Decoding the Decline in the CPA Pipeline

August 3, 2021

Recent data suggests that we’re witnessing a nationwide decline in both new CPAs and college accounting program enrollments. Why is this happening, and what can be done about it? Do the profession and the CPA license have a branding problem? Are accounting firms and companies doing anythign to adapt? We discuss all of this and more in an eye-opening conversation with Tood Shapiro and Kari Natale from the Illinois CPA Society. 

Episode Transcript

Don Meyer: Hello, and welcome to the IssuesWatch Podcast. I'm Don Meyer, chief marketing officer at the New Jersey Society of CPAs, pinch-hitting for your regular host, Jeff Kaszerman. Earning the CPA credential has historically been one of the most notable ways to establish a professional identity and exhibit a high level of competence in the accounting profession. Yet, recent data suggests that we’re witnessing a nationwide decline in not just new CPAs, but also college accounting program enrollments. Here with me to make sense of these sliding statistics and discuss their own research into this issue are two of our colleagues from the Illinois CPA Society. First, their president and CEO, Todd Shapiro. Welcome, Todd.

Todd Shapiro: Good morning.

Don Meyer: We also have their senior director of the CPA Endowment Fund and planning and governance, Kari Natale. Welcome, Kari.

Kari Natale: Hi, Don. Thank you.

Don Meyer: Todd, in 2016, you said “A stagnating CPA pipeline is a threat. It’s an issue that will only get worse and grow more troubling without action.” Then, you wrote recently, “five years later, the issue has, in fact, grown worse and more troubling.” Let’s go back to 2016. What was happening at that time, back in 2016, that made the leaders of the Illinois Society and staff look into this issue?

Todd Shapiro: We’d seen a couple of things happen, Don. A couple of trends that were at that time disconcerting to us. If you go back to 2014, 15 and early 2016, we had seen... This is based upon AICPA information... we had seen seen a continuing increase in the number of people major in accounting at universities, but we had seen a stagnation in the number of people sitting for the CPA Exam. That was one factor. First, when you see obviously an increasing number of accounting majors, a stagnant number of people sitting in for the CPA Exam, that drew our attention to the issue. In fact, we started looking at the numbers and in less than 50, we're about 50 percent of less than 50 percent of accounting graduates were beginning to sit for the CPA Exam. If you take those numbers, check those out, obviously why, in fact, aren't people sitting for the Exam? You combine that with the fact that the stark reality is we have an aging profession.

We have a lot of... You can look at the numbers of members of both our societies, I'm guessing, and the number of members, which is going to be indicative of the profession in general, over the age of 50 is significant. In fact, we anticipate, and it's been talked about that we anticipate is significant number of retirements to begin to happen in the next five to 10 years or so. You combine a significant number of retirements… you combine a staggering number of people sitting for first time exam takers with yet, seeing increasing accounting majors — that gave us pause for concern. Why aren't we seeing people sit for the Exam and do we have a long-term issue, which we thought we began to have a long-term issue when you combine that with the long-term retirement? That's what drove us to the point of 2016, that this was significant.

I will then go a step further and say, what we did see in 2016 was when we saw a significant increase in Exam takers, but that really was premised on the fact that the Exam went through a major change in 2017, and the jump in 16 was merely the people who wanted to get the Exam done before the change. That gave us no assurance of anything had been resolved, but that, to your question, that’s what happened at 16 that caused us to initially raise the alarm bell.

Don Meyer: I know in New Jersey, we’ve been interested in this issue for quite some time, because even with millennials becoming the biggest part of the workforce, and we’ve been talking about baby boomer retirements for at least what, 10 years, probably more than that. Baby boomers still make up more than 40 percent of our membership. They’re still the biggest portion of our membership. This is definitely an issue that has been on our radar for a long time, but it was nice in the studies that you did to see it in black and white, as opposed to just talking about it conceptually. Kari, why does the Illinois society believe the situation has gotten worse?

