The global accounting shortage is real. According to Bloomberg, the U.S. alone is short of more than 340,000 accountants, highlighting the accounting industry’s significant gap between supply and demand. The talent pipeline is also drying up as the number of students taking the CPA exam continuously drops yearly, the 2024 numbers being the lowest since 2006.
On top of this, many accountants are transitioning to other careers for better pay, work-life balance, and opportunities for career advancement. According to CNBC, more than 300,000 U.S. accountants have left their jobs in the last two years alone. As a result, there has been a 17% decline in employed auditors and accountants (Source: The Wall Street Journal).
To make matters worse, more than 75% of AICPA members are near retirement age, which forecasts even more significant shortage problems in the future.
Now that it is established that there is an incidence of accounting shortage let’s look at its impact on your business. Following that, with inputs from our accounting experts at Outsourced Bookkeeping, we’ll explore strategies that can address the overall shortage and mitigate its impact.
Impact & Consequences of Accounting Shortage:
The need for the right amount of accounting resources is detrimental in every way for every business, whether small, medium, growing, or large. Every company that aims to maintain the sanctity of its financials or is looking to scale its growth must be supported by the right accounting expertise, which has become increasingly rare. Every business’s accounting department now has to make do with the available resources, burdening them with additional work that reduces their productivity and efficiency.
Publicly traded companies are now openly lamenting that they cannot find certified accountants in their financial statements. As a result, high-profile errors in regulatory filings have been growing, according to one of our accountants at Outsourced Bookkeeping. Some of the other accounting challenges being faced by companies worldwide due to the accounting shortage include:
- Longer Turnaround Times for Financial Reporting:More resources can slow down every accounting process, especially those relying on manual accounting. The ultimate result is delays in financial reporting insights and operations, which can slow down business operations and investor relations and even skew regulatory compliance.
- Budgeting and Forecasting Become Difficult:Any financial optimization requires insights and analysis, which can only be improved with the right expertise in accounting. A business with the right accounting resources and accurate financial reporting will be able to make effective use of insights.
- Reduced Internal Controls:Fewer resources handling multiple tasks decreases security and increases the chances of fraud. A company that previously invested in internal controls and audits will no longer be able to keep them in check effectively.
- Limited Capacity for Strategic Planning:Delayed financial reporting, reduced resources for budgeting and forecasting, and other strategic initiatives impact a business’s ability for long-term strategic planning.
- Increased Workload for Existing Accountants:The accounting shortage leads to overworking existing accounting staff, increasing the risk of burnout and worsening the overall shortage problem.
- Higher Costs of Accounting Services:The growing shortage of accounting talent may increase the cost of accounting services, further putting an additional strain on companies.
How to Address the Accounting Shortage Problem?
The accounting shortage has become a global crisis, with 87% of publicly listed businesses needing help securing and retaining accounting talent for essential functions like financial reporting and analysis. It is high time for every business to take proactive steps to avert this crisis and mitigate its impact. Here are a few strategies that can help:
- Investing in Accounting Automation Tools:With the emergence of full-scale accounting automation tools, businesses can reduce their reliance on accounting resources for manual tasks. Investing in the proper accounting automation tools can help companies to focus on the strategic side of accounting.
- Internship & Training Programs:Building accounting talent pipelines is another practice businesses can use to mitigate the shortage problem. Many companies today offer training and internship programs to new graduates, providing practical experience. These training programs can act as talent pipelines for businesses.
- Training Existing Staff:Offering continuous learning programs that equip accountants with emerging technologies and accounting training also helps businesses bolster their existing talent. Studies repeatedly show how investing in employees pays dividends for businesses.
- Seeking Help from Outsourced Accounting Partners:Businesses and even CPA firms are partnering with outsourced accounting firms to reduce the burden on existing resources while improving the quality of work. Partnering with outsourced accounting firms can help businesses save time and money, redirect accounting resources to core work, and shield themselves from the accounting talent crisis.
If your business or CPA firm is looking to bolster your services with the help of outsourced accounting partners, Outsourced Bookkeeping offers complete bookkeeping and accounting assistance and support for all your endeavors. As one of the most trusted remote accounting firms, Outsourced Bookkeeping has an exceptional track record in delivering bookkeeping, accounting, payroll, tax auditing, and consulting services. For more information about our services, please visit us here.
