With Thanksgiving recently behind us here in the United States, I think is well overdue that we all “give thanks” for the accounting professionals who work diligently to make sure that the financial data that we all use is reliable and trustworthy. And below I hope I can convince you why it is more important than ever that we collectively increase our level of appreciation for accounting professionals.
Why I chose to be an accounting professional
I am an accounting professional - after receiving my accounting degree from the University of Iowa (Go Hawks!) and passing the CPA exam, I eagerly joined the workforce as the Accounting Manager at a small publisher of financial and project management software. While I have transitioned to an accounting technology consultant, I continue to work with accounting professionals on a daily basis and value the contributions these individuals. My transition into my current position is a perfect example of how one's accounting background can be leveraged to grow into other related opportunities.
Back in the 1990s, as I was trying to figure out my career path, I recognized an elevated level of esteem placed on those individuals who were able to get through the rigors and challenges of an accounting program. For any student studying business, a job at a “Big 6” accounting firm (I am aging myself!) was viewed as an outstanding path for developing skills and advancing toward a successful long-term career in business. While there have always been some negative stereotypes and perceptions of accountants, those did not overwhelm the positive stereotypes and perceptions of accountants – that they were intelligent, hard-working, disciplined, and capable of applying their knowledge to help an organization implement and maintain tight controls over the business processes and financial reporting that is required in order to make a business operate smoothly.
We currently face a shortage of qualified accounting professionals
Unfortunately, since my entry into the workforce, I have witnessed a gradual erosion in the perceived value placed on accounting professionals and the importance of their roles within an organization. This has led to the current state of the industry, which as many others have noted is in a “near-crisis” state. There simply are not enough available qualified accounting professionals to fill all of the positions available. For example, according to CPA Practice Advisor, accountants have recently been one of the most sought after positions by corporate hiring managers, both for full-time positions and contract positions. Where a small to mid-sized organization may have once had a CFO/VP of Finance, a Controller, an Assistant Controller, and one or multiple Staff Accountants who were all well-equipped to ensure that tight controls were placed on business processes and financial reporting, it is much too common that a small to mid-sized organization may rely on a single person with the accounting skills required to successfully enforce controls and produce accurate period-end financial statements. Today, I work with many small and mid-sized businesses where this decline in allocated accounting resources has led to many situations where financial statements and bank accounts are left unreconciled, inventory values are inaccurate, or sales information is not usable.
This lack of internal accounting skills should be very troubling to all of us. You certainly are impacted if you own or manage a business, but every person who owns shares in a publicly traded company is also impacted as you rely on the company’s financial results to decide when to buy, sell, or hold. Additionally, “data” (and “big data”) has become so crucial to how businesses operate, without tight controls on processes and integrity of the data being used, this data becomes less and less valuable. The old saying “Garbage In, Garbage Out” truly applies today more than ever.
We need to understand HOW we arrived at this point. According to the Wall Street Journal, over 300,000 accountants left the profession between 2019 and 2021 – a 17% decline in the total talent pool. Then, assuming we can agree that this talent gap exists, we next need to understand WHY this talent gap exists.
Why there is a shortage of accounting professionals
I believe that the primary cause of a reduction in skilled accounting professionals is a general lack of appreciation for accounting professionals and the value they provide to an organization. This lack of appreciation is primarily expressed through the lower compensation that is offered for accounting-related positions, especially when compared to the compensation offered for some of the more currently popular technology-related or data analytics careers.
I have experienced first-hand the continued devaluing of accounting professionals by executives within the business community. This mindset typically manifests itself via an organization that is unwilling to pay a salary that is justified by the years of experience and advanced skills that a qualified accounting professional would bring to the organization. Recently, I watched an interview on a major financial news network in which the CEO of a Fortune 500 Company explained how AI was expected to help the company improve their operations by automating tasks currently handled by “low-skilled resources, such as accounting roles”. Enough already!
I am certainly not arguing that there are some positions where technology can provide great value and reduce the need for the same number of accountants as decades ago, but this has gone much too far. It is time to change the current perception that accounting is a “low-skilled” position and return to a place where accounting professionals are more highly valued for their significant contributions to the overall success and growth of a company.
