CPA firms show progress in diversity amid pipeline challenges

By Ken Tysiac

U.S. CPA firm accounting and finance functions made gains in hiring and promoting diverse personnel in 2020 amid an overall slowing in the CPA pipeline that's probably at least partly attributable to the COVID-19 pandemic.

These are the findings presented in the AICPA's 2021 Trends report. The Trends report, first published in 1971, provides data reported to Integrated Postsecondary Education Data System (IPEDS) as well as statistical projections and expectations based upon university responses for the abbreviated 2019–2020 and 2020–2021 academic years, and firm responses for the 2020 calendar year. The data provides a snapshot of the profession, set against the current economy and the ability to forecast future trends.

Takeaways from the 2021 report, which was released Wednesday, include:

  • The portion of new bachelor's and master's of accounting graduates with ethnically diverse backgrounds hired into accounting/finance functions of U.S. CPA firms increased to 35% in 2020 from 30% two years earlier. Ethnicities with increases included Asian or Pacific Islander, Black or African American, and Hispanic or Latino (up 1.9, 0.6, and 1.6 percentage points, respectively). These three groups were at or near their highest proportions in the history of the AICPA's Trends data collection. Meanwhile, ethnically diverse candidates and women made significant gains at leadership levels.
  • Total hiring of new accounting graduates for accounting and finance functions by U.S. CPA firms in 2020 decreased by 10% from 2018 and was down to 27,751 from a high of 43,252 just six years earlier. Firms reported that 57% of their new graduate hires were accounting graduates, compared with 43% that were nonaccounting graduates. In 2018, 31% of these hires were nonaccounting graduates, and that was up from 20% in 2016. Nonetheless, CPA firms' interest in accounting graduates for accounting and auditing positions remains high, as such positions were the career starting point for 66% of accounting graduate hires at CPA firms. That's up from 56% two years earlier and far exceeds the 24% who made their career debut in taxation positions at firms.
  • Almost three-fourths (74%) of firms that hired one or more accounting graduates in 2020 expect to hire the same number or more in 2022 compared with 2021. Almost nine in 10 (89%) of all U.S. CPA firms expect to have the same number or more CPAs on staff in 2022 compared with 2021.
  • The number of new CPA Examination candidates decreased 17% between 2019 and 2020 amid short-term closings and various restrictions at test centers related to the pandemic; that number had been essentially flat between 2018 and 2019. A 6% increase was reported between 2020 and 2021. Meanwhile, the number of candidates who passed their fourth section of the CPA Exam fell 11% between 2019 and 2020 and dropped another 5.5% between 2020 and 2021.

"We're up from where we were, but at the end of the day, it's still trending down," said Jan Taylor, CPA, CGMA, academic in residence for Academic & Student Engagement at the Association of International Certified Professional Accountants, representing AICPA & CIMA. "That's why we have a whole variety of pipeline initiatives underway, to slow down that decline and reverse it."

A transformative model

While it's difficult to discern exactly how much COVID-19 is responsible for some of the pipeline trends, the AICPA and the National Association of State Boards of Accountancy already have been moving to address them through the CPA Evolution initiative, which is transforming the CPA licensure model in recognition of the skills and competencies needed to succeed in the practice of accounting now and in the future.

The AICPA and NASBA are moving forward with a new licensure model that focuses on building core competencies in accounting, auditing, tax, and technology while developing deeper expertise in one of three disciplines: information systems and controls; tax compliance and planning; or business analysis and reporting.

In a matter of just four years, the percentage of nonaccounting graduates hired by CPA firms more than doubled, from 20% to 43%, as there is an increased demand for technology skills in the accounting firm hiring model.

A CPA Evolution-aligned CPA Exam is expected to launch in 2024, and a model curriculum has been created to help college and university educators prepare students for success in the new environment.

"Accounting programs across the nation are bringing in more data analytics and technology," Taylor said. "Academics are recognizing that the profession is changing. Most of the faculty I've talked with are excited about the fact that they're going to be able to teach a curriculum that's relevant to the profession and give students skills that are going to be highly marketable."

Diversity progress

The profession's efforts to encourage diversity, equity, and inclusion delivered progress with a rise of almost 5 percentage points (a change from 30.1% in 2018 to 34.7% in 2020) in the portion of new accounting graduate hires at CPA firms who are ethnically diverse.

This occurred despite an ethnic diversity trend in bachelor's degrees that has been almost completely flat dating back to 2013–2014.

Meanwhile, the portion of ethnically diverse partners in accounting/finance functions at CPA firms doubled over a two-year period from 9% to 18%. These included gains with partners identifying as Asian/Pacific Islander (from 4% to 10%), Hispanic/Latino (from 2% to 5%), and Black/African American (from 1% to 2%).

Women also made significant gains at the partnership level, representing 39% of those positions in accounting finance functions compared with 23% just two years earlier. The percentage of women CPAs at firms also grew from 42% to 46%, while the portion of ethnically diverse CPAs rose from 16% to 23%, including a 4-percentage-point gain in Asian/Pacific Islander representation.

"It's imperative that we continue to grow the diversity that we need," Taylor said. "It's important to have [diverse] people in those spaces, and it also is important that they represent the profession by going to college campuses and being visible in classrooms and student organization events to show students from diverse backgrounds that they have opportunities to succeed in the profession."

Pipeline challenges

Difficulties maintaining the supply of potential CPAs in the pipeline mirror challenges experienced throughout the educational sector since the start of the COVID-19 pandemic. Overall, educational enrollment is down as some young people have reevaluated their aspirations and their ability to pay for college amid the pandemic.

Total undergraduate enrollment declined 6.6% from the fall of 2019 through the fall of 2021, representing a deficit of 1,025,569 students, according to the National Student Clearinghouse Research Center.

Accounting postsecondary programs also have seen a decline, although its start began before the pandemic. The combined number of bachelor's and master's degree graduates in accounting has dropped steadily since reaching a high of 79,854 in 2015–2016. Between 2018–2019 and 2019–2020, that number fell 4% to 72,923.

On the other hand, the number of new CPA Exam participants is expected to rise in the upcoming years after an increase from 30,385 in 2020 to 32,186 in 2021. Historical trends have shown that overall candidate volumes tend to increase prior to the launch of a new exam format. With the CPA Evolution-aligned exam debuting in January 2024, more exam-takers are expected in 2022 and 2023.

In addition to CPA Evolution and the numerous profession pipeline efforts that are underway, Taylor believes individual CPAs can help the profession grow with the stories they tell. She encourages CPAs to talk more about how a career in accounting, including the various pathways that it provides, can propel their careers and set them up for success.

"Positive messages and sharing experiences and learnings that accountants receive to help them understand and navigate the language of business will help us attract strategic, innovative-thinking individuals into this profession," she said. "We do it with our stories."

— To comment on this article or to suggest an idea for another article, contact Ken Tysiac at

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