Kari Natale: The data Todd was referring to was 2016 AICPA trends report, and then the 2018 data was even worse. The Illinois CPA Society had a strategic planning retreat around the same time that data was released. We saw a 10 or 12 year decline in the number of people taking the CPA Exam for the first time. The Illinois CPA Society and our board, in addition to what Todd said about the retiring members and the less people becoming CPAs, also putting in to consideration technology, allowing people to do more with fewer people and businesses happy hiring accounting majors, not requiring CPA — there were just a lot of things going on, the Society decided to really take some time and do some research to learn the reasons for this audience not becoming CPAs so that we can see if we can find some answers to the decline.

Todd Shapiro: If I can just add to that, Don. Kari mentioned the 2018 report. Just to be very clear, we saw a stagnating number of new Exam candidates, maybe a slight decline in ’13, ’14, and ’15, and then in ’16, we saw this big jump. Well, the world didn't get better. As I said to you, that was just people jumping to take the Exam beforehand. We saw the same exact thing happen by the way, in 2010, when they made it an Exam update. We expected and we fully expected a trough the year afterwards. People jumped in ’10, it fell off in ’11. People took it in ’16, it fell off in ’17. None of that was unexpected. The trends that Kari's talking about were there, and that causes concern.

What then really raised our radar was in 2018, if you look at the number of first-time Exam takers, that should have rebounded to normal levels of ’14, ’15 levels, which already were stagnant. It fell further. It fell significantly further. In fact, when the next report comes out and we see 2019, because we’ve seen some of this information, ’19 still about low level. When you talk about a 12-year low, what we didn't expect was this drop in 2018 from ’17. We expected ’17 we’d be down. 2018 was an alarm clock going off going, “Whoa. What happened here in ’18 that caused it dropped out.” What happened in ’19 that keeps it... literally, 2006 levels. That combined all the trends. That was hard data, not trend data, that was hard data. First time Exam takers. That was something that really was what spurred us to go something's going on here. That all of a sudden it took this big to drop.

Troubling Perceptions

Don Meyer: Let's talk about the report that Illinois did, Decoding the Decline. You’d identified that students, young professionals are not pursuing the CPA credential because they feel they can be successful in their anticipated or chosen careers without it. They 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. That’s such horrible news, I had trouble getting it out! You also learned a few more troubling facts:

  • They don’t the CPA credentials having value or relevance to their careers.
  • They don’t see the return on investment.
  • They don’t see their employers or prospective employers supporting or requiring it
  • And they see other credentials or specialties as being more valuable to their careers.

I'm not sure I could have read five or six worse sentences for the CPA license. Either Todd or Carrie, did your research indicate why students and young professionals feel this way? Because that’s pretty damning information about the license. And I should point out, this was not some tiny little study where you interviewed 100 people. If I recall, there were over 3,000 individuals that responded to the survey, is that accurate?

Kari Natale: We had about 2,500 completed surveys over, about 3,000 who started. I will say to clarify the points that you were referencing were of those who said they are not interested in pursuing the credential front. Instead, we did find throughout that the perceptions and things of that nature, all of the things swayed based on if somebody was interested in the credential or not. There was a true correlation to those who wanted to become CPAs and their feelings, but we thought it was really important to dig into those results of those who were not interested in pursuing the credential. Those are the findings that you were just talking about that. I'll start here and then Todd can add to it. Why did they feel that way? There was quite a bit of open-ended responses that we did analyze, and a lot of the individuals in this group that were not interested in doing pursuing the credential seemed to have a clear lack of understanding about what CPAs do. We did have some questions about what words that they associated with the CPA credential and this audience in particular, highly associated the credential with only accounting, auditing and tax prep. So that narrow perception of this audience would make it seem unnecessary if you’re only... If you're not interested in spending most of your career in public accounting or one of those areas, it wouldn't be worth your effort or return on your investment. I think a lot of it had to do with what they thought CPAs did. Todd, did you want to add to that?

Todd Shapiro: Well, I think you raise a great point and I think the challenge we have now is as technology begins to further automate the areas of — if you think about auditing, accounting, tax prep — is auditing begins to affect those careers even more, and students are looking at potentially going into the corporate world versus public accounting. Is this really worth the perception of... I'll take a step back, because perceptions... We can say perceptions don't matter. Perceptions are reality. The question is, is this something... If you think about what this is representing, and then you combine that with relatively flat salaries over the last few years. I will tell you, this isn’t the first time we’ve seen a drop in accounting and one thing people aren't aware of that much.

