Where Have All the CPAs Gone?

As the pool of accounting students shrinks, employers scramble to beg, borrow, or steal entry-level finance staffers.

Like a river after a drought hits at its source, the flow of newly minted certified public accountants is thinning. The shortage has reduced Corporate America’s options for filling entry-level finance posts, and has led the Big Five and other bastions of the accounting profession to find ways to attract and retain future generations of students.

Experts offer a number of explanations for the dearth of CPAs. The Securities and Exchange Commission’s new conflict-of-interest rules, which block accounting-firm managers from owning stock in client companies, certainly do their part to make the prospect of Big Five work less appealing to business students. So does the proposed SEC ban on providing consulting services to audit clients. Until recently, the bull market also created a surplus of corporate finance opportunities, especially among start-ups, making a career path through the Big Five no longer seem mandatory for ambitious business grads. And, of course, accounting remains hindered by its old image problem as something less than a glamour profession.

Whatever the reasons for the shortage, though, statistics point to a serious problem. Undergraduate and graduate accounting programs enrolled 149,800 students in the 1998­99 school year, down 22 percent–from 192,300–just three years earlier, according to the American Institute of Certified Public Accountants (AICPA). And in 1998, 117,000 students sat for the CPA exam nationally, 18 percent fewer than in 1990. The number taking the exam spiked to 126,800 last year, but that reflected another problem: Applicants flooded the system to get in before the expansion of state-enacted regulations that require CPA candidates to complete 150 college-credit hours–a full year more than a standard four-year diploma requires. The regulations have already been enacted in 33 states, and state legislatures in 15 more have voted to enact them in the next few years.

Some accounting experts cite the increased course requirement as a big factor in the drop in CPA applications. “Students are thinking, ‘Why would I go to school for another year and incur the costs?’” says Dana Ellis, global director of recruiting for Arthur Andersen, which hires more than 6,000 new employees in the United States a year, 4,000 of them from campuses. “The 150-hour requirement is really a cause for concern on our part,” he says, especially when combined with the students’ perception that “CPAs aren’t doing interesting, dynamic work.”

Meanwhile, the AICPA, a chief supporter of the increased CPA course requirements, suggests that the issues go even deeper. The organization cites a general lack of awareness of the profession among high school students who are selecting colleges. A recent study done for the AICPA by The Taylor Research & Consulting Group Inc., in Portsmouth, New Hampshire, showed that of 1,000 students polled, only 10 said they wanted to go into accounting. “We were concerned about whether the 150-hour rule was an impediment to students entering the profession. Our research shows that it wasn’t,” says Bob Elliott, a former AICPA chairman and a partner at KPMG. “Students are saying that they’ll jump a hurdle of any height if it’s worth it to them,” he says, but most don’t think it’s worth it. Too few of them understand that accountant training exposes students to how businesses operate financially–knowledge still considered crucial for top corporate jobs.


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