The Growing Shortage of Accountants and Its Impact on Businesses

The accounting profession is currently facing a significant challenge as the number of accountants dwindles, resulting in a growing shortage of these vital professionals. This shortage is having a profound impact on businesses across various industries, affecting their financial operations and decision-making processes.

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The Decline in Accountants

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In 2022, the United States had about 1.65 million accountants and auditors,according to the Bureau of Labor Statistics’ current population survey, reflecting a modest 1.3% uptick from the previous year. However, a deeper dive into the numbers reveals a concerning trend. Between 2020 and 2022, the accounting profession experienced a 2.6% decline, and this decline was even steeper at 15.9% when compared to the figures from 2019.

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This decline becomes more evident when we consider that over 300,000 accountants decided to exit their roles between 2019 and 2021. Furthermore, there has been a notable decrease in the number of U.S. students pursuing accounting degrees, with a 2.8% decline in bachelor's degrees and an 8.4% drop in master's degrees during the 2019–2020 academic year compared to the previous year.

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Why Accountants Are Leaving

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Accountants are departing due to long hours, perceived low pay compared to their education, and repetitive tasks causing burnout. Automation and stringent educational requirements, like 150 college credit hours for CPA certification, discourage new talent. Former accountants often transition to finance, financial analysis, or roles in HR and banking.

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To counter these challenges and retain accountants, firms are implementing strategies such as raising salaries to enhance attractiveness and providing training in new skills to keep accountants engaged and updated.

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The Impact on Businesses

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The shortage of accountants is directly impacting businesses across industries. Finance and accounting departments, crucial for financial operations and reporting, are struggling to find qualified personnel. Consequently, job vacancies are taking longer to fill, resulting in delayed financial reporting and decision-making.

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Data from Revelio Labs Inc. reveals that the number of postings for U.S. accounting and audit roles has increased, totaling around 177,880 jobs in a recent year through November 30. This marks an increase from the prior year, and on average, it now takes 56 days to fill these positions, up from 46 days in the previous year.

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A survey conducted by Robert Half further emphasises the severity of the issue, with 87% of respondents finding it increasingly difficult to secure the talent they need for essential accounting functions like general accounting, financial reporting, and financial planning and analysis.

The Impact of the Accountant Shortage on Financial Statements

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The accountant shortage is impacting corporate financial statements as companies must report weaknesses in their internal financial controls (ICFR). This issue is set to worsen with retiring accountants and insufficient replacements. A recent Bedrock AI study found that nearly 600 U.S.-listed companies out of 7,359 reported personnel-related ICFR weaknesses in the first half of the year. While it's a 5.2% decrease from the previous year, it represents a significant 40.6% increase from 2019. For instance, Advance Auto Parts cited ICFR weaknesses due to turnover, leading to a delay in filing its 10-Q quarterly report as it struggled to attract and retain qualified individuals for internal control responsibilities.

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In conclusion, the accountant shortage remains a persistent challenge, demanding innovative solutions for the profession's stability and effectiveness across industries.

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