Tackling the Accountant Shortage in the USA

Authored By: Garima
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The purpose of this blog is to provide a structured framework for understanding and addressing the accountant shortage in the USA in 2024. It aims to clarify what the accountant shortage 2024 is, its severity, and the implications it has on businesses, the economy, and the accounting profession.

To support the shortage claim, it’s worth noting that in just one year, the number of accountant jobs increased from 1,449,800 to 1,538,400. This level of growth in such a short time is undeniably remarkable in any profession.

Accountants are highly skilled in managing the economy of any nation, but in the last few years, the United States has added over 126,500 new positions in this field. As a result of the accountant shortage, more than 40% of jobs have seen delays in financial reporting.

But the question is, why does a sudden shortage of accountants arise? 

What Suddenly Happens That Causes Accountant Shortage in the USA?

• Increase in Retirement: 75% of CPAs reached retirement age in 2020. The average age of a CPA in the US is 52–53 years old. 
• Less Enrollment in Accounting Graduates: Enrollment in accounting programs has declined, with 33% fewer first-time candidates sitting for the CPA exam in 2021 than in 2016. 
• Change in Curriculum & Tough Examination: Extended education requirements for CPAs and unattractive salary packages can make accounting less appealing. 
• Accountants moving to other roles: Experienced accountants are leaving the field to work in finance and technology. 
• Frenzy Resignation: Some accountants left during the Great Resignation. 
• Wage packages Do Not Woo Accountants: A public accounting associate should expect to start with an average starting salary of $59,750, according to Robert Half’s 2022 Salary Guide. As one advances to senior positions, compensation increases are expected to be minimal.

NASBA’s Perspective on Accountant Shortage in USA

According to the NASBA National Association of State Boards of Accountancy, there has been a decrease in the number of accounting graduates taking the CPA exam in recent years. In addition, there is a 17% decline in the number of accountants and auditors in the US. Furthermore, nearly 75% of CPAs will reach retirement age within the next 15 years

Low salaries, mundane tasks, burnout, and the threat of new technology

Additionally, NASBA also shed light on the accountant shortage report and related industry data. Check out the summary of their report in the later section. 

Accountant Shortage in the USA

• In 2022, there were approximately 190,000 open accounting positions in the United States.
• The shortage is expected to grow to over 200,000 by 2024.
• Driving factors include baby boomer retirements, increased demand for accounting services, growing complexity of tax codes and regulations, and emerging technologies like AI and blockchain.

Recommendations to Address the Shortage

• Simplify licensing processes for foreign-trained accountants.
• Expand the use of apprenticeships and alternative training programs.
• Promote accounting as a career choice, especially for young people and diverse populations.
• Invest in accounting education and research.

Industry Data

• The U.S. Bureau of Labor Statistics projects a 7% growth in employment of accountants and auditors from 2020 to 2030.
• The global accounting services market is expected to grow from $574.5 billion in 2020 to over $734 billion by 2025, reflecting the escalating need for accounting expertise amid evolving financial landscapes and regulatory standards.
• The median annual wage for accountants and auditors in May 2021 was $73,560.
• The accounting profession boasts diversity, with women and minorities significantly represented.

Challenges and Mitigation Efforts

• Challenges include long working hours and a demanding work-life balance.
• The cost of accounting education can be a barrier for some students.
• Accounting firms and organizations are addressing the shortage by offering flexible work arrangements, signing bonuses, and providing tuition reimbursement programs.
• Promotional efforts target young people and diverse populations to diversify the profession.

From the aforementioned data, we can conclude that the accountant shortage in the USA refers to a significant and persistent gap between the demand for qualified accounting professionals and the supply of available talent to meet this demand. 

The shortage isn’t solely about the absolute number of accountants but also about having enough professionals with the right skills and qualifications to fulfill the evolving needs of businesses, organizations, and government agencies. 

