7 September 2023

Why Gen Z's interest in learning accountancy has gone red

The number of students studying accountancy is gradually decreasing, with the latest figures showing a 2.8% fewer bachelor’s degrees awarded in the U.S. for the 2019-2020 academic year. But why is Gen Z less interested in the subject?

The number of students studying accountancy is declining, with widespread disagreement over why fewer students are interested in getting a degree in the subject.

The Association of International Certified Professional Accountants’ (AICPA’s) 2021 Trends Report found students were dropping off the path to become CPAs at every level. The report showed a 2.8% decrease in accountancy bachelor’s graduates in the 2019-2020 academic year, an 8.4% decrease master’s graduates, and a 17% decrease in new CPA Exam candidates.

Francine McKenna, writer and former accounting lecturer at The Wharton School, University of Pennsylvania, notes that while accountancy firms have always had a high turnover of staff, the dwindling number of students is having a large impact.

“It was always the case that people would work in large accounting firms, auditing for a few years to gain experience, and then move on. The problem is that people who were doing that now aren’t even going to work at those firms in the first place, and the ones that do leave sooner,” she explained.

Some industry experts argue that the change in the requirements to be certified, introduced in the early 2000s state-by-state, which requires 150 credit hours of study, an increase from 120 hours, is putting off students. In practice, the addition 30 hours of study equates to an extra year studying, meaning students now must gain a master’s degree to take the exam to become a CPA.

Others claim that the low salaries students can expect from an entry-level accounting position are not enough to attract people into studying for an accountancy degree. Salary levels have not kept up with other professions that require a similar level of education to gain an entry-level position.

McKenna argues that just removing the additional year of study or increasing salaries would not be enough to entice new students into studying accountancy, claiming there are larger factors in play.

The reputational issue

Removing the barriers to become a CPA, such as the extra 30 hours of study, or increasing the expected salary for an entry-level accountancy position might attract more students. However, McKenna argues that large scale changes would be required to address the broader issue – that the big accounting firms in the U.S. are no longer held in the same high regard by the public.

“Frankly, there’s been great reporting on all the scandals that all the firms have been getting into over and over again, and the failures to catch corporate accounting fraud,” she said.

“We have had one scandal after another, with firms not raising their hand and informing the market when something goes wrong. Top students want to have good CVs – so they do not want to be associated with firms that are in the news for the wrong reasons.”

Professor Atul K. Shah, author and academic at City, University of London, said students in the UK are making the same decision. “The big firms aren’t struggling to get the numbers they need, but they are not getting the quality of students they would want,” he explained. “The top students, who are switched on and watch the news, see these stories and they don’t want to work for the firms that are involved.”

Another major issue in the U.S. is the collective monopoly power that firms have over potential recruits, according to McKenna, with all the major firms using the same compensation consultants.

She claims that firms privately agree on salaries and terms of employment so, even after students have graduated and passed their CPA exams, they cannot negotiate as the same package is offered by all the major firms.

What can be done

In the UK, Shah argues that an overhaul of the way accounting degrees are taught, including reducing class sizes and placing more emphasis on the ethics of the profession, would in turn lead to improvements across the industry.

In the U.S., McKenna advocates for the government to evaluate the condition of the accounting industry and competition between firms – but also argues that the changes need to go further.

“We have come to a point where nothing less than a complete rethinking of the product is required,” she said. “We need to be asking: ‘What does the market want from an audit? And is the product and the ways that the firm are mandated by law to do it matching that?'”

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