College graduates without accounting degrees made up nearly a third of new graduate hires in public accounting in 2018 – an increase of 11 percentage points from 2016 and nearly 30 more than in 2014, according to the AICPA.
While undergraduate accounting enrollments were the second-highest on record in 2017-2018, CPA firms are focusing more heavily on technology skills and 31% of all new graduate hires are coming from outside accounting. As firms continue to embrace technology and evolve their approach to the audit, they are seeking employees with data science and data analytics skills, according to the AICPA.
Additionally, the number of CPA exam candidates and newly licensed CPAs in 2018 dipped to the lowest level in 10 years.
The data, from the AICPA’s biennial report, “2019 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” is based upon university responses for the 2017-2018 academic year and firm responses for the 2018 calendar year.
The results echo data analyzed by INSIDE Public Accounting (IPA) in its annual survey of more than 500 accounting firms across the nation.
“As firms continue to expand service lines and seek to hire the most qualified candidates to serve clients in many non-traditional services, we’re seeing more non-CPA professionals in the ranks of the IPA 100,” says Mike Platt, principal with INSIDE Public Accounting. “In fact, we discovered that 28% of all client-serving professionals at the IPA 100 have no intentions to pursue a CPA license.”
According to IPA’s data, 1 of every 11 equity partners is not a CPA. These non-CPAs include client-accounting service staff, MBAs, computer scientists, COOs, data analytics professionals, wealth managers, cyber-security experts, consultants, engineers, entrepreneurs, health care specialists and others.
AICPA president and CEO Barry Melancon says the accounting firm hiring model is shifting. “This is leading to more non-accounting graduates being hired, particularly in the audit function. CPAs have an unmatched reputation for trust and integrity, earned through decades of working in the public interest. However, to play this vital role in the future will require an increased focus on technology.”
On the supply side, nearly 208,000 projected students were enrolled in undergraduate accounting programs during the 2017-2018 school year. More than 33,000 projected students were enrolled in master’s programs in 2017-2018. This reflects a 6% decline from 2015-2016 but remains comfortably above any level pre-recession. Declines in graduate student enrollment is due largely to more students opting to enter the workforce in lieu of pursuing an advanced accounting degree, the report says.
There were nearly 55,000 projected bachelor’s and more than 21,000 projected master’s degrees earned in 2017-2018. This reflects a decline of 4% each from the previous report.
New CPA exam candidates increased significantly in 2016, largely attributed to the new version of the exam launching in 2017. For 2018, CPA candidates fell 7% to 36,827, while newly licensed CPAs fell 6% to 23,941.
Some of these initiatives to attract the next generation of CPAs include:
- The CPA Evolution project, launched in partnership with the National Association of State Boards of Accountancy, seeks to ensure that CPAs continue to have the needed skills.
- A CPA Exam practice analysis focused on the impact of technology and the critical skills for newly licensed CPAs. An exposure draft and invitation-to-comment will be published in late December.
- Accounting Accreditation Practitioner Engagement Program, which places CPA practitioners on AACSB accounting accreditation teams and committees.
- Accounting Doctoral Scholars Program, which provides funding for CPAs to obtain their doctorates and teach.
- Accounting Program for Building the Profession, which trains high school educators to teach a college-level accounting class.
Additionally, the AICPA is working with organizations and offering scholarships and programs to increase the likelihood that racial and ethnic minority students consider accounting early in their career decision-making process. The report found that racial/ethnic diversity has increased, with the highest percentage of non-white enrollees to date. Enrollment by gender is nearly even at both the bachelor’s and master’s levels.
