Want to fix the accounting talent shortage? Raise starting salaries, students say.

Dive Brief:

More than eight out of ten (84%) professionals and (85%) students identified raising starting salaries as one of the most effective strategies for tackling the accounting industry’s talent shortage, according to early results of two separate surveys contained in the “Accounting Talent Solutions Draft Report” from the National Pipeline Advisory Group. The group is an independent task force convened last July by the American Institute of CPAs to analyze causes and solutions for the current accounting talent gap.
The findings contained in the 82-page report released last week, were based on initial responses from a national survey of 4,500 professionals received through mid-April out of the eventual total of 5,800 respondents, as well as a separate survey of 1,500 business and accounting majors queried out of an eventual 2,000. Full survey results from all 7,800 respondents will be included in the final report released in July.
Mean starting salaries for accounting and related services majors in 2022 stood at $60,698, the lowest of seven business-related majors cited in the report. Computer and information sciences majors earned the top of the starting salaries cited at $86,964, while finance and financial management services majors saw starting salaries of $66,650. “If 2022 starting salaries were the primary determinant for business students choosing a major, accounting would be their last choice among this slate of options,” the report said.

Dive Insight:

The NPAG is looking to address the shrinking pool of U.S. accounting professionals that CFOs and finance department recruiters have been grappling with as they seek out staff needed to close books, complete audits, and make sure the company’s financials comply with GAAP and other regulations.

The wide-ranging report examines multiple systemic drivers of the shortage in the U.S. as well as solutions; it cites the pre-pandemic decline in the number of working-age immigrants that had been a sizable pool of students pursuing accounting degrees and details such solutions as gamifying accounting education in high school to make the profession more relatable.

But the issue of salaries that are not high enough to compete with other professions rose to the top of cited concerns among those surveyed by the group.“Early, partial results have given us helpful clarity,” the NPAG report states of the surveys’ interim findings. “Addressing the lack of competitive starting salaries ranked as the most supported solution among students and stakeholders alike.” Greater flexibility in work arrangements and more manageable workloads ranked second and third, respectively.

More attention is needed on salaries even as many employers say they are already making adjustments, the report stated. Among the report’s cited concerns: over the six years from 2017 to 2022 when the Consumer Price Index rose 19.8%, accounting salaries rose just 16%.

The report also weighs in on the controversial issue of onerous state licensure rules that typically require certified public accountants to complete 150 college credit hours — effectively a fifth year of college. The group evaluated six different licensure alternatives, ranging from safer to more bold ways to reduce the cost and time to obtain a CPA. But it also stated that the NPAG recommends “referring to the current minimum level of required education as a bachelor’s degree, versus a number of hours, to allow flexibility as higher education experiments with changes in the hours themselves.”

As part of its action plan to address the talent shortage, the group also made recommendations based on six high-level themes that it identified as needing to be addressed including: telling a more compelling story about careers in accounting, creating a more engaging college experience for accounting majors and potential majors, reducing the time and cost of education, increasing support for CPA Exam candidates, expanding access for underrepresented groups and transforming employer cultures and business models.

In a statement, the AICPA last week praised the group’s work to date. But it also cautioned against making changes that would harm the ability for CPAs to practice outside the states they are certified to practice in, a term referred to as “mobility”.

“Minimizing or eliminating those disruptions is key, and a nationally coordinated and cohesive plan on licensure changes represents the best path forward to achieve that goal. Unilateral actions by states will be highly disruptive to CPAs and the businesses who engage or hire them and should be avoided,” the statement said.

The task force, will present the draft report at the AICPA Spring Council Meeting later this week and reflect any feedback received in the final report that will be published in July. The task force is comprised of 22 members from 15 states that included public accounting firm members, state accounting society chiefs, academics, business and industry leaders, a representative from the AICPA and others.