Firm Hiring Trends of Accounting Graduates
As pointed recently by the 2018 Rosenberg Survey (CPA Journal, 2018), technological innovations such as blockchain and artificial intelligence will dramatically transform how accounting firms are managed and staffed, and what it will mean to be a certified public accountant (CPA) moving forward.
Due to the growing demand for technology and data analytics skills, and the lack of qualified candidates among accounting graduates, public accounting firms have recently reduced their hiring of accounting graduates. Instead, firms increased the recruitment of graduates from other disciplines to fill the gaps. Choosing other fields over accounting graduates is a notable hiring trend. According to a recent AICPA report (2019a, January), hiring of new accounting graduates slowed 11% in 2018 compared to 2016 (continuing its downward trend since 2014), whereas the hiring of non-accounting graduates as a percentage of all new graduate hires was up 11 percentage points to 31%. In other words, non-accounting graduates comprised 31% of all new graduate hires in public accounting in 2018.
Commenting on these trends in a press release (AICPA, 2019b, August), Barry Melancon, CPA, CGMA, president and CEO of the American Institute of Certified Public Accountants (AICPA) stated:
Increased demand for technology skills is shifting the accounting firm hiring model. This is leading to more non-accounting graduates being hired, particularly in the audit function.
CPAs have an unmatched reputation for trust and integrity, earned through decades of working in the public interest. However, to play this vital role in the future will require an increased focus on technology. It is incumbent upon the profession to ensure accounting graduates and newly licensed CPAs have these skills and expertise needed to support the evolution of the audit, (para. 3)
Skillsets Needed in the Next Ten Years
In response to the latest trends, professional organizations in the accounting profession are actively working on increasing coverage of Al along with other technologies in their publications. They are also introducing education programs that offer their members opportunities to adapt to new technologies and embrace them in practice. However, the upskilling efforts of accountants need to go beyond acquiring knowledge about the technologies and how to use them: They must also include developing the skills they will need to assume their new roles as Al-powered accountants.
As an illustration, in their white paper on the impact of Al on the audit and the role of the auditor, CPA Canada and the AICPA (2020) discuss the changing skill sets of auditors and state:
Advanced technologies provide a wealth of information to an auditor that enables them to make a judgment. But the auditor will still be the one making that judgment. Technology is an enabler and is unmatched when it comes to identifying correlations among datasets or variables. However, it takes human insight and experience to ultimately understand the context underlying the output as well as the causation of the output relative to the inputs provided, (p. 10)
... As a result, it will be even more important for CPAs to have skills beyond expertise in accounting and auditing statutes to the fundamental underpinnings of accounting and auditing, and of business processes ... (p. 11)
... Audit and assurance professionals will need an increased knowledge of data science, data management and machine learning techniques (how they function, as well as their limitations). An enhanced understanding of IT, data analysis, data capture and enterprise resource planning will be needed along with skills such as critical thinking, analysis, and creativity, (p. 11)
As part of the current efforts to evolve the skillsets of the accounting profession, the A1CPA and the National Association of State Boards of Accountancy (NASBA) have initiated a significant initiative (the CPA Evolution initiative) aimed at evolving CPA licensure requirements to align them with the demands of the new technology-driven business environment.
The body of knowledge required of newly licensed CPAs has grown dramatically over the years. According to the AICPA and NASBA (Tish & Reeb, 2019), there are three times as many pages in the Internal Revenue Code, four times as many accounting standards, and five times as many auditing standards today compared to 1980. The procedures historically performed by newly licensed CPAs are being automated, offshored, or delivered by paraprofessionals. As a result, freshly licensed CPAs need to know more earlier in their career and have more in-depth skills in areas such as, but not limited to:
- • Critical thinking
- • Professional judgment/skepticism
- • Problem-solving
- • Understanding of the business (including systems, controls, and risk)
- • Data management and analysis
- • Performance of System and Organization Controls (SOC) engagements
Consequently, NASBA and the AICPA are proposing to evolve the CPA licensure model to a “core + discipline” approach, with a more significant emphasis on technology skills. This proposed model features a substantial core knowledge test in accounting, auditing, tax, and technology that all candidates must complete and the choice of a discipline in which they must demonstrate more in-depth skills and knowledge. The proposed model recognizes the critical role played by technology in a CPA’s job responsibilities moving forward by updating the core body of knowledge required for all newly licensed CPAs and allowing specialties in disciplines such as:
- • Business reporting and analysis
- • Tax compliance and planning, and
- • Information Systems and Controls.