Why Diversity Is a Challenge and Opportunity for the CPA Talent Pipeline

 – July 19, 2023
Why Diversity Is a Challenge and Opportunity for the CPA Talent Pipeline

The CPA talent pipeline and diversity in the profession are two massive, yet critical, issues. They’re also tightly interwoven, with diversity, equity, inclusion and belonging (DEIB) emerging as one of the top issues for attracting and retaining young talent.

“The truth is that this profession has been — and continues to be — primarily a white man’s profession, particularly at the leadership levels,” wrote Todd M. Shapiro, former president and CEO of the Illinois CPA Society, in their 2022 CPA diversity report Uncovering the Barriers to Success. “For the profession to remain relevant, it needs to better represent the population and clients it serves.”

The diversity conversation has long been ongoing, and there have been some gains in the past couple years: the AICPA’s 2021 Trends Report found approximately 41 percent of new accounting grads identify as non-white. But the number of people of color in leadership positions continues to lag, and accounting programs as a whole are facing an enrollment drop.

With the overall pipeline challenges, it might seem unproductive to largely focus on recruiting traditionally underrepresented students into the profession instead of recruitment as a whole. But Liz Barentzen, vice president of operations and talent initiatives for the Center for Audit Quality (CAQ), emphasizes that diversity is a critical issue if a CPA firm or organization hopes to attract young talent from any background.

“All students of all demographics care deeply about the culture of the workplace they’re joining,” Barentzen said.

Sixty-six percent of white students, 71 percent of Hispanic and Latino, 70 percent of Asian and Pacific Islander and 77 percent of Black students all said diverse, inclusive, welcoming environments are critical for their future workplace.

The data is clear: In their January 2022 study, Increasing Diversity in the Accounting Profession Pipeline: Challenges and Opportunities, part of their Bold Ambition initiative to drive diversity in the accounting profession, 66 percent of white students, 71 percent of Hispanic and Latino, 70 percent of Asian and Pacific Islander and 77 percent of Black students all said diverse, inclusive, welcoming environments are critical for their future workplace.

Many students are taking note of the profession’s reputation as non-diverse. “Unless we can really work on improving the diversity and inclusiveness of this profession, we're going to continue to have a pipeline issue across all demographics,” Barentzen said.

Reframing the Story of Accounting

The CAQ’s research has provided several key insights, including the top barriers for majoring in accounting. INCPAS has partnered with the CAQ to share this research, as well as their Accounting+ content created specifically for students.

While many students still express an interest in the business field, emphasis on STEM has led many to explore science and more traditionally tech-related fields, something the AICPA is working to resolve. In their plan to strengthen the accounting pipeline, they identify a goal of accounting to receive a federal STEM designation to reflect the profession’s increasing “role as a technology driver.” If federal legislation passes in 2023 to incorporate accounting into STEM, it will create a pathway for more promotion and awareness of the field in K-12 educational programming.

But STEM promotion isn’t the only barrier. When students do choose to pursue a business-related major, accounting faces two key challenges:

  • The belief that accounting is boring.
  • The belief that accounting requires complicated math, leading many students to believe they don’t have the skill set they need to succeed.

Overall, “having an interest in and enjoying the work” was the top priority of students when it came to picking a career path.

Running with this data, the CAQ launched Accounting+, a multi-channel campaign focused on the overarching message that there are many ways to be an accountant and it can connect to your passions.

“Putting ourselves in the students’ shoes to whom we’re trying to reach and understanding their own motivations is really, really important,” said Barentzen.

The CAQ has taken particular note of what resonates with Black and Hispanic and Latino students — two highly underrepresented groups in the profession.

“What we saw very clearly is that for Black students we're trying to bring in and attract [to the profession], the idea of accounting as a path toward entrepreneurship resonates,” Barentzen said. “And for our Latino and Hispanic student audiences, the idea of accounting as a means to give back to your community to support small businesses and the success of your community is a big driver for students.”

Personal connections like parents, other family members and mentors were also cited as critical for influencing career paths and providing exposure to the profession. In fact, 75 percent of current accounting majors personally know an accountant. But sometimes sharing your personal story isn’t enough.

“When people speak from their own experiences about why to be an accountant, there are a million different reasons someone might have, and it has traditionally been about stability or the idea of making a lot of money or long-term earning potential. That all might be true, but it might not necessarily land or sit with a student in a way that’s going to really move the needle for them,” Barentzen explained.

The Cost of Being a CPA

The CAQ research also identified a third key barrier for business students not pursuing a CPA license: the general barriers on the path to licensure.

The hard truth is that it’s expensive to become a CPA. In addition to the debt many students acquire to finish their undergraduate degree, there’s the cost of the required 30 additional hours of credit, plus the time and cost for Exam preparation. All of this can add additional thousands of dollars, an intimidating figure for any young student, but especially for a first-generation student from an underrepresented background.

“It’s easy to be turned off by the upfront costs, whether it’s the time or money, especially among students that are more worried by the semester ahead rather than the years ahead,” writes Derrick Lilly in Pipeline Disruption: The search for solutions to the weakening supply of CPAs. “That’s why first and foremost we must emphasize that investing in the CPA credential yields life-long dividends.”

But understanding the upfront cost will eventually pay off isn’t enough, and the AICPA is taking note. In their Pipeline Acceleration Plan they focus on the AICPA Foundation as a tool to fund and support CPA candidates, with 2023 as a transitional year for the Foundation to “laser focus” on this initiative.

Foundation fundraising and scholarships can only go so far, though. Firms play a significant role in helping candidates achieve Exam success through mentorship, financial support and an overall supportive culture.

No sole CPA will solve the problems the profession faces, but there are steps you can take to help move the needle and encourage more talent to look to the promise of accounting.

Taking Individual Action to Support DEIB and the CPA Talent Pipeline

No sole CPA will solve the problems the profession faces, but there are steps you can take to help move the needle and encourage more talent to look to the promise of accounting. Here’s how to get started:

  • Follow and share Accounting+. One of the easiest ways to familiarize yourself with the messaging that resonates with younger audiences is to follow Accounting+ on social media and explore their website. “Individuals will see that content and be able to frame how they communicate about accounting to students in their lives in a more meaningful way,” Barentzen said. Follow them on FacebookInstagramTwitter, and TikTok.
  • Stay on top of the research. Follow Bold Ambition and the Center for Audit Quality to stay up-to-date on their ongoing research into the pipeline and diversity.
  • Mentor. As the research shows, students who have a direct relationship with someone in the accounting profession are more likely to explore it.

Reprinted with permission of the Indiana CPA Society.