The accountant shortage has been a problem since long before the 2020 COVID-19 pandemic, impacting the industry for at least the past decade.
What’s driving this accountant shortage? The aging workforce and a shrinking pipeline of incoming accountants, not to mention the increasing complexity of accounting regulations and changing business demands. Let’s dive into the causes of this decade-long problem and learn how we can face them head-on.
What’s Causing the Current Accountant Shortage?
The accounting profession is undoubtedly aging. 75 percent of certified public accountants (CPAs) will retire during the next 15 years, according to the New Jersey Society of CPAs. This incoming retirement wave will leave a major shortage of experienced accountants. Knowledge management is becoming more important as firms try to capture decades of experience before senior partners retire.
In addition to an aging profession, the pipeline of new accountants is shrinking. Many blame the decline on lower starting salaries for first-year graduates, the 150-hour rule, and poor work-life balance. Additionally, there is an impending crisis in higher education that will likely worsen the shortage of new accountants.
According to a presentation at the National Association of College and University Business Officers (NACUBO) 2022 conference, there are not enough high school graduates to fill the current number of colleges in the United States, and the declining number of prospective students will reverse tuition pressure.
Without an alternative solution like immigration, it’s estimated that as many as 30 percent of colleges in the U.S. will be forced to close between 2026 and 2036. The declining number of total college graduates will undoubtedly chip away at the number of future accounting graduates.
The growing complexity of financial regulations
The accounting profession is also facing increasing complexity. New GASB accounting standards for leases, subscription-based IT arrangements (SBITAs), and other regulations have made it more difficult and time-consuming for accountants to comply with certain requirements. This added complexity is making it more difficult to attract and retain qualified accountants-driving many seasoned accountants to retire early.
Expectations have shifted for accountants
The demands of businesses are also changing-many organizations are increasingly seeking accountants who can provide more than traditional accounting services– they’re looking for help with strategic planning, risk management, and compliance. This changing demand makes finding accountants with the right skills and experience more challenging.
3 Solutions for Combatting the Accountant Shortage
There are several things that CPA firms can do to address the accountant shortage, such as raising salaries, offering flexible work arrangements, providing training, and partnering with universities to educate students about opportunities in the field.
By showing these improvements to prospective staff, CPA firms can create an environment that will help ensure they have qualified professionals to meet the demands of clients. Additionally, CPA firms can:
(1) Outsource Accounting Tasks
Outsourcing is an option for accounting firms who need additional staff or expertise to increase their capacity and resources for clients.
For example, SAPRO provides specialized tax and advisory professionals that are custom trained when you need them. There are many functions that can be outsourced and creative ways to find the talent you need. CPA firms can outsource a variety of tasks, including:
- Bookkeeping: Tasks related to entering transactions, preparing financial statements, and reconciling accounts.
- Payroll: Human resource tasks like calculating and issuing paychecks, withholding taxes, and filing payroll taxes.
- Accounts receivable: Tasks such as collecting payments from customers, managing credit accounts, and sending out invoices.
- Accounts payable: Tasks such as GL coding, paying bills, tracking expenses, and reconciling accounts.
- Tax preparation: Preparing individual and business tax returns.
- Auditing: Reviewing financial statements for accuracy and compliance with applicable laws and regulations.
- Consulting: Providing advice on a variety of accounting and financial matters.
Outsourcing these tasks can free up accountants’ valuable time to take on more clients and focus on more complex work, such as strategy, planning, and analysis. It can also help CPA firms reduce costs and improve efficiency.
Why should CPA firms consider outsourcing?
- Access to specialized expertise: This can be helpful for tasks such as debt, lease, and subscription accounting, tax preparation and auditing, which require a high level of technical knowledge.
- Scalability: Outsourcing can help CPA firms scale their operations quickly and easily. This is important for firms that are growing rapidly or that need to handle a large volume of work during peak seasons.
