Accounting Practitioner Trends Picture is Bleakby
Several surveys and data-backed reports have demonstrated that many accounting practitioners have left the profession over the past few years, this is especially true in public accounting. In addition, fewer people are enrolling in college-level accounting programs in the first place. A smaller number of those who graduate with an accounting degree have pursued credentials like the CPA or CGMA than in previous years.
Despite the significant investment in time and money to pursue an accounting career or obtain an advanced accounting credential, accountants are quitting their jobs in alarming numbers. In short, the Great Resignation has indeed infected the accounting profession.
The reasons for the global accountant shortage are complex, ranging from retirements to issues with workplace culture. And the fields where these former accountants are flocking to are equally varied, as well.
A Look at the Numbers
Historically, accounting has been considered a reasonably stable profession. That is, during recessions, unemployment rates for accountants were usually lower than unemployment rates for other workers. Nevertheless, that trend could change in the future.
As the U.S. Bureau of Labor Statistics (BLS) notes that demand for accountants and auditors, the demand for accountants and auditors is expected to grow 7 percent by 2030. This increase will be due to globalization and increasingly complex regulatory environments. For example, the globalization of business needs accounting services to carry out international mergers and acquisitions as well as trade. So if the global economy falls, it’s likely that the need for accounting practitioners will fall, too.
Although a 7 percent job growth sounds promising, the actual reality is a little more complicated. After all, the anticipated demand for accountants and auditors is less than the 8 percent growth expected for all occupations.
Furthermore, just 5 years ago, in 2016, the U.S. BLS predicted that accounting practitioner positions would grow 10 percent by 2026. In comparison, this growth was considerably more significant than the growth of all occupations, which the BLS expected to be about 7 percent.
More specifically, the job outlook for accounting practitioners varies depending on the exact nature of the services provided. For instance, technology and software like cloud computing and other automation advances are expected to reduce the demand for bookkeeping, accounting, and auditing clerks by 3 percent by 2030, resulting in the loss of 48,100 jobs. Similarly, tax preparation and payroll clerk jobs will decrease by 4.9 percent by 2030.
Plus, as early as 2016, the BLS predicted that the number of bookkeeping, basic accounting, and auditing clerk positions would decline more than any other job. Put another way, the percentage of these jobs will probably decline more than other seemingly out-of-date jobs like switchboard operators.
In 2020, for example, about 67,000 accountants and bookkeepers lost their jobs or were laid off due to the global economic downturn related to COVID-19. Although many of those accountants are now back to work, these layoffs still highlight the fact that when the economy goes up or down, jobs for accounting practitioners follow suit.
Still, other accountants are quitting their jobs voluntarily in addition to lay-offs. And this issue isn’t just from the so-called Great Resignation of 2021—it’s been happening for years.
Take, for instance, an account from Johnson & Johnson. A senior director in the financial compliance department noted that it took the company 6 months to fill a junior-level accounting position. In particular, companies have struggled to find technical accountants who can navigate complex GAAP regulations.
Why Accounting Practitioners Are Leaving the Field
Several factors contribute to the current lack of accountants, and experts predict that the trend will continue in the future decade.
First, the Baby Boomer generation is reaching retirement age. Although this reality impacts every industry, it’s significantly affecting the accounting profession because of a lack of talent to fill their shoes. And as Baby Boomers age, this mass retirement will only increase.
Second, accounting practitioners in their 20s through 40s leave because of unrealistic workloads. And not just during busy times, like tax season. Instead, some workers feel their companies place too much emphasis on the bottom line over employee satisfaction. Above all, some former accountants note that hostile workplace cultures, a lack of advancement opportunities, and toxic supervisors caused them to leave accounting altogether.
Furthermore, other former accountants have cited a perceived lack of equitable treatment and inclusion for females, minorities, and members of the LGBTQIA community. For instance, according to a 2021 report from the Institute of Management Accountants and the California Society of Certified Public Accountants, 90 percent of senior-level accounting professionals are white. About 80 percent are male, and few openly identify as LGBTQIA.
