The CPA profession has been struggling for years to retain talent in the industry. The number of overall graduates coming out of school with accounting degrees has declined, the number of students taking the CPA has declined, and the number of younger generation CPAs leaving the profession has increased.
All this has left a huge gap in the market in terms of the number of qualified professionals compared to the demand for work. Top all that with the number of individuals facing retirement in the industry and we certainly have reason to raise red flags about the future.
While this tax season seemed slightly less compressed without all the changes coming from last minute legislation, statistically the need for tax professionals has grown each year. The estimated number of returns prepared by professionals in 2022 was 57%, up about 0.3% per year since 2005.
While that annual increase may not seem like a lot, we are talking about a total of 120 million returns filed each year. An increase in demand for tax professionals of only 0.3% is approximately 360,000 new returns with a declining number of preparers. We can see where the math doesn’t work.
In February, the American Institute of Certified Public Accountants (AICPA) issued their detailed plan to address the decline in CPAs in the US. The full plan can be found HERE.
The 20-page plan highlights awareness, improved perceptions, training and education, firm culture, diversity efforts, and educational institution partnerships as the core points that need to be addressed.
Interestingly, the plan includes some suggested next steps that we haven’t seen before, such as extending the 18-month window to pass the exam, and adding CPA Exam costs to the list of approved expenses that can be covered tax free by a 529 plan.
The plan also includes a creative look at students obtaining their 150-credit hour requirement. Because most bachelor programs are 120 credit hours, CPA candidates must extend their education beyond their bachelor’s degree in order to obtain a license.
AICPA wants to work on a plan where the remaining 30 credits can be obtained through paid work experience and expanded education options.
The institute has also developed “Transforming Your Business Model” as a firm toolkit to roll out as part of their plan. The toolkit helps firms to challenge the status quo in the industry and look at innovative ways that firms can address their culture. A core need in the industry if we hope to not only attract the next generation but keep the ones we have.
The plan is comprehensive and forward thinking, but it truly is going to take the efforts of the entire industry to turn around the statistical decline.