We actually went separate from doing the study of the students, there’s the urban legend that this happened before. Well, we actually went back and looked at some of the trends reports from the 1990s, because if you’ve been around long enough and sadly I've been around a long time, back in the ’90s, people were saying, "Oh, we’re seeing a decline in accounting majors. We’re seeing accounting departments have to shut down. We're seeing decline... People not becoming CPAs." I started with the Society in 1998. Well, that was the words that were out there back then. It was like, “Well, wait a minute. Hasn't this happened before? What caused the problem back then?” Well, we actually went and looked at the data. Interestingly, if you look at 1992, about ’92 to about 2000, there was... guess what? A steady decline of first-time exam takers of the CPA exam. Why was that? Now, I don't have hard data, so I'm going to make a supposition. If you think about the ’90s, it was a time of growing business. Oh, by the way, that’s what’s happening now. It was a time of growing opportunities to other areas. That was what was happening in that back then. People moved away from the CPA profession, they did. We can say whatever we want, but the reality is they did and we know that by looking at first-time exam takers. That’s a fact.

What happened to change that trend? What turned around the 1990s trend? Well, if you think about it, there was a slight thing called Enron that occurred in 2002. Melted down the economy, created that other thing that Congress called Sarbanes Oxley which drove salaries up because we needed significant number of CPAs to do all the testing they had to get done. That causes trend. If you look the ’90s, we saw it before and it was really driven by perceptions of the profession, which is what Kari just talked about. Perceptions of the profession and it was turned around by legislative action to a large degree. I’m not saying it’s good or bad. I'm just talking specifically what happened in our history. You think about what’s going on today, we have technology exploding. We have other opportunities which are presenting itself to students, both at the corporate sector, as well as other majors, and we see people not sit for the exam because they don’t see the return on investment. I can go on to the world with corporate don’t need to get. It can get a great job to get paid more potentially in the corporate side and on the public side. It may, whether or not I find it more exciting, whatever the case may be, I’m not going to take the CPA exam. I think the perceptions that Kari talked about of the work to be done, if you combine that with somewhat flat salaries, here’s your outcome.

Don Meyer: I think part of that other ’90s narrative... Because I heard this —  I've with the NJ CPA for about 16 years — one of the first things I heard was about declining enrollments in the ’90s. One of the reasons I heard for that was because of the dot-com boom, because of stock market boom, that a number of people who normally would have gone into accounting instead went and chased and all of those companies that came out and went public very quickly and then faded just as quickly. Then, it was essentially the Enron WorldCom crisis that saved accounting and of course, Sarbanes-Oxley, also known as the accountant full employment act. We’re in a similar situation as you pointed out, Todd now, but assuming we’re not going to have legislative action from Congress to save the day, what is it about this situation that might be a little bit different and perhaps a little bit more concerning is that perception that graduates and young professionals have about the CPA license? Is that something they feel about all credentials? Or they just feel like, “Well, I can make the same amount of money or advance the same way without the credential as I can with it.” Is that really... The problem here is a war against expertise and licensing and so forth and just feeling like, “Well, it's not worth the time and effort.”

Kari Natale: One thing that was interesting in our data, many of our respondents said they weren’t interested in pursuing any credential at all. It was not, “I want to choose this credential because it’s more impactful.” We had a lot of comments and a good part of the research on credentials in general and comments stating that this generation, just the respondents under 35 who took the survey said, they saw credentials just as a memorization tests, not a true test of their knowledge. They saw... In their entry-level jobs, people doing just fine without it, and thought that their work experience would be more valuable. It’s just interesting comment you made about any credential in general. It was this perception that credentials aren’t really worth it... They did have respect for the CPA credential and it wasn't that they didn’t think highly of the credential, whether they were interested in or not, but they didn't think it was valuable enough for them to spend the time commitment to take it.

A Branding Problem?

