Category Archives: Certified Public Accountant (CPA)

Interim CFO requests skyrocket 46%: BTG

Posted on by • Posted in Certified Public Accountant (CPA), Interim CFO, Interim Controller, Interim Executives, Interim Financial Leadership, Interim Resources, Interim VP Finance, On Demand Talent, Recruiting, Talent Acquisition Strategy, Talent Competition, Talent Imperative, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/interim-cfo-requests-skyrocket-46-percent-btg-accounting-accountants-hr/712730/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202024-04-16%20CFO%20Dive%20%5Bissue:61108%5D&utm_term=CFO%20Dive

Companies are turning to interim financial leadership more frequently as they struggle to fill widening gaps in their accounting and finance functions.

Dive Brief:

  • Demand for interim financial leadership skyrocketed last year, with requests for interim CFOs jumping by 46%, according to a report by Business Talent Group, a Heidrick & Struggles company.  
  • As well as interim CFO leadership, requests for on-demand talent with skills in key areas of finance also jumped; requests for talent that’s skilled in audit, accounting and financial controls have increased 33%, while those for FP&A and modeling skills increased 28%, the report found.
  • The rise in demand for audit, accounting and similar skills is “a logical consequence of the declining pipeline of accounting majors and CPA candidates,” Jack Castonguay, an assistant professor of accounting at New York’s Hofstra University, said in an email.

Dive Insight:

Competition to nab skilled accounting talent has only become fiercer in recent years amid a worsening shortage of accounting professionals, leaving companies with critical gaps in their financial leadership and function.

In addition to surging demand for interim CFOs, requests for senior vice president or vice president-level financial professionals — such as controllers and the heads of financial planning & analysis — rose by 114%, according to BTG.

When it comes to roles such as the head of FP&A or controllers, for example, “I think as you have shortages on one end, you’re going to have demand with organizations, whether it be full time or on-demand, for talent coming in,” Sunny Ackerman, global managing partner for on-demand talent at Heidrick & Struggles said in an interview. Ackerman does believe there is a link between the shortage in talent and the spike in requests for on-demand employees in these areas, she said. “So I think there is definitely a correlation for that.”

Historically, many companies have looked to fill roles in FP&A, audit, financial reporting and up to the CFO or controller chair with employees that have previously worked for an accounting firm, but dynamics have changed in recent years where many roles in accounting are now outsourced, Castonguay said.

“With accounting firm dynamics, largely insufficient salaries and work-life balance leaving firms struggling to attract people to the profession, the companies needing these people are now logically also struggling,” he said in an email. “You cannot disconnect the two.”

The narrower pipeline of new accounting graduates plus a high rate of retirement in the industry can leave the employees that are left overworked, increasing the likelihood of mistakes, according to a report by Fortune.

“Significant attrition” in the accounting department for retail brand Tupperware contributed to a delay in the company’s ability to file its annual 10-K form on time with the Securities and Exchange Commission, for example, the second consecutive year the brand will be filing late.  

“Fewer grads lead to fewer public accountants which leads to fewer qualified and experienced hires for companies to place in their internal accounting-focused roles,” Castonguay said. “The dynamic makes me wonder how the temporary or outsourced staffing firms are finding candidates at their staffing firms. It’s possible that will be the next shoe to drop.”

On the labor side, changing ways of working may also be impacting how employees want to work; while there may be shortages in certain areas, the company is not necessarily seeing a slowdown of new candidates joining their platform, Ackerman said. 

“So I think, even though there’s shortages in certain areas, I think talent is looking at this way of working differently than they did five years ago, and more companies are engaging with it,” she said. 

Companies may also be more motivated to try out on-demand talent as they look to plug critical skill gaps in their workforces. Ninety-five percent of executives said they anticipate difficulty finding the “ideal combination of skills, capacity and expertise” inside their teams, BTG’s report said.

Today’s companies “now are starting to really open up and look at how they can blend full time talent with more independent talent and tapping into those capabilities at the desired time,” Ackerman said.

That includes how they might be approaching interim leadership; many firms are looking for on-demand talent to help provide critical support for larger-scale projects or initiatives, according to BTG, a category that makes up 27% of all talent requests.

