Accounting firms struggle to fill the pipeline with new accountants because they struggle to recruit talent.
At the Illinois CPA Society summit this week, ICPAS President and CEO Todd Shapiro discussed the issue in light of figures from the American Institute of CPA. âWe have seen worrying things in the pipeline,â he said in his opening speech Tuesday.
He underlined the AICPA Trends Report as of 2019 based on 2018 data showing a 7% drop in the number of CPA exam candidates for the first time since 2017. The number of CPA exam candidates who passed the fourth section of the exam The review declined 6% between 2017 and 2018. He compared it to previous declines.
âWhat shocked us was 2018,â Shapiro said. âLook at 2011. He fell, then he came back. In 2018 it fell and what we don’t see are the numbers for 2019, which I was aware of. The numbers for 2019 are the same as in 2018, so it’s a concern for us when we see the numbers going down. What causes the fall? By the way, 2020 will be a waste of time as the test centers have been closed for most of 2020. So when you look at 2018 it has dropped to 36,000. In 2019 it was around 36,000. 2020 will be something below that. We won’t know for a while, but I’m really interested in what’s going on in 2021. What’s the cause? I think it’s relevant for young people when they think about the profession and becoming a CPA.
He noted that in a Korn Ferry survey of the 1,000 largest US companies, only 36% of CFOs were CPAs. âI think it’s the tip of the spear,â Shapiro said. âIt’s a leading indicator. We have already seen that. In 1998, we talked a lot about the difficulty of the profession, about people who do not become CPAs and so on. And then it changed. “
It may take time for the accounting profession to turn the tide. âIt’s not going to change overnight, and the pandemic has done nothing to help the trend,â Shapiro said in a subsequent interview. “I haven’t seen the numbers, but I expect 2020 to be down from 2019 simply because of the challenges of registering for the exam.”
He pointed to a recent column by Ken Bishop, president and CEO of the National Association of State Boards of Accountancy, in a NASBA newsletter that called for more focus on the declining pipeline of CPA candidates. Shapiro believes the causes of the decline need to be addressed, including the surprisingly low starting salaries offered to many young accountants graduating from colleges and universities.
âStarting salaries are stable and have been stable for a number of years,â Shapiro said. âI was chatting with heads of accounting departments, and one of them said they were talking to freshmen about careers in business and they said accounting was the third most starting salary. low. So are we seeing a change of pipeline? I’ll guess no. Because if it’s the relevance, if it’s the employers who don’t demand it, if the starting wages are stable, until we start to change those causal factors, you’re not going to see any change in the pipeline. What we are seeing, I think, is more embracing the problem. “
He said he heard positive comments from AICPA officials about his highlighting of the problem, as well as recent comments from NASBA.
The new president of ICPAS is Tom Murtagh, partner at BKD CPAs & Advisors, who is actively recruiting young accountants. âI feel like our pipeline installation has been pretty solid,â he said in an interview. âWe have a very strong campus recruiting team that is developing very good campus relationships. We are a good alternative for students who may have the perception that stepping into the Big Four is a bit like being a little fish in a big pond and maybe not being able to be a impact actor right away. I think our students who are looking to be a little more engaged and invested with clients earlier in their careers see this as a good option for that. What’s also good is that we can go to campuses because we have a footprint across the country. We can have, say, our recruiting team based in Indiana, maybe at [Indiana University]. There are a lot of Chicago students going to IU. It helps us attract current students again, so I think the pipeline that’s coming in, for us anyway, is that we’re actively managing it and we feel like we’re getting a fair amount of student buy-in. I think the challenge is really moving forward as students convert to accounting full time. Does the career they work in give them long-term meaning and relevance? For us, it’s about retention. I have the impression that this has been a problem as old as time. You have a three to five year old who is starting to assess what the next stage of their career will look like. Finding ways to help them see the value they can bring is really essential, and helping them see what an interesting career path looks like to them that takes them beyond that entry level job.
As the new president of ICPAS, he intends to help accountants deal with the persistent pandemic. âThe focal point of what I’d like to keep talking about over the next year or so is just this transition from where we were to where we’re going,â Murtagh said. âWhen I was asked to become president, I thought it would be like a post-pandemic environment, and what does it look like? And clearly, we are not after a pandemic. During this pandemic, it’s helping practitioners and people across the state to think about it. Todd mentioned it a lot in this presentation today, that we are not backing down. When you look at the statistics of people changing jobs and looking for opportunities, for me, the idea of ââflexibility and integration of work life and their personal and family life, in addition to thinking about the introspection that people have done in the last 18 months. I would like to participate in conversations about this with practice practitioners. I’m fortunate to be in an organization where we have these conversations internally.
BKD has around 40 offices across the country where it is helping clients deal with the pandemic. âA lot of our offices are very small markets,â Murtagh said during the summit’s opening speech alongside Shapiro. âWe have an office here in Chicago and New York, but we also have an office in Enid, Oklahoma. They are not like power markets. And these clients, these family businesses are also looking for advice. Even when I was part of a large local company, what differentiated us was the ability to provide advisory advice. And we see this fairly regularly in our customer surveys. We will ask what more can we do? They can be very happy with our punctuality and compliance and meeting deadlines and that sort of thing, but quite often we get that little extra “I just wish you could be a little more strategic, just bring a little more. proactivity at the table. ‘ And I think about it in the context of what we’ve all been up against over the last year, with the P3 program and employee retention credits and I think our customers looked at us and said, âC ‘It’s incredible. You give us tons of interesting information, keeping us abreast of a process that is evolving very rapidly here. But when it came to how to integrate PPP here and employee retention credit, at this point we had to go beyond just trust and we had to be more strategic. We had to look at the numbers and figure out where to draw the lines so we didn’t overlap and maximize the benefits of those two things. This is a small example, but it has an impact on all the small businesses that participated in these two programs.
Attracting a more diverse pool of accountants has become more important to businesses, but Shapiro believes he has yet to see enough progress on this front. âThe challenge is that it’s going to take time, so patience is a virtue,â he said. âWhen I picked up my job in 2013, we looked at the number of black and Hispanic accounting majors in the state of Illinois, and it wasn’t much, especially as a percentage of total accounting majors. My personal goal, which was not given to me by the board of directors, was to double that number before I retire, which is happening in less than 18 months now. Of all the things I wanted to do when I became CEO, this goal will not be met. I vastly underestimated the challenges of building the pipeline. We are in competition. It may be helpful for accounting to be part of STEM when it comes to research funds, but it will take time. I think we are doing more than ever before. You have EY coming out with a big program and Deloitte coming out with a big program. I think it will help. But I think growing our pipeline is going to take time. We are missing a lot of potential CPAs. In high school, especially in a diverse high school, they are going to hear whether they should become an engineer, whether they should become a lawyer, doctor, or investment banker, etc. The key, then, is relevance. How do you make it really attractive and interesting for someone who doesn’t know anything about the profession? They do not have a parent, uncle or family member who has been a CPA. I think we’re going to make some progress, and I think that will help with the pipeline. This is all going to take time, but it is going to take a concerted effort. “