Don Meyer: It’s interesting the differentiation between the research the AICPA does when they ask business decision-makers about the value of the license and the respect they have for the license. Since I’ve been with the organization, it’s always very rated very highly. Business decision makers, investors always see the CPA license as the top of the line. Then, when you go down to the folks who actually have to sit for the exam, there seems to be a bit of a drop-off, in that regard. So does the CPA license have a branding problem? One of you mentioned earlier that the perception is that, if you have a CPA license, you do tax and audit. Is it a part of a branding problem? I say this as chief marketing officer for the organization, so that’s where my head went.

Todd Shapiro: Let me take a stab at that one. I want to back up for for a sec. One of the things that... When you talk about the credential that, I’m sure, and I guarantee, because they hear this in the state of Illinois all the time, what people are going to say, “Well, it’s a credentialing problem.” And part of the problem with the credentialing, by the way, I want to deal with this sensitive subject that they say, “Well, if we didn't have to get the extra 30 hours, we only have 120 hours, by the way, that would solve our problem. Because people don't want to get the extra 30 hours. The extra work I have to put in to get that extra 30 hours is not worth the cost.” We’re very clear here that we actually asked that question specifically, and amongst those that are not pursuing or not going to pursue or unsure, it didn't even make the top four reasons is the cost of the additional 30 hours. We could say, “Well, is it a pushback to it and it’s all credentials.” Some people would say, “Well, yeah, it is because they got to spend extra money to get extra 30 hours.” It may be a pushback on credentials, but it’s not the cost of getting that credential.

To answer your question, the branding problem — and I'll give it to you a different way. Interestingly, and again, you go back a little bit to the ’90s and I'm going to refer to that because I think if you don't learn from history, you’re going to repeat it, and I believe that hardily, right? It was a study that was done. I think it was published in Bloomberg that at the top 1,000 largest companies, only 36 percent of CFOs are CPAs. Do we have a branding problem? We believe we have a branding problem in the state of Illinois. I look at that statistic as a leading indicator. Oh, by the way, let’s go back to the ’90s, again and say, “What was happening in the ’90s?” Well, we were seeing some of that same trend. The reason given for this 36 percent is, people don’t see CPAs is being strategic and what they need in their CFO is they need a strategic partner. More and more and more as businesses are growing, we’ve moved away from Sarbanes-Oxley — Sarbanes-Oxley is still there. But as we’ve gotten that under control and we moved away from the early 2000s, where we saw a shift back to CPAs becoming the CFOs because of all the control issues. We’re now seeing this resurgence to that trend before that was going on before Sarbanes-Oxley of people saying, “I need my CPA in my company to be a strategic partner. And do I see CPAs that way?” Well, this is the study that was published in Bloomberg. It says, “No, I don”t see them as being strategic.” We believe, absolutely we have a branding issue. If you look at the results of the study, they saw it as accounting, auditing and tax prep.

Kari Natale: Right. What they didn’t see it as were strategic, tech savvy, data analytics. We had other words in the association didn’t even come close to the top. It just to add onto that too, we also tested characteristics and “trusted” still came among the top of all categories, except the highest next associated word was “overworked.” Whether that’s perception or reality, that’s what people see the CPA license, that’s one of the top characteristics they view the license as. And this audience of our respondents found that a top barrier for them, the top barrier actually for the audience we surveyed, was workload time commitment. So of they see a CPAs as being overworked, they don’t have the time to commit. Perhaps, that is a generational view of their time, but found that just interesting in terms of the branding when you couple their narrow view of the credential with being overworked and no time. There’s your problem.

Don Meyer: I think the license is more closely identified with public accounting than it is private. You mentioned a couple of things about public accounting and maybe the workload and some of those perceptions. Does public accounting have a branding problem? Is the thought process that... Well, I don't want to go into public accounting because I’m just going to get worked to death, and when you go into industry right out of school, you're not surrounded or immersed in that CPA mentality, the way you might be in public accounting. So is some of this like a pushback against the public accounting, not just the license, but public accounting itself?

Todd Shapiro: I do think there’s some. If you listen to the respondents to the questions and if they saw public accounting as overworked, and if you go back and read the report we issued in 2016, we have to start looking at the world to diversity. We can’t continue to look at the profession through our perceptions. I'm 64 years old. I talked a lot of partners who are in their upper 50s and 60s, and they have a perception. Actually, I was told by a managing partner once, these young people just don't get it if they just pay their dues, they’re going to get this annuity and this annuity, it’s annuity for life.

