Accounting firms show progress in diversity despite pipeline challenges
The accounting and finance functions of U.S. CPA firms made gains in hiring and promoting diverse staff in 2020 amid an overall slowdown in the CPA pipeline that is likely at least partly attributable to the COVID-19 pandemic.
These are the findings presented in the AICPA’s 2021 report Tendencies report. the Tendencies The report, first published in 1971, provides data reported to the Integrated Postsecondary Education Data System (IPEDS) along with statistical projections and expectations based on university responses for the abbreviated academic years 2019-2020. and 2020-2021, and firm answers for the 2020 calendar year. The data provides a snapshot of the profession, relative to the current economy and the ability to forecast future trends.
Takeaways from the 2021 report, which was released on Wednesday, include:
- The proportion of new ethnically diverse bachelor’s and master’s accounting graduates hired into accounting/finance roles at U.S. CPA firms rose to 35% in 2020 from 30% two years earlier. Ethnicities with increases included Asian or Pacific Islander, Black or African American, and Hispanic or Latino (up 1.9, 0.6, and 1.6 percentage points, respectively). These three groups were at or near their highest proportions in AICPA history. Tendencies data gathering. Meanwhile, ethnically diverse candidates and women have made significant gains in leadership levels.
- The total number of recent accounting graduate hires for accounting and finance roles by U.S. accounting firms in 2020 was down 10% from 2018 and fell to 27,751 from a high of 43,252 in just six years earlier. Companies reported that 57% of their newly hired graduates were accounting graduates, compared to 43% who were non-accounting graduates. In 2018, 31% of these hires were non-accounting graduates, up from 20% in 2016. Nonetheless, CPA firm interest in accounting graduates for accounting and auditing positions remains high, as these positions were the career starting point for 66% of accounting graduate hires in CPA firms. This is up from 56% two years earlier and far exceeds the 24% who started their careers in corporate tax roles.
- Nearly three-quarters (74%) of companies that hired one or more accounting graduates in 2020 plan to hire the same or more in 2022 compared to 2021. Nearly nine in 10 (89%) of all companies US CPAs expect to have the same or more CPAs on staff in 2022 compared to 2021.
- The number of new CPA exam takers decreased by 17% between 2019 and 2020 due to short-term closures and various restrictions at test centers related to the pandemic; this number had remained essentially stable between 2018 and 2019. A 6% increase was reported between 2020 and 2021. Meanwhile, the number of candidates who passed their fourth section of the CPA exam fell by 11% between 2019 and 2020 and fell a further 5.5% between 2020 and 2021.
“We’re up from where we were, but at the end of the day, the trend is still down,” said Jan Taylor, CPA, CGMA, Scholar-in-Residence for Academic Engagement and IAAF student. Association of International Certified Professional Accountants, representing AICPA and CIMA. “That’s why we have a whole series of pipeline initiatives underway, to slow this decline and reverse it.”
A transformative model
While it’s difficult to discern exactly how much COVID-19 is responsible for some of the pipeline trends, the AICPA and the National Association of State Boards of Accountancy have already taken steps to address it through the CPA Evolution initiative, which transforms the CPA license. model of recognition of the skills and competencies needed to succeed in the practice of accounting today and in the future.
The AICPA and NASBA are moving forward with a new licensing model that emphasizes building core skills in accounting, auditing, tax, and technology while developing deeper expertise in one of three following disciplines: information systems and controls; tax compliance and planning; or business analysis and reporting.
In just four years, the percentage of non-accounting graduates hired by CPA firms has more than doubled, from 20% to 43%, as there is an increased demand for technology skills in accounting firms’ hiring model.
A CPA exam aligned with the evolution of CPA is set to launch in 2024, and a curriculum model has been created to help college and university educators prepare students to succeed in the new environment.
“Accounting programs across the country bring more data analysis and technology,” Taylor said. “Academics recognize that the profession is changing. Most professors I have spoken with are excited that they will be able to teach curriculum that is relevant to the profession and give students skills that will be very marketable.”
The profession’s efforts to encourage diversity, equity and inclusion have seen progress with an increase of nearly 5 percentage points (a change from 30.1% in 2018 to 34.7% in 2020) in the proportion of new accounting graduates hired by CPA firms that are ethnically diverse.
This happened despite a trend towards ethnic diversity in bachelor’s degrees that has been almost completely stable since 2013-2014.
Meanwhile, the proportion of ethnically diverse partners in the accounting/finance functions of accounting firms doubled over a two-year period, from 9% to 18%. These included gains with partners identifying as Asian/Pacific Islander (from 4% to 10%), Hispanic/Latino (from 2% to 5%) and Black/African American (from 1% to 2). %).
Women also made significant gains in partnerships, representing 39% of these positions in accounting and finance functions, up from 23% two years earlier. The percentage of female CPAs in companies also increased, from 42% to 46%, while the proportion of ethnically diverse CPAs increased from 16% to 23%, including a 4 percentage point gain in the representation of Asians and Pacific Islanders.
“It’s imperative that we continue to grow the diversity that we need,” Taylor said. “It’s important to have [diverse] people in these spaces, and it is also important that they represent the profession by traveling to college campuses and being visible in classrooms and at student organization events to show students from diverse backgrounds that they have opportunities to succeed in the profession.
Difficulties in keeping the supply of potential CPAs in the pipeline reflect the challenges faced across the education sector since the onset of the COVID-19 pandemic. Overall, school enrollment is down as some young people have reassessed their aspirations and ability to pay for college amid the pandemic.
Total undergraduate enrollment fell 6.6% between fall 2019 and fall 2021, representing a shortfall of 1,025,569 students, according to the National Student Clearinghouse Research Center.
Post-secondary accounting programs have also seen a decline, although their start-up began before the pandemic. The combined number of graduates with bachelor’s and master’s degrees in accounting has steadily declined since peaking at 79,854 in 2015-2016. Between 2018-2019 and 2019-2020, this number fell by 4% to 72,923.
On the other hand, the number of new CPA exam takers is expected to grow in the coming years after an increase from 30,385 in 2020 to 32,186 in 2021. Historical trends have shown that the overall volumes of takers tend to increase before the launch of a new form of examination. With the debut of the CPA-aligned exam in January 2024, more exam takers are expected in 2022 and 2023.
In addition to CPA Evolution and the many ongoing profession pipeline efforts, Taylor believes that individual CPAs can help the profession grow with the stories they tell. She encourages CPAs to talk more about how a career in accounting, including the various pathways it offers, can propel their careers and set them up for success.
“The positive messages and shared experiences and learnings that accountants receive to help them understand and navigate the language of business will help us attract strategic and innovative individuals to this profession,” she said. declared. “We do it with our stories.”
— To comment on this article or suggest an idea for another article, contact Ken Tysiac at [email protected].