The accounting profession is struggling with a huge drop in the number of people taking the CPA exam. According to a new story in the FT, the number of CPA test takers is down over 20%. At first, it was hypothesized that this was simply another pandemic anomaly. However, it may be part of a worrying trend.
“The number of people sitting the CPA exam had hit a decade low even before the pandemic, which caused a further drop to just 72,271 last year, from almost 103,000 five years before. With 43,000 candidates in the first half of 2022, the rebound does not look strong enough to recover lost ground.”
The trend can even be seen in the number of students enrolled in accounting at university. Starting in 2016, there has been a downward trend. Worse still, it is starting to accelerate.
Many in the profession are baffled. Some firms are trying to entice new graduates to the profession with bigger pay packages.
“Big Four firms have created numerous CPA “accelerator” programmes. KPMG, for example, is offering to start paying next year’s new hires two months early while they complete the extra study, according to Becky Sproul, talent and culture leader for KPMG in the US.”
I believe that the decline in enrollment is because the process is too onerous compared to other career paths that young people have available to them. More specifically, the process is too onerous and the pay is too low to compensate for the onerous process. For that reason many young people that I know are simply opting for data science jobs. The boom in tech jobs post 2016 also coincides with the drop in the CPA exam test taker numbers. There were so many high paying jobs available in the high tech industry that CPA candidates looked elsewhere.
However, as the economy starts to slide into recession in 2022, it is possible that the CPA exam numbers will start to trend up again. The silver lining of the looming recession is that some in the profession see accounting as a counter cyclical profession.
“Nasba’s Conrad said an economic downturn might help swing people back to the profession. “When the economy is good, the market is good, there is a lot of M&A activity, people that might go into accounting may say they’ll go into finance,” she said. “If the economy starts to turn and we start to see lay-offs as we have recently among the investment banks, you may see people coming back to accounting. “Accounting is solid. You can always get a job as a CPA.”
