Only 1% of U.S. Accounting firms can find staff

The U.S. Accounting Industry is on shaky ground facing a significant shortage of accountants in U.S. firms, particularly a shortage of CPAs in U.S. firms.

• According to the WSJ, over the course of the past two years, a staggering 300,000+ accountants and auditors have voluntarily resigned from their roles in the U.S.
• The U.S. Bureau of Labor Statistics, projects an annual vacancy of around 136,400 accounting and auditing jobs from 2021 to 2031, exacerbating the accounting talent shortage.
• The shortage of accountants in the U.S. Firms can be attributed to the significant wave of Baby Boomer retirements, combined with the insufficient influx of younger individuals. Particularly from Generation Z, pursuing accounting studies and engaging in the CPA Exam, has created an undeniable void.
• The staffing shortage has hit accounting and finance departments the hardest, affecting various industries and particularly smaller privately-owned enterprises. This trend is expected to worsen as time goes on, and the shortage of accountants in U.S. firms becomes even more acute.
• This scarcity's repercussions resonate across various industries and company sizes, with a more pronounced impact on smaller privately owned enterprises, a trend that is predicted to exacerbate as time progresses.

Why is this happening?

As per the May 2021 Bureau of Labor Statistics report, the total count of Accountants and Auditors stood at 1,318,550. By 2022, the National Association of State Boards of Accountancy (NASBA) recorded an active licensed CPA count of 665,612. However, both statistics have notably plummeted.

1. The decline in accounting graduates:

Reflecting data from the 2021 AICPA Trends Report for the years 2019-2020, the number of students completing bachelor's or master's degrees in accounting amounted to 72,923.

This figure exhibits a downward trend when juxtaposed against the preceding five years, during which the annual tally of accounting graduates fluctuated between 76,000 and 79,000.

2. Shortage of accountants in U.S. Firms:

In the past, most U.S. jurisdictions mandated only 120 hours of higher education (akin to a bachelor's degree) for CPA aspirants. However, the extended requirement of 150 credit hours—equivalent to a master's degree—appears to discourage students from pursuing the CPA qualification, primarily due to the associated cost of over $20,000 (for Master’s degree).

Furthermore, candidates must invest over 300 hours in CPA exam preparation, which, on average, maintains a pass rate of 50%. Considering these factors, more students are diverting their attention towards alternative certifications like Master of Business Administration (MBA), Certified Internal Auditor (CIA), and Certified Management Accountant (CMA).

3. Unappealing salary packages:

According to Robert Half's 2022 Salary Guide, an average starting salary for an Audit Associate in public accounting is $59,750. Considering a workload that often involves 70-hour weeks during peak periods and 45-hour weeks during regular periods, the hourly wage averages around $21.50—falling short even of what a DoorDasher earns for a dinner delivery.

Salaries see minimal improvements as individuals progress to more senior positions, with Senior positions averaging around $72,000 and even Managers, who undergo strenuous busy seasons, barely crossing the $100,000 threshold.

4. Accounting Software:

The prevalence of cloud-based small business accounting software has streamlined many of the time-intensive aspects of bookkeeping. QuickBooks Online, with a 62% global market share in the small business accounting software industry, has seen greater uptake compared to Xero, with 2.3 million members worldwide. The majority of QuickBooks' users are based in the U.S.

5. Accounting just isn’t cool:

The accounting profession gets a bit of a bad rep, primarily because it’s seen as a ‘boring job’. From being labeled as ‘bean counters’ to ‘number crunchers’, there’s nothing sexy about being an accountant. Before, accounting was a noteworthy and reliable profession if you were good at math. However, with advances in science and technology, there are much more appealing professions for capable mathematicians. As ‘uncool’ as accounting may be, it's still a very needed aspect of any business, and firms will need to find a way to fill the gap. 

