Numbers taking US accounting exams drop to lowest level in 17 years

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Accounting firms in the US are being urged to revamp their business models to attract more young people after the number of entry exams plummeted to the lowest level in at least 17 years.

New data from the American Institute of Certified Public Accountants showed that the CPA candidate shortage that has plagued the profession in recent years worsened in 2022, dashing hopes for a quick recovery from the pandemic.

THE shortage of new entrants it comes at the same time as a wave of baby boomer retirements and threatens to weaken companies’ ability to do the accounting, tax and auditing work that companies and individual clients rely on.

The number of people who took the CPA exams in 2022 was just over 67,000, down from 72,000 in 2021 and below the institute’s forecast of 74,000, according to a note in the AICPA’s annual report released this month. That was the lowest level since records for the modern exam began in 2006.

Details shared among the AICPA board showed that figure too was flattered by applicants from overseas. The number of CPA exam modules taken by US candidates has decreased by more than 10% year over year.

The Institute of Management Accountants, which runs an alternative certification for those entering finance departments at companies, told the Financial Times it also saw a 5% drop in applicants in the US last year.

“It’s becoming a crisis, and not just for accounting firms but for businesses,” said Dennis Whitney, IMA’s senior vice president. “Accountants they are the backbone of companies not only for financial reporting purposes, but also to help them make decisions”.

The AICPA said it saw an increase in new applicants in early 2023 and expected an overall increase of 10% this year, spurred in part by upcoming exam changes. But that would still mean that the numbers are 20% lower than the average for the past decade.

Wayne Berson, the head of BDO USA, told the FT earlier this month that his company planned to double the staff abroad and move more work overseas due to shortages.

The pipeline of new applicants has dwindled as college accounting courses have become less popular in the United States. Starting salaries of graduates can also be at least one-fifth higher in finance or technology, and those careers may not require such an expensive professional qualification.

“As long as it takes to become a partner, as long as it takes to achieve financial success, the financial model of CPA firms is archaic,” said Alan Whitman, who ran accounting firm Baker Tilly for seven years through March.

“Companies need to work to improve the attractiveness of the profession through a variety of ways, the most important of which is by reinventing the operating model and career advancement,” he said.

The AICPA said it was increasing scholarships to help applicants and encouraging companies to offer competitive salaries. “There’s a generation looking for a shorter ROI,” said Mike Decker, vice president of AICPA.