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As I sarcastically mentioned last week, the AICPA has finally released its highly anticipated 2021 Trends in supply of accounting graduates and demand for public accounting recruits (or Tendenciesfor short) report [PDF here], a huge accounting industry statistics data dump first published in 1971 and published biennially since 2009. We are working on an in-depth analysis of individual statistics from previous years for your reading pleasure, but for now, we’ll share the basics to keep you up to date with the current state of the profession. Well no exactly fluent.

This latest version of the report covers university data reported to the Integrated Postsecondary Education Data System (IPEDS) for the 2019-2020 academic year, in addition to universities’ abbreviated responses regarding enrollment expectations for the following years. academic years 2019-2020 and 2020-2021. The business data presented in this report is a mixture of statistical projections and descriptive statistics calculated from business survey responses. I borrow the previous two sentences from AICPA Scholar-in-Residence Jan Taylor, CPA, CGMA, Ph.D, who wrote the introduction to the report. As we review this data, let us all remember that 2020 was an amazing year and we are still feeling the effects today. I guess I didn’t need to remind you. Either way, the pandemic has screwed up a lot of things.

Ready to find out how things have changed in recent years? Let’s go.

Accounting entries

The late 2008s and early 10s were good for accounting programs, in part because of the 2008 financial crisis and the resulting surge in accounting enrollment when unemployed workers on the brink of foreclosure discovered that accounting was one of the few industries. with a relatively low unemployment rate. However, in 2014, the benevolent overlords of the AICPA noticed a troubling statistic: despite record enrollment, this abundance of accounting students didn’t seem to be pursuing the CPA exam as intended. In other words, more people than ever have earned an accounting degree, but the number of CPA exam takers has remained the same. AICPA President and CEO and cross stitch enthusiast Barry Melancon said in 2014:

We’ve had about six consecutive years of record numbers of people majoring in accounting. This is a good thing. Over the past three years, however, we’ve basically had a number of people take the CPA exam. So there is a widening gap.

This concern has since been added to the long list of complications collectively referred to as “the pipeline problem”, a maelstrom of issues which on their own would not have much impact on the profession, but which overall , all occur at once and quickly lead to an accountant. shortage. Some of these most important issues are:

  • Low number of CPA exam candidates
  • A worsening shortage of accounting teachers
  • Baby boomers — who make up 47% of AICPA members — are retiring in droves, accelerated by the pandemic
  • Persistent difficulty in recruiting diverse candidates into the profession, thus missing a whole pool of potential accountants

Additionally, the profession struggles with a value proposition as students weigh the demands of a career in accounting – mostly at the Big 4 firms – with pay and benefits that do not fairly offset said demands. There are a few other minor pipeline issues that fall under perception issues, but we’ll save the graphical details of those reputation issues for another day.

So where are we at filling that pipeline?

Accounting graduates trended downward in the 2019-2020 academic year, with declines of 2.8% and 8.4% at the bachelor’s and master’s levels, respectively. Accounting programs are optimistic about enrollment for the 2021-2022 academic year – 58% of respondents to bachelor’s and master’s programs said they expect enrollment for this academic year to be the same or better to those of the 2020-2021 academic year. (Note: IPEDS data for 2020-2021 has yet to be released at the time of this publication).

According to the chart on page 17, the total number of accounting degree graduates from 1994 to 2020 peaked in 2015-2016:

The breakdown of the total supply of new accounting graduates for 2019-2020 is as follows:

  • Associates: 11,625
  • Baccalaureate: 52,481
  • Mastery: 20,442
  • PhD: 39
  • Certificate: 18,298
  • Total: 102,885

Hiring Trends

The 2019 Tendencies report revealed an interesting shift in accounting industry hiring trends: 31% of new hires to accounting firms were non-accounting graduates. The increased demand for technology skills, especially in the audit function, was seen as the reason for this change. Two years later, the number of new non-accounting hires is up more than 10%. In the 2021 report, 42.7% of new hires are non-accounting graduates. It is the humble opinion of this author that this number will only continue to increase in the future as traditionally tech-averse accounting firms continue to embrace technology, especially as businesses struggle to recruit and retain talent where technology solutions exist to replace tasks and processes previously performed exclusively or predominantly by humans.

Total hiring of new accounting graduates in 2020 decreased by 10%, but there was a 2% increase in new hirings of master’s graduates. New non-accounting graduates hired into accounting and finance functions increased by 10 percentage points. The composition of hiring continues to shift, with 57.3% of new graduate hires being accounting graduates and 42.7% non-accounting graduates. New hires of recent accounting graduates are increasingly assigned to auditing — a change of 11.5 percentage points from 2018. Of companies that hired one or more accounting graduates in 2020, 74% expect to hire the same number or more in 2022 compared to 2021. Eighty-nine percent of all U.S. CPA firms expect to have the same or more CPAs on staff in 2022 compared to 2021.

We continue to hear about a worsening shortage of auditors at large firms, which could perhaps partly explain why auditing accounts for such a large portion of new accounting graduates hired by service line:

accounting for hires by service line

Diversity, Equity and Inclusion

As the profession continues to struggle with diversity — less than 1% of the 658,267 actively licensed CPAs in 53 of 55 licensing jurisdictions are black, a percentage that has remained virtually unchanged in 40 years — some progress has been made. made.

In 2020, the diverse hiring of new bachelor’s and master’s in accounting graduates in accounting/finance functions at U.S. CPA firms increased by nearly five percentage points (including multi-ethnic hires). New hires of Asian or Pacific Islander, Black or African American, and Hispanic or Latino accounting graduates all increased by nearly one or more percentage points (1.9, 0.6, and 1.6 percentage points, respectively). These three groups represent their highest (or near the highest) percentage of all new graduate hires in the history of Trends data collection.

We’ll cover the details of the AICPA’s ongoing diversity initiatives and the impact they’re having in a later article.

CPA Exam Numbers and the Pandemic

More than any other data point in the 2021 Tendencies report, the number of CPA exam takers has been hit the hardest by the pandemic due to test center closures, government lockdown restrictions preventing in-person testing, and the quarantine of takers after exposure to the coronavirus or avoiding in-person testing entirely due to virus concerns. The CPA Evolution project will see the launch of a completely transformed and refined CPA exam in 2024, no doubt “artificially” inflating the number of new candidates over the next few years, as we saw before the launch of CBT-e in 2010/2011. The drastic change will mean a flood of candidates who might otherwise have been waiting to take the exam if they took it, a thought that should comfort Barry Melancon as he lies awake at night trying to figure out why no one is taking the CPA exam. . Should the number of applicants stay where it is or drop even lower over the next Tendencies despite the massive change to the CPA exam in 2024, we have a big, big problem. Let’s not think about it for now.

The number of new CPA exam candidates entering the CPA pipeline has declined abnormally in 2020 due to short-term closures and various restrictions at Prometric® testing centers, with overall COVID concerns continuing until ‘ in 2021. So while new CPA exam takers decreased by less than 0.5% between 2018 and 2019, there was a 17% decrease between 2019 and 2020. A 6% increase is is produced between 2020 and 2021. The number of CPA exam candidates who passed their fourth section of the exam decreased by 11% between 2019 and 2020. after a 2% drop between 2018 and 2019. The number of winners decreased by 5.5% between 2020 and 2021.

So that’s the gist of where we are. There’s so much more to the report worth reading if you like that stuff, and we’ll be putting together more detailed snapshots of that data in the weeks to come. To see all of 2021 Trends in supply of accounting graduates and demand for public accounting recruits report, simply go to this link to download it from the AICPA.

Photo by Lucas

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