The accounting field is experiencing an increasingly drastic shortfall in able professionals. In other words, this is what we refer to as the “accountant shortage.” This issue severely affects the public and private accounting departments, as businesses, organizations, and individuals are affected. Here, we shall analyze the accountant shortage and its effects on public and private accounting and acknowledge the causes and solutions to the deficiency.
What is the Accountant Shortage?
The term ‘accountant shortage’ generally means the ever-growing disproportion between the demands for competent accountants and the available number of accountants capable of performing the task. It is created by different reasons such as the graduation of the ageing workforce, fewer accounting graduates within the recent year’s trend, and regulatory changes that have contributed to the rise in the need for accounting expertise.
As baby boomers start retirement, it is expected that a great number of accountants will simply quit the industry, leaving a huge gap that needs to be filled. Based on a report by the American Institute of Certified Public Accountants (AICPA), 75% of all the CPAs in the US are forecasted to retire within the next fifteen years (Dore, 14). These departing professionals are creating a widening void of their expertise that is very difficult to fill.
Besides this, accounting professionals, because of the security of work and work-life balance, are few students with accounting degrees. Therefore, it is worsening the shortage. US accounting undergraduate programs have experienced an enrollment decline of almost 20 per cent per NASBA (Nebraska Association of State Boards of Accountancy) data over the last ten years.
Impacts on Public Accounting
The consequence of the accountant deficiency in audit companies, which render auditing, taxes, and consultancy services to numerous clients, is immense. This kind of company completely depends on the steady flow of skilled workers to cope with the growing service requirements of their clients.
Increased Workload and Burnout: Distributed heavier workloads on existing staff is what public accounting firms do, while the number of available accountants has decreased. This results in longer working time, higher stress levels and burnout, thus having a negative impact on staff retention and satisfaction. The American Institute of Certified Public Accountants poll affirmed that almost 60% of accounting professionals reported extreme exhaustion and the effect of burnout due to the shortage of workforce (Dore 16).
Recruitment and Retention Challenges: Accounting firms operating in the public space are locked in a fierce fight to recruit and retain the profession’s elite. Now, it is quite more challenging to find and hire qualified experts, which contributes to higher recruitment costs and the loss of valuable employees to other firms/ industries or competitors that offer better packages and work-life balance. Companies are often compelled to give higher salaries and additional incentives to attract candidates, which eventually increases operational costs.
Compromised Service Quality: With difficulty meeting fast growth, the firm manages the quality of service offered. Staffed and working too hard may miss essential details or not meet the deadlines, ultimately the satisfaction of clients and reputational damage may result. This leads to long-term consequences for the ability of the firm to retain clients, and it is a competitive edge in the market.
Increased Reliance on Technology: Public accountancy firms have addressed the shortage issue by looking for scientific solutions using automation and artificial intelligence (AI) to speed up processes and improve efficiency. Nevertheless, the construction and introduction of these technologies may be too costly, necessitating huge initial capital expenditure and training of the in-house employees.
Impacts on Private Accounting
However, the accountancy shortage has had arguably greater impacts on accountancy for the private sector as the second category of accounting within businesses, organizations and governmental institutions.
Increased Reliance on Outsourcing: To substitute for the deficiency of inside accounting skills, many private organizations include outsourcing accounting functions to third-party service providers or consulting firms. However, it may be the case that outsourcing is the only affordable choice for the organization. However, this may lead to loss of control over the strategic direction of the organization as well as risk of sensitive financial information (Berry et al., Np). The problem of inadequate control over and interconnectedness with the accounting teams working from home could arise, miscommunication could ensue, and all this could lead to errors.
Delayed Financial Reporting and Decision-Making: Tightly staffed accounting departments might need help maintaining balanced books, which could result in delays in preparing financial statements, reporting financial information and other important issues (Berry et al., Np). Such a condition might leave the management teams with delays in making critical decisions and developing newer strategies regarding market movements. However, it could also limit the organization’s chances of reacting immediately and seizing newly emerging business chances.
Compliance and Risk Management Challenges: Accounting experts have a very significant part to play in fulfilling the requirements of regulations and understanding risks. Accounting shortage can be a factor in non-compliance, incorrect information dissemination and weak risk management strategies, leading to legal and financial issues for the organization. That is why it is crucial for highly regulated industries, such as finance and healthcare, where strict compliance with accounting principles and rules is mandatory.
Limited Opportunities for Career Advancement: Company commercial with restricted finance and accounting staff may miss chances for career and professional development (Berry et al., Np). Staff who are unsatisfied will shift their focus on seeking greener pastures, eventually increasing the number of people leaving the organization, and this will again compound the problem within the organization.
Causes and Potential Solutions
Determining the reasons behind the accounting gap and exploring the options for tackling this matter efficiently is vital.
