demand for new hires softens as college talent pipeline sets record.
by rick telberg
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the next generation of accountants in the collegiate pipeline set a record last year and remains at that level this year, even as firms appear to be backing off on expanding headcounts with new graduates, according to new research.
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in addition, the value of the cpa credential in the job market may be eroding. more young accountants are moving ahead with their careers without a cpa license. the number of new cpa candidates increased 13 percent between 2015 and 2016. but the number of cpa candidates who passed their 4th section of the cpa examination increased at half that rate—7 percent between 2015 and 2016.
still, it wasn’t long ago that the accounting profession looked a little shaky. college enrollment figures showed fewer and fewer people crazy enough to go into accountancy. in 1993, an estimated 189,863 people were pursuing a bachelor’s degree in accounting. over the next five years, the number declined steadily, dipping to 127,960 in 1999. the number seeking a master’s in taxation dropped by almost half.
but the trend turned around—slowly at first, then faster. it took 15 years for the enrollment figures to return to their 1993 levels. the economic concerns following the bush administration may have fueled a big increase around that time. accounting may not be the sexiest profession, but there’s always a job out there.
there are an estimated 216,482 seeking bachelor’s degrees—almost 10,000 more than last year—and over 36,000 seeking post-graduate degrees, about 10,000 fewer than last year, according to the american institute of cpas’ 2017 trends in the supply of accounting graduates and the demand for public accounting recruits.
the growing diversity in accountancy
also encouraging: a strong increase in ethnic diversity. whites are still the preponderant ethnic population in accounting programs, but the percentage of nonwhites has become almost as large. in 2016, the asian/pacific islander cohort represented 13 percent of undergrads. african-americans represented 12 percent, pretty close to their 13.3 percent portion of the general population. hispanics accounted for another 12 percent of future accountants. in all, just over 40 percent of incoming accountants are nonwhite. the numbers are about the same for those who just graduated.
about 30 percent of new hires were nonwhite, but if the pipeline is any indication, that number’s going to move upward in the next few years. new hires at the upper levels of the profession, however, are still disproportionately white, an inevitable reflection of earlier ethnic percentages. ninety-five percent of partners hired in 2016 were white. just two percent were black, and under one percent were hispanic—radically different from new student enrollments! it will be interesting to see what partners look like 20 years from now.
women a big part of the profession
ten years ago, slightly more than half of bachelor’s and master’s students were women. in 2008, that started to change. in 2010, the percentages were just about 50-50. by 2016, 53 percent of undergraduate accounting majors were male, but women still held a one-point lead in postgraduate studies.
american higher education must be doing something right. in 2015-16, 13 percent of accounting graduates were from other countries. one in five postgraduates graduates were foreign students.
demand high but in decline
the demand for accounting graduates is still high, though it has been higher. new hires in 2014 set a record at 43,252, up from 40,350 the year before. in 2016, it was “only” 34,889, a decline, yes, but still the third-highest level since the aicpa began tracking trends in 1971. that number for 2016 reflects 21,167 recent grads with bachelor’s degrees plus 13,722 with master’s diplomas.
how this softening demand will meet up with the burgeoning supply is a question that may come to a head in three or four years. a lot depends on the trend between now and then. the stats bode well. sixteen of 20 firms in the largest category said they expected to hire as many or more new graduates in 2016.
the number of people taking the taking the cpa exam increased dramatically—13 percent from 2015 to 2016. yvonne hinson, cpa, cgma, ph.d., aicpa senior director, academic & student engagement, says “this increase is due to the new exam launch in april 2017, the efforts of state societies and the aicpa to encourage exam takers, and the efforts of firms to encourage individuals to take the exam, aligned with our research that shows encouragement as a key driver to taking the exam.”
hear that, ye of the profession? be encouraging! and ye in study mode: be encouraged.
key trends in hiring at u.s. cpa firms
- “public accounting firm hiring projections have slowed after several years of growth,” according to the aicpa. “as technology advances, we expect that the largest firms may not need to hire as many new accounting graduates as entry-level employees. we are also seeing that university accounting programs are starting to incorporate more data analytics to keep up with the pace of technology change in the profession. for example, the kpmg master of accounting with data and analytics program is one of many data-focused programs you will see launch in the next few years.”
- after several years of growth, hiring has declined for both bachelor’s and master’s in accounting graduates. total demand in the latest survey stands at about 35,000 new graduates a year, down from 43,000 the year before.
- of firms that hired 1 or more accounting graduates in 2016, 59 percent expect to hire the same number of new accounting graduates or more in 2017. only 14 percent say they’re hiring more.
- future hiring of new non-accounting graduates at cpa firms is uncertain. of firms that hired 1 or more new non-accounting graduates in 2016, 50 percent are not sure how many non-accounting graduates they will hire in 2017.
- 65 percent of all u.s. cpa firms expect to add no new cpa positions this year, and 13 percent plan on reductions or aren’t sure.
- 12 percent of firms expect to add new non-cpa positions this year, while 71 percent expect no change.
- firms overall expect a decrease in the number of partners in 2017, and 9 percent expect the same or fewer.