Why we must address the shortage of accounting professionals
Why is this so important? First, because over the last several years, the quality and reliability of financial data within some businesses has continued to deteriorate to the point where for some organizations the financial statements have been rendered mostly meaningless, and certainly unreliable. We continue to see in the news major publicly traded companies who cannot produce a reliable fully audited financial statement. While today’s technology can improve the efficiency and accuracy of processing data and financial entries, qualified accounting professionals are still required to validate and enforce processes and controls on financial transactions. Second, we have all been continually bombarded with messaging around how critical data analytics is in today’s business environment in order to be able to utilize data, stay competitive, and ensure the long-term success of the business. And at the same time, students and young professionals are encouraged to pursue careers in technology and data analytics instead of accounting. Very often the general justification for this is because “accounting is backward looking” whereas data analytics is used as a forward-looking tool that can help an organization with “how to succeed into the future”. This argument is representative of the type of thinking that must be changed if we are to reverse these recent trends.
How to address the shortage of accounting professionals
This lack of appreciation for accounting professionals has directly led to diminished compensation growth for accounting professionals over the past two decades, especially when compared to the compensation levels available in today’s economy for data analytics or other technology-related professionals. In order motivate young professionals to pursue a career in accounting, there must be an increase in compensation levels for traditional accounting roles so that they are comparable to these other data or technology-related roles. Without the presence of competent and trusted accounting professionals to stand behind the reliability of the financial statements, the value of the information is greatly reduced, all too often to the point of unreliability.
A secondary reason for the lack of qualified accounting professionals was the perhaps well-intentioned, but ultimately ill-conceived decision by the AICPA in 1998 to increase the minimum college credit hours required to sit for the CPA exam to 150 hours (or effectively the equivalent of a Masters degree). This change has also been a significant contributor to the reduction in the number of individuals who even attempt to pass the CPA exam - and has more generally reduced the number of people who decide to choose accounting as their profession. According to the CPA Journal, while the global economy continues to grow each year, between 2010 and 2021 the number of candidates sitting for the Uniform CPA exam has dropped by a significant 36%!
I myself was lucky enough to still have the opportunity to pass the CPA exam prior to these new requirements. My own personal reality was that I had no desire (or money) to continue my education for another year, so had this current minimum requirement been in place when I was graduating with my bachelors degree, I very likely would have chosen another major or career. One of the most compelling features of an accounting degree for many people was that it afforded all individuals with an opportunity to realize a solid career without the requirement of having an advanced degree. And for those individuals who came from a low-income or even mid-income household, the accounting profession held great promise as a great way to build long-term wealth. My fear that this option does not exist today to the same degree that it did in the past.
While I fully acknowledge that there are others who are much more well-qualified to fully address this issue than me, one easy step that can be taken to inspire more students to choose accounting as a profession is to revert the minimum college credit hour requirement back to pre-2000 levels so that more individuals may decide to choose a career in accounting.
Impact of AI?
Finally, we must consider the impact of AI on the accounting profession. We are at the very early stages of integrating AI into the standard business processes that have existed for generations, and the truth is that we do not yet fully understand the total impact AI will have on the accounting profession (as well as many others). But I believe that AI will ultimately serve as an additional tool that can be used by accounting professionals to provide greater efficiency and improved insights into the financial data that they produce. Just as computerized general ledger systems or the proliferation of spreadsheets did not eliminate accounting professionals and instead become tools that were used to improve the profession, so will AI become another tool used by accounting professionals to improve the quality of their work.
Summary
There has been an erosion in the perceived value provided by accounting professionals, and this has been caused by multiple factors. The diminished appreciation for accounting professionals must be reversed and we must increase the value we assign to accounting professionals.
Appreciation must be accomplished by properly compensating the most talented and experienced accounting professionals for the significant value they bring to ensure that the financial data that is regularly relied upon by management teams, ownership groups, and shareholders is accurate and trustworthy. Accounting professionals bring more to the table than just a set of financial statements. They also provide peace of mind, historical analysis, detailed insights, and recommendations for how to best prepare for the future. It is accounting professionals who provide the trustworthiness, stability, reliability, and assurances that are essential to make tomorrow’s decisions with confidence and conviction.
So let’s all give thanks!
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