Interim leadership can provide benefits to companies who are in transition or who are undertaking major changes, according to a 2023 CFO Dive report citing BTG data from that year.

An interim controller, for example, could take point on business process optimization for the business to successfully execute such a project; “the CFO or that finance function is quite a bit of a right hand, I would say to the executive suite,” Ackerman said.

Targeting the accounting shortage: 2024 tactics

Posted on by • Posted in Accountant, Accounting, Accounting Talent Shortage, Audit, Certified Public Accountant (CPA), Financial Reporting, Generally Accepted Accounting Principles (GAAP), Recruiting, Talent Competition, Talent Imperative, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/3-tactics-targeting-accounting-shortage-cfo-trends/706071/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202024-02-01%20CFO%20Dive%20%5Bissue:58721%5D&utm_term=CFO%20Dive

CFOs and finance department recruiters have faced a workforce problem for years now, labor experts say: a shrinking pool of U.S. accounting professionals needed to close the books every quarter, complete audits, and make sure the company’s financials comply with GAAP and other regulations. 

The hits that have chipped away at accounting labor health are myriad and the statistics stark. While the number of practicing accountants and auditors in the U.S. spiked in 2019, across the past decade since 2013 the total declined by about 10% to 1.62 million last year, with roughly 190,000 jobs disappearing from the work rolls, according to the Bureau of Labor Statistics.

Meanwhile, the total number of test takers who passed the CPA Exam fell to 18,847 in 2022 from 19,544 the year earlier, and the lowest level since 2007, according to the latest numbers available from the Association of International Certified Professional Accountants. 

Studies and those analyzing the trend point to a variety of likely culprits: the onerous 150 hours of course credit — equivalent to a fifth year of college — students typically need to become a CPA, generally lower starting salaries compared to other areas of finance, and the demanding hours and rising regulations that lead some practicing accountants to look for the exits once they’re in the field. At the same time, the launch of the generative AI tool ChatGPT in late 2022 led to a new wave of questions about the industry’s future.

Tom Hood, executive vice president of business engagement and growth at the AICPA, is in the optimistic camp of those who believe the pipeline decline is poised to turn around, noting that he has seen other cycles when disruptive shocks such as Microsoft’s Excel in the 1980s damped interest and sparked doomsday talk around the possible “end of accounting.”  

“We’ve had ebbs and flows, we’ve had these shortages before and every time that’s happened we as a profession have rallied together,” said Hood, a CPA, adding that AI will automate certain tasks in accounting but will not replace accountants. “We’ve moved this needle before and I think we’re already starting to see it move now.” 

In 2024 professional associations and lawmakers are working on numerous initiatives as well as legislation to close the cracks that have leaked talent from the field. In the meantime, companies have found ways to get the staff needed to get their finance work done. CFO Dive talked to experts about some notable tactics that are likely to shape the accounting workforce this year. 

States, CPAs and the 150-hour credit question  

Currently state regulatory bodies that set the rules require those who want to to become a Certified Public Accountant to have 150 credit hours of education in accounting or related subjects to become a licensed CPA. But amid the growing shortage, there has been a controversial push by states to create another pathway to licensure which include cutting the college credit hour requirement back to 120 hours.

For example, this year Minnesota lawmakers are expected to consider new legislation introduced in the state’s Senate and House in 2023 that would allow candidates to earn a CPA certificate with only 120 hours of college credit, along with passing the CPA exam and some additional work experience or professional education. This alternative would be in addition to the current system that requires 150 hours and one year of work experience, plus passing the CPA exam.

Geno Fragnito, director of government relations for the Minnesota Society of CPAs that supports the change, notes that the current national shift to the 150 rule gained steam in the 1980s after Florida made the change amid a surplus of accountants due to many wanting to move to the state. Florida started the ball rolling by increasing the credit hour requirement to 150 hours in 1983, according to a Journal of Accountancy report.

But in recent years, the MNCPA’s members have consistently pinpointed the credit requirement as one of the main contributors to the drop in CPAs.