Regardless, the make-up of senior-level accountants does not reflect the diversity of the industry as a whole, with over 50 percent of workers being female and 20+ percent being non-white. As a result, some practitioners leave the field because of this inequity.
To illustrate, the IMA and CalCPA report stated that “Our study found that 43 percent to 55 percent of female, non-white, Hispanic, Latino, and LGBTQIA respondents have left a company due to a perceived lack of equitable treatment.”
Other accounting practitioners are leaving because the Big 4, private firms, and industry positions are looking to hire a different type of worker. In 2021, PWC announced plans to hire 100,000 employees and spend $12 billion to improve its cybersecurity, machine learning, and artificial intelligence capacities. Additionally, PWC is looking for professionals with specialized expertise in environmental and governance issues. The other Big 4 firms have recently put billions of dollars into their cloud-based infrastructure and other technologies, too.
And finally, some accounting practitioners are leaving the field because their organizations are forcing them to for a few different reasons. To start, many more companies are using AI processes that have eliminated jobs.
After all, as many economists have pointed out, the Fourth Industrial Revolution is here. Basically, the phrase refers to the 21st-century technological advances like AI, blockchain, and IoT (the internet of things) that have affected industries, work functions, and even economies.
Technological changes have especially affected tax preparers. For these positions, AI solutions like Robotic Process Automation can streamline the number-crunching tasks associated with tax calculations. And AI processes can be more accurate, too, and reduce error levels when a large amount of data must be calculated. PCW, for example, is substantially investing in the cloud. As a result, accountants worry that they will become obsolete.
Salaries May Be a Contributing Factor
Researchers have suggested that in addition to brutal working hours, relatively low starting wages are turning young people away from accounting. For example, according to the U.S. BLS, the average U.S. salary from all occupations was $41,950. And yet, the latest Robert Half salary report notes that the starting salary for finance and accounting positions is not much higher.
Besides, entry-level internal auditors only make about $49,750, while entry-level tax accountants earn about $50,250 and entry-level staff accountants make $51,000. And as a demonstration of private accounting positions, the average accountant salary at Johnson & Johnson is $50,376, per data verified by Glassdoor.
Still, accountants can earn much more, with Directors of Accounting averaging $152,000 annually. And CFOs in corporate accounting make $210,250 to $247,500 a year. However, young accountants can struggle to find the value of staying in a stressful accounting position if their supervisors fail to outline clear paths to promotion.
Pipeline of New Accountants is Decreasing
Not only is the number of accounting practitioners decreasing, but the number of people who want to be accountants in the first place is decreasing, too. In the past, educators and career counselors pushed students with a specific acumen for business toward accounting. Students with those skills now have a range of jobs to consider beyond accounting, like business intelligence and data management.
To highlight this pipeline issue, fewer students enroll seeking university accounting degrees. In fact, according to a 2019 AICPA Trends Report, enrollment in bachelor’s accounting programs has decreased 4 percent, and master’s enrollment is down 6 percent. Furthermore, Ph.D. programs have seen a 23 percent decrease in enrollment.
What’s more, fewer accounting graduates are pursuing a professional accounting credential. For instance, the number of accountants sitting for the U.S. CPA Exam and the CGMA Exam is decreasing. According to the 2020 AICPA and CIMA integrated annual report, the organizations had 667,000 combined members in 2017 but just 642,000 in 2020.
Moreover, candidates sat for 235,193 CPA exams in 2017 but only 167,468 in 2020—a decline of almost 29 percent. Likewise, candidates attempted 97,981 CGMA in 2019. But a year later, this number also declined to 79,195 exams taken.
To compile this report, the AICPA and CIMA surveyed 3,120 accountants and other interested parties who outlined why people decided not to pursue accounting credentials. Reasons given include the time it takes to study for the exams and overwhelming workload commitments that prevent studying.
But even more troubling, many accountants no longer see the value of credentials. That is, they cited that they don’t yield enough returns on their investments in money and time, nor do they result in a substantially higher salary or greater work satisfaction.
