Why are there fewer accountants? What the research says

The factors contributing to a decline in the accounting talent pool are many, and so are the strategies to address the issue.

In this podcast episode, Sue Coffey, CPA, CGMA, AICPA & CIMA’s CEO–Public Accounting, explains what early research has shown about why students are showing less interest in accounting. She also details the steps that multiple entities, including the National Pipeline Advisory Group (NPAG), are taking to grow the pipeline.

In the interview, Coffey discusses CPA licensure, the 150-hour educational requirement, CPA practice mobility, and other issues important to her and the profession.

Resources

NPAG survey page:

https://www.accountingpipeline.org/survey/

AICPA & CIMA business model transformation tools

JofA content:

• Podcast episode with NPAG Chair Lexy Kessler, CPA, CGMA
• Podcast episode with NPAG independent facilitator Jennifer Wilson
• Podcast episode about including accounting in STEM curriculum with Jan Taylor, CPA, CGMA, and Lauren Pfingstag-Vahey
• Article on the formation of NPAG

What you’ll learn from this episode:

• The main goals of the National Pipeline Advisory Group (NPAG).
• Why the recently released NPAG survey is aimed at current professionals and students.
• What NPAG research is showing about the reasons for a decline in CPA candidates.
• Coffey’s response on whether the AICPA is being stubborn about the 150-hour education requirement for CPA licensure.
• The importance of audit transformation in Coffey’s mind.
• Some of the regulatory agencies she speaks to as part of advocacy efforts.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript

Neil Amato: This is Neil Amato with the Journal of Accountancy. Welcome back to another episode of the JofA podcast. Sue Coffey, the CEO of Public Accounting for AICPA & CIMA, is joining me for this episode to discuss a host of issues that are important to her and to the profession. Sue, first, thank you for being on the Journal of Accountancy podcast. We’re glad to have you.

Sue Coffey: I’m so happy to be here. Thanks for asking me.

Amato: I want to ask, first, about the National Pipeline Advisory Group. I guess it also goes by the acronym NPAG. What is NPAG, and why was it established?

Coffey: Well, of course, we have to have an acronym for everything, right, Neil? But very simply, it is a group of individuals who represent many stakeholders within our profession who were asked by AICPA’s governing Council to develop a data-driven, highly inclusive national pipeline strategy to address our profession’s talent needs.

Amato: I think that’s a good start. I want to ask some about research that NPAG has done or has had a third party carry out on its behalf. It’s been a big undertaking, polling multiple stakeholders, including even high school and college students. Why is this research so important to the CPA profession?

Coffey: Part of, again, what Council asked us to do was to be data-driven. There are a lot of opinions out there on what’s driving our talent shortage. From Day 1, the NPAG made the commitment about the criticality to understand what is truly driving the problem and then develop solutions that will have the greatest positive impact and that will also allow for the natural ebb and flow of our profession’s talent needs.

I’ve been observing this ebb and flow from my position at AICPA & CIMA for the last 30 years, and it changes. NPAG is determined to make sure that the strategy that they develop allows us to be nimble enough to go with those ebbs and flows as the environment changes.

Amato: I want to go back to one part about that research. The polling of students includes those who are both considering the profession and have said they’re maybe not considering. Is that right?

Coffey: That’s right. In fact, we’re going to be launching a student survey. Actually, by the time you probably air this, we will have launched that survey, because that voice is so important about why they’re choosing us and, candidly, why they’re not choosing us as a profession.

Amato: Now, based on the outside research and the research conducted directly by NPAG, state societies, and other organizations, what would you say are two or three main factors that have led to the declines in accounting graduates and the increase in people leaving the profession?

Coffey: Neil, I think you need to start first with just general demographics. Birth rates have been declining in the United States for years, and that’s finally caught up with us, and by the way, every other profession. That means there are fewer people going to college, and that means we’re competing with other professions for this reduced talent pool. Again, we’re not the only ones experiencing it. But having said that, demographics are really only part of the picture.

What we found is that young adults are not choosing accounting when they’re making career decisions in high school and college. Because, first, they really don’t understand what a career in accounting means. They don’t know what we do, why we do it, how we do it, the impact that we have on societies, communities, businesses, and individuals, nor do they understand the variety and the breadth of the opportunity our profession offers.

Second, the cost and time of our education requirements for CPA licensure are absolutely a part of it, as is the accounting academic experience, including the coursework that they do and the instruction they get, that instructor engagement.

Then lastly, I would say that the one- to five-year employment experience is a part of it, too. Young professionals who have had bad experiences within those first five years go on social media. We didn’t have social media many years ago. But now they go on social media, and they tell their stories, and that then cycles back to high school and college students who are just starting to think about careers. Those are probably the big research points that are driving the work that the NPAG is doing.

Amato: We’ll come back to that cost and time of education point in just a bit. I want to talk some more about NPAG expected outcomes. What are they, and what is the timeline, I guess, for them?

Coffey: The NPAG is just starting to test through a national survey, and through the student survey we talked about earlier, a number of solutions that they believe could have a real impact on our pipeline.