“I don’t think there was a meeting that either our CEO or I attended where it was not brought up organically. It was never on our agenda to discuss but it always came up,” Fragnito said. Looking ahead, Fragnito said that other states that are seeking to tweak the credit hour formula include South Carolina and Washington state. 

A “volatile year” for CPA exam takers 

Two exam-related changes are impacting accounting candidates this year in very different ways. “It’s an exciting time but I think 2024 will be a very volatile year,” Mike Decker, vice president of the CPA Examination & Pipeline Extension for AICPA, said in a recent interview. One of the changes is student-friendly: it’s designed to ease deadline pressures and address pandemic-related delays that might have affected some test takers. In a move announced last spring, the National Association of State Boards of Accountancy extended the window that a candidate has to complete the exam once they pass the first section from 18 months to 30 months. The move grew out of the AICPA’s effort to address the accounting shortage, known as its pipeline acceleration plan. 

Meanwhile, this month marked the launch of a revamped CPA Exam called the CPA Evolution. The test has both new content and structure and a greater focus on technology in an effort to combat research that found that accounting firms were hiring fewer accountants in favor of non-accountants with tech backgrounds, according to a Nov. 7 report by Michael Potenza of Becker. “It’s not that CPA Evolution is meant to be harder than the previous version of the exam, it’s simply meant to better prepare you for the skills and competencies needed in modern accounting,” Potenza, a CPA, wrote. 

Raises and remote work 

Tactics that CFOs themselves are using to meet their staff needs include sweetened offers and going offshore or considering remote workers to gain talent. With most small and medium-size CPA firms unable to find enough qualified U.S. accountants, this summer a study found that over half of firms planned to hike starting salaries by 14%, CFO Dive previously reported. Lisa Simpson, vice president of firm services at AICPA, is hearing about similar approaches taken by firm leaders she’s spoken with. In the past few years, she said, firm leaders indicated they were providing several high percentage salary increases for new hires and existing employees. Last year firms gave raises at rates above inflation as well as continuing bonuses, and business leaders said they expect to continue raises into 2024.

Meanwhile, many firms are outsourcing U.S. accounting work to professionals in India, the Philippines, and Eastern European countries like Poland, according to Matt Wood, head of global FAO Services at Austin, Texas-based Personiv, a global outsourcing provider which serves those needs. While outsourcing to other companies was previously the domain of larger firms, the pandemic has led to more companies being comfortable with remote accounting staff, he said.

The shift to hiring accounting staff outside the U.S. “has been happening for a while now, but it really accelerated in 2020. The accounting talent pool was already shrinking, and businesses were feeling the impact of that pre-pandemic. Then, all of these other pieces fell into place; teams were working remotely and protecting cashflow took priority,” Wood said in an emailed response to questions from CFO Dive.

Job creep reroutes path to CFO seat

Posted on by • Posted in C-Suite, Career Development, Career Growth, CEO, Certified Public Accountant (CPA), CFO, Leadership, Leadership Skill Sets, Masters in Business Administration (MBA), Skill Set, Talent Management, Talent Pipelines • Leave a comment
https://www.cfodive.com/news/slumping-cpa-mba-trained-cfos-raise-succession-questions/652092/?utm_source=Sailthru&utm_medium=email&utm_campaign=Newsletter%20Weekly%20Roundup:%20CFO%20Dive:%20Daily%20Dive%2006-10-2023&utm_term=CFO%20Dive%20Weekender

As the CFO remit gets broader and broader, the seat is beginning to attract individuals from different backgrounds, experience levels and skill sets outside of traditional accounting. 

While this opens up a wider range of potential candidates, this also means the traditional pipelines to the CFO seat are becoming less and less reliable. For companies, that means succession planning is becoming more critical — companies should be less focused on hunting for already experienced CFOs and more focused on developing those leaders, said Jim Lawson, co-leader of Russell Reynolds Associates’ CFO practice.

“You really need to make bold moves and give finance people a chance to sit in roles that might take a little bit of time to ramp up to,” Lawson said in an interview.

The new CFO path

A recent study published in May by RRA, a leadership advisory firm, pointed to the rapidly expanding number of responsibilities today’s CFOs are juggling, prompting changes in who is interested in the role and the skill sets and experience needed for the position.