Well, if you looked at what drove the behaviors or what people found important in the survey we did, money wasn’t at the top of the list. Part of that gets into, very simply, the life I grew up in the 1960s and ’70s isn't the same as what kids or young professionals — they didn't grow up in the same world that I grew up in. Back in this... Having one TV in your house. Yeah. I'm going to sound like an old person, but that’s the truth. Having one TV in your house, that’s a world that people today wouldn’t understand. Yet, we have this perception that we instill on young people. Well, if they just pay their dues, look at what they’re going to get.

So is it a branding problem? Is it a perception problem? If you listen to the survey, it said that r public accounting is overworked and audit, accounting and tax prep. That’s not necessarily a bad thing, but if it’s not what people want to do necessarily, then in fact, we need to start thinking about how we’re positioning public accounting. Previous research said that if you talk to the number-one influencer, I’m going to re-emphasize the point, I guess. The number-one influencer is — we’ve looked at this before — in whether somebody becomes a CPA or not, we’ve always said, was your employer. It was your employer and then it got to your college professor. What we actually asked the people in the survey, we said, “What are the top influencers in whether you decided pursue the CPA?” Employer, I believe, Kari, came out, number two?

Kari Natale: Yeah. Their self was what came up high on, number one, and then down below, almost tied, was employers and educators. I think that was based on if they were a young professional or student when we dissected that even deeper.

Todd Shapiro: And what’s interesting about this, Don, I think to the point you just made about not accepting, I know some people are going to look at this research and go, “Whatever. I know what I know.” Somebody would say, “Well, self is going to be influenced by your employer.” So if your employer tells you, that influences self. Well, self has all kinds of other factors. Is it worth it? Do I really care about it? Do I want to put the time and effort in? Do I care about being a part of it? All these other factors come into self, and we’ve got to start viewing self as not what I tell you is what self-perception is. Self is going to be driven by a lot of things.

Now, are firms reacting to this? I’d love to say they are. I think there’s some level of it. They’re trying to. You look at the pandemic, for instance, and the idea of being able to work remotely. The question is now dp we go too far to the other way where literally, it’s going to be whatever you want, you can have because I don't want to lose you. I think there’s some level of trying to react here. Even before the pandemic, some firms were going to work anytime, anywhere. Some firms were going to unlimited PTO as a way to combat this. I think that was in the larger firms. I think some of the smaller firms, they would say, "We were doing that anyway." They were more flexible. I think there's some level of combat it.

Yet, on the other hand, you'll look at what's being done. If I can work anytime, anywhere, but I'm still going to have to work 70 hours a week or 65 or 70 hours a week, but I can do it anytime, anywhere, I am still working the 65 or 70 hours a week. I don't know if we've moved the perception and I'm not sure how we can move the perception to, you're not going to... This is a profession that you can do well, you can make a great living in the public accounting side of it. In fact, you can have that work-life balance. Have we moved it?

I will tell you, take it to the next level. Have we moved the perception to the type of work we're doing? One of the things that we hear out of young professionals is they really care about trying to make the world a better place. I'm not saying that my generation didn't, I guess I'd like to think we did, but not so sure we did. There's a lot of evidence that we didn't. We were more worried about making more money than making a little bit better place. One of the things that are we helping people to try to think, even if you're working in public accounting, "Am I really there to help small businesses become successful?" Are we communicating that message enough versus just adding another tax return, adding another audit. How do we change the perception? I don't think we're doing a great job on this.

We're here to help main street businesses become successful. Other people in the world become successful. I think if you talk to partners, they'll tell you that's what they do. I think when you come into the profession, you think, "Oh, I'm just going to work on another audit. I'm going to work on a tax return. This is really exciting." Versus, "I want to go to work for this accounting firm because I want to help small businesses and the people that own those small businesses become successful." I think we've got a long way to go to change that because I'm not sure we're actually doing enough of that.

