The accounting profession has a serious image issue.
Take a look around and you’ll see lots of evidence suggesting there is a shortage of CPAs in the accounting profession.
Based on a 2022 study reported by The Financial Times, the number of candidates sitting for the CPA exam was the lowest since 2006.
On the other hand, the AICPA reports that the average age of accountants in the US is 55 years old, and 75% of CPAs have reached retirement age as of 2020.
Look, these trends could lead to some serious issues if they continue this way, but they don't have to.
This conversation gets more interesting as we talk about the causes behind this shortage…
I recently took to X (let's connect on there if we aren't already) to get people's opinions:
I received a lot of the typical answers:
The 150-hour requirement
A lack of starting salary compared to industries like finance and tech
Long working hours and burnout
The cost of becoming a CPA is too high
While I recognize these could be contributors, I believe they are merely symptoms of an underlying issue.
Why don't finance and investment banking, or professions, like becoming a doctor or lawyer, seem to have the same issues?
From my perspective, the root cause of this shortage is that the accounting profession, as wonderful as it is, has become less attractive as a result of the firms becoming stale.
The firms have hung on to long-standing operating principles and conventional ways of thinking—and the profession has suffered because of it.
Despite the current trends, I'm confident in the future of the profession and believe the firms can turn things around.
Here’s what firms can do to fix this image issue and stop the trend of fewer people becoming CPAs:
1) Move away from the chargeable hour.
For decades, professional services firms have been fixated on hours.
We track hours.
We enter hours.
We bill hours.
We plan our years around hours.
We manage people according to hours.
What does that lead to? Among many other things, it leads to uninteresting and repetitive work.
Look, I'm a tax guy by background.
I performed hundreds of tax returns in my career.
How many of them were really career value-added tasks? Maybe the first 100?Maybe.
After that, was completing more tax returns really helping me grow as a professional? Was I learning new things and taking on new challenges?
I certainly didn’t think so...
So why’d I keep completing so many tax returns?
Because the P&L was built off chargeable hours, and every January I got the dreaded email that told me I had to have 55 chargeable hours so the firm could meet its projections.
So I did the same, uninteresting, repetitive, and non-career value-added work for the sake of meeting projections. It led me to seek out other opportunities to build my career within the profession so it's not a surprise it's leading to others doing the same.
Firms can address this by moving to an outcomes-based (value-based) accounting model.
With an outcomes-based model, we don't have to complete and bill for repetitive work for the sake of meeting projections.
We can free ourselves up to focus on other, more interesting, and more meaningful work that delivers value for clients and is rewarding for professionals.
2) Leverage technology and AI to do manual, repetitive tasks.
I don't see technology and AI as a threat to the accounting profession.
Instead, firms have the opportunity to utilize technology to enhance and automate repetitive tasks which allows more focus, time, and energy toward client and career value-added tasks.
Take a basic tax return...
How many aspects of completing a tax return can be made more efficient or completely automated using technology? A lot...
And once those manual, repetitive tasks are automated, what are professionals freed up to do? Well, things like:
Advise clients on ongoing tax strategies
Identify and provide integrated solutions (aka "cross-sell")
Acquire new skills and hone areas of expertise
Automate other parts of the business to increase efficiency and profitability
Essentially, things that are a lot more fun, rewarding, meaningful, and profitable.
The more time and energy that CPAs can place toward career value-added work, the more they grow as individuals and professionals. The more the professionals grow, the more firms have the potential to grow and increase their profitability.
More profitable companies can invest in more technology, pay people better, enable more growth and scaling... see where I'm going here?
It's up to the firms to make the work more interesting—leveraging technology and AI will be a massive step toward accomplishing that.
3) Embrace intentional development.
Attracting people to the profession is only half the battle. Once someone enters the profession, now we have to get them to stay.
A foundational issue in attracting and retaining people in the profession is that traditional development models are outdated.
The CPA profession has been built on the apprentice model.
Enter the profession out of college, shadow someone in a higher position for a couple of years, then earn the opportunity to oversee the work and continue to climb the ladder.
For decades, everyone who enters the profession has been thrown into the same well-worn development paths meant to spit out the next generation of CPAs.
Then Covid hit.
I like to say that Covid was like a time machine. It was like we entered the pandemic and left 10-15 years into the future. Things that were happening gradually happened suddenly once the pandemic hit—like the way we worked.
Remote work has changed the game.
People have different expectations for where and how they work and that means the days of knowing that entry-level team members can sit behind more senior CPAs and look over their shoulder as they work weren't going to work anymore.
Plus, the next generation of professionals aren't interested in following the same career paths and development paths that have been around for decades.
Enter, intentional development.
Intentional Development(n): Understanding people's unique values and aspirations and providing tailored professional opportunities that align with the organization's strategy and goals.
Firms can make the profession and associated career trajectory more enticing by providing tailored development opportunities based on each team member's vision and career aspirations.
Development shouldn't be a buffet-style one-size-fits-all approach—at least not 100% of it.
When we embrace, celebrate, and invest in people's unique vision for their work, we create more rewarding and fulfilling careers.
So while we might have standardized training and development programs, at least 20% of someone's development should be tailored to them.
What position do they aspire to attain?
What type of work do they want to do every day?
What unique skillsets do they hope to gain?
Rewarding and fulfilling careers built on intentional development can go a long way to solving the image issues at hand.
It's time to BREAK THE MOLD™
One thing is clear: What's gotten the accounting firms to this point is not going to be what allows them to thrive in the future.
The CPA profession has a serious image issue and we need firms to BREAK THE MOLD™ of long-time operating principles and conventional thinking to lead the charge toward making the profession more enticing and rewarding.
Addressing the symptoms will only provide temporary fixes to the underlying issues.
In order to fix the foundational image issue, firms need to:
Move away from the chargeable hour.
Leverage technology and AI to do manual, repetitive tasks.
Embrace intentional development.
It can be done. I firmly believe good things lie ahead for the profession and the firms must be the ones to lead the charge.
With intention,
Alan D Whitman
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