There are fewer CFOs today who began their careers at the Big Four accounting firms such as Ernst & Young, KPMG, Deloitte and PricewaterhouseCoopers, for example, while the number of less-tenured or experienced CFOs who hold CPA certifications has shrunk as well.

In 2012, 55% of S&P 2000 CFOs had CPA designations, the study found. By 2022, that figure was down to 43%.

Part of the reason behind the shifts in financial leaders’ backgrounds is that the skills needed by such leaders have morphed away from those related to traditional fiduciary responsibilities into operational and capital allocation talents or expertise.

“What we’ve seen in the last few years is while having operational experience continues to be very important, this theme around capital allocation strategy, (being the) external communication interface, has been the leading trend more recently,” Lawson said.

The change in the experience that CFOs are bringing to their jobs means that accessing and developing future financial leaders should be a top priority for businesses today, as the career journeys of many CFOs veer off from their historic paths. The number of financial leaders who hold MBAs could potentially fall in the coming years, for example, according to the RRA study, which found professionals in younger generations — such as millennials — are less likely to hold such degrees.

While the number of CFOs in the S&P 2000 who held MBAs increased to 48% last year from 42% in 2012, the percentage of millennial CFOs with such degrees fell to 38% compared to 50% for Generation X and baby boomer CFOs, the study found.

Certifications like CPAs and MBAs have become less common following a trend in the early 2000s when many companies stopped paying for the completion of such programs, Lawson said — and as a natural consequence, those certifications are less prioritized than they might have been previously when filling the CFO chair.

“Do you have to get an MBA to be the CFO of a big company? The answer is not necessarily,” Lawson said.

The new CFO career pipeline

Another trend that could be impacting where future financial leaders are likely to come from is the increasing specialization of finance talent, the RRA study said: in the past, certain larger corporations served as “hotbeds” for upcoming leaders in the space, thanks to rotational programs that covered a wide remit of roles, business sectors and use cases, the study found.

As specialization increased, that means the “direct reports to CFOs’ responsibilities within the finance function had become a bit more siloed,” Lawson said.

While experience at hotbeds of financial talent like the Big Four is still highly prized, RRA is expecting the number of CFOs that have that training to slump in future years — a factor that will also change who is tackling what financial responsibilities as well as the future career paths of finance leaders.

For example, regional or division CFOs now have the ability to be more strategic, because they are no longer the ones doing all the transactional accounting, statutory reporting and local taxes, Lawson said — which could also be one of the factors for why CPA certification popularity is declining.  

The tech factor

New technologies like automation and AI are also changing the CFOs’ day-to-day responsibilities, which — while coming with some potential flaws or cons — could also be a positive for financial leaders.

“As tasks become more automated, it’s helping the CFO spend less time mining the data and more time analyzing the data, a difference which is really positive for the CFO,” Lawson said.

As CFOs’ makeup shifts to prioritize these operational skills, an emphasis on training is key for companies who want to tap future financial leaders for the seat. The emphasis on such experience — which means CFOs are also becoming more essential in driving business strategy, in addition to business execution — could also be changing the future career path for those who wind up in the chair.

The trend of CFOs taking on CEO roles at companies has increased, for example, and is likely to continue in the future, Lawson said, although he pointed to such moves being more likely in certain sectors such as manufacturing and perhaps less likely in sectors such as technology.

“I think we’ll continue to see more CFOs become CEOs as a result of CFOs getting a better opportunity to be part of the business strategy and capital allocation decisions,” he said.

KPMG primes shrinking CFO, CPA pipeline

Posted on by • Posted in Accountant, Accounting Talent Shortage, Certified Public Accountant (CPA), CFO, Controller, Financial Reporting, Financial Statements, Financial Stewardship, Financially Distressed, Recruiting, Talent Competition, Talent Imperative, Talent Management • Leave a comment
https://www.cfodive.com/news/kpmg-primes-shrinking-cfo-cpa-pipeline/641245/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202023-01-26%20CFO%20Dive%20%5Bissue:47579%5D&utm_term=CFO%20Dive

The shortage of accountants is one of the main concerns keeping KPMG’s Greg Engel up at night. The firm is teaming up with universities to expand the talent pool.