- Cost savings: Outsourcing can help CPA firms save money on labor costs, as outsourcing vendors often have lower overhead costs.
- Improved efficiency: Outsourcing can help CPA firms streamline their processes and increase capacity.
(2) Utilize Accounting Software to Streamline Processes
The right software can automate repetitive or simple accounting tasks, which helps accountants complete client work more quickly, reducing room for error. In today's digital age, technology, and automation have become essential tools for businesses that want to streamline their accounting processes.
By implementing accounting software, businesses can automate repetitive tasks such as data entry, invoicing, and financial reporting. This not only saves time and reduces the risk of human error, but it also allows accountants to focus on more strategic and value-added activities. Additionally, technology can help improve collaboration and communication between accountants and their clients.
For example, cloud-based accounting software enables real-time access to financial data, making it easier for accountants to work with clients and remote team members. Overall, leveraging technology and automation can help businesses optimize their accounting operations and overcome the challenges posed by the accountant shortage.
How can the right software help better manage leases and IT subscriptions?
- Improved accuracy: Software can help ensure that all relevant information contained in leases and SBITAs is accurate and up-to-date. This can reduce the risk of errors, which can have a significant impact on financial reporting.
- Higher efficiency: Software can automate many of the tasks involved in managing leases and SBITAs, such as generating lease schedules, tracking payments, and calculating renewal options. This saves time and resources, which can be reinvested in other areas of the business.
- Compliance: Software can be used to simplify compliance for accounting standards, such as GASB 87 and GASB 96. This can help protect the organization from financial penalties and reputational damage, and bring peace of mind come audit time.
- Reporting: Software can generate reports that provide insights into lease and SBITA activity. This information can be used to make better financial decisions and improve risk management.
(3) Embrace Change
Change can be difficult, but it presents opportunities for growth. The accounting profession is constantly changing, so CPA firms need to be willing to adapt to new methodologies. Following the steps below allows you to effectively embrace change and learn from it:
- Accept that change is inevitable. Change will inevitably happen. The sooner you accept this, the sooner you can start to focus on how to handle it.
- Understand the need for change. Once you’ve accepted that change is inevitable, you should aim to understand why change is happening and what its benefits are. By doing so, you’ll start to view change as an opportunity for growth and improvement.
- Be open to new ideas. When you’re open to new ideas, you are more likely to be receptive to change. Letting go of old ways of thinking will open the door to new possibilities.
- Be adaptable. In order to adapt to new situations, you must change your behavior and thinking, and be willing to adapt.
- Be patient. Change takes time. It’s important to be patient with yourself and with others when changes occur.
Why is it important to embrace change?
- Stay ahead of the competition. In today's ever-changing world, businesses and individuals must be able to adapt quickly to stay ahead of the competition.
- Improve your problem-solving skills. When faced with change, you’ll inevitably think of new solutions to problems. This can help develop your problem-solving skills, helping you become more resilient when facing new challenges.
- Opportunity for growth. Change can be a great opportunity to learn new things and grow as a professional.
By taking advantage of outsourcing, automation, and embracing change, CPA firms can help address the accountant shortage and ensure accounting firm leaders have the qualified professionals they need to meet the demands of their clients.
CPA firms can benefit from implementing software as a revenue driver rather than a cost. By using software to provide services to clients or generate revenue as a reseller, CPA firms can increase their profitability and efficiency. For example, software that automates accounting processes can help firms save time and money while providing better service to clients.
Helpful GASB Compliance Resources:
- Check out DebtBook’s Guide to the Incremental Borrowing Rate and download the IBR template below!
- Project Costs: What They Are & How They're Relevant to GASB 96
- GASB 96 Definitions, Guidelines, and Best Practices
Disclaimer: DebtBook does not provide professional services or advice. DebtBook has prepared these materials for general informational and educational purposes, which means we have not tailored the information to your specific circumstances. Please consult your professional advisors before taking action based on any information in these materials. Any use of this information is solely at your own risk.