The Shortage of CPAs Gets Front Page Attention in the Chicago Tribune: Marc’s Response
Marc Rosenberg, CPA / Oct 2, 2024
On September 22, 2024, the Chicago Tribune featured a front-page piece about the dire shortage of CPAs. This article brought the problem to the attention of a large and probably previously unaware audience.
I was so moved by the piece that I immediately wrote a “letter to the editor” response. Within 15 minutes, the managing editor responded that he liked the piece, and it would be printed within the week.
Highlights of the Chicago Tribune op-ed
“America’s most famously boring profession is in trouble.”
“Addressing the [CPA] shortage means changing the time-consuming path to becoming a CPA without lowering the standards…”
“Consulting, investment banking and other high-paying finance jobs are competing for the same up-and-coming number crunchers who used to pursue accountancy.”
“Approximately three-fourths of CPAs today are expected to retire within the next 15 years.”
“The [CPA] industry has struggled for years to address the shortage.”
“The [CPA] profession is made up of well-organized, thoughtful people who should have solved this problem by now. The time has come for aggressive action; CPAs need to save CPAs, soon.”
Chicago Tribune subscribers, click here to read the article.
My letter to the editor
I was both shocked and elated at your op-ed in the September 22, 2024 edition of the Chicago Tribune. Shocked to see front-page attention to the ominous shortage of CPAs and elated that you brought this to your readers’ attention. Allow me to offer some additional perspective.
Like most industries, a small number (roughly 1%) of all CPA firms represent a disproportionately high percentage of the industry’s revenue. These larger firms focus more keenly on audits and publicly traded companies than all the other firms. The 99% group, which has been our long-term focus, is quite different from the larger firms. Yes, they also perform audit, accounting and tax services. But they are their clients’ most trusted advisors in all matters, both business and personal. Most business owners look forward to having dinner with their CPAs as much as with their closest friends.
The CPA profession has shot itself in the foot in several ways:
- In 1988, the profession began requiring a fifth year of college in order to become a CPA (the implementation spanned over 20 years). This was triggered by a misguided notion that CPAs needed a more comprehensive knowledge of areas including technology, ethics, oral and written communications, business law and other non-accounting areas. This additional knowledge would be more on a par with the schooling lawyers and doctors receive. But it has become abundantly clear that these additional hours (a) have not made accountants meaningfully more knowledgeable than those with undergraduate degrees alone, and (b) have been a direct and clear deterrent to those who thought about majoring in accounting. This fifth-year requirement is one of several reasons the number of accounting majors dropped 17% from 2012 to 2022, and the number of CPA exam candidates dropped 24% between 2016 and 2022. Industry experts expect these figures to be even worse when updated.
- Until 10 or 20 years ago, an entry-level position with a CPA firm was one of the highest-paying jobs available to those with an undergraduate degree. Today, it is barely average. Students are repeatedly saying that one of the reasons for not majoring in accounting is the low pay compared to other majors. This can only be explained by greed and short-sightedness. CPA firm revenue and profits increase every year, dramatically since the onset of Covid. Partners’ (owners’) salaries at typical local firms (say those with 40 or more personnel) average roughly $600,000. It’s shameful that CPA firms enjoying so much prosperity have allowed their staff’s salaries to become mediocre.
- The CPA examination, a very difficult exam requiring extensive post-graduate preparation, has increasingly become a deterrent to students considering majoring in accounting. No one is suggesting making the exam “easy.” But our profession must keep in mind what all CPAs know: upwards of 80% of what they have learned to do their work, even the most complex work, came from their experience with clients and mentors, dwarfing what they learned in college. During their career, most CPAs will never use a substantial portion of the content of the CPA exam.
- Many staff at CPA firms must wait until their mid-to-late 30s before making partner, the ultimate measure of success for many staffers. It’s not difficult to understand why ambitious, highly talented staff are unwilling to wait that long for the recognition and compensation they deserve.
The accounting profession has done very little to change the bland, nerdy, boring image of a CPA.
- For years, I have spent a hundred or more hours a year mentoring college students. How many CPAs can say that? Shouldn’t partners earning $400K to $1M or more a year devote at least 100 hours a year reaching out to impressionable high school and college students to open their eyes to an exciting career in accounting?
- The CPA profession needs to invest in a decades-long, multi-faceted, multi-million-dollar program of promoting a career in accounting. Television promos. Hiring writers to pen page-turning novels where CPAs save the day. And other campaigns that the best Madison Avenue geniuses can create.
The Roman Empire fell. Great Britain became a second-tier world power. The horse and buggy gave way to motorized transportation. I’m not ready just yet to predict the demise of the CPA profession, but I’m not happy with the path we are on.
6 Comments
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Wow – this should wake up some folks at the AICPA! Thanks for writing the paper!
I have to say, I have been preaching about the 150 hour rule for at least years. Both the AICPA and VA Society have given multiple reasons why it’s so great. Only in the last year, has the tide begun to turn. My belief all along is leadership designed this to be a barrier to entry into the profession to raise prices. Well guess what – it worked, and we have no one to blame but oursevles.
I received an email from the CEO of the VA Society yesterday saying” we are looking for alternatives to the 150 hours and we aren’t waiting on the AICPA…” Goodness gracious Mark, now they are trying to say they are the savior’s?!?! Such hypocrasy
Great insights Mark, especially #3. And, CPA salaries are a well kept secret among CPA candidates and the general public. 5 year requirement was ego driven and has done nothing good. Keep up the good work.
Wow- this is a real punch in the face to CPA firms! I share many of these opinions, especially the 150 hour requirement, but my experience is that many leaders in the profession refuse to acknowledge this. The leadership of the AICPA is praised constantly for its leadership in improving the CPA brand, while at the same time, many states are making moves to undermine the 150 hour requirement. It’s not just CPA firm leaders and owners, but the AICPA itself shares responsibility for the decline in our profession.
