Accounting Talent Shortage Threatens Capitalism

Accounting is a vital component for economic development. Without an effective accounting system, capitalism cannot run.

The transition from feudalism to capitalism in Renaissance and Reformation Europe was because of the rise of qualified accountants.

Jason Soll wrote in his fascinating history of accounting, - The Reckoning: Financial Accountability and the Making and Breaking of Nations, that “good accounting practices have built the levels of trust necessary to fund stable governments and capitalist societies, and poor accounting with lack of accountability have led to financial disruption, economic crimes, civil unrest and worse.”

And just as old times, poor accounting practices have been to blame for some of the biggest shocks to the financial markets and the economy. Major examples of this include Lehman Brothers and Enron.

All of this suggests that we should pay attention to the issue that American accountants have been facing for years: Accounting Talent Shortage.

Reasons for This Accounting Talent Shortage:

• The number of employed accountants and auditors decreased by 17% between 2019 and 2021, as per Bloomberg tax report. As more businesses have gone public, the demand for accountants has increased.
• On the supply side, it appears that universities are producing fewer accountants each year. Meanwhile, between 2017 and 2018, there were 7% fewer CPA candidates.
• The number of applicants who passed the CPA exam decreased by 6% during that time.
• Additionally, there has been a lot of employee turnover at accounting firms. Even Deloitte & Touche LLP reports that 82.4% of hiring managers in public companies for accounting and financial positions consider recruitment to be a "big challenge."
• Other factors include the fact that many accounting workers are choosing to use their experience from accounting firms to obtain better positions in fields other than accounting.

High turnover and rising demand combine to make the talent shortage worse.

Because of the accounting talent shortage, the remaining accountants must put in more effort under challenging circumstances. They are less likely to get to experience the camaraderie of teams and are more likely to have to work alone under pressure.

Let's consider this:

"A decline in the quality of audits is the obvious outcome of the accounting talent shortage. Public companies are having a harder time finding accountants to review their books, and when they do, they frequently have to push them further. Errors (or dodges) go unnoticed and crucial checks are omitted. Companies risk getting in trouble with the SEC if they file late; if they include errors, they risk fines and a negative impact on the market. Stock prices can fall as a result of even minor mistakes."

However, at the same time,

"The lack of accountants is arguably also lowering the likelihood that US regulators will detect mistakes, or worse: A higher than 6% attrition rate plagues the SEC, and a rising percentage of its work is performed by contractors. A bigger company that is mishandling its finances and will eventually collapse, wreaking economic havoc in its wake, is more likely to happen as a result of subpar oversight."

The accounting talent shortage has, in some ways, fostered a culture of blissful ignorance. You never know whether you're about to walk into a financial minefield or not. Scary, right?

Here is How the Accounting Talent Shortage is Threatening Capitalism

Businesses are able to attract capital and make wiser decisions because the public has confidence in the financial information they provide. If this continues, the economy will become less productive, and economic crisis could flourish because more capital will flow into low-productivity areas, which will cause higher-productivity areas to experience a decline in productivity.

A key factor in the distribution of capital in society is played by accountants. Our economy should operate effectively.

We hope that this accounting talent shortage prevents US firms from earning the same reputation that the Chinese firms have after the Great Recession: companies with unreliable financial statements and a high propensity for fraud.

With the ongoing accounting talent shortages, it is getting difficult to attract and retain accounting talent.

The constant increase in client demands and the workload with tax season coming up, it’s going to be challenging for accounting firms to get more people onboard with them. Is there any way to attract and retain accountants so they thrive in this competitive market?

What if we consider raising the pay?

The industry is doing more to entice new hires even though it is still committed to the long-term reward model by offering bursaries to college students who want to become accountants or signing bonuses for new employees. But will the small and mid-sized CPA firms be able to do this after the post-Covid financial crunch?

What if the working condition gets better?

Due in large part to how challenging the market is for them, the big four accountants are setting the example for other major corporations by adopting "work from anywhere" policies. This will help companies' employees save money and also help them attain a work-life balance.

Can technology act as the cavalry?

Technology can help you redefine your business processes for sure. Accounting is exactly the kind of field that AI, with its uncanny capacity to spot patterns and anomalies in data, is supposed to revolutionize. But despite their enormous resources, even the top companies have struggled to create new technologies for accounting professionals.

Additionally, AI has its limitations: human judgment and political sensitivity are still needed to solve some of the most complex accounting issues.

These evolving trends and technology can help you scale your business. But you will also need people to support you when your clients' demand increases. There is a way out. Outsourcing can help you thrive during this accounting talent shortage.

How about outsourcing to beat this talent shortage?

Companies are having a harder time accessing a better workforce as the number of workers with the necessary skills is not increasing at a rate that keeps up with demand globally.

Finding and keeping the right employees is a challenge for business owners, regardless of whether they run a small accounting firm or a major financial institution.

To combat the talent shortage in your company, you can strengthen your team by outsourcing.

You may be using innovative techniques as the owner of an accounting firm to recruit accountants and bookkeepers for your firm. However, if you are unable to get any results, you can choose a practical solution known as "outsourcing. or “offshoring.”

The benefits:

Continuous supply of resources:

In the nick of time, outsourcing can save you from a mountain of tax work or low-skilled jobs like bookkeeping.

Effective talent pool:

This means you can avoid hiring and training inexperienced accountants. Depending on the volume of work, you can hire as many accountants, auditors, and bookkeepers from the outsourcing company.

Better control:

Although CPAs and accounting firms are more receptive to outsourcing than ever before, the majority of them still view it as a significant step.

Usually, the uncertainty centers on whether or not they would still be in charge of all the activities. And "yes" is the response. You can leverage the power of technology to help you get detailed reports and meetings.

Cost-effective:

Hiring and onboarding are costly processes. You should probably outsource if you believe that looking for the right candidate for your business is something you are struggling with and is using a lot of your time and money. It will even help you reduce your cost of operations.

Bottom Line:

As the shortage of accountants deepens, the problems threatening the capitalist system seem to multiply. Moreover, a business can’t grow if there is a talent shortage in the firm since it is the people that ensure the continuity of plans.

We can proactively assist you to address talent and retention issues. You don’t need to go around searching for full-time staff when you can get all the help you need without wasting much.

Ace Global assists accounting firms to build remote teams that allow them to grow and adapt to ever-changing market needs. With us, you get access to top accounting talent and technology.?