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Demand for Accountants Remains Strong

5 min read

The accounting profession, much like other professions, is preparing for a wave of departures as the baby boom generation moves to retire.

But this phenomenon is just one of several factors helping fuel a continuing demand for accounting professionals – as well as a shortage of accounting professors at the Ph.D. level – several in the industry said.

(To see the list of largest accounting firms in Arkansas, click here. A spreadsheet version of the list is available here.)

"Increased regulation (such as Sarbanes-Oxley) fuels strong demand for accountants, and retirements due to the wave of baby boomers suggest there is a smaller supply," said Vernon Richardson, chairman of the accounting department at the Walton College of Business at the University of Arkansas at Fayetteville.

Richardson, in Ghana on a study abroad trip with students, responded to questions from Arkansas Business by email.

Professors also are in short supply because of baby boomer retirements, Richardson said. The median age of accounting professors is now 60, he said.

Scott Moore of the American Institute of CPAs said that while it was true that boomers were coming into the retirement years, several reasons were behind a potential shortage of accountants, and "they are largely attributable to increased demand and accountants expanding their core functions.

"An increased level of regulation means increased need for accountants/auditors," Moore said. "As these financial regulations (SOX, Dodd-Frank, etc.) call for increased scrutiny of financial statements and the importance of compliance is greater than ever, accountants are in greater demand.

"This is coupled with the fact that CPAs are increasingly expanding into roles such as financial planning and management accounting, and niche areas such as fraud detection and information technology work, which has pulled from the field for the core functions such as accounting." (For more on management accounting, see commentary.)

The UA, however, currently has the largest class of undergraduate, master’s students and doctorate-level students in its history, Richardson said.

Moore, senior manager of college and university initiatives for the AICPA, also noted that "student enrollment [nationwide] is at an all-time high, and the [number of] young CPAs and accountants coming up through the pipeline is very strong, with a record number of students graduating with bachelor’s and master’s in accounting in 2011," the last year for which data are available.

As for the growing shortage of accounting professors, Moore and Richardson both pointed to the Accounting Doctoral Scholars program. According to the AICPA website, the program seeks "to increase the supply of academically-qualified accounting faculty, with special emphasis in auditing and tax, who have recent experience in public accounting, at universities that provide talent to the profession."

The AICPA says that "concerned practitioners, leaders from over 65 of the largest firms and over 48 state CPA societies have joined together to fund the (ADS) Program. Sponsors have committed financial support totaling over $17 million over an eight-year period for the Program."

As for local accountants in the numbers trenches, people like Ryan Underwood of BKD, Doug Richardson of Frost and Jim Phillips of JPMS Cox said they’d had little to no trouble finding highly qualified professionals to hire.

"We have had excellent results in recruiting straight-out-of-school folks," said Phillips, managing partner of JPMS Cox PLLC of Little Rock. "We made seven offers this year and got seven acceptances, 100 percent. They were the very best."

Richardson, chairman of the executive committee of Frost PLLC in Little Rock, said his firm "had been successful attracting talent over our history. We believe that is the result of several factors, including our dynamic workplace environment, relatively young age of our professionals and complex client base, which we believe is attractive to young professionals."  

Richardson did note, however, that in 1998, the National Association of State Boards of Accountancy changed the college requirements to sit for the CPA exam to 150 hours.

"Colleges and universities added a fifth-year master’s program," he said. "When this change occurred, there was a year with no accounting graduates because of the requirement to go to school one more year. This shortage of accounting graduates, coupled with the attraction of instant riches during the tech boom, caused a shortage of CPAs at that time."

(For more from Richardson, read the Executive Q&A.)

Succession Plans

The giant lump of baby boomers moving through the anaconda of life has presented the accounting profession – and others – with a critical challenge: succession planning.
"While it is true that many baby boomers are coming up on retirement age, firms are increasingly focused on developing succession plans to ensure that the right people are available in-house to take the reins when they do retire," Moore said.

A 2011 AICPA survey of CPA firms "showed that, for firms with 11 to 20 professionals and firms with 21 or more professionals, developing a succession plan ranked as one of the top five issues they were facing," he said.

Phillips said this "is a massive issue, not only for our profession but for a lot of our clients that we work with just due to the sheer size and number of baby boomers. We have worked extremely hard on succession planning in our firm," he said. "And I feel very, very good about where we are in that process. We are very, very close – probably there – to being a second-generation firm and not just a first-generation firm."

Phillips was one of a group of four that founded JPMS Cox in 1987. "We have seven partners at this point, so we’ve added a net of three, but we’ve also retired two of my original partner group."

However, the wave of retiring baby boomers has also presented accounting firms with opportunities.

"In working with our clients on their family business succession planning, I’ve found the wave of baby boomer retirees is having a noticeable effect on succession plans for companies," Frost’s Richardson said. "Not only will the baby boomer retirement phenomenon result in a loss of knowledge from experienced professionals, but it will also force businesses to undertake workforce development initiatives to smooth the transitioning process."

Richardson referred to a 2005 survey by Robert Half Finance & Accounting that showed a majority of executives were concerned about losing experienced workers in 2010-15. Almost 60 percent of the executives said that "implementing a succession plan" was the main step to take to lessen the impact of baby boomers’ departure from the workforce.

Frost’s clients share this concern, Richardson said, and the firm has been working to help its clients with succession planning.

As for his firm in particular and the accounting industry in general, Richardson said that "the baby boomers’ mass retirement will provide new opportunities for acquisitions or mergers of other accounting firms. Additionally, the dwindling workforce will also provide substantial opportunity for the younger professionals working in the accounting industry."

(To learn about BKD’s policies regarding mandatory retirement and partners’ compensation, see sidebar.)

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