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NextGen Magazine


Shortage of Accountants Blamed—in Part—for Recent Earnings Statement Mistakes

S.J. Steinhardt
Published Date:
Mar 4, 2024

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As companies continue to make financial reporting mistakes this earnings season, resulting in restatements, some professionals point to the shortage of CPAs as a possible partial cause, Accounting Today reported. It mentioned that, as Bloomberg reported, several major companies had to correct their quarterly earnings statements recently, including Lyft Inc. and Planet Fitness Inc. 

As retirements outpace the infusion of new practitioners entering the profession, the result is an increase in current accountants' hours and workloads, increasing the potential for mistakes and burnout. 

"If the people preparing the financials are overworked, or there's not enough of them, you will have errors," said Joshua Khavis, assistant professor of accounting and law at the University at Buffalo School of Management, whose research has documented links among auditor turnover, long working hours and mistakes.

Last year, more than 720 companies cited insufficient staff in accounting and other departments as a reason for potential errors, an increase of 30 percent from 2019, according to an analysis by equity research firm Hudson Labs for Bloomberg News.

Experts have cited several reasons for the shortage. For example, Guylaine Saint Juste, the president and CEO of the National Association of Black Accountants, Inc. (NABA), wrote in Fortune that the 150-hour rule has become "a structural barrier that many believe, and recent research supports, makes it difficult to attract skilled talent." Student debt loads and low pay, compared to that of other fields that attract those with accounting skills, are additional problems.

“I would attribute a large portion of that national decline in accounting enrollments to the general reluctance of public accounting firms to significantly increase starting salaries,” said Michael Donohoe, head of the accounting department at the University of Illinois Urbana-Champaign, who previously worked at PwC, in an interview with The Wall Street Journal last year. “Over the last eight to 10 years, starting salaries have not kept pace with these really cool emerging fields, like data science.”

Jacqueline Burke, a professor of accounting at Hofstra University's Zarb School of Business, told Accounting Today that the demand for fresh talent has become so intense that more firms are turning to undergraduates to bridge gaps, leading to many students taking on full-time internships on top of their full-time studies. "The number of students doing that—it's unheard of," she said.

Companies are intervening to help ease the path to certification, such as PwC’s pilot program with Saint Peter's University in New Jersey that allows students to count full-time, paid work at the firm toward their credit hours. Other companies emphasize the positive social impact accountants can make when posting jobs; listings that do so draw 80 percent more applications, on average, according to Handshake.

For some, the problem still remains the 150-hour rule.

"You're talking about the opportunity cost of working full-time for a year and the cost of tuition," said Ralph Polimeni, an accounting professor at Hofstra University. "If I were entering now into [a] profession, I don't think I would've gone into accounting."