KPMG’s Greg Engel likens the accounting profession to the turtle in the proverbial race with the hare — a turtle that’s seeking to pull ahead even as it competes with flashier industry sectors for workers.

The shortage of accounting talent is one of the main concerns keeping Engel — vice chair of tax in the U.S. for the Big Four accounting firm — up at night as he assesses the new year’s challenges, even as KPMG has undertaken numerous initiatives to ease the talent crunch. 

At the same time, he sees a potential silver lining for his sector in the recent surge of layoffs in the formerly sizzling tech sector that has won over some college graduates who might have otherwise gone into accounting.

“A lot of people went to the technology sector because it was exciting. But now that Meta and Twitter and all these other companies are laying off people, kids going into college might go, ‘wait a minute, maybe KPMG sounds a little better than Twitter,’” Engel said in an interview. “Accounting is that boring, stable profession that doesn’t do as well in hugely expansive economies but does great when the economy’s on the downslide.”  

Making accounting’s case

Historically, the Big Four accounting and consulting firms have mounted robust programs designed to recruit and train accounting students right out of colleges and major universities. 

KPMG, along with PwC, Ernst & Young and Deloitte, hire thousands of graduates and students each year out of colleges, often training them through internships which lead to full-time jobs. Many of the certified public accountants go on to be controllers, tax directors and even CFOs. The entry level accounting salary range at such programs in the tax area can be roughly in the $70,000 to $80,000 range, depending on the market, according to some industry estimates. 

“The hallmark of the Big Four was to train people really, really well,” Engel said. The longer employees stay at a firm, the better their prospects after they leave, Engel said.

That means an employee who leaves after a couple years could probably join a company’s accounting department at a lower level, he said. But if the employee leaves after rising to the level of senior manager, he or she could join the same company as controller — and those who leave as a partner might join as a CFO, Engel said.  

CFO machine showing signs of wear  

But the machine generating CPAs and CFOs has shown signs of wear in recent years. For one thing, KPMG has not been immune to the Great Resignation. It was hit by the surge in turnover that weakened the middle ladder rungs of its workforce. “There’s a kind of battle in the middle,” Engel said. The company responded in part by hiring experienced accountants from companies like Apple and Home Depot, he said. 

At the same time, accounting has attracted fewer students in recent years. The total number of U.S. students completing a Bachelor’s degree in accounting fell about 8% in the 2019-2020 school year compared with the 2011-2012 period, shrinking to 52,481 graduates from 57,482, according to a 2021 report from the American Institute of Certified Public Accountants.

Priming the pipeline

Firms and accounting organizations have been taking deliberative steps in recent years to boost their case with talent and solve the talent shortage. For instance, the AICPA and the Department of Labor announced in November that they had teamed up to cultivate candidates and expand the pool of professionals, CFO Dive reported. 

If students are not deterred by the accounting profession’s long hours and subdued reputation, they may feel reluctant to put in the credit hours required before taking the exam to become a Certified Public Accountant. That typically means a student will need more study beyond that of a four-year degree. 

In an effort to make the extra course work pay off, KPMG worked with a number of universities to develop a Master in Accounting and Data Analytics Program that gives students the data analysis skills that are increasingly important in the field.

Recently, an additional seven universities were added to the program and KPMG has pledged to provide more than $7 million in scholarships. The schools added to the program included some historically Black Colleges and Universities such as Howard University School of Business and North Carolina Agricultural and Technical State University. Other universities that offer the program include Villanova University and The Ohio State University. 

Separately, KPMG has teamed up with Engel’s alma mater, the University of Northern Iowa in Cedar Falls, Iowa, to help strengthen the accounting program and opportunities for students attending Des Moines Area Community College.

The company will also aim to provide internships to the students who often attend school at night or part-time, which can make it difficult to obtain the credit hours needed to become a CPA. 

“We’re going to start adding people to the profession with two-year associates degrees,” Engel said, noting that similar programs are cropping up elsewhere. “We’ll give them a pathway to add the extra courses and programs they need.”