There’s a nationwide shortage of accountants, and it’s becoming a problem for businesses.
The American Institute of Certified Public Accountants says fewer people are graduating with accounting degrees than in years past, and the number of people taking and passing the certified public accountant exam is dropping. Meanwhile, a 2022 Deloitte poll found that 82% of hiring managers for accounting and financial positions at public companies and 69% at private companies said talent retention is a challenge.
Accountants manage financial processes and financial reporting and ensure regulatory compliance. If the shortage of these workers continues, accountability and integrity in business could suffer, Steven Kachelmeier, the chair of the accounting department at the University of Texas, told Insider, which could lead to a rise in fraud like the Enron and WorldCom scandals of the early 2000s.
He said that a lack of accountants is like playing sports without a referee.
To combat shortages, those in the accounting industry are working to attract more people to the field. Advancing technology in the sector, raising awareness about accounting careers, increasing diversity, and changing the profession’s image are some of the ways they’re tackling the challenge.
Why is accounting experiencing a decline?
Many experts blame the Great Resignation for the decline in available accountants. And, AICPA notes, 75% of CPAs reached retirement age in 2020.
But accounting has long had image problems that’s made it difficult for the industry to recruit younger talent, Kachelmeier said, noting that his accounting program has seen majors decline between 20% to 40% over the past few years. Thinking of the profession often conjures up images of number crunchers with mountains of paperwork and endless data entry, when in reality, much of these mundane-sounding tasks have since been automated.
“There’s not a lot of high-school students out there who say, ‘I’m going to be an accountant,'” he said. “You have to sell them.”
Sandy Torchia, the vice chair of talent and culture at KPMG, said the company hasn’t been impacted by the accountant shortage yet. “But, certainly, we have it on the horizon as a risk for the future,” she said. “It’s definitely on our radar.”
How a shortage of accountants could impact businesses
With experienced accountants leaving the field and fewer newcomers entering, it could pose an “emerging audit risk,” George Botic, the director of inspectors at the Public Company Accounting Oversight Board, said at a conference recently.
Compliance is more important than ever, following recent high-profile accounting scandals. Last year, the crypto exchange FTX was hit with federal charges and an SEC complaint saying the company defrauded customers and investors and improperly used billions of dollars worth of customer deposits to fund its founder’s other businesses and political activities. Errors might occur when companies don’t have enough qualified staff, and crucial accounting checks may be skipped.
The landscape could become the “Wild West” without accounting and auditing to ensure business integrity, Kachelmeier added. “It could hurt investors if you invest in companies that don’t have financial integrity, and we’ve seen it,” he said.