Bridging the Gap in the CPA Pipeline
As part of its 2021 “Top 100 Most Influential People” survey, Accounting Today asked, “What is the most important issue currently facing the accounting profession?” NJCPA CEO and Executive Director Ralph Albert Thomas, who was selected to the most influential people list for the ninth time, responded, “The decline in the number of new CPAs and in the number of accounting program enrollments at colleges.”
You may have seen by now the most recent AICPA Trends Report from 2019 — a comprehensive biennial report tracking the supply and demand of U.S. accounting graduates. It showed projected bachelor’s, master’s and Ph.D. accounting enrollments were down 4 percent, 6 percent and 23 percent in 2018, respectively, and the number of new CPA Exam candidates hit a 10-year low. Why the decline in CPA Exam candidates? The AICPA suggests the continued declines are being driven by “both economic conditions and an expansion of the alternatives available” to potential accounting students who are “opting to enter or remain in the workforce in lieu of pursuing an advanced accounting degree or to pursue other avenues for advanced education.”
According to a study conducted by the Illinois CPA Society (ICPAS), “A CPA Pipeline Report — Decoding the Decline,” among young professionals who do not plan on becoming CPAs, ICPAS identified that they are not pursuing the CPA credential because “they feel they can be successful in their anticipated or chosen careers without it and ultimately believe any value the CPA credential holds is outweighed by its lack of relevance to their personal endeavors and the time commitment necessary to obtain it.” The report also noted that they do not see their employers or prospective employers supporting or requiring it.
As the profession addresses challenges on the front end of the pipeline, we’re also coming face to face with a growing reality on the back end: retirements. Statistics from the AICPA suggest that 75 percent of current CPAs will retire in the next 10 to 15 years, leaving a huge vacuum in the profession.
These trends are also impacting NJCPA membership. Currently, the Society is comprised of 42.9 percent Baby Boomers or older, 42.1 percent Generation X and Millennials, and 4.6 percent Generation Z, with the remaining 10.4 percent having not provided birthdays (as of November 2021). Baby Boomers make up 25 percent of the national workforce but 38 percent of NJCPA members. Millennials make up roughly 40 percent of the national workforce but only 20 percent of members.
In fact, our retired member segment is the Society’s fastest growing segment. As a result of the exodus of CPAs from the profession, the NJCPA has experienced significant membership losses in recent years, particularly among members in corporate finance or private industry. Between 2016 and 2021, the Society lost more than 1,000 CPA members.
The NJCPA Board of Trustees recognizes the impacts that these trends will have and is taking steps to address the situation. The Board is focused on the front end of the pipeline, specifically the NJCPA’s CPA Candidate membership category, recognizing that the greatest opportunity for bringing new candidates into the profession is to focus on supporting graduates and young professionals who are still unsure about becoming a CPA.
While the CPA Candidate category was created to put graduates on the path to taking the CPA Exam, it may also be forcing them to choose a direction — and a membership category — that they may not be ready for. According to the National Association of State Boards of Accountancy (NASBA), the average age of successful CPA Exam candidates is 29, with the median age being 25 years.
Our membership structure for graduates shouldn’t be based on what we want them to do immediately upon graduation, but what those new young professionals want out of their careers. Instead of trying to convince them of what they should do or why the CPA credential may be important to an employer, over time we stand a better chance of naturally showcasing the relevance and benefits of the CPA credential. But the only way to accomplish this is to hold onto them as members of the NJCPA.
Revamping the CPA Candidate category, even providing one year of free membership for graduating Student members, will enable young professionals to take advantage of the benefits of membership (e.g., discounts, training) while the NJCPA demonstrates the relevance and benefits of the CPA credential to them.
The AICPA’s CPA Evolution initiative will attract a new breed of professionals, including graduates who specialize in data science and analytics, who are most likely unfamiliar with state CPA societies. A new, more-responsive and flexible membership category will attract graduates who are considering a career in accounting and/or finance but who are still unsure about becoming a CPA.
The NJCPA Board will share more information about changes to the CPA
Candidate category, as well as other proposed adjustments to the Society’s membership structure, this spring and summer.
This article appeared in the Spring 2022 issue of New Jersey CPA magazine. Read the full issue.