Firms big and small are facing a crisis. There's not enough accountants (CPAs) : The Indicator from Planet Money We crunched the numbers (on Excel of course), and the results are in. There's not enough Certified Public Accountants right now. Can the world of finance come up with a solution to address this issue?

If the world had no accountants

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SYLVIE DOUGLIS, BYLINE: NPR.

(SOUNDBITE OF DROP ELECTRIC'S "WAKING UP TO THE FIRE")

ADRIAN MA, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.

WAILIN WONG, HOST:

And I'm Wailin Wong. We have heard a lot about upheaval in labor markets lately. It's been hard to find enough truck drivers, nurses, teachers.

MA: Restaurant workers, airline pilots, lifeguards.

WONG: And I've got another one to put on the list - a profession that is probably less visible to the average person than, you know, a barista or a day care worker but is crucial for keeping the business world running smoothly. And that is certified public accountants - CPAs.

MA: Yeah. CPAs may be behind the scenes of the economy, but the economy needs them. They are the ones who balance the books and make sure taxes get paid correctly. They can also investigate fraud or serve as chief financial officers for companies.

WONG: And right now, there are not enough of them.

MA: That's right. There's a shortage of CPAs. And that is why on today's show, we're going to figure out where all the CPAs have gone and what the industry is doing about it.

(SOUNDBITE OF MUSIC)

MA: In the world of accounting, all CPAs are accountants, but not all accountants are CPAs. So CPAs earn a special license that gives them a kind of, like, accounting superpower. For example, they're the only ones who are authorized to audit financial statements of publicly traded companies.

WONG: Now, with great accounting power comes great accounting responsibility - you know, as Spider-Man taught us - or at least it comes with a lot of hoops to jump through. To earn a CPA, first, you need a bachelor's degree, usually in accounting or finance. You also need 150 credit hours. Now, a typical four-year program only adds up to 120 credit hours. So to get that extra 30, you need more school - either, like, a double major or a master's degree.

MA: Then there is the professional licensing exam, which, like a lot of other professional exams, can be very taxing. And you know who knows all about this is Adrienne Gonzalez. She used to work for a CPA exam prep company, so she has heard some stories.

ADRIENNE GONZALEZ: There was one student who was pregnant. She wrote in to tell us about this. She had very bad morning sickness, and she threw up in a trash can. And there was a whole debate whether she would be able to continue her exam. And I made the joke, you know, is vomit a prohibited item - because, you know, you can't bring in gum. You can't bring in tissues. You can't bring in vomit.

WONG: Oh, gosh, that poor woman. I hope she...

GONZALEZ: I know.

WONG: I hope she came out all right (laughter).

GONZALEZ: She did. She passed. She passed.

MA: Today Adrienne is managing editor of Going Concern. It's a news site for millennial and Gen Z public accountants. And this site has been banging the drum on the CPA labor shortage for years. Adrienne says the problems have been brewing for about a decade.

WONG: For example, there's a downward trend in both the number of accounting graduates and people taking the CPA exam. And this is coming just as the industry really needs CPAs because of retiring baby boomers. The American Institute of CPAs estimates that three-quarters of its members hit retirement age in 2020.

MA: Which, you know, that would be a lot of shoes to fill, even before factoring in the global pandemic that prompted millions of people to quit their jobs or retire early.

GONZALEZ: I feel like the pandemic just changed things for everybody. Everybody sort of woke up and was like, what am I doing? And accountants in particular - they are miserable.

WONG: Adrienne says at first it seemed like that misery was limited to what's known as the Big Four accounting firms - Deloitte, Ernst and Young, KPMG and PwC. But now all kinds of businesses are feeling the pain.

GONZALEZ: What we're seeing nowadays, probably in the last, I would say, year or two, everybody is struggling to find accountants. We're hearing it from, you know, Big Four firms. We're hearing it from small firms. We're hearing it in industry. It's almost like there was a accounting rapture, and accountants just kind of disappeared overnight.

MA: Adrienne has been hearing from smaller accounting firms, too, that they have had to turn away clients or raise prices. And all this has had an impact on small and medium businesses that rely on those accountants to, you know, help them with tax filings and advising them on accounting rules.

