more to it than that.  

The advantage of offshore accounting staffing services lies in alleviating the burden on your existing accounting team and overall firm. CPAs and firms have warmly embraced this approach and have found value in outsourcing labor-intensive, high-volume work to offshore CPAs, accountants, and bookkeepers.

However, there are still many firms that have their doubts about accounting outsourcing and some even see it as a failed solution. Concerns about relinquishing control and potential data breaches contribute to this hesitation. Yet, it's essential to acknowledge that risk accompanies every endeavor we undertake in life. By aligning with a reputable offshore staffing services provider, accounting firms can mitigate the associated outsourcing risks.

Here's how outsourcing your accounting, tax, and audit work can be the solution to your talent scarcity concerns:

• Sourcing Qualified Staff:  With outsourced accounting services, concerns about recruiting qualified accounting and technology personnel are eliminated. India's accounting outsourcing industry provides qualified professionals adept at utilizing cutting-edge tools to integrate financial data across an organization.
• Adapting to Technology: Outsourced accounting professionals also ensure your business stays updated with the latest technologies. They invest effort in ongoing research, training, and technology upgrades, all while keeping your firm's context in mind.
• Cost and Time Efficiency: Outsourcing enables firms to bypass the expenses and time commitments associated with recruiting, training, and overseeing additional accounting personnel. Managers can thus focus more on core functions while minimizing HR-related burdens.
• Immediate Scalability: Outsourcing offers accounting firms swift scalability, providing access to highly skilled professionals well-versed in U.S. accounting standards and tax regulations.

Selecting the Ideal Outsourced Staffing Services

Opting to outsource is a significant decision. Maximizing its potential necessitates a diligent evaluation of the firm's credentials. When making your choice, consider the following:

• Qualifications and Certifications: Assess the qualifications and certifications of the outsourced bookkeeping service provider. CPA and accounting firms should thoroughly research their outsourcing or offshoring provider, confirming they have adequate certification and compliances, such as SOC type 2, ISO 270011, and GDPR.
• Relevant Experience: Determine if the outsourcing provider has experience working with firms like yours. Ask for references, and feel free to speak with their clients to understand how they work better. 
• Problem-Solving Skills: Problem-solving abilities are crucial in challenging circumstances. Ensure the outsourced team demonstrates proven prowess in logical and quick decision-making.
• Data Security Protocols: Given data privacy concerns, verify the security protocols in place with the outsourcing provider.
• Quality Control: A robust quality control process is imperative to avoid costly errors and non-compliance issues. Does the provider utilize the buddy system or other measures to ensure tasks are completed efficiently?

Future Prospects of Offshore Staffing Services: 

Accounting firms are evolving from offering specific services to becoming comprehensive advisors. Amid talent shortages and clients seeking more value for their fees, offshore staffing services provide a solution. These services offer familiarity with U.S. accounting standards at affordable rates, granting flexibility in staffing numbers as needed. Outsourcing offers an extensive network of experienced accountants, freeing you from training and management duties while you concentrate on your firm's growth.

In summary, the shortage of accountants in U.S. firms is a critical issue that requires urgent attention. With only 1% of accounting firms able to find the staff they need, businesses must explore innovative solutions, such as offshore accounting, to meet their accounting needs. By addressing the talent gap in the industry and investing in training and development programs for young professionals, U.S. firms can overcome the challenges posed by the accountant shortage and ensure sustainable growth in the future. Offshore staffing services pave the way for future-oriented accounting firms, enabling them to thrive amid staffing challenges and shifting client expectations. Choose the right offshore accounting solutions and tackle this challenge of accounting shortage with ease. 

Shawn Parikh

Co-Founder & CEO

Shawn Parikh is the CEO and Co-Founder of MYCPE ONE. A Chartered Accountant by qualification, he has over 15 years of experience of being a problem solver for small to mid-size firms and over time he has given consultation to thousands of CPAs, accountants and tax pros. Shawn has always been a big believer and advocate of social enterprises and small accounting firms & businesses. He consults and speaks on several topics ranging from Building Remote Team - Remote Working, Offshore Staffing, strategic planning, Scalability of Accounting Practice, cloud accounting, practice management, LinkedIn marketing, etc.