Accountants Battle Decline in New CPAs

Source: Arkansas State Board of Public Accountancy

It’s a great time to become a certified public accountant.

That’s the sales pitch of the CPA industry as it tries to come to grips with fewer accountants entering the market. The Arkansas Society of CPAs said that enrollment for students seeking accounting degrees was down more than 6.5% between 2019 and 2021, the largest two-year decline in more than half a century.

Those decreasing numbers come as demand for staff accountants and CPAs is growing, robustly in some quarters. The COVID-19 pandemic changed the work environment and structure for many industries, but the influx of federal aid dollars put a premium on accounting services.

“It’s not just a phenomenon that has happened in the past year or two years,” said Susan Davenport, the managing partner of Forvis LLP in Arkansas. “It is increasingly a problem and has been that way probably for the last five years. In my opinion, the pandemic magnified that somewhat.”

The U.S. Bureau of Labor Statistics predicts an annual 6% growth in accountancy employment for the next decade. That translates to more than 136,000 job openings each year.

“It’s the biggest challenge we’ve got right now,” said Randy Milligan, the managing partner at Landmark PLC in Little Rock. “It’s mainly because there aren’t as many kids going into the accounting field.”

Bloomberg Tax reported a 17% drop in the number of employed accountants and auditors from 2019 to 2021. 

In Arkansas, the decline is not as severe. The Arkansas State Board of Public Accountancy said the number of active CPAs in the state has dropped by 2% in the last six years.

“For Arkansas, it’s not terrible as far as a pure numbers perspective,” said Jimmy Corley, the executive director of the state board. “We are not quite replacing them 100%. I wouldn’t say it is an emergency issue here like it is in some places. It is a problem we are looking at.”

No One Solution

Solving the shortage will likely involve a number of responses. 

To become a licensed CPA in Arkansas, as in other states, a student must have completed 150 hours of undergraduate credit hours. Most bachelor’s degrees require 120 hours. Corley believes those extra 30 hours are a deal breaker for many students who don’t have the time or money for another year in school.

There’s also a perception problem. Many who want to enter the business world might not realize the important role CPAs play. CPAs aren’t numbers nerds with “pocket protectors,” Corley joked.

“In every industry, there is definitely a battle for talent,” Davenport said. “There are really fewer students who are pursuing an accounting major, and we think that is partly because of the increased competition of other types of majors. That presents us with a challenge when there are fewer students that are coming out of the schools. 

“We have to reach out much earlier than we have historically. It is such an interesting career, more so than people might think. We have this vision of someone sitting behind their desk at a computer for 10 hours a day, when in reality there is a whole lot more to it. It’s up to us to tell our story better. When we can get in front of students or recruits and tell more of the fun stuff we do at our job, that is when their eyes light up.” 

Another possible factor is pay. The BLS reported that the annual median salary for a CPA in 2021 was more than $77,000, but Corley said CPA firms and companies must consider raising pay for beginning CPAs.

Gary Peters, the head of the accounting department at the University of Arkansas at Fayetteville, agreed. He said many students who might have chosen accounting in the past are diverting to other business-related disciplines.

“You always hear you can’t buy yourself out of a problem,” Corley said. “We may have to. Starting salaries have not kept up with some of the other sectors.” 

‘Language of Business’

The rewards of being a CPA, either at a private firm or at a publicly held company, extend beyond salary and benefits.

That’s what Davenport wants to preach to potential accounting candidates as early and as often as possible. She said accounting is more than just preparing taxes and doing audits.

“Accounting is really the language of business,” Davenport said. “To understand accounting, you’re more effective as a businessperson. Even in public accounting, there is just so much to it. Once you learn those basics of blocking and tackling, you start learning the aspects of industries. That’s the fun stuff.”

Forvis, the state’s largest CPA firm, came into being through the merger of BKD CPAs & Advisors of Springfield, Missouri, and Dixon Hughes Goodman LLP of Charlotte, North Carolina, earlier this year. 

The firm has invested “substantially” in accounting programs at Harding University in Searcy and Arkansas State University in Jonesboro.

“We are interested in their continued success and, hopefully, their increased success,” said Davenport, a graduate of University of Central Arkansas in Conway.

Peters said some of the enrollment decline is attributable to the normal cyclical ebbs and flows of various industries. 

“I expect this to also increase in the future,” he said. “We are continuing to make sure we are messaging appropriately what the opportunities are for people with accounting skills and knowledge sets.”

The accounting industry has done a better job of attracting minority candidates, Corley said. The American Institute of Certified Public Accountants said in a 2021 report that minority CPA hiring increased by 5% from the previous year.

“We have to put all our cards on the table and look at what things are holding us back,” Corley said. “It’s a complex problem that is going to take a complex solution.”

Davenport knows there is work to be done. 

“I am bullish on it,” she said. “I think there is a definite need for CPAs and public accounting in particular to help businesses prosper.”