From the above description, we may ask one question, why does this scarcity of accountants arise in the current scenario? Let’s find out its answer in the below section.

Factors Contributing to the Accountant Shortage 2024

The 2024 accountant shortage is driven by increased demand, baby boomer retirements, tech skill gaps, stringent certification requirements, work-life balance issues, and a lack of interest from younger people, leading to a projected 140,000 accountant shortfall by 2027.

There is an acute lack of accountants in the United States. According to the Bureau of Labor Statistics (BLS), there will be a shortage of about 200,000 accountants by 2023-24. A multitude of factors are contributing to this shortage, such as

• Increased Demand for Financial Expertise:: As businesses become more complex and the economy moves into a growth phase, there will be a greater demand for accounting services. Accountants are needed to help businesses with a variety of tasks, such as tax preparation, financial reporting, and auditing.
• Enrollment in accounting programs is declining: In recent years, fewer students have been enrolling in accounting programs. This is partly due to the misconception that working in accounting is uninteresting and unglamorous. That being said, accounting is a very fulfilling career with excellent earning potential and stable employment.
• Retirement of Baby Boomers: Approximately 10,000 baby boomers are retiring daily in the United States, affecting various sectors, including accounting. The accounting workforce is aging, and many accountants are nearing retirement age. This demographic shift is contributing to a projected shortfall of 140,000 accountants by 2027.
• Regulatory changes: As governments around the world enact new financial regulations, accountants need to keep up with the latest changes. This requires ongoing training and education, which can be time-consuming and expensive.
• Competitive Salaries in Other Fields: With starting salaries in tech and consulting sectors often surpassing those in accounting by 20% to 30%, talented individuals who might have considered accounting are choosing alternative career paths.
• Lack of Awareness and Interest: A survey by the AICPA found that only 4% of high school students express interest in pursuing a career in accounting, highlighting a lack of engagement with the profession among younger generations.

The accountant shortage is a serious issue for the United States economy. Accountants are essential to the smooth and productive operation of businesses. A shortage of accountants could make it more difficult for businesses to grow and create jobs

Also read: How Much Should Accounting Cost a Small Business?

Impact of the Accountant Shortage in the USA

Owing to the scarcity of qualified accountants, companies of all kinds are having difficulty hiring them. The shortage is putting a strain on businesses’ auditing capabilities and accounting functions. Furthermore, businesses are finding it challenging to comply with intricate tax laws and regulations due to the shortage of accountants.

Here are some specific data points from the BLS and the American Institute of Certified Public Accountants (AICPA) about the accountant shortage in 2023-24

• The projected job growth rate for accountants and auditors is 4%, which is faster than the average for all occupations.
• The median annual wage for accountants and auditors is $73,550, which is higher than the median wage for all occupations.
• The job market for accountants and auditors is expected to be very good in the coming years, with job openings projected to exceed the number of qualified job seekers.

How much of a threat is the talent shortage to the accounting profession?

The talent shortage in the accounting profession poses a significant threat. Several factors contribute to this issue, including less competitive starting salaries compared to fields like finance and technology, stringent entry requirements like the 150-hour rule for CPA licensure, and perceptions of poor work-life balance​ (IFAC)​.

Additionally, the pandemic has exacerbated the pre-existing conditions of high stress and long hours, leading to burnout among accounting professionals. This, coupled with an aging workforce and the retirement of baby boomer CPAs, intensifies the shortage​.

Data from a recent Bloomberg Tax analysis highlighted a 17% drop in employed accountants and auditors from a 2019 peak, indicating a worsening gap as older professionals retire without sufficient new accountants to replace them​.

Addressing this shortage requires innovative solutions, including flexible work arrangements, improved pay, and possibly rethinking the extra educational requirements that deter potential entrants into the profession​.

