The 2024 Top Issue Troubling CPA Firms of Almost All Sizes

This vicious circle is taking its toll on the accounting profession.

The research results of the AICPA 's 2024 Private Companies Practice Section (PCPS) CPA firm top issues survey clearly reflect this. According to AICPA , "The PCPS CPA Firm Top Issues Survey gathers insights from practitioners nationwide to identify the most pressing issues facing firms of all sizes. The results provide perspective on the state of public accounting, both now and over the next five years."

Surprisingly, it is not a surprise

It is not surprising that the survey result shows this to be the top issue for firms of all sizes, excluding solo practitioners.

The surprise is that despite all that is being done and talked about to overcome this problem, it is still a massive challenge for firms and looks like it will continue to be so for quite a while.

The #1 issue

Finding qualified staff.

It is the top issue for accounting firms of all sizes, except for sole practitioners.

The #2 issue

Firms with 11 or more professionals cited this as their No. 2 issue.

Retaining qualified staff.

Related issue

Small to midsize firms say “developing the next generation of firm leaders” is one of the top five concerns or higher.

Firms with six to 10 professionals are cognizant that the demographic of owners' and partners' age is a top five concern, indicating that leadership development could result from staffing and retaining talent challenges.

Causes and remedies

The National Pipeline Advisory Group (NPAG) , an independent advisory group, was convened in July 2023 in response to an AICPA Council resolution to develop a national strategy to address accounting talent issues. After a herculean effort spanning months, it released its 85-page report of findings and recommendations to overcome the challenges. According to the report, the key causes of the accounting talent shortage are:

Changing labor market:

• Demographic shifts
• Overall labor shortage

Educational challenges:

• Cost and time of education
• Declining enrollment

Perception of the profession:

• Negative perceptions
• Awareness issues

Workplace culture and conditions:

• Work-life balance
• Compensation

Diversity and inclusion:

• Underrepresentation
• Lack of mentorship

Technological impact:

• AI and automation

Global Trends:

• International shortages

Major themes and recommendations in the report

• Telling a more compelling story about accounting careers
• Making the academic experience more engaging
• Addressing the time and cost of education
• Increasing support for CPA Exam candidates
• Expanding access for underrepresented groups
• Enhancing the employee experience

The report is a HUGE step towards calling for concerted action by all concerned to address this top issue.

A closer look at the causes and the recommended remedies points to a vicious cycle. One will require rocket power to escape the profession's current gravitational pull of talent shortage. Addressing one area in isolation is insufficient and inefficient. A comprehensive, integrated approach is required to break this vicious cycle and overcome the talent shortage in the accounting profession.

Why is it a vicious cycle?

• The demographic shifts leading to a shrinking workforce require expanding access for underrepresented groups. However, without sufficient talent entering the pipeline due to educational and perception challenges, efforts to expand access may fall short, worsening the overall labor shortage.
• High educational costs and long pathways to licensure keep potential students away, thus creating a decline in enrollment. When enrollment declines, the number of people to fill vacancies also declines, thus creating a shortage again. Without reducing the cost and with no/inadequate student engagement at an earlier age, the pipeline will stay leaky, reducing the effectiveness of the work being done to attract new students.
• Poor perceptions about the accountant's role, impact, and overall awareness keep students away from accounting. Without changing the story (actually, we need more celebrities in accounting to "show," not just "tell") and creating a better public perception, even well-funded educational programs may not draw enough new students, continuing the cycle of reduced interest and enrollment.
• Bad work-life balance and low competitiveness of compensation drive away professionals who are already in the field and discourage new professionals from entering. Enhancing the employee experience is key, but this also requires enough new people to enter the profession to take the burden off the current workforce and improve the situation to avoid a catch-22.
• Lack of diversity and mentorship of underrepresented groups. Increased access is key but it is difficult without a diverse and supportive environment, which has made breaking the cycle for under/low-represented groups harder to do.
• AI and automation will significantly reshape the nature of accounting work, i.e., the "tasks" we currently call "work." Different educational content and methods need to be used in tune with the "future of work." If the academic experience is not modernized in line with the technological challenges at hand, new talent entering the profession will constantly be un/under-prepared, further widening the talent gap.

How can you and your firm break free from the vortex pull of this vicious cycle?

If it all sounds too pessimistic, take a deep breath and relax. Some firms, including smaller firms, are setting examples of overcoming this huge challenge.

At Datamatics Business Solutions , we provide services EXCLUSIVELY to CPA/Accounting firms. All our clients are such firms. We get to see how firms of different sizes adjust to this talent-shortage reality and win the war for talent. Here are some effective best practices for you to take inspiration from. Despite talent shortages, you can deploy one or more or all of these strategies to enhance your firm.

• Liberate the human potential: Automate. Automate. Automate. Leverage technology to the hilt to liberate your team's human potential. Let them focus on discovering intelligence from information and not just getting data in its place. That will also help your firm deliver better and more profitable (for your firm) advisory services to your clients.
• Change your firm's business model: If you are still working on the "get paid for your time" model, it's time to radically change it. If you have mostly "price-conscious" clients, this indicates that they perceive you as an hourly labor provider. Embrace a subscription and fixed-fee model and intently change your client mix, and charge for the true value you deliver to your clients.
• Expand your talent sourcing: Hopefully, your firm has embraced "remote working" post-pandemic. If not, ensure your technology stack enables that as quickly as possible. It will help you hire talent wherever they are available/based, giving you a better chance of hiring staff quickly.
• Hire non-accounting graduates for non-core non-technical roles: With technology progressing by leaps and bounds and advisory services being the future, you may not always need to hire only accounting graduates. For roles that need client interactions for advisory services, data-savvy staff with great communication skills might be the relief you are looking for.
• Offshore/outsource to create your global team: This choice has rapidly emerged as the most viable and fastest solution to staffing challenges. Remote staffing, outsourcing, and offshoring are alternative names of the same underlying strategy that successfully growing firms leverage. While there are several outsourcing providers, you'd want to ensure control and not incur huge time delays and costs by doing it on a trial-and-error basis. Here is an exclusive quick-read eBook in which you can learn:

a) 17 critical aspects of the strategies for outsourcing, and offshoring

b) 12 important steps to take before you decide to outsource.

c) Five technological measures to ensure seamless outsourcing arrangement.

• Get in touch with me: I am blessed that Accounting Today has recognized me as one of the top 100 most influential people in accounting for the last seven consecutive years. I have the experience and expertise gained in nearly 20 years of working in the accounting-exclusive outsourcing industry. I know the "insider truths" of this market -so very vital for you to make the right choice about outsourcing and offshoring. Whether you end up working with my company or not, rest assured that you will receive honest and no-holds-barred actionable intelligence from me, gratis. Click here to get on my calendar . (BONUS P.S.: I'd love to share with you a copy of the ebook "How to Create Your Firm's Global Team in Just Two Weeks," downloaded so far by 850+ accountants).