73% of accounting students lack money for gaining CPA license

Dive Brief:

More than 73% of accounting students count on external financial support to gain a license as a certified public accountant, and many students view the 150-credit-hour requirement for certification as “not worth the time,” according to an association of CPAs.
Students seeking a CPA license expressed a need for a mentor, help finding their first job, support in exam preparation and weak understanding of a CPA’s job opportunities, the Pennsylvania Institute of Certified Public Accountants found in a survey aimed at identifying the causes of a persistent CPA talent shortage.
“The pipeline of qualified candidates entering the CPA profession is running dangerously low,” PICPA said, reporting on a survey of 763 accounting students in 47 states. “Looking at the data overall, the PICPA believes that the human capital situation facing the profession will only worsen in the near term.”

Dive Insight:

The number of students who graduated at the end of the 2021-2022 academic year with a degree in accounting plunged 7.4% compared with the prior period, accelerating a six-year trend of declining entrants into the profession, according to the American Institute of Certified Public Accountants.

The number of graduates who received a bachelor’s degree fell 7.8% compared with the 2020-2021 period, while those earning a master’s degree declined 6.4%, the AICPA found.

Given the shortage of CPAs, “audits are more expensive and more difficult to complete in a timely manner,” PICPA CEO Jen Cryder said in an email response to questions. “Some firms are leaving the audit sector in bulk because of the risks and lack of staff.”

Several trends crimp the talent pipeline: a decline in both the U.S. birth rate and college enrollment, the rising cost of college tuition, the falling number of students earning accounting degrees and the decreasing number of candidates taking the CPA exam, PICPA said.

In addition, the accounting industry faces a challenge recruiting so-called Generation Z, or those born between 1996 and 2010, the association said. They “have different concerns and priorities today, communicate differently and get their information from more varied sources than many currently in the accounting profession.”

Compared with millennials, Generation Z is more pragmatic, holds a less positive world view than earlier generations and lacks the social and emotional well-being of earlier generations, PICPA said, citing a study by McKinsey. The age group next year will make up 27% of the workforce.

“Younger generations hold different values than professionals who are farther into their careers,” Cryder said.

The accounting industry must try harder to understand the mindset of Generation Z and their communication habits, the association said.

“The current generation of students is looking for meaning and emotional connection in their work, and they are finding it elsewhere,” PICPA said.

More than one out of five students majoring in business administration said accounting is less appealing than other fields, and 14% said starting salaries are much lower compared with other careers, the association said.

The accounting industry needs to reach out to would-be CPAs in high school, before they select their college majors, according to PICPA.

“In order to reshape the narrative of the accounting profession, we have to find fun, engaging ways to appeal to high school students before they select majors in college,” Cryder said.

“There is an issue of perception with the younger generations who may view accounting as a less appealing career option because of a variety of reasons — primarily the pay is higher in other industries and the work is not as engaging,” she said.

Accounting firms that “are unwilling to adapt, refresh their culture and change the narrative on the accounting industry will struggle to bring in fresh talent,” according to Cryder.

The accounting industry cannot rely on just in-person events and mail to reach candidates, PICPA said.

“Social media, community engagement and unique educational events are going to be hugely important when recruiting at the high school level,” Cryder said.