Rita Keller, an award-winning and widely respected voice to CPA firm management, is uniquely positioned to help CPAs and their teams face rapid and significant change.
“Out of your vulnerabilities will come your strength.” – Sigmund Freud
The following is a press release I received from the AICPA. It is much longer than my normal post but I think it is important for firm leaders to read. Read it, then think about it and begin making plans.
Public Accounting Firm Hiring Model Shifts: AICPA ‘Trends Report’
Undergraduate accounting enrollments were second highest on record in 2017-2018
AICPA is working with key stakeholders on programs to strengthen pipeline of talent entering the profession
NEW YORK (Aug. 12, 2019) – Rapid advances in technology continue to impact the accounting profession. As CPA firms shift their hiring models to focus more on technology skills, non-accounting graduates now comprise 31 percent of all new graduate hires in public accounting. That’s an increase of 11 percentage points from 2016 to 2018, according to the “2019 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” released today by the AICPA.
The biennial report, published since 1971, provides statistical projections and expectations based upon university responses for the 2017-2018 academic year and firm responses for the 2018 calendar year. This data provides a snapshot of the profession, set against the current economy, and the ability to forecast future trends.
“Increased demand for technology skills is shifting the accounting firm hiring model. This is leading to more non-accounting graduates being hired, particularly in the audit function,” said Barry Melancon, CPA, CGMA, AICPA president and CEO, and CEO of the Association of International Certified Professional Accountants. “CPAs have an unmatched reputation for trust and integrity, earned through decades of working in the public interest. However, to play this vital role in the future will require an increased focus on technology. It is incumbent upon the profession to ensure accounting graduates and newly licensed CPAs have these skills and expertise needed to support the evolution of the audit.”
One of the ways AICPA is seeking to address this trend is through the CPA Evolution project, in partnership with the National Association of State Boards of Accountancy. This project strives to ensure that CPAs continue to have the competencies needed to support an accounting profession that plays a critical role in protecting the public interest.
The percentage of new accounting graduate hires assigned to audit-related work is increasing. This area now comprises 56 percent of new accounting graduate hires. That’s up four percentage points from 2016 and nine percentage points from 2014.
Overall CPA firms hired about 11 percent fewer accounting graduates in 2018 than they did in 2016, and nearly 30 percent fewer than in 2014. As firms continue to embrace technology and evolve their approach to the audit, they are seeking employees with data science and data analytics skills. They are largely filling those needs with non-accounting graduates, though there is anecdotal evidence from firms to suggest that some of this technology-specific hiring is occurring at the experienced hire level.
On the supply side, enrollments in undergraduate accounting programs stand at the second highest level on record after pulling back slightly from their all-time high in 2015-2016.
Nearly 208,000 projected students were enrolled in undergraduate accounting programs during the 2017-2018 school year, topping 200,000 for the fourth Trends report in a row. More than 33,000 projected students were enrolled in master’s programs in 2017-2018. This reflects a six percent decline from 2015-2016 but remains comfortably above any level pre-recession. Declines in graduate student enrollment is due largely to more students opting to enter the workforce in lieu of pursuing an advanced accounting degree.
There were nearly 55,000 projected bachelor’s and more than 21,000 projected master’s degrees earned in 2017-2018. This reflects a decline of four percent each from the previous report. However, the combined 76,542 degrees remains above pre-recession levels.
After a significant increase in the number of new CPA Exam candidates in 2016, largely attributed to the new version of the exam launching in 2017, the number of candidates and newly licensed CPAs in 2018 dipped to the lowest level in 10 years. CPA candidates fell 7 percent to 36,827, while newly licensed CPAs fell 6 percent to 23,941.
“The AICPA and other stakeholders in the profession are focused on anticipating the changes shaping our economy and ensuring newly licensed CPAs have the skills they need to serve as trusted advisors to their clients,” said Yvonne Hinson, CPA, CGMA, Ph.D., AICPA Academic-in-Residence, Academic & Student Engagement. “As the pace of change increases, the Institute has been accelerating our work on a number of profession-wide initiatives that attract, inspire, and engage the next generation of CPAs.”
In addition to CPA Evolution, some of these initiatives include:
A CPA Exam practice analysis focused on the impact of technology and the critical skills for newly licensed CPAs. An exposure draft and invitation-to-comment will be published in late December.
Accounting Accreditation Practitioner Engagement Program which places CPA practitioners on AACSB accounting accreditation teams and committees.
Accounting Doctoral Scholars Program provides funding for CPAs to obtain their doctorates and teach.
Accounting Program for Building the Profession trains high school educators to teach a college-level accounting class.
The Institute is working with organizations to increase the likelihood that racial and ethnic minority students consider accounting early in their career decision-making process. AICPA scholarships and programs such as the Accounting Scholars Leadership Workshop help ensure accounting students have a meaningful and successful experience as they work to earn their CPA license.
