In recent years, the workforce has seen a decline in accounting graduates, which has led to a shortage of accountants. An accountant’s role is to examine past financial records and identify risks and opportunities to provide necessary solutions for businesses and clients. Particularly, accountants track tax liabilities and prepare tax returns and documents. Another part of the job includes auditing, in which accountants prepare financial statement audits or objective examination of a company’s financial statements and compile financial information to provide to the public and companies.
Some reasons as to why the number of accountants have been declining include the fact that accounting demands long hours and tight schedules, the use of outdated technology, and often results in employee burnout. According to the AICPA 2021 “Trends Report,” there has been a national downward trend in accounting graduates in years 2019-2020. Specifically, there has been a 2.8% decrease at the bachelor’s level and a 8.4% decrease at the master’s level. Furthermore, according to a study conducted by the AICPA, 75% of today’s accountants will retire within the next 15 years.
The effects of such shortages have been detrimental to businesses’ performance, including a delay in reports, increased errors in financial statements, and accuracy issues. For example, a research company “Intelligize” concluded that the container store, Tupperware, has claimed that they did not have enough accountants to get its annual report out on time. Tupperware is not the only company that has been facing this prominent issue. About 70 other companies have postponed annual reports, which is a 40% increase of companies who postponed annual reports due to accountant shortages from last year, Intelligize expanded. Because of the decrease in numbers of accountants, finishing reports has been a slower process—offices are fast-paced and there simply aren't enough accountants to get the work done. The delay in reports can cause businesses to miss opportunities, inefficiently allocate capital resources, and destabilize business financials. Thus, financial reports are often not reviewed as thoroughly.
As errors start to arise in financial statements, the trust stakeholders place in companies becomes depleted. The accuracy of financial statements is the foundation of stakeholders’ trust. Many errors, including minor oversights to significant misstatements, start to appear and this then leads to incorrect strategic decisions, an overall loss of investor trust, and the need for financial restatements, which wastes company resources, like time and money. Such mistakes will not only damage the company’s reputation, but also harm relationships with investors.
A big portion of an accountant’s job is to be financial integrity and compliance gatekeepers. They need to make sure that earning reports reflect both the financial position of companies and the complex web of regulations governing financial reports. Thus, if companies struggle to meet compliance requirements, it can lead to legal penalties, fines, and even the loss of a license to operate.
The overall decrease of efficiency in performance will cause a business to become subpar. Many investors will turn away from businesses with inaccurate financial information and withdraw investments or sell shares, which could have negative implications. The loss of trust in companies is long-lasting and the effects are major: Businesses will find it challenging to raise funds, invest in growth opportunities, and maintain strong stock prices.
The financial market operates on predictability and stability, and when businesses are producing errors, more uncertainty and volatility is introduced. With that said, the shortage of accountants suggests that society should look for ways to overcome this issue. One way to address the problem would be to create educational incentives to increase pathways into accounting for college students. In particular, offering scholarships to accounting students through programs like the AICPA Foundation’s scholarship program—which offers scholarship money to both Undergraduate and Graduate students pursuing a CPA—would draw students toward an affordable path to pursuing a CPA. Another way may involve using Artificial Intelligence wisely and carefully to handle basic compliance checks and data entry to alleviate the workload for accountants, so they can focus more on the important and in-depth part of accounting. Furthermore, businesses can create more positive and regulatory systems for accountants in the workforce.
Works Cited
https://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#:~:text=Accountants%20and%20auditors%20prepare%20and%20examine%20financial%20records%2C%20identify%20potential,that%20taxes%20are%20paid%20properly.
https://nowcfo.com/the-accountant-shortage-and-its-effect-on-earnings-reports/#:~:text=Errors%20in%20Financial%20Statements%3A%20The,oversight%20to%20significant%20misstatements%E2%80%94increases.
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