Causes:
Demographic Shifts: The maturation of the workforce and the retirement of baby boomers is notably one of the leading causes of the crisis, as fewer young people have started being absorbed into the field to replace the ones that left (Modisakeng et al.,1-10). This demographic earth movement led to a heterogeneous accounting workforce.
Perception of the Accounting Profession: Accounting is seen as a field where work-life balance is very scarce, with late nights and stressful environments designed for you to not apply for accounting jobs (Modisakeng et al.,1-10). This perception, with the glamor of the technology and entrepreneurship sectors that have created a severe shortage of top talent, has made deciding whether or not to choose this profession a daunting experience.
Evolving Technology: The constant revolution in technology that drives the profession of accounting has led to a skills gap, where accountants with old technique may not be knowledgeable enough to effectively execute areas like data analytics, cloud computing, and automation. The skills gap is so serious now that no organization can found accountants who are equipped to take advantage of new technology and steer digitalization strategies.
Globalization and Increased Regulatory Requirements: The globalized business environment and prevailing new accounting standards and regulations (like the International Financial Reporting Standards – IFRS) have resulted in increased need for finance and accounting expertise, which consequently has been caused by the shortage of qualified candidates for the finance and accounting position.
Potential Solutions:
Promoting Accounting Careers: Measures should be taken to market the accounting sector as a promising and dynamic profession delivering various career chances as well as the option to balance work and home life. This can be reached by doing specific marketing campaigns, establishing mentorship programs, and publishing materials with the interesting aspects of the job to the educational institutions for the fake students.
Improving Education and Training: Partnerships between higher education and real-world practitioners could bridge a skills gap that is especially significant in accountancy. Learning materials would be current and in line with professional needs as time goes on, plus more technology is used and practical experience is available. similarly, the providers of continuing education and professional development trains will enable career accountants to always be aware of innovation.
Retention and Upskilling Strategies: Organizations must invest in employee retention and lifelong learning programs, creating rewarding schemes, telework opportunities and thereafter continuous development of employees’ skills, to gain and maintain the services of high-quality employees. An organization can achieve this by supporting a healthy work environment and giving employees the chance to develop further, so that retention of accounting staff is low.
Leveraging Technology: Leveraging automation and advanced technologies, like cloud accounting solutions, data analytics tool, and AI, will bring efficiency to the processes of accounting and make them simple on accounting professionals to handle, thus giving them a focus on strategic decision making and the other higher-value work.
Encouraging Diversity and Inclusivity: Encouraging diversity and inclusivity of the profession leads to expanding the healthy flow of applicants that ensures the intake of new and different ideas as well as filling the shortage by multiple approaches. It consists of various measures that will be handled like specialized recruiting from underrepresented groups, provision of mentorship and support programs, and building the inclusion in the workplace that values people from different backgrounds and experiences.
Exploring Alternative Talent Pipelines: Perhaps organizations grow their talent pool via non-traditional avenues by recruiting from the communities where they do business or even creating in-house apprenticeship programs to equip those individuals who lack formal accounting education. Offering an apprenticeship program or mentorship program in an organization, reinforces vital skill sets and ultimately deals with this shortage by using unconventional routes.
Collaborating with Professional Associations and Regulatory Bodies: Collaborating with the AICPA should be a part of the vision for the organizations or companies to have all industry-wide strategies and initiatives to address accountant shortage. These partnerships can spark policy changes, educational reforms, and results in coming up of a set of established best practices for recruiting, keeping and training officials in finance department.
The accounting shortage is a complex problem that requires all stakeholders, including educational institutions, professional associations, employers and policymakers, to make concerted and sustained efforts to address it. By addressing the issues at grassroot level and applying the appropriate remedies, the accounting profession can surmount this problem, to consequently have a sustainable and skilled workforce that is able to sufficiently meet the diverse demands of business organizations all over the world. A proactive approach to measures with a firm commitment to continuous improvement will be a main factor in fighting against the accountant shortage and ensuring the accounting profession as a viable professional career
Works Cited
Berry, Leonard L., et al. “The high stakes of outsourcing in health care.” Mayo Clinic Proceedings. Vol. 96. No. 11. Elsevier, 2021.Np https://www.sciencedirect.com/science/article/abs/pii/S0025619621005127
Dore, Amanda C. The Impact of the Accounting Curriculum on Alumni Professional Success. Diss. University of St. Francis, 2022. Pg. 1-20.
https://www.proquest.com/openview/af21dd0822e168e199c18a69babb6cdb/1?pq-origsite=gscholar&cbl=18750&diss=y
Modisakeng, Cynthia, et al. “Medicine shortages and challenges with the procurement process among public sector hospitals in South Africa; findings and implications.” BMC health services research 20 (2020): 1-10.
write