Kari Natale: Todd, talked about how top influencer was self and we dug into that pretty deeply try to figure out what that even meant and how do you influence somebody who says they're the only one who can influence themselves. The way I took that is, even if your employer and your educator or your family, your friends, they have some influence based on their decisions. They were telling us that they make decisions based on what they want, not what others tell them to do. When you start your career and your boss tells you to get the CPA, and if not, you can't be promoted in three years — what used to motivate somebody, now motivates them to move on to some somewhere else. Don, you asked on another topic about the... Are the employers or public accounting firms responding? One data point I wanted to mention when you said that was 27 percent, only 27 percent of all of our respondents said they want to spend most of their career in public accounting. Whether the public accounting firms are responding or not yet, they will when that big of an audience under 35 does not want to stay in public accounting.

Is There a Solution?

Don Meyer: Part of the challenge is letting our current CPAs know that there is no magic bullet. If they accept the idea that this is a challenge that the profession has to face the next five to 10 years, that there's no one thing that's going to solve it. There's the individual speaking to the individual — the students or the young professional — about what a great profession this is. It's speaking to them in a way that they're comfortable with, because, as the research pointed out, they are really making this choice themselves. And there may be some influences from a boss or from an educator, but it's really, they're making up their own mind, so it's speaking to them. It's continuing to work with firms to educate them and make sure they understand this audience maybe a little bit better. Then, it is to some extent, expanding the tent, whether it's through CPA Evolution or something that we didn't have a chance to touch on: diversity, equity and inclusion. We all know only about 2 percent of CPAs in the United States are African-American, and that is a great opportunity to talk to a new audience about what a great profession this is and how far you can go once you get that CPA license. I think that's probably part of it. Our job as state society professionals is to let people know that there's no one thing that that has to be done. There's a series of things.

Todd Shapiro: Well, you raise a really good point and I will tell you, and I'm going to say it again, one of the things that came very clearly of this, because a lot of CPAs think they knew why we saw the client. Again, they keep going back to this 150 hours. Change 150 hours, you'll make the whole thing go away. Well, that's not the silver bullet. It's been in existence since 2001 in the state of Illinois, longer and some states shorter in other states. We saw increasing numbers. Don't think that's your silver bullet, because in our survey, didn't make the top four reasons as to why people don't become a CPA. Debunking something is important. Now, we have sit back and say, to your point, what's causing it? There's no one thing. It's perception, it's branding, it's work-life balance. It's the kind of work you're doing. Is it rewarding enough? Rewarding is in the personal fulfillment that way, not rewarding as it puts money in my pocket that way. Again, the more we can stop looking at the world through our eyes, that's the boomers’ eyes, where putting money in your pocket was the most rewarding thing to do, the more we can make progress on this.

Don Meyer: I think that's a great point and a great place to end on. We probably could talk about this topic for another couple of hours, but I'm not sure our viewers and listeners will stick around with us. This has been an enlightening and sometimes alarming conversation, but mostly enlightening, and it should be a wake-up call to many people listening. Thank you so much, Todd and Kari for taking the time to be with us today. And thank you all for listening and watching. To access the Decoding the Decline report, visit


Don  Meyer

Don Meyer

Don Meyer, CAE, is the chief marketing officer of the New Jersey Society of CPAs, where he is responsible for setting the vision, strategy and direction for the organization’s marketing, communications and membership campaigns and for driving the success of a deep and broad swath of organizational initiatives.

More content by Don Meyer:

Kari Natale

Kari Natale, CAE, is the senior director of planning and governance at the Illinois CPA Society and is also the senior director of the CPA Endowment Fund of Illinois.

More content by Kari Natale:

Todd Shapiro

Todd Shapiro is president and CEO of the Illinois CPA Society. He also serves as president and CEO of the Illinois CPA Foundation, CPAs for the Public Interest as well as ex-officio board member of the CPA Endowment Fund of Illinois. Mr. Shapiro is on the Accountancy Advisory Board for the University of Illinois Urbana–Champaign and the AICPA’s Peer Review Board. He also served on the AICPA’s Future of Learning Task Force. In 2016 he was named to Accounting Today Magazine’s list of the Top 100 Most Influential People in the accounting profession for the second straight year.

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