CPA 2027: The CPA Population Stalls
CPA numbers are dwindling as CPAs face increased competition for the public accounting and corporate finance roles they held in the past. What’s next for the profession?
Digital Exclusive - 2021
Of the Illinois CPA Society’s seven predictions for 2027, this is arguably the controversial one: There will be significantly fewer CPAs in 2027 than in 2019 when the National Association of State Boards of Accountancy reported there were more than 650,000. While the Society’s leaders were mixed on this outlook, 67 percent still agreed this is the likely scenario. Why? Because the trends are pointing in this direction:
- Technology—i.e., AI and automation—allows more work to be done with far fewer people
- Businesses only need so many individuals providing strategic insight
- A large population of CPAs will be retiring
- The number of new CPAs is declining
- The hiring of accounting graduates by CPA firms is declining
- The hiring of non-accounting graduates by CPA firms is increasing
- The CPA is losing corporate influence
Many of these points have already been touched on, but the CPA population trends deserve a deeper look. According to the 2019 edition of the AICPA’s Trends Report—a report issued roughly every two years on the supply of accounting graduates and the demand for public accounting recruits—the number of new CPA Exam candidates hit a 10-year low in 2018.
What’s more, the AICPA’s report also shows falling demand for public accounting recruits. In 2018, hiring of new accounting graduates by public accounting firms slowed by 11 percent. While that doesn’t seem dire, looking across the AICPA’s last two Trends reports reveals an approximate 30 percent decline in hiring of new accounting graduates. Meanwhile, non-accounting hires as a percentage of all new graduates hired by public accounting firms is up 11 percentage points to 31 percent.
We’re also seeing the CPA’s presence drop at the highest level of corporate finance—the CFO. At the 1,000 largest U.S. public companies, the portion of CFOs who are CPAs fell to just 36 percent in 2019, down from 46 percent in 2014, which is the lowest figure in the six years Korn Ferry has been collecting the data. The Wall Street Journal explains: “Executives and recruiters trace this evolution to the aftermath of the global financial crisis, when companies increasingly wanted strategy-focused CFOs who would promote transparency and operational changes to spur growth and guard against threats. That was a change from the years after the 2002 Sarbanes-Oxley Act, when companies—under pressure to improve their financial reporting—often picked chief accounting officers as their finance chiefs.”
But the Society’s prediction of fewer CPAs goes beyond trends in accounting and finance. “This is a societal issue,” Shapiro says, pointing to the fact there’s more incentive than ever to keep replacing humans with smart machines.
A recent TIME article says the “drive to replace humans with machinery is accelerating as companies struggle to avoid workplace infections of COVID-19 and to keep operating costs low. The U.S. shed around 40 million jobs at the peak of the pandemic, and while some have come back, some will never return. One group of economists estimates that 42 percent of the jobs lost are gone forever.”
USA Today featured another prediction: “Automation could destroy as many as 73 million U.S. jobs by 2030.”That comes from a McKinsey Global Institute report indicating up to 800 million workers globally could be displaced and as many as 375 million may need to learn new skills for new occupational categories. McKinsey’s report also points out that “advanced economies such as the U.S. that have higher wages are more vulnerable to the adoption of labor-saving technology.”
And here’s another: Dubbed the “Oracle of AI,” artificial intelligence expert Kai-Fu Lee, Ph.D., CEO of Chinese venture capital firm Sinovation Ventures and a former executive at Apple, Google, and Microsoft, believes AI and automation will displace 40 percent of the world’s jobs.
Speaking to CBS News’ Scott Pelley in a “60 Minutes” interview, Lee warned that “AI will increasingly replace repetitive jobs. Not just for blue-collar work but a lot of white-collar work.”
“The invention of the steam engine, the sewing machine, electricity, have all displaced jobs. And we’ve gotten over it. The challenge of AI is this 40 percent, whether it is 15 or 25 years, is coming faster than the previous revolutions,” Lee said. “I believe [AI] is going to change the world more than anything in the history of mankind. More than electricity.”
The takeaway for CPAs? They’re facing increasing competition for positions they’ve typically held in both public accounting firms and in the corporate sectors—all while AI and automation are reducing the overall demand for human talent.
This is the final installment in a seven-part series taken from “CPA Profession 2027: Racing for Relevance,” a 2020 Insight Special Feature from the Illinois CPA Society. Read parts one, two, three, four, five, and six.