Accountant shortage: understanding the impact on businesses

Key takeaways:

• The accounting profession faces a critical talent shortage with 75% of CPAs approaching retirement age while fewer graduates enter the field.
• Businesses now need up to five weeks to fill accounting positions, creating significant operational delays and increased workload for existing staff.
• The shortage leads to concrete business risks including delayed financial reporting, weaker controls, and less strategic planning.
• Automation tools and documented processes can help companies maintain efficiency despite reduced accounting staff.

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Fewer professionals are entering the accounting profession, while many practicing accountants are set to retire in the coming years. This growing shortage means businesses may face challenges in securing the expertise needed for financial reporting, budgeting, planning, and compliance.

Understanding the accountant shortage

According to the Bureau of Labor Statistics (BLS), there are currently 1,562,000 accounting and auditing jobs in the US. BLS explains that these jobs typically require a bachelor’s degree for entry-level positions. 

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The Bureau projects 130,000 job openings yearly over the next decade. BLS points out, "Many of those openings are expected to result from the need to replace workers who transfer to different occupations or exit the labor force, such as to retire.”

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However, many young people have moved away from accounting majors and considered other career paths in recent years, leading to a talent gap.

Fewer accounting graduates

Many business students opt for majors like finance, perceiving accounting as less appealing due to its rigorous demands and lower starting salaries. This perception has created a talent shortage that impacts the staffing of accounting positions.

Challenges with CPA requirements

Becoming a Certified Public Accountant (CPA) involves meeting rigorous standards set by the American Institute of Certified Public Accountants (AICPA) and state regulatory bodies. Candidates must complete 150 college credit hours—30 more than a typical bachelor’s degree—resulting in higher tuition costs. They also spend over 400 hours preparing for the CPA exam, designed by the AICPA, and are required to gain relevant work experience before obtaining licensure.

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The CPA licensure process is administered by State Boards of Accountancy, with the National Association of State Boards of Accountancy (NASBA) coordinating efforts across all state boards to ensure consistency.

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In contrast, other business-related majors require fewer credit hours and do not mandate certifications, making these career paths more accessible and appealing. Accounting students face higher financial and time commitments, including purchasing CPA test preparation materials. These barriers contribute to the growing talent shortage in the accounting industry.

Industry reputation 

The accounting profession is known for requiring long hours, particularly during month-end. Accountants specializing in tax preparation for IRS and state filings have heavy workloads from late January to April 15th, and there is a higher risk of burnout than in many other professions.

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Entry-level accountants may perform mundane tasks like inventory counts or bank reconciliations. However, many people entering the workforce want work-life balance and more interesting projects.

Salary considerations

For some professionals, starting salaries do not justify working more hours on tasks that may not be interesting. Business majors may decide that finance offers higher compensation and more interesting work. 

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Professionals retiring

The Financial Times points out that: “75% of existing CPAs are at or near retirement age.” The youngest baby boomers (those born between 1959 and 1965) are approaching retirement age, and this group includes many accountants. These veteran accountants have valuable industry knowledge that employers lose when they retire. 

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The same article states that the number of people taking the CPA exam fell to a 17-year low in 2022. Fewer CPAs are available to replace retiring accountants, and the accounting talent pool is shrinking.

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A Robert Half survey in the Journal of Accountancy reports that businesses need four weeks to fill staff-level accounting jobs and five weeks for management-level positions. When an accounting position is vacant, the accounting staff may fall behind on work and not have time to complete valuable analysis for management.

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How the accounting shortage affects businesses

Business owners rely on the accounting staff for accurate financial reporting, strategic planning and budgeting, and regulatory reports. Without enough staff, businesses face a range of operational challenges, including increased demands on existing employees.

Heavier workloads

As your business grows, you must process more accounting transactions, and the accounting work becomes more complex. Your accounting staff will work more hours to keep up, which may demoralize your team. Employees may feel burned out and leave if you can’t add to the accounting staff.

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Heavier workloads also increase the risk of errors, particularly during the month-end or year-end close. Mistakes can lead to inaccurate financial statements or incorrect regulatory reports, resulting in fines and penalties for your business. Your team must invest more hours to correct errors.

Less time for strategic planning

The accounting staff provides information for strategic decision-making. Senior accountants, including the CFO, can offer strategic thinking on major decisions, such as purchasing a competitor or starting a new product line.

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If your accounting staff struggles to complete the day-to-day accounting tasks, they have less time to generate management reports and discuss planning options.

Weak financial controls

Businesses need experienced accountants to complete accurate financial reports promptly. The Wall Street Journal reports that many companies cannot file financial reports on time or have to restate financial results due to errors or missing information. The same report notes an increase in CFO turnover.

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Your business needs strong financial controls to maintain shareholder confidence. Accounting requires judgment, and experienced accountants have the skills to make intelligent decisions regarding complex financial issues. A CFO must be able to support accounting decisions when meeting with senior management and board members.

Practical solutions for businesses

Start by ensuring that you have a written process for every routine task the accounting staff must complete. Those tasks include payroll, billing, accounts payable, and other monthly activities — document who performs each task and how often.

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Maintain your processes in a procedures manual that your staff can access on the cloud, and update the manual as needed.

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Automation cannot solve the accountant shortage, but it can help your accounting staff save time, reduce error rates, and free up hours for more interesting work. 

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Consider expense management, for example. Before automation, a salesperson would return from a business trip, review the physical expense receipts, and manually complete an expense report. A manager would review the expense report and the attached receipts and forward the approved report to the accounting department.

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A manual process is time-consuming, and physical receipts can get lost or damaged. The accounting department posts transactions using hardcopy documents that require hours of manual input.

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Ramp’s expense management solution automates many tasks:

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• Spending controls: Give employees a Ramp corporate card with expense policies built-in so that you can prevent unapproved spend. Allow employees to request spend from pre-set budgets.

• Automated receipt processing: As soon as spend happens, Ramp prompts, collects, and matches receipts via SMS, mobile app, and integrations with Gmail, Lyft, and more.

• Faster approvals: Create custom workflows to ensure the right stakeholders are looped in to approve.

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Ramp’s accounts payable automation tool uses artificial intelligence to automate data entry so your team can focus on more strategic work.

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Using cloud-based platforms to eliminate manual processing and paper files delivers transformative benefits, enabling automated reconciliations that simplify and accelerate month-end book closures.

The future of financial roles

With technology improvements, accountants will spend less time on transaction input and manually reconciling accounts. Instead, accountants will oversee automation platforms that complete routine tasks. 

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The future accountants will use AI to perform higher-level analyses and work more as business advisors for senior management. Use Ramp to leverage your existing accounting staff and scale your business with less effort. Explore how Ramp customers save an average of 5% a year across all spending.

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