Stay informed with free updates
Just sign up for accounting myFT Digest — delivered straight to your inbox.
The head of KPMG US said the industry urgently needs to make it easier and cheaper to become an accountant to avoid a “serious crisis” in the profession.
As the number of U.S. students taking accounting courses plummets, Paul Knopf will become the first head of a Big Four company to eliminate the requirement for five years of higher education on top of the standard four-year bachelor’s degree. publicly supported it.
In an interview with the Financial Times, Knopp supported an “apprenticeship” model to replace five-year education.
“We are now seeing an increase in the number of students going on to university and the number of students going on to accountancy, so there is a crisis and we absolutely need to address this issue in the very near future,” he said. .
“I can’t stress enough that it’s not just the Big Four. We need more accountants outside of the Big Four. The industry we work in is critical to the functioning of capital markets. It’s systemically important.”
The accounting profession is at times under intense scrutiny over how to attract young people, who are increasingly seeking careers in industries such as financial services and technology, where educational requirements are lenient and starting salaries have increased in recent years. It is in the midst of debate.
Some companies have begun to report a shortage of accountants as a risk to financial disclosure, and local governments and some small businesses across the country have complained of difficulty finding firms willing to undertake audit work at low cost. are.
Mr Knopf said that while the big four firms – KPMG, Deloitte, EY and PwC – were still choosing graduates, changing demographics would exacerbate the problem.
Government data shows the number of undergraduate accounting students in the U.S. has fallen to its lowest level in 15 years, and 75 percent of existing CPAs are at or near retirement age, leaving potential to grow. The pipeline of new certified public accountants is thinning.
The number of CPA exam takers has declined from a peak of more than 100,000 in 2016, reaching just over 67,000 in 2022, the lowest level in 17 years.
The increase in 2023 is a result of students rushing to take exams before the new curriculum is introduced, and numbers are expected to fall again in the short term, according to the AICPA, a professional association.
“The cost of becoming a CPA has become too high, including both the cost of additional education and the opportunity cost of spending an additional year in school,” Knopp said.
“We think we can accelerate our talent development by getting them to start their apprenticeships with us sooner, which means they can actually start working instead of doing unpaid internships,” he said. said.
He acknowledged that other factors were also discouraging students from joining accountancy, adding that KPMG has increased salaries by facilitating operations throughout the financial year and reducing late-night and weekend shifts required of audit staff. He said it had been reduced.
To qualify as an accountant in the United States, students currently must complete the equivalent of five years of education and one year of work experience and pass the CPA exam.
The rules are set at the state level, so any changes to the rules would require approval from the 50 state legislatures. The AICPA had previously opposed the change, arguing that a phased approach risked confusion where people licensed in one state could not work in another state.
Under pressure, the company changed its position this year, proposing to replace the fifth year of education with a one-year “competency-based experience.” New employee accounting firms will need to demonstrate that new employees have mastered a specific list of technical and professional skills. . An additional year of general work experience is also required.
KPMG plans to advocate for states to adopt a simpler version that requires only two years of oversight. “The dialogue across the country is a step in the right direction in terms of recognizing agreement for change, but details are what matter,” the spokesperson said.
