Solving the Accountant Shortage: Leaning on AI is Key

For a deep dive into how AI is changing the accounting industry, read Numeric's complete guide to AI for accountants.

Every accountant has almost certainly heard of this at the watercooler (or in Slack threads): We're facing a shortage of accountants, and reportedly, fewer people are entering the profession each year.

These anecdotes are more than hearsay. In true accounting style, I'll let numbers paint a picture:

• The number of CPA exam takers has steadily decreased since 2016
• 82% of the accountants who exited the profession had at least six years of experience.
• A 2020 study reported that 82% of accountants say their clients are looking for more services than ever.

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So what is causing a shortage despite companies needing accountants more than ever?

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Why We Are Facing a Shortage of Accountants

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We must travel to the past to fully understand the reasons for the accountant shortage. 

Back in September 2000, the Institute of Management Accountants (IMA), the American Accounting Association(AAA), the American Institute of Certified Public Accountants (AICPA), and the Big 5 (yes five, not four) commissioned a study titled “Charting a Course Through a Perilous Future.”

That alarmingly titled report noted that college students viewed accounting as a staid subject and less valuable compared to other majors. It also cited studies from 1989 that warned of accounting growing less desirable as a prospective profession.

Clearly, the alarm bells have been ringing for a while, but as a profession, accounting has not addressed them. As accounting grew less desirable over the years in the eyes of students, fewer people entered the profession, creating the problems we're in now.

Specifically:

• Accountants are tasked with more work than ever
• Accounting career conversations have not changed
• Technology is constantly presented as a threat

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Accountants Are Tasked With More Work Than Ever

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What happens when older practitioners leave the workforce but fewer new entrants replace them? Incumbent professionals begin bearing excess workloads.

Accounting has faced an imbalanced workforce funnel for at least three decades (per the studies I previously highlighted). The result is accounting workloads have steadily increased, especially at public firms.

Worse, this degree of overwork and stress is increasingly normalized in accounting culture. For instance, accountants have long known that Big Four work culture can be toxic and stressful—and it's scaring away new entrants.

Long viewed as a pathway to Industry, accountants leaving the Big Four for senior roles elsewhere may have been normalizing this culture as they join in-house accounting teams. Is it any surprise that we have finally reached a breaking point?

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Accounting Career Conversations Have Not Changed

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I get it. Accounting isn't the most exciting or sexy career out there. However, it is far from an unrewarding path. Not every student in college chooses a major solely based on "sexiness."

Salaries and compensation play a role too. Job search platform Indeed reports that the average accountant's salary in the United States is $62,863. 

In contrast, a software engineer's average salary is $105,544, and a Mechanical Engineer earns $92,840. On the surface, it looks like students are making the right career choice.

However, as accountants, we know how rapidly pay scales increase in our profession. Also, the diverse types of accounting one can practice affect the average quite a lot.

The problem is that the accounting industry is not educating prospective practitioners enough about these nuances. Accounting is painted as a career choice with little room to grow. 

The truth is that the average accountant uses skills a software or mechanical engineer uses. We don't shout about it loud enough to overcome the flawed "average salary" argument.

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Technology is Constantly Presented as a Threat

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Accountants have always faced a wave of technology encroaching on their jobs. And the reaction has always been hysterical.

Take the recent talk of AI taking accounting jobs. While plenty of surveys show that accountants are "vulnerable" to AI, they mask the truth—the latest technology wave is an opportunity to solve the accountant shortage by empowering existing accountants to do more with less time.

Much like how calculators saved us from doing sums on an Abacus, and spreadsheets helped us analyze data at scale, AI is an opportunity to solve some of the profession's most pressing problems—like executing a timely month-end Close without burning ourselves out.

However, we won't get to solve those problems unless we stop viewing technology as a threat.

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How to Solve the Accountant Shortage

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A lot of commentary on the accountant shortage focuses on the lack of new entrants in colleges. While that problem needs addressing, any solution there will take a few years to leave a mark.

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What can we do right now to address the issues accountants face and prevent them from leaving the profession due to burnout? I see three possible ways:

1. Adopt AI as standard in accounting
2. Recognize the accountant's strategic role
3. Modify accounting education

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1. Adopt AI as Standard in Accounting

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The current industry talk around AI revolves around how it is poised to steal jobs. This is not a nuanced view, as I previously explained. AI isn't here to take our jobs.

It is, ironically, the best solution to address the root causes of the issues accountants face right now. AI eliminates manual work that bogs accountants down.

With too few accountants and too much work on their plates, AI provides a much needed helping hand that frees up time for higher leverage work.

Instead of staring at reams of data on one spreadsheet after another to determine if you’ve missed an accrual or tagged an expense to the wrong account, you can ask AI to summarize key drivers of variations with AI auto-drafted flux analysis. 

Instead of manually calculating and booking adjustments for a disposal, give AI context on what’s changed for a fixed asset and then simply review and post relevant outputs. Instead of scouring the web for answers to technical GAAP questions, ask AI, and it instantly gives you a response.

Best of all, AI is a boon for small companies with short-staffed accounting teams. By eliminating clerical work, AI gives accountants more time for strategic projects—which fuels my next point.

2. Recognize the Accountant's Strategic Role

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Accountants have long suffered from the scorekeeper stereotype. While we have to stick to rules, this hardly means accounting cannot exercise its creative muscles for strategic benefits.

Technology is the key to unlocking this aspect of the job. Software gives accountants more time to dive deeper into data and unearth insights their organizations want. 

Accountants must become editors, architects, and interpreters—not just number crunchers. This is the best way to position accounting as an important business role and a desirable career.

It is time the industry embraced the time back that tech can give us instead of treating it as a threat. The AICPA’s move to focus on technology in the 2024 CPA exam is a great step. 

With AI, the role of the accountant is undeniably going to change. And that’s good for the profession. 

Acknowledging technology's role in boosting accounting is critical, and certifications must focus on it.

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3. Modify Accounting Education

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Much of the debate around the accountant shortage has centered around the 150-hour rule. 

Some respected voices have suggested an alternative to this hurdle, thinking that lowering barriers will attract more prospective accountants.

On the other hand (as our economist friends say), Rick Reisig, Principal of Pinion Global, points out that the 150-hour rule came about because of earlier moves to address the shortage.

While these discussions are valid, they don't address the elephant in the room—fewer undergraduates view accounting as a fulfilling career. 

An EY survey in November 2023 noted that career stability and the opportunity to discover solutions in data were students' primary career motivations.

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Interestingly, the survey highlighted a gap between executive and student perceptions of AI's role and creativity. 

19% of students felt AI would help them focus on higher-level thinking, while almost double that number of executives felt AI would have a positive impact.

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This gap perhaps highlights the disconnect between education and practice. Executives have received far more exposure to AI's practical role, while students are still receiving instructions in spreadsheets and cannot see AI's potential. 

The spreadsheet is powerful and central to much of what we do. But it is time we embrace other forms of technology and incorporate how accountants can leverage automation and AI as a key pillar of accounting education. 

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It’s Time to Address the Perennial Accountant Shortage

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The accountant shortage has been in the works for a long time. 

With AI and improved automation finally taking work off of accountant’s plates and contributing to a well-needed rebrand of the profession, the end of the shortage (and overworked, understaffed accounting teams) may be in sight.

Curious how we use AI to reduce stress on accounting teams and deliver more strategic value? See Numeric in action.