A recent article from the Wall Street Journal touted, “More than 300,000 U.S. accountants and auditors have left their jobs in the past two years, a 17% decline.” It’s getting harder to find a tax professional.
Accounting enrollment is also on a downward trend. Recent estimates indicate that “the enrollment of undergraduate students has now fallen 9.4% in two years, or nearly 1.4 million students since the COVID-19 pandemic started.”
The running joke in the accounting profession is we hope to avoid the retirement plan of dying at our desks. But not everyone is so lucky. The average age of CPAs in the US is now 43, and trending older each year. (I’m not helping the average, dear reader…)
So why are we having a hard time filling roles in the accounting profession? After all, there are those like me that love what we do. The answer is – there are easier and more profitable careers for those that choose corporate accounting and tax work over public accounting and personal tax return preparation. And for new graduates, there are certainly higher profile job opportunities in the broader finance world where an MBA may have more value than the CPA credential.
It’s Been a Rough Couple of Years
COVID has been tough on everyone. But I would argue that the massive avalanche of legislation was tougher than average on the accounting profession. Here is a list of the major tax legislation we’ve been dealing with over the last few years:
- Inflation Reduction Act of 2022 (PL 117-169)
- American Rescue Plan Act of 2021 (PL 117-2)
- Consolidated Appropriations Act of 2021 (PL 116-260)
- Continuing Appropriations Act and Other Extensions Act of 2021 (PL 116-159)
- CARES Act of 2020 (PL 116-136)
- Families First Coronavirus Response Act of 2020 (PL 116-127)
- Further Consolidated Appropriations Act of 2020 (PL 116-94)
- FUTURE Act (PL 116-91)
- Taxpayer First Act (PL 116-25)
- Bipartisan Budget Act of 2018 (PL 115-123)
- Tax Cuts and Jobs Act of 2017 (PL 115-97)
Not to mention the myriad of state level changes caused by these federal tax law changes and the states that decide to not conform (I’m looking at you, California).
In a profession where it isn’t unusual to work 60-70 hours per week for three months straight in a normal year – these past few years have hit a breaking point for many in the profession.
Tax Software Developers Have It Hard
The past few years have been hell for tax software developers. All the legislation mentioned above resulted in scores of software updates.
In what so far has been a “slow” year for software updates – here’s what things look like over a three day period in our tax software as various technical corrections and updates are applied:
That’s a lot of updates. And they come at a cost. Some of our tax software has increased pricing by almost 50% since the start of the pandemic. I’m sure more price increases are coming.
Getting the CPA Designation Isn’t Easy
Accounting graduates are required to have 150 credit hours before they can sit for the CPA exam. For many, this means an extra year of school, and all the related costs (and debt) that goes with it. The average entry level accounting salary of about $60,000 doesn’t shine so bright when stacked up against the cost of an extra year of tuition.
I was lucky enough to be one of the last tranche of students that wasn’t required to have 150 hours. I wonder how many graduates are now not even considering the profession. Many wonder if this extra hurdle makes it harder for minority students to enter the field. There are now calls to drop the 150 hour requirement. So far the American Institute of CPAs (AICPA) has resisted the effort and seems to have their head in the sand about the matter.
Where Do We Go From Here
Faced with decreased numbers of tax professionals we’ve made some strategic decisions at McCarthy Tax.
- Supporting efforts by the Ohio Society of CPAs through the Ohio CPA Foundation to attract the next generation of talent to the accounting profession. The Foundation is committed to reaching students in high school and introducing them to the accounting profession through Accounting Career Days and CPA Camp. I’m excited that they have a special focus on reaching out to minority students so that the accounting profession starts to look more like the community that we serve. To date we’ve committed over $3,000 to their efforts.
- Decreased long hours from Feb – Apr 15 by extending all client returns. This policy will allow staff to have a better work life balance through tax season by extending our work through June 1. As tax documents come in later and later, I believe tax extensions will become the norm across the accounting profession and we’re leading the way.
- Focus on tax planning. The seasonality of tax preparation leads to an imbalance of work throughout the year. However, since employees generally prefer a paycheck year round, we’re focusing more on tax planning in the summer and fall. This helps to meet our budget goals and retain high quality professionals throughout the year.
- Increased pricing. While price increases are never fun to discuss, they are a reality to keep up with higher retention costs and tax software price increases. We’re not alone here as we’re hearing the same across the industry.
While the profession faces some challenges in the coming years, I still wake up each day excited to find tax savings for our clients.
I’m excited to build the next generation of CPA firms using technology to its fullest.
And, I’m excited to prove that accounting can be a great career path for both our current team and team members to come.