CPA firms are turning to nonaccounting graduates in increasing numbers, a new AICPA survey reveals. Nonaccounting graduates constituted 31% of all new graduate hires in public accounting in 2018, an increase of 11 percentage points over 2016, according to the 2019 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits report released Tuesday.
The Trends report is issued every two years and has been published since 1971. The 2019 report is based on university responses for the 2017–2018 academic year and firm responses for the 2018 calendar year. The data provides a snapshot of the state of the profession.
While overall hiring of new accounting grads is down, the portion of new accounting graduate hires assigned to audit-related work rose to 56% in 2018. That’s up 4 percentage points from 2016 and nine percentage points from 2014.
But CPA firms hired about 11% fewer accounting graduates in 2018 than in 2016, and approximately 30% fewer than in 2014.
“Increased demand for technology skills is shifting the accounting firm hiring model,” Barry Melancon, CPA, CGMA, AICPA president and CEO and the CEO of the Association of International Certified Professional Accountants, said in a news release. “This is leading to more nonaccounting graduates being hired, particularly in the audit function.”
The AICPA is seeking to address this trend through the CPA Evolution project in partnership with the National Association of State Boards of Accountancy. This project is an effort to make sure CPAs continue to have the skills needed to support the accounting profession.
As technology plays an increasingly important role in audits, firms are turning to nonaccounting graduates with data science and data analytics skills on audit teams, although there is anecdotal evidence that some of this technology-specific hiring is occurring at the experienced-hire level.
“CPAs have an unmatched reputation for trust and integrity, earned through decades of working in the public interest,” Melancon said. “However, to play this vital role in the future will require an increased focus on technology. It is incumbent on the profession to ensure accounting graduates and newly licensed CPAs have the skills and expertise needed to support the evolution of the audit.”
Enrollment remains high
Nearly 208,000 students — the second-highest number on record — were enrolled in undergraduate accounting programs during the 2017–2018 school year, according to projections in the report. That’s a slight decrease from the all-time high posted in 2015–2016.
Meanwhile, the 33,000 projected students enrolled in master’s programs in 2017–2018 represented a 6% decline from 2015–2016. Declines in graduate student enrollment may be due to more students opting to enter the workforce instead of pursuing an advanced degree.
Almost 55,000 bachelor’s degrees and more than 21,000 master’s degrees were projected to be earned in 2017–2018, a 4% decline in each figure from the previous report. But the combined 76,542 projected degrees remains above prerecession levels. The prerecession comparison is important because more people tend to pursue and earn degrees during a recession as they seek to train themselves during a period when employment is relatively unstable.
Diversity is increasing in accounting education, as the portion of nonwhite enrollees in accounting bachelor’s degree programs rose to 44%, an all-time high. A rise in Hispanic or Latino students contributed to this trend, with rises of 3 percentage points in the portion of bachelor’s enrollees and 8 percentage points in the portion of master’s enrollees. The percentage of nonwhite students graduating with bachelor’s or master’s degrees was 42%, again fueled by a rise in Hispanic or Latino graduates. Bachelor’s and master’s enrollees were split nearly evenly along gender lines.
“The AICPA and other stakeholders in the profession are focused on anticipating the changes shaping our economy and ensuring newly licensed CPAs have the skills they need to serve as trusted advisers to their clients,” Yvonne Hinson, CPA, CGMA, Ph.D., AICPA Academic-in-Residence, Academic & Student Engagement, said in a news release. “As the pace of change increases, the Institute has been accelerating our work on a number of professionwide initiatives that attract, inspire, and engage the next generation of CPAs.”
Effects of CPA Exam changes
The launch in 2017 of a new version of the CPA Exam may have contributed to some unusual developments in the number of new CPA Exam candidates and newly licensed CPAs. A significant increase in the number of new CPA Exam candidates in 2016 has been attributed to the eagerness of prospective CPAs to take the exam before the exam underwent changes in 2017.
Following those changes to the exam, the number of candidates and newly licensed CPAs in 2018 fell to the lowest level in 10 years. The number of CPA candidates fell 7%, to 36,827, and the number of newly licensed CPAs dropped 6%, to 23,941.
In addition to the CPA Evolution project, AICPA initiatives addressing these issues include:
- A CPA Exam practice analysis focused on the impact of technology and the critical skills for newly licensed CPAs. An exposure draft and invitation to comment on potential changes will be published in December.
- The Accounting Accreditation Practitioner Engagement Program, which places CPA practitioners on Association to Advance Collegiate Schools of Business accounting accreditation teams and committees.
- The Accounting Doctoral Scholars Program, which provides funding for CPAs to obtain their doctorates and teach.
- The Accounting Program for Building the Profession, which trains high school educators to teach a college-level accounting class.
- AICPA scholarships and programs such as the Accounting Scholars Leadership Workshop, which help ensure that accounting students have a meaningful and successful experience as they work to earn their CPA license.
— Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.