Impacts Individuals, Businesses & CPA Firms

 January 2025

The United States is facing a significant challenge: a shortage of Certified Public Accountants (CPAs). CPAs play an essential role in ensuring financial health and compliance by both individuals and businesses. These critical functions are in increasing demand and will be negatively impacted by the significant decline in the number of licensed CPAs.

The Virginia Society of Certified Public Accountants recently described the situation as “a perfect storm” facing the profession. The question at hand is “why the decline”. The issues are threefold:

• Fewer graduates
• Aging workforce
• Talent exiting the profession

Fewer Graduates

According to the Virginia Board of Accountancy, newly issued Virginia CPA licenses have been slashed by more than a third since 2008. That’s a slide from a high of 1,434 to 940 in 2023. Nationally, according to the AICPA 2023 Trends Report, the number of bachelor’s degree completions in accounting dropped 7.8% from 2021 to 2022 ... a recurring decline of 1-3% per year since 2015-2016. This trend is matched by a 6.4% drop in accounting master’s degrees during the same period. What are the contributing factors?

• Increased Complexity of the Exam & Education Requirements

The CPA examination process was revised with added requirements for students to demonstrate a thorough understanding of accounting principles plus the ability to apply them in complex, real-world scenarios. These performance hurdles, coupled with the investments of time and money to prepare for the exam have discouraged many students from pursuing accounting as a career.

• Alternative Employment Opportunities

Candidates with financial acumen have employment options in finance and high technology industries. The lure is high paying starting salaries, rapid career advancement and a dynamic work environment.

Aging Workforce

A critical problem for the accounting industry is the “graying workforce”. The AICPA reported that 75% of today’s public accounting CPAs will retire within the next 15 years. And as people approach retirement, many tend to reduce their work product and seek to retire by the age of 59½.

The Bureau of Labor Statistics projects 130,800 as the annual number of job openings for accountants and auditors over the next decade. Many of these vacancies are reflected in a retiring labor force as well as the next trend that contributes to a shrinking pool of accountants.

Talent Exiting the Profession

The operative word to describe this trend is “burnout”. Accounting jobs are highly demanding and during peak tax season a work week can be incredibly onerous. Newly licensed accountants often leave the profession soon after initially “signing on”.

Experts tend to agree that the drivers of burnout are demanding hours, tight deadlines, constant changes in tax codes and limited work/life flexibility than alternative jobs.

Artificial Intelligence & Automation Solutions

There is increasing evidence that progressive firms that invest in next-generation software to automate repetitive, mundane tasks enjoy much higher attraction and retention rates with accounting degreed job candidates.

Forbes magazine notes in an article, “Fortunately, one bright spot may be the rise of technology that can aid accountants in the field by streamlining time-consuming processes and reducing manual efforts.  A recent pulse survey conducted by RGP shows that 43% of financial decision makers polled said their organization is investing more in end-to-end automated accounting processes and AI tools as a result of the ongoing shortage of CPAs.”

Click here to read the entire piece. Here’s a summary of key takeaways.

• AI And Automation Have the Potential to Improve Work Life Balance

Young professionals entering traditional accounting roles have long had to navigate demanding hours driven by manual data entry and analysis. Research published in The CPA Journal shows that negative perceptions around work-life balance have contributed to industry turnover. This perception issue has also been a major hurdle for Gen Zers seeking work-life balance.

• Less Manual Tasks Could Lead to Higher Value Work Opportunities

As adoption of AI and automation grows, employers can offer accounting talent more opportunities to focus on higher caliber work. The use of new technology requires professionals to learn modern analytical skills that can be applied to areas such as financial modeling and data visualization. The greater opportunity to contribute to more valuable tasks should, in turn, make the field more attractive to young professionals. By reducing time for manual work, accountants can spend more time engaging meaningfully with their clients in terms of improving communication and client service – a good result for all.

The above presentation is meant as an overview only.  
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