The accounting profession, once that is typically stable and secure, is now facing a significant crisis. This isn't just a temporary blip — the challenges facing accounting firms and professionals today are complex and multifaceted, with far-reaching implications for individuals, businesses, and the economy as a whole.
In this blog post, our team at Lewis.CPA will explore the challenges facing the accounting industry and why it's a "big deal" for small businesses, the reasons for the crisis, its impact on individuals and small businesses, and some practical tips on navigating the evolving landscape.
Why Is It So Hard to Find Accountants to Hire?
The number of individuals pursuing a CPA license fell sharply in 2022, raising concerns about the future of the accounting profession. The accounting crisis is the result of several interconnected factors:
#1. The Aging Workforce and Retirement
A wave of experienced professionals is reaching retirement age, creating a significant talent gap within accounting firms. The aging workforce, with 75% of CPAs approaching retirement age, poses a critical challenge to the future of the accounting profession.
#2. Declining Interest in Accounting
The perception of accounting has shifted. The once-popular "smoke-filled back offices" have been replaced with cutting-edge technology, but the image of the profession hasn't caught up. College enrollment in accounting majors has been on a steady decline, with more students gravitating towards other professions, including fields like tech and finance.
#3. The 150-Hour Rule and the CPA Exam
The rigorous 150-hour rule requirement for aspiring CPAs, often coupled with the challenging CPA exam itself, acts as a deterrent for potential candidates. This hurdle, coupled with the perception of long hours and demanding workloads, makes the accounting profession less appealing to younger generations.
#4. The Rise of Remote Work and Changing Expectations
The rise of remote work, fueled by the pandemic, has brought about a shift in employee expectations. Today's accountants, especially those in younger generations, want a better work-life balance, flexible work arrangements, and opportunities for personal fulfillment, which aren’t always readily available in traditional accounting roles.
#5. The Lure of Higher-Paying Wall Street
The allure of lucrative salaries and a fast-paced environment in the finance industry is drawing top talent away from accounting, creating a further talent shortage. "Silicon Valley firms" and "higher paying Wall Street" roles are often perceived as offering more exciting opportunities and higher earning potential than traditional accounting positions.
How the Accounting Crisis Impacts the Economy
The consequences of this crisis are rippling through businesses and impacting the economy in several ways:
- Firms struggling to hire: Accounting firms are finding it increasingly difficult to attract and retain qualified staff. This staffing shortage is forcing firms to take on more work than they can handle, leading to longer turnaround times, reduced service quality, and a potential increase in errors.
- Increased demand for outsourcing: Businesses are increasingly turning to outsourcing for accounting services as they struggle to find qualified internal staff. This shift puts pressure on outsourcing firms to find enough talent to meet the rising demand.
- Higher costs for businesses: The shortage is driving up salaries and compensation for accountants, leading to increased costs for businesses. This financial strain can impact their ability to grow and invest in new initiatives.
- Challenges for regulatory agencies: The lack of qualified professionals also impacts regulatory agencies responsible for overseeing financial reporting and compliance. The ability of these agencies to effectively perform their duties is at risk.
Why the Hiring Crunch Matters for Small Businesses
The accounting profession in crisis has a direct impact on your business:
- Talent competition: Businesses of all sizes are scrambling for qualified accountants which makes it harder to find the right fit for your specific needs.
- Increased costs: The shortage drives up salaries and compensation, impacting your bottom line.
- Delayed services: Firms are overwhelmed with work which can potentially lead to longer turnaround times and decreased service quality.
Steps to Take to Go Through the Accounting Profession Crisis
Addressing the accounting profession in crisis requires a multi-pronged approach that focuses on attracting new talent, retaining existing professionals, and adapting to the evolving needs of the industry:
1. Improving Education and Training
The education system needs to be revamped to attract more students to accounting and prepare them for the challenges of the profession:
- Rethinking curriculum: Integrate more practical skills, real-world applications, and technology into accounting courses.
- Building stronger partnerships: Forge stronger partnerships between accounting firms and universities to provide internship opportunities, mentorship programs, and access to cutting-edge technology.
- Investing in teacher training: Support accounting professors with training and resources to better prepare students for the demands of the profession.
2. Creating a More Attractive Work Environment
Today's accounting professionals expect more than just a paycheck. They want a work-life balance, opportunities for personal growth, and a positive work environment:
- Embrace remote work and flexible scheduling: Offer remote work options and flexible schedules to attract and retain talent.
- Invest in technology: Utilize automation and technology to streamline menial tasks, allowing accountants to focus on more strategic and fulfilling work.
- Promote diversity and inclusion: Create a welcoming and inclusive environment that attracts and retains a diverse workforce.
- Offer opportunities for growth: Provide training, mentorship, and leadership development opportunities to support career advancement.
The accounting profession is evolving, and embracing these changes is necessary for attracting and retaining top talent. Small businesses that adapt will be best positioned for success.
3. Embrace New Technologies
The accounting profession is undergoing a transformation, with artificial intelligence (AI) playing an increasingly significant role. This is a challenging yet exciting opportunity.
- AI and automation: Accountants need to learn how to leverage AI and automation to enhance their skills and perform tasks more efficiently.
- Data analytics: The ability to analyze data and extract insights will be crucial for success in today's data-driven world.
How Lewis CPA Can Help Your Small Business
At Lewis CPA, we offer a comprehensive suite of services that address the unique needs of businesses and individuals facing the accounting profession in crisis:
- Tax planning and tax preparation: Our team of experienced CPAs can help you navigate the complexities of the tax code, optimize your tax strategy, and ensure compliance with all relevant regulations.
- Audit and assurance: We provide independent assurance services to help businesses ensure the accuracy and reliability of their financial reporting.
- Financial planning: Our experienced financial planners can help you develop a customized financial plan to meet your individual goals, including retirement planning, investment strategies, and estate planning.
- Outsourced accounting: We provide comprehensive outsourced accounting services to businesses of all sizes so you can focus on your core competencies while we handle your accounting needs.
- Technology consulting: We help our clients leverage cutting-edge technology to streamline their accounting processes, improve efficiency, and gain valuable insights.
We understand the challenges facing the accounting profession and are committed to helping our clients navigate this complex landscape. This means we are constantly adapting and innovating to provide our clients with the services they need.
Trust Lewis CPA in Navigating the Accounting Crisis
The accounting profession can seem daunting, but it requires a proactive approach. Lewis CPA is committed to providing our clients with the knowledge, resources, and support they need to succeed in this evolving environment. We understand that you need a reliable and trustworthy accounting partner, which is exactly what you can expect with our team. Contact Lewis CPA today to discuss how we can help you secure your financial future.
Contact us today to discuss how we can help you navigate the accounting challenges and secure your financial future.
