The Aging of the Accounting Profession
The accounting profession is battling several critical concerns: an aging profession, decreased enrollment in accounting programs and fewer candidates sitting for the CPA Exam. The Virginia Society of CPAs published an article titled The Perfect Storm is Coming for Our Profession! The “perfect storm” is referencing a weather phenomenon. You may remember the 2000 movie titled The Perfect Storm which tells the true story of a group of fishermen trying to navigate a ship when faced with multiple weather systems. Unfortunately, the CPA storm has already hit the shoreline, which means the CPA profession is currently battling the storm.
CPAs from the Baby Boomer generation are reaching the age of retirement and are leaving the profession. The AICPA has reported that 75 percent of today’s public accounting CPAs will retire in the next 15 years. Baby Boomers include those born between 1946 and 1964, which means the earliest entrants are now 77 and last entrants are now 59.
Burke, Hoitash and Xiao (2021) concluded that the top U.S. audit firms have mandatory retirement policies that vary between 55 to 62 years of age. These retirement ages are lower when compared to other countries and other professions. The eighth annual 2022 NYSSCPA-Rosenberg Survey found that partners over the age of 60 increased from 24 percent to 25 percent from the previous period. Furthermore, the data showed that one quarter of accounting firms’ partners are either at or past retirement age.
CPAs who have smaller practices are not seeing the next generation take over their accounting practices, forcing these CPAs to either close or sell their accounting practices. Unfortunately, with an aging CPA population and more practices being sold, less cash will be offered in a buyers’ market.
The seventh annual 2021 NYSSCPA–Rosenberg Survey identified trends from the National 23rd Annual Practice Management Survey. Key takeaways included how to deal with the labor shortage, hiring graduates outside of accounting programs and allocating more resources for recruiting. These takeaways explain possible causes of the declining enrollment in both undergraduate and graduate degrees in accounting, along with the decline of candidates eligible to sit for the CPA Exam. The AICPA reported the number of CPA Exam candidates has been declining over the past 10 years. For example, in 2010 there were 50,000 Exam candidates in comparison to 32,000 in 2021. Having a mandatory retirement age within the U.S. Big 4 audit firms may need to be reconsidered since there is a shortage of new CPAs.
The Next Generation
Accounting has been marketed as a recession-proof profession. However, this may not be enough to attract students into the profession to replace the retiring CPAs. Another factor causing students to look for other career choices is simply not understanding the role of the CPA. Many students do not have much of an understanding of the accounting field beyond the age old “all they do is taxes” assumption. Also, students must begin their journey in accounting by taking Financial and Managerial Accounting courses which are difficult and the foundation for other accounting courses.
Academics and practitioners need to increase their efforts in communicating how accounting and technology can open new employment opportunities. For example, show how technology will not replace the CPA, but allow CPAs to reduce remedial tasks and focus on finding solutions and insight for their clients and employers.
The future of accounting depends on how academics and practitioners adapt to the rapidly changing technology and workforce. Both academics and practitioners must leverage the anticipated 2024 roll out of the CPA Evolution. We must not forget accounting is the language of business and brings prosperity to small and large firms.
So, how can we battle the storm? As CPAs transition into retirement, we must use their knowledge to help bring excitement back into the profession. For example, retiring CPAs can present to high school and college students and create more internships and mentoring opportunities to keep students engaged in the accounting profession. Academics must continue to partner with practitioners by creating events and presentations to showcase the many different roles of a CPA. To weather The Perfect Storm, we need a team effort from both academics and practitioners.
Rachel S. Serebnick
Rachel S. Serebnick is a student at Stockton University and is a Student member of the NJCPA.