6. Exploring alternative career paths:

More CPAs are venturing into more engaging and financially rewarding domains, such as risk management, buy-side financial analysis, corporate finance, forensic accounting, corporate banking, and fund management.

How Accounting Firms are addressing the shortage of accountants in U.S. firms?

Addressing the scarcity of accountants, the industry is actively implementing strategies aimed at drawing a larger pool of individuals into the profession. These efforts encompass a range of initiatives, including adopting remote work policies, integrating automation and advanced technology, and a focused drive toward enhanced diversity in recruitment.  

Moreover, academic institutions are undergoing a transformation of their curricula to render accounting more alluring to students. This transformation involves the introduction of courses encompassing topics such as environmental, social, and governance concerns, data analytics, and sector-specific accounting disciplines.

In order to expand the available talent pool, a significant 78 percent of 2,175 hiring managers surveyed in November 2022 expressed their intent to elevate their utilization of contract workers within the initial half of 2023. This approach aims to fill vacancies within the accounting and finance sectors, as indicated by a survey conducted by the consulting firm Robert Half. 

Furthermore, prominent larger enterprises are also embracing the approach of offshoring routine tasks to company centers situated in countries such as India, the Philippines, and Brazil. This strategic move serves to bolster the available workforce. Notably, the "Big 4" accounting firms have capitalized on this approach, establishing captive centers in India and other international destinations to leverage this advantageous workforce expansion technique.

U.S. Accounting & CPA Firms Outsourcing to India:

The shortage of accounting professionals in the U.S. is not going to reduce any time soon and outsourcing accounting, tax and auditing work to India looks like the most viable solution. 

A reliable outsourcing provider grants you access to a comprehensive accounting team, negating the necessity of independent hiring. Offshore staffing services encompass various tasks including coding daily transactions, processing accounts payable and receivable, managing payroll, drafting management financial reports, and other duties tailored to client requirements. Many accounting firms view outsourcing just to cut costs; however, there’s more to it than that.  

The advantage of offshore staffing services lies in alleviating the burden on your existing accounting team and overall firm. CPAs and firms have warmly embraced this approach and have found value in outsourcing labor-intensive, high-volume work to offshore CPAs, accountants, and bookkeepers.

However, there are still many firms that have their doubts about accounting outsourcing and some even see it as a failed solution. Concerns about relinquishing control and potential data breaches contribute to this hesitation. Yet, it's essential to acknowledge that risk accompanies every endeavor we undertake in life. By aligning with a reputable offshore staffing services provider, accounting firms can mitigate the associated outsourcing risks.

Here's how outsourcing your accounting, tax, and audit work can be the solution to your talent scarcity concerns:

1. Sourcing Qualified Staff:  

With outsourced accounting services, concerns about recruiting qualified accounting and technology personnel are eliminated. India's accounting outsourcing industry provides qualified professionals adept at utilizing cutting-edge tools to integrate financial data across an organization.

2. Adapting to Technology:

Outsourced accounting professionals also ensure your business stays updated with the latest technologies. They invest effort in ongoing research, training, and technology upgrades, all while keeping your firm's context in mind.

3. Cost and Time Efficiency:

Outsourcing enables firms to bypass the expenses and time commitments associated with recruiting, training, and overseeing additional accounting personnel. Managers can thus focus more on core functions while minimizing HR-related burdens.

4. Immediate Scalability:

Outsourcing offers accounting firms swift scalability, providing access to highly skilled professionals well-versed in U.S. accounting standards and tax regulations.

Selecting the Ideal Outsourced Staffing Services: 

Opting to outsource is a significant decision. Maximizing its potential necessitates a diligent evaluation of the firm's credentials. When making your choice, consider the following:

1. Qualifications and Certifications:

Assess the qualifications and certifications of the outsourced bookkeeping service provider. CPA and accounting firms should thoroughly research their outsourcing or offshoring provider, confirming they have adequate certification and compliances, such as SOC type 2, ISO 270011, and GDPR.