They’re basically based on six themes that are coming out of the research. That we need to tell a more compelling story about our profession to attract young adults. That, as I mentioned earlier, we need to address the cost and time of education and make the academic experience more engaging. We have to provide better support to CPA Exam candidates. It’s hard, they’re struggling, and they don’t have the time. We also have to enhance that one- to five-year employee experience and then expand paths for those in underrepresented communities. We have to address the diversity within our profession, and our profession needs to better match the diversity of our country.

Those are those six themes, and NPAG is testing a number of recommendations via survey. For example, how a campaign at the high school level would enhance the image of our profession. Whether restructuring the CPA Exam to tie exam sections more closely to when a course is taken in college would better align with how the younger generation thinks and create an attraction. Whether and how to revamp the intro to accounting course and the intermediate accounting course to create greater excitement about what the profession does.

It’s not just debits and credits. It’s advisory, it’s auditing, its financial planning. There’s so many things that our profession offers, and they don’t hear about that until they’re like seniors in college.

Just a couple of other things that we’ll be testing, how to help firms reimagine their business models to better align with the expectations of a new generation coming in. How underserved students can transition effectively from those who go to community college to four-year colleges so they can get the education they need to be successful in our profession.

Then, we’re talking about ways to insert more flexibility into the licensure process. This gets to the cost and time of the education to really address those issues. But, very importantly, do it while we preserve CPA practice mobility. Those are just some of the things that we’re going to be testing, and we are on track to issue a draft report at the upcoming AICPA Council meeting in May with a final report that we’ll be issuing in July. We’re hitting our milestones and our time metrics on that.

I will say that the national survey that I mentioned is super critical. We want as many people in all of our stakeholder communities to take the survey and give us opinions. I’d encourage all the listeners to take the survey by visiting NPAG’s website, which is accountingpipeline.org. I’ll mention that at the end, too, because it is so important that we get a lot of voices.

Amato: Yep, and as we’re recording late February, by the time this episode airs, I expect early March, that survey will be live. We will share the link in the show notes for this episode and certainly mention it again, because it is important.

You mentioned a phrase in that answer, “CPA practice mobility.” For those who might not know, what is CPA mobility, and why is it, in this whole thing, so important?

Coffey: Basically today, if you have one CPA license, you can practice anywhere in the country on a temporary basis, either virtually or in-person. I have a New Jersey license, and if I had a client in Pennsylvania that I visited regularly to provide audit or tax services and I had a client in California that I remotely provided, let’s say client accounting services for, I wouldn’t need a CPA license in Pennsylvania or in California to serve those clients. My New Jersey license would allow me to do what I need to do, and that’s called CPA practice mobility. It’s made possible because jurisdictions or states have substantially equivalent CPA licensure requirements.

The licensing requirements revolve around three things — the 150 hours of education, one year of professional experience, and passing the Uniform CPA Exam. These are the three things that create mobility. If a state changes any one of those three things, like the amount of education or the experience, mobility is typically compromised for the CPA licenses in the state that changes it. That would mean that those CPAs would have to do something, whether it’s notifying the state board of accountancy in Pennsylvania or in California that, for example, I’d be doing the work or registering with the state board or paying a fee, or actually getting another license.

Whatever we do in this space, we just have to be really careful that we don’t do something that has unintended consequences.

Amato: You’ve mentioned the 150-hour requirement that is currently the educational requirement for CPA licensure, which is 120 hours of undergraduate education followed by 30 hours, I guess, of postgraduate. Is the AICPA being stubborn on eliminating the 150-hour requirement for CPA licensure?

Coffey: Oh, Neil, I love that question. I guess I’ve answered it this way. First, the three E’s — the education, experience, and exam requirements that I mentioned earlier, our licensing requirements — state legislatures and state boards of accountancy set those requirements. Opening state laws to change those requirements is very risky in any environment. The current environment is no different. In fact, I’d say it’s even messier than in the past. I just want to set that as a baseline, but a couple of other things.

Mobility helps firms serve clients without more licensing, cost, or risk of noncompliance, which premobility was extremely high due to the diversity of state laws and state board rules. Breaking mobility, as I mentioned earlier, would put more cost into the system for firms. It would create a risk that CPAs may need additional licenses and may be caught without one if they need one.

We’re trying to be thoughtful in how we address this, and I think that the work of the National Pipeline Advisory Group, the NPAG, is actually doing it. Mobility was a solution to a lot of pain in the system. Many years ago, pain to our members who told us that they wanted us to address it, with NASBA [National Association of State Boards of Accountancy] and the state boards of accountancy and the state societies. And it took us many years to accomplish.

We are now one of the very few professions who have it, and to lose it would challenge a number of practitioners. But having said that, the NPAG has been very open to discussions around licensing and has been having very productive discussions around licensing models that would take cost out of the system for students, would create flexibility, and would minimize, not necessarily eliminate, but would minimize any risk to our ability to be mobile.