Perceived Need for Accountants is Decreasing
Some professionals are concerned that technological advancements and changing business practices could lead to a reduced need for accountants. Artificial intelligence and automated robotic processes, for instance, will likely change the day-to-day activities of accountants, auditors, financers, and even tax professionals. Although organizations could automate some technical accounting skills in the future, they will still need accountants to interpret data and integrate data into strategic planning.
As a result, organizations have shifting staff needs. For instance, public accounting firms are hiring fewer new accounting grads (11 percent decrease) and more non-accounting new grads (up 55 percent), according to the 2019 AICPA Trends Report.
Where Are Accountants Going?
Some accountants move into other business or finance-related positions like investment banking. After all, most banks—from small regional banks to big commercial ones—usually have an investment banking division. Plus, venture capital firms, asset management companies, and private equity institutions also hire investment bankers.
And investment bankers tend to make more than accounting practitioners, too. For example, Cowen Inc. is a major investment banking, research, and management firm. Cowen’s 2020 annual report stated that the median employee compensation was $205,000. And that’s as much as four times what the average accountant makes.
Other accountants transition to business or financial analyst positions. Besides, as previously mentioned, accounting jobs are evolving away from a focus on technical skills and toward more diverse opportunities in business development and strategic planning.
Plus, business and financial analysts often have accounting degrees and problem-solving skills. But these positions may be more personally rewarding than accounting jobs and may have better work/life balances. And the salaries are usually higher, too, as evidenced by recent raises at the Goldman Sachs Group. In 2021, the investment firm announced a pay increase for all entry-level analysts.
Consequently, first-year analysts will make $100,000 with second-year analysts at $125,000 annually. But first-year associates will see a salary of $150,000. And again, these salaries are double or triple those of the average entry-level accountant.
Other former accountants are going into business for themselves as entrepreneurs. After all, entrepreneurs only need a good idea that fills a consumer void, the business knowledge, and the drive to bring an idea to life. In addition, skills like communication, time management, sales can translate from an accounting career to the entrepreneur path.
For example, Forbes has reported on Michael Gietzen, an accountant-turned-entrepreneur who is now the managing director of Identity Group, a top-100 fastest-growing company in the U.K. As an auditor, Gietzen enjoyed digging into a company’s financial info, and he learned about the practices of successful businesses.
Still, he admits that he didn’t love accounting. So,when an opportunity opened as a director for a struggling exhibition display and sign manufacturing business, he took it. Eventually, he found a passion for the sales and creative aspects of the business.
After steering the company toward a more profitable market and diversified revenue streams, the business started to boom. Gietzen credits the success of his calculated risks to the skills he gained as an accountant.
The Future of Accounting
Although IA is taking over bookkeeping and entry-level accounting tasks to a certain extent, accounting practitioners still have a silver lining. After all, accountants who stay in the field might see some benefits down the road. To start, skilled practitioners may have less competition for highly regarded senior- and partner-level positions. Additionally, recent accounting grads that fill the Great Resignation void may be able to negotiate higher salaries and better benefits.
And many top firms are taking other measures to improve workplace culture and flexibility to retain quality talent. For instance, PWC allows top employees to work remotely, and Deloitte is moving toward a remote/office work hybrid model. Likewise, Botkeeper--a company that uses both machine learning and skilled accountants to provide bookkeeping services--now has an unlimited PTO policy to retain staff.
Plus, accounting can be a gateway to more lucrative positions or jobs with better work/life balances. And accounting skills are easily transferable within the business and finance world.
Organizations and individuals will still need accountants in the future, but their daily job tasks might change from today’s job description. Plus, since many accountants are changing careers due to the field’s overall environment, workplaces will need to improve their culture, equity, and promotion paths to retain top talent.
If job improvement occurs, accountants might feel less compelled to change fields and be more willing to learn new skills that align with the evolution of accounting.
Stephanie Ng is the author of How to Pass The CPA Exam (published by Wiley) and publisher of several websites containing helpful information about accounting certification exams. As a licensed CPA (not in public practice), Stephanie recalls her own experience as an accounting...