2. Relevant Experience:

Determine if the outsourcing provider has experience working with firms like yours. Ask for references and feel free to speak with their clients to understand better how they work. 

3. Problem-Solving Skills:

Problem-solving abilities are crucial in challenging circumstances. Ensure the outsourced team demonstrates proven prowess in logical and quick decision-making.

4. Data Security Protocols:

Given data privacy concerns, verify the security protocols in place with the outsourcing provider.

5. Quality Control:

A robust quality control process is imperative to avoid costly errors and non-compliance issues. Does the provider utilize the buddy system or other measures to ensure tasks are completed efficiently?

Future Prospects of Offshore Staffing Services: 

Accounting firms are evolving from offering specific services to becoming comprehensive advisors. Amid talent shortages and clients seeking more value for their fees, offshore staffing services provide a solution. These services offer familiarity with U.S. accounting standards at affordable rates, granting flexibility in staffing numbers as needed. Outsourcing offers an extensive network of experienced accountants, freeing you from training and management duties while you concentrate on your firm's growth.

In summary, offshore staffing services pave the way for future-oriented accounting firms, enabling them to thrive amid staffing challenges and shifting client expectations.

FAQ’s

1. Why is there a shortage of accountants in the U.S.?

The shortage of accountants can be attributed to several factors, including the retirement of Baby Boomers, a decline in the number of accounting graduates, the extended education requirements for CPAs, unattractive salary packages, and the perception of accounting as an unexciting profession.

2. How are accounting firms addressing the shortage of accountants?

Accounting firms are implementing various strategies to address the shortage, such as remote work policies, automation and technology integration, increased diversity in recruitment, and curriculum enhancements at universities. Additionally, firms are looking to contract workers and offshoring to bridge the talent gap.

3. What benefits can outsourcing accounting work to offshore staffing services offer?

Outsourcing accounting work to offshore staffing services provides several benefits, including access to a skilled accounting team,  cost efficiency, adaptability to technology, scalability, and the ability to focus on core functions. Offshoring allows firms to tap into a pool of qualified professionals without the need for extensive recruitment and training.

4. What factors should accounting firms consider when selecting an offshore staffing services provider? 

When selecting an offshore staffing services provider, accounting firms should consider qualifications and certifications, relevant experience, problem-solving skills, data security protocols, and quality control measures. It's important to choose a provider that aligns with your firm's needs and adheres to security and quality standards.

5. Is the U.S. Facing a shortage of accountants?

Yes, the United States is currently facing a shortage of accountants, particularly in specialized fields but also for entry-level accounting positions.

6. What is the Starting Salary for Accountants in the U.S.?

The starting salary for accountants in the U.S. varies depending on factors like location, education, and experience, but it generally ranges from $45,000 to $70,000 per year. 

7. What are the ways to attract and retain accounting talent?

What are the ways to attract and retain accounting talent?To attract and retain accounting talent, firms can offer competitive salaries and benefits, provide opportunities for career advancement and professional development, foster a positive work culture, and embrace technological advancements to streamline processes and reduce manual tasks.

8.  Why offshore accounting staff is best for U.S. Firms? 

Offshore accounting staff can be advantageous for U.S. firms due to cost savings, access to a global talent pool, scalability, and the ability to focus on core business functions while outsourcing routine accounting tasks to experts in other countries. However, it should be done carefully to ensure data security and compliance with regulations.

Entigrity™ is a trusted offshore staffing partner to 725+ accountants, CPAs, and tax firms across the US and Canada. Our flexible and transparent hiring model gives helps firms of all sizes to hire staff for accounting, bookkeeping, tax preparation, or any other task for 75% less cost. As a firm 'run by accountants, for the accountants,' Entigrity captures the hiring needs of accounting firms most precisely, providing staff that works directly under your control and management; still, you are left with the least to worry about compliance, payroll taxes, overheads or any other benefits.