I think you’ll see some ideas coming out in the NPAG’s report in May. So, to simply answer your question after that whole long answer, I think we’re being very open-minded and flexible in how we’re looking at it.

Amato: Now speaking of NPAG topics, another thing I’ll mention for the show notes is I have had recently on the podcast Jennifer Wilson — I guess she’s the independent facilitator with NPAG. I’ve had Lexy Kessler, she is the chair of NPAG. We’ll link to those episodes as well. Sue, apart from you being a member of NPAG, what is the AICPA doing now to address pipeline challenges?

Coffey: Neil, thanks for asking that, because we started a number of years ago to address some of these pipeline challenges. We did notice, probably five or six years ago, that there were definitely changes in the number of people graduating and sitting for the exam and the types of people that CPA firms and corporate finance departments were hiring. So we actually started addressing that at that time, and that actually resulted in a new CPA Exam that was launched this past January, the CPA Evolution CPA Exam, which was really designed or redesigned both in content and structure to create greater attraction into our profession.

We’ll see how that works. It was a massive effort. I’m very excited about what we’ll see in terms of new people coming in and taking it because it’s a core-plus-disciplines model. The second thing we did was we launched our pipeline acceleration plan about 18 months ago to get some quick hits on the board, to make some fast impact, to try and attempt to resolve some of our pipeline issues. For example, with the National Association of State Boards of Accountancy and Tulane University, we launched a pilot Experience, Learn and Earn Program that allows students to get their remaining credits needed while working for a CPA firm or a corporate finance department at the very low cost of $150 a credit. That’s amazing.

We launched that pilot in mid-January with the spring semester, and so we’re gathering information and will undoubtedly make revisions to it, but it’s being very well received by CPA firms and corporate finance departments across the country.

We’ve also released several firm business model transformation toolkits to help firms navigate the current talent challenges. We ramped up our programs around high school and college student engagement to help them understand the opportunities and learn more about the profession quickly. We’ve awarded way more scholarships over the last year, and we intend to do the same this year and in 2025. We’re working on federal legislation to redefine STEM to include accounting so that we can get federal funding for K through 12th grade to promote awareness and education programs about the profession.

And we’re working to have 529 funds be available for CPA Exam and review course usage. Those are just some of the things. There’s a whole host of things going on that are already making an impact and we hope will continue to make an impact as NPAG rolls out its recommendations as well.

Amato: That STEM topic was also recently addressed on a podcast episode I did with Jan Taylor and Lauren Pfingstag-Vahey, so we’ll include that link as well. You mentioned CPA firm business model transformation as a part of the solution. What are some of the changes, I guess, that are being recommended for that for accounting firms?

Coffey: We’ve been hearing that firms need more support and resources to help them transform their practices in areas like strategy and vision, what do they want to be and how do they get there; compensation for staff and partners and what models work and don’t work, or what are best practices; the types of services provided and how to bill for them and how to account for time on service delivery, value billing versus time billing; how firms are structured and make decisions, do they have the best governance structures for their success?

The Private Companies Practice Section, which is led by Lisa Simpson, has been working with leading consultants to develop this toolkit series, and I’m very proud of the fact that it recently received Accounting Today’s top new product award. For those who may be interested in thinking about firm business model transformation, they can just go to our website and find [the toolkits].

Amato: That’s great. We will include that link as well in the notes for the episode. Obviously, pipeline and business model transformation are big, in-depth topics, but I think there are other focus areas for you this year and beyond. Do you want to talk some about those?

Coffey: Well, I always love to talk about the things I’m working on, so thank you for that question. I always do like to start with audit quality and transforming the audit. We are continuing our Enhancing Audit Quality efforts to drive quality in the audit space. That is so important to what we do as a profession and our brand, but we’ve also been developing a technology-based tool called the Dynamic Audit Solution, which is a resource that reimagines audit methodology and, coupled with advanced technologies like AI, basically assists the auditor in doing his or her job more effectively and efficiently. Another thing is identifying and developing opportunities around other forms of assurance. Think about subject matter beyond the financial statements like sustainability, or system organization and controls, or cybersecurity, or AI. How do you audit the AI? How do you audit an entity that uses AI? How do you audit with AI?

There are a whole host of things we’re working on in that space. Helping firms understand the opportunities between tax and financial planning and integrating these services to provide greater value to clients. We’re doing a lot in that space. Generally advancing our members’ use of technology solutions to provide capacity and client value — again, another area. Then lastly, I’ll just mention advocacy and working with policymakers to make sure good public policy is developed, that positions and serves the profession well. Working with leaders at, for example, the Internal Revenue Service, the SEC, the PCAOB, the Department of Labor, federal [inspectors general], and even at the state level — in partnership with the state societies — we’re doing a lot of work there. Again, it’s an election year, and we have opportunity, and we have the risk, and making sure that we’re at the table is super important.

Amato: That’s a lot of things you’ve got going on, and we appreciate the recap and all of the insight, Sue. Thank you.

Coffey: Well, I appreciate the opportunity to be with you, and thank you.