SHORTAGE OF ACCOUNTANTS

In yesterday’s Wall Street Journal there was another front page article concerning the shortage of accountants. It continued to state that there is a shortage of over 300,000 and that the inference was because the C.P.A. exam now requires a fifth year of college. It also went on to state that salaries have stagnated in accounting. More college students are majoring in Finance or Marketing and taking jobs in consulting or other financial areas where salaries are higher.

I am sure that the research indicates some of that but not every accounting student aspires to become a C.P.A. I realize that I am a “dinosaur”, having passed the C.P.A. exam in 1964. However, in my day, you did not need a fifth year of accounting but you did need two years of experience with a public accounting firm doing attestation work (audits).

Today, you need no experience, just a fifth year of education. What a mistake!

The AICPA (American Institute of Certified Public Accountants), in my opinion, made a major mistake in doing away with the experience requirement and adding additional education. Although the C.P.A. exam is a state exam and requirements to sit were not always uniform, the exam was a uniform exam. As an example, in my day, Maryland added an Economic section and Virginia allowed you to sit for the exam without having any experience. However, in Virginia, you would not receive your C.P.A. designation until you had experience.

Not everyone who began their career in public accounting became a C.P.A. I would estimate that in my 4 ½ years in public accounting, less than 20% of the new hires ever became C.P.A.’s. If you didn’t aspire to become a C.P.A. or if you just wanted to get experience that would translate to a better position in industry, public accounting was still the place to start.

You didn’t work in public accounting to get rich, you did it to get experience with many different types of organizations that would allow you to obtain a better position in industry when, or if, you left public accounting. When I started in public accounting, 1961, my starting salary was $4,350. annually. I was offered the same salary to go into banking as an intern in the investment department.

In my day, you were a generalist, not a specialist. You did audits, taxes, consulting, etc. You were not assigned to one industry either. I worked on audits of unions, not-for-profits, construction companies, retail, manufacturing, etc. You saw all types of organizations and it gave you a better understanding of business. It was the ideal background for moving into industry, if you so desired.

If you were going to transition into a business outside of public accounting, it was considered standard that you needed 5 years of public accounting experience. In the firm that I was with, if you didn’t pass the C.P.A. exam or weren’t interested in taking it, they would assist you in moving to an industry position.

Public accounting was not an easy profession. During the “off season,” generally May to October, we worked about 48 hours weekly. During the rest of the year we worked an average of 60 hours per week. This was considered the busy season where we did work up’s on audit clients, audits and then taxes. Saturday work was a common occurrence. We did not receive overtime pay either.

We knew we were making an investment in our future and having that experience would pay off. That does not appear to be the situation today. We are living in the “entitled” world with everyone wanting instant gratification.

We knew that salaries were generally higher in the business world. I left public accounting because there was a “glass ceiling.” I had moved from, a junior accountant position to a manager’s position and the next step was resident partner. They problem was “age.” You needed to be in your early 30’s to mid-30’s to be considered and I was just 28. I was doing what a manger did, running audits, etc. but I was too young to be considered for resident partner.

When I left public accounting in 1966, my compensation was $9,500. My starting salary in industry was $13,500. However, I have been ever thankful for my time in public accounting. I could never have transitioned without that experience. It was worth every minute.

I am not sure what it will take to get more young people interested in accounting today. The profession has made many changes that are not conducive to growing that profession. One thing that needs to be remembered is that all C.P.A.’s are not equal. Without the experience requirement you are only getting folks that can pass an exam and have no practical experience. There are no generalists in public accounting today. You specialize in one industry and either auditing, taxes, etc.

I don’t see this changing any time soon.

Jess Sweely