WONG: And when it comes to the Big Four firms, the ones that do the audits for a lot of big public corporations - you know, making sure all their financial reporting is on the up and up - the CPA shortage could compromise the quality of these complex audits.

GONZALEZ: I don't think your average person really realizes how fragile the entire financial system is - basically resting on the back of overworked 22-year-olds, you know, performing audit procedures at Big Four firms. So those procedures are going to suffer, and I think that's going to be the most noticeable thing. You know, this could threaten the integrity of audits, and that's pretty huge.

MA: And you know who really cares about the integrity of these audits - the Securities and Exchange Commission. They regulate public companies, so they take the work of CPAs very seriously. And in fact, a few weeks ago, the SEC hit Ernst and Young, one of the Big Four accounting firms, with a $100 million fine. And that's because the SEC said accountants at the firm cheated on the exams they needed to maintain their licenses.

WONG: Now, maintaining those licenses, along with, you know, grueling hours - it gets at some of the reasons why college students may be shying away from accounting careers.

KRISTIN GAYOSO: There were days where I would start at 7, 8 a.m., and I would work till 3 a.m.

WONG: Kristin Gayoso is a CPA who started her career at a Big Four firm. She loves numbers and Excel spreadsheets, and she wanted to follow in the footsteps of her mom, who worked as an accountant and is now one of those retiring baby boomers.

GAYOSO: The scary thing is, when you work in public accounting, if you take your salary and divide it by the hours that you're working, a lot of times you're making below minimum wage, but...

WONG: You probably don't even need an Excel spreadsheet to figure that out, right?

GAYOSO: Yeah. You don't.

WONG: That's just, like, back-of-the-envelope mental math.

GAYOSO: Yeah. Yeah. It's always depressing the first time you actually calculate that in public accounting.

MA: And then, of course, there are a lot of jobs in the finance industry that demand long hours from junior employees. But people who work in accounting - they say that their starting salaries are often lower than those other jobs. And the salaries have been kind of stagnant for years.

GAYOSO: When I moved to New York and I was an audit struggling on a $60,000 a year salary, I had friends who were investment bankers. And I mean, they were making triple, quadruple what I was making for the same hours. So if I'm going to work that many hours and be that miserable, I might as well make more money.

WONG: Kristin ended up leaving her Big Four job after four years. Today she's using her accounting skills at a tech company. And in her spare time, she runs several social media accounts where she posts funny memes about being an accountant. It's a lot of dark humor about the punishing workload and dealing with clients.

MA: And Kristin is actually not the only one sharing real talk about the industry. On Reddit, there's a whole forum for accountants where people commiserate about their jobs and swap information about salaries.

GAYOSO: People that are in college now have so much more visibility into the flaws of the public accounting business model that I didn't have when I was in college.

WONG: The Big Four firms are responding to the conversation around compensation and burnout. KPMG, for example, announced a $160 million investment in salary increases. PwC - it gave its entire firm 5% raises this year and expanded parental leave and access to mental health services.

MA: When it comes to filling the pipeline for new accountants, companies are also funding college scholarships and trying to recruit a more diverse pool of students into the profession. So Deloitte, for example - they have this program for students at historically Black colleges and universities.

WONG: Another major initiative is helping future CPAs navigate that 150 credit hour requirement. This requirement can push candidates out of the pipeline because it's so cost-prohibitive to do what essentially amounts to a fifth year of school. Ernst and Young launched a program last year where its interns can earn their course credits by taking virtual classes instead of doing a master's program.

MA: The companies are also trying to, like, poach future accountants from other majors like computer science and data analytics. Adrienne Gonzalez of Going Concern - she says that could help modernize the profession in some exciting ways.

GONZALEZ: Where, you know, the talent shortage will not be as critical because the technology is starting to kind of pick up the slack and all that. So I hope people aren't waiting around for this, you know, huge bumper crop of CPAs 'cause I don't think they're coming.

WONG: And that technology she's talking about, it's automating the most tedious parts of the job - all that administrative paper pushing that can now be done with software, which means CPAs could be freed up for more creative problem-solving work - you know, the fun stuff.

This episode of THE INDICATOR was produced by Corey Bridges with engineering from Maggie Luther. It was fact-checked by Kathryn Yang. Viet Le is our senior producer. Kate Concannon edits the show. And THE INDICATOR is a production of NPR.

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