And the latest trend now is for non-CPA’s to take over our profession through the blitzkrieg of private equity takeovers of major firms. In a sense, CPA’s are supposed to be the watchdog of the financial markets. But the way things are going, we will be nothing more than active participants in the markets, managed by Wall Street executives focused only on increasing our profits and stock prices.
I mostly agree with you, Marc. The only question is whether some of these issues can really be effectively addressed, and whether they really need to be addressed. I’ll speak to a couple where I have slightly different views: attractiveness of the profession (which I think will be a heavy lift), and earning potential (probably just need better communication).
Certainly a huge issue is whether we can ever really make the profession sexy. Compared to other options like computer science, I’m not sure that we can ever really compete, at least not against the glitz and glam of the possibilities there.
As a personal anecdote, a few years ago at one of my son’s tennis matches, the athletes from the other team were all talking about their plans for college. What were they all talking about? Which schools had the best computer science programs. They must have gone on for a solid hour debating various schools, and talking about the billions they were going to make in tech.
A large chunk of the most wealthy people in the world come from tech. And even if you’re not on the list of the 100 richest in the world, a slice of those that go along for the ride can make silly money with stock options. There’s just too much cash being poured into startups, and high-flying tech shops with nosebleed valuations. Just about everyone can rattle off a long list of famous tech entrepreneurs, and their ranks seem to grow every day. By contrast, how many famous accountants can the average American name? For that matter, the accounting profession doesn’t mint billionaires. While we have plenty of modest millionaires and deca-millionaires, we’re just never going to be able to compete with the crazy cash and excitement of changing the world that the tech scene brings.
The good news is that there seems to be a lot of tech people looking for work these days, as a lot of those shops overhired during the pandemic, and are now cutting back. Many of those workers are struggling to find jobs. I don’t know many accountants who are struggling to find work. I will concede that a few of the bigger CPA firms have announced targeted layoffs, but those accountants are finding work pretty quickly. From what I’m reading, a lot of the laid-off tech workers are going months or sometimes years without finding work. And when they do find it, often they have to take a big step down. So in some ways, those trends may be starting to turn back in our favor.
While I’m not predicting a recession, one is bound to happen sooner or later. Often that leads to a recognition that safe and boring can be a lot more exciting than changing the world but unemployed. It’s been a while since the great recession, which is the last real downturn in the economy, setting aside the very brief COVID downturn. Someday, when a recession arrives, students will come back to accounting as a great career path, when they realize that there are too many people chasing tech dreams compared to the opportunities.
By way of analogy, it almost might be like the current surge in the trades amongst Gen Z. For a long time, the trades were old and dying. Now, the young are getting into it, in part because the pay has gotten a lot better. Being a plumber isn’t necessarily all that sexy, but the opportunities are there now. I suspect the pendulum will similarly shift back in our direction in the coming years.
On the other hand, when it comes to compensation, accountants make good money. While starting pay isn’t going to turn many heads, annual raises are substantial, often around 10% or more. These days, it’s common for CPAs with a few years of experience to be knocking on the door to 6 figures, and it keeps getting better from there. Within a decade in the profession, it’s common to be well into 6 figures. Obviously not dock worker money, but still a very nice compensation level. While many other professions might start a little higher right out of college, within a few years, most CPAs have caught up, and from there, it’s common for CPAs to blow many other professions.
My own experience is pretty typical. My brother became a doctor, while I became a CPA. In the beginning of his career, he out-earned me by a wide margin. After several years, I caught up. And now the numbers have flipped pretty dramatically, and I have out-earned him by a WIDE amount for the last decade. Plus he spent a lot longer in school and in training. Plus plus plus he has the pressure of saving people’s lives every day!
Bottom line for me is I think the profession is going to be just fine. We could probably stand to lose the 5th year requirement, if that’s really an issue keeping people from choosing accounting. And we could probably do a better job of advertising the economic possibilities once you’ve been in the profession for a few years. But those seem like relatively modest changes at the margins, rather than dramatic sea changes.
Yes, the CPA exam includes topics that may not be frequently utilized in day-to-day practice. While some may argue that these topics are unnecessary, I firmly believe they play a critical role in ensuring the integrity and competence of our profession.
The CPA exam is designed not only to assess a candidate’s knowledge of accounting principles but also to evaluate their commitment to the comprehensive understanding of the field. By covering a wide range of topics—some of which may seem obscure or rarely applied in practice—the exam ensures that candidates possess a robust foundation. This foundation is essential for a profession that is constantly evolving due to changes in regulations, technology, and business practices.
Besides, if the CPA exam was made easier, I’d have to stop telling the joke that CPA stands for Couldn’t Pass Again.
Thomas- you make great points. I’m all about keeping the bar high on professional standards and policies. But as my dear mother once said, “everything in life is a matter of degree.” The CPA profession is faced with a horrific shortage of accountants. One of the reasons for this is that majoring in accounting has become increasingly unappealing to college students due to (a) low starting salary compared to other majors, (b) the 150 hour rule and yes, (c) the CPA exam, including the rigorous post-graduate study necessary to pass the test, is seen as too difficult and burdensome. We as CPAs have two courses of action: ONE is to do nothing, keeping the standards high on the barriers to entry and watch the supply of accountants continue to decline, threatening the viability of the CPA profession. Or TWO, ease up on these barriers and reverse this awful trend of college students finding a career in accounting unappealing. A critical caveat to the second course of action: The operative words are “ease up,” not making the exam “easy.” We just need some tweaking. Thanks for taking the time to give us your comments.