The report found that racial/ethnic diversity has increased, with the highest percentage of non-white enrollees to date. Enrollment by gender is nearly even at both the bachelor’s and master’s levels.
I know that most of you are already fairly deep into this service. However, I still talk to many firm leaders who are taking a “wait and see” attitude. Others still do not have or know about, the technology it takes to proceed.
Now, if you are offering CAS services you can set yourself apart from others with the AICPA and CPA.com certification in CAS.
You earn the certification in two parts. One, by attending the Digital Client Advisory Services Roadmap Workshop and two, with Client Advisory Services Self-Study. It gives you a total of 29 CPE credits.
Learn more about it here. Visiting this site will also give you extensive information about the CAS Workshop.
Baby steps count, too, as long as you're moving forward.
“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin
As the title says, be aware. Maybe I should also add, beware!
It has always been in the back of your mind that when the time comes, you will fund your retirement by simply merging your firm “up” into a larger organization. After all, the M&A market for CPA firms has been very hot for several years. No need to worry because you have no one in your own firm that has the skills, ambition, and desire to buy you out.
Beware, because that is beginning to change dramatically. The larger firms are not so eager to acquire another compliance accounting firm. They are seeking to make their firm more diverse and to bring in companies offering complementary services such as technology consulting, technology security and data analytics.
Here’s an example from a firm I have always admired, LBMC in Nashville:
LMBC, a leading accounting and consulting firm in the US Southeast, has acquired Nashville-based Think Data Insights, a national data analytics company.
“If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But if each of us hires people who are bigger than we are, we shall become a company of giants.” – David Ogilvy
The accounting profession traditionally has not been very open-minded about hiring remote workers. I believe that is changing rapidly because of the scarcity of talent. Even some of my smallest CPA firm clients have people working from other parts of the country and even the world. So can you.
You continue to be challenged to find talented people. If you remove location as a limiting factor, it gives you access to all the talent in the world. It also gives you the opportunity to create more diversity and allows talented people to live where they want.
Per a great article via HBR, you need to assess whether the person is independent, passionate about their work, and collaborative. They need to be flexible and willing to travel and know that the firm headquarters is still where the action takes place. It is also important for you to do more intense due diligence when hiring
Read the article and make the decision to be more open-minded about hiring remote workers.
“There is nothing so useless as doing efficiently that which should not be done at all.” – Peter F. Drucker
I love the above quote from Drucker. It certainly applies to some of the work inside a CPA firm.
I have observed that in most CPA firms, there is a culture of busyness. It creeps into how you talk and how you act or react.
You need to do this but you get distracted by that. Just having to quickly check your email turns into an hour or two. You become focused on the immediate rather than the important.
The author states: “I largely blamed myself for not making the time to do more ambitious, high-priority work, or managing to get it all done within reasonable hours and have more time for life. It’s only recently that I’ve begun to see how I was trapped in a busyness tunnel.”
Here’s an excerpt that explains the Busyness Paradox:
Here’s how the busyness paradox works: When we’re busy and have that high-octane, panicked feeling that time is scarce — what one participant called the “sustained moment of hecticness” through the workday — our attention and ability to focus narrows. Behavioral researchers call this phenomenon “tunneling.” And, like being in a tunnel, we’re only able to concentrate on the most immediate, and often low value, tasks right in front of us. (Research has found we actually lose about 13 IQ points in this state.) We run around putting out fires all day, racing to meetings, ploughing through emails, and getting to 5 or 6 PM with the sick realization that we haven’t even started our most important work of the day.
I am sure much of this sounds all too familiar to all of us who have worked, or who are currently working, inside a “busy” CPA firm! It is a serious issue in the CPA profession and one that drives young workers away from public accounting.
Take a few minutes to read the entire article. The author gives you “3 Ways to Break Your Employees Out of the Busyness Paradox.”
“Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like.” –Will Rogers
Many CPA firm partners do manager work, client service manager work. Many CPA firm partners do internal management/administrative work, firm administrator/COO work.
Don’t get caught in these traps.
Some partners use management/administrative work to fill idle time when they should be:
Bringing in new business
Training/Mentoring/Sponsoring younger team members
Building stronger client relationships
Your COO/Firm Administrator should be continually taking non-billable work away from the managing partner and the other partners.
Here’s how much money a COO could save partners annually. The BIG issue is, the partners must use the saved hours to create revenue!
It happens daily in accounting firms. Younger, less experienced staff members hesitate, and even fear, to ask what they consider a dumb question.
Yet, one brave soul will often ask it and then everyone nods their head and admits that they wondered the same thing. I love people who ask the dumb question.
That’s why this quote means so much to you as you build your career in accounting:
“No one is dumb who is curious. The people who don’t ask questions remain clueless throughout their lives.” – Neil deGrasse Tyson
Beginning this week, no matter how many or how few years of experience you have – be brave, ask questions.
What makes us human, I think, is an ability to ask questions.