Source: CPA Journal & IFAC

Solutions to the US Accountant Shortage Provided by BLA and AICPA

The accountant shortage is a significant challenge for the United States economy. However, there are a number of things that can be done to address the shortage, such as:

• Promoting accounting as a career: Colleges and universities can do more to promote accounting as a rewarding and lucrative career.
• Making accounting education more affordable and accessible: Accounting education can be expensive, which can deter some students from pursuing a career in accounting. Colleges and universities can offer more scholarships and financial aid to accounting students.
• Encouraging experienced accountants and students to stay in the workforce: Employers can offer incentives to experienced accountants to stay in the workforce, such as flexible work arrangements and opportunities for professional development. For students to pursue accounting careers and for businesses to invest in training and development programs for accountants
• Pay Accountants a Competitive Salary: Accounting firms and businesses can offer competitive salaries and benefits to attract and retain accountants.

By addressing these challenges, the United States can ensure that it has the accountants it needs to support its growing economy.

This shortage can encompass various fields of accounting, including public accounting, corporate finance, auditing, tax preparation, and management accounting, by hiring a virtual accountant. 

Worth Exploring: How Virtual Assistants Can Help Businesses in the Current Rundown Economic Situation

Accounting Shortage in the USA: Learn How Invedus Can Help

How Offshore Virtual Accountants Can Take Your Financial Responsibility And Manage Your Financial Resources

Offshore virtual accountants handle financial responsibilities and resource management

These Virtual accountants can help you and your organization fill the gap and fill accountant shortages. 

They can play a vital role in the U.S. economy by ensuring financial integrity and facilitating informed decision-making. In addition, they will also take responsibility for your financial record-keeping, reporting, auditing, tax compliance, and strategic financial planning.

In addition, these offshore accountants are the pillars of the economy who contribute to the stability and transparency of financial markets, which is essential for attracting investments and maintaining economic growth. They also support regulatory compliance, making sure businesses adhere to legal and accounting standards.

Furthermore, offshore virtual accountants can efficiently handle financial responsibilities and manage financial resources. They provide remote accounting services, which include:

Cost-Effective Solutions: Offshore virtual accountants often offer cost-effective services compared to in-house accountants, saving businesses money.

Expertise and Skills: They bring expertise in financial management, tax compliance, and accounting practices, ensuring accuracy and compliance.

Financial Analysis: Virtual accountants analyze financial data, helping businesses make informed decisions and strategize for growth.

Timely Reporting: They provide timely financial reports, enabling businesses to monitor their financial health and make adjustments as needed.

Scalability: Virtual accountants can scale their services to match a business’s needs, making them suitable for small startups to large corporations.

Reduced Workload: Outsourcing financial responsibilities reduces the workload for in-house staff, allowing them to focus on core business activities.

Data Security: Reputable offshore providers prioritize data security, ensuring the confidentiality of sensitive financial information.

Compliance: Virtual accountants keep up with changing regulations, minimizing the risk of non-compliance and associated penalties.

As an ISO 27001 Certified Company, Invedus offshore virtual accountants streamline financial management, allowing you to focus on strategic decisions while they handle your financial resources with precision. Click on the banner to learn more about offshore accounting services.

Conclusion

As of now, you are aware of the fact that the accountant shortage in the USA is a real and growing problem. It is important to understand the causes and implications of the shortage in order to develop effective solutions

Furthermore, the severe shortage of accountants is harming all types of businesses. There are a number of factors contributing to the shortage, but there are also a number of things that can be done to address it. 

By working together, stakeholders can help to ensure that there is a sufficient supply of accountants to meet the needs of the US economy in the years to come.

Despite challenges, the accounting profession remains strong and growing, with opportunities for career advancement and significant impacts on businesses and individuals. The shortage, though a serious concern, offers a chance to attract new talent and create innovative career paths in the field. 

Resources Used In the Above Discussion

• American Institute of Certified Public Accountants (AICPA)
• National Association of State Boards of Accountancy (NASBA)
• Institute of Management Accountants (IMA)
• US Bureau of Labor Statistics