Posted Monday, February 13, 2023 (updated May 14, 2023)
According to the Wall Street Journal from December 28, 2022-
The number of U.S. students who completed a bachelor’s degree in accounting declined nearly 9% to about 52,500 in 2020, down from almost 57,500 in 2012, according to the Association of International Certified Professional Accountants. The slump has continued over the past two years, according to the group, though it hasn’t published final numbers for 2021 and 2022. Fewer students are also sitting for the four-part examination to become a CPA.
Here is another excerpt from December 19, 2022–
The profession is also attracting fewer job entrants, with the number of U.S. students who completed accounting degrees falling by 2.8% for bachelor’s and 8.4% for master’s in the 2019 to 2020 academic year compared with the prior year, according to the latest available data from the American Institute of Certified Public Accountants, a professional organization.
Initial WCG Response
To maintain the highest level of client satisfaction and ensure a positive client experience, WCG continuously analyzes our workflow and our firm resources. As of May 2023, WCG regrets that we cannot accept all new Business Advisory Service (BAS) and Tax Patrol Service engagements to maintain our service standards. We are thrilled to work with all of the following-
- Referrals from current clients or other professionals including Facebook groups (ie, our CRNA fan base) and the like, or
- Experienced business owners who have historically filed business tax returns as an S Corp (Form 1120S), C Corps (Form 1120) or Partnership (Form 1065), or
- Those people who are in Colorado (the 20% club since most of WCG’s clients are outside Colorado).
From there, and this is where it gets really tricky, we will accept certain engagements outside of the above provided it is a good professional fit between the you, the client, and our team. There are certain engagements (and human relationships) that are better serviced by another CPA firm. For example, we don’t take on large partnerships with several states and several owners. We don’t take on real estate development groups. Certain foreign ownership businesses are a no-go. We are grateful for the other CPA firms who specialize in some of these tax matters.
All this might sound like a jerk thing to say… but we would definitely be jerks if we said we could, but failed to deliver.
Our limiting factor is finding the right people. According to the new Accounting Firm Operations and Technology Survey, recruiting and retention have consistently been the top concern for the last two years; 33.6% of firms citing it this year, up from 28.8% of firms in 2019. To use professional sports as an example, you can grow your team through drafting and developing, or free agency.
Supply Side Economics
At this time, entry-level positions are relatively easy to fill with college graduates and interns (draft and develop). However, mid to senior level positions of course require free agency. The problem is that free agents are not looking for new opportunities, which is a supply and demand problem. What happened to the supply?
According to AccountingToday and other sources, colleges are graduating fewer and fewer accounting students. Additionally, fewer people are taking the CPA exam as well. Why? 30 years ago, accounting was a noble profession and didn’t have a lot of competition except medical, law or engineering. Today, there are a lot more careers in technology and other developing industries. Also! There are fewer accounting professors as well.
So, accounting is no longer sexy. 20-30 years ago, students chose accounting because they either a) love it or b) it was the best thing out there considering other careers. Today, it is only because people love it.
What about hiring other experienced tax and accounting professionals? That is not easily done either. At any one time, WCG has active engagements with 5-6 recruiters. However, they are only as good as the pool of applicants, and they too are limited by the supply issues explained above.
What is WCG Doing?
We refuse to let the tail wag the dog, so WCG is doing a ton to get ahead of the accounting industry-
- Mail letters to CPAs. Old school, but does work.
- Develop marketing materials and flyers highlighting the benefits of joining our team.
- Recording podcasts about our culture, who we are, where we want to go.
- Partnering with local colleges (UCCS, PPCC, CU-Denver, DU among others) to speak, host open houses, networking, etc.
- Good ol’ fashion position postings on Indeed and occasionally Monster.
- Continuing to work with recruiters.
- Review existing engagements to elegantly and gracefully terminate creating vacant space on the bookshelf for replacements (this one is tough!).
After a lengthy interview and testing period WCG made the decision to partner with KMK Ventures Private Limited, a tax and accounting company in India with over 15 years of experience and 225 professionals including Chartered Accountants, to assist us with tax return preparation. KMK provides us with a team of highly talented accountants who have over 4 years of U.S. tax experience and who also have advanced degrees in our field. We made this decision because we wanted to continue to provide the high quality work that we both expect of our firm and we did not want to have to make decision to release clients because we would not have the capacity to do the work in a timely fashion.
Many well-known and highly visible accounting firms have been off-shoring tax return preparation and accounting services for more than two decades. WCG has been reluctant to join these ranks, but as of November 2022, we believe using the two-pronged effort of off-shoring while also recruiting accounting professionals is the best approach. If you own a cell phone, have cable television or a bank account with most major institutions, a large portion of the work and support for those companies is already handled by offshore staffing. If you review your agreements with these institutions you will find disclosure to that end. As business owners we must look at options to continue to do business, retain clients and contain costs.
This is the option we’ve chosen to address all of these issues.
We realize the stink this might bring from an American jobs going overseas perspective, but that is not our motivation. And No, it is a not a money thing either… our team tells us we pay more than most CPA firms and we are happy to do so. WCG compensates the team well but money only takes you so far. Sure, every business says that but you see all our compensation and job descriptions on our Careers Page if you really like, and judge for yourself.
Has WCG grown too quickly? Have we outgrown our britches as they say? Perhaps. At the same time, we are modulating our growth significantly as you can tell and we are making business decisions to maintain our client service levels.
We also realize that identity protection and security is top of mind for everyone; WCG is following (and going beyond) the accounting industry’s best practices including IRS compliance directives to safeguard your data. Fortunately there is a ton of excellent resources and guidelines from the hundreds of CPA firms that have done this before us.
While this is not meant to be flippant and not be sensitive, but data theft is not just from overseas. There are plenty of bad people in the United States working for Fortune 500 companies selling confidential data. Please read more about our Security and Privacy Procedures.
Currently, WCG will be using two Tax Accountants and two Tax Managers to prepare about 25% of our tax returns. We have an experienced CPA and in-house trainer who leads the KMK team, and is primarily charged with training and quality control. All tax returns will be reviewed, tweaked and reviewed again by your Client Manager.
What?! Really… in a professional service? Unfortunately, Yes. WCG has created waitlists in the past and for the most part they worked out well. We maintain continuous communication so you can make decisions as time demands. Again, we know it is a buzzkill.
Sorry in advance for the perceived runaround… we further apologize if we cannot offer immediate assistance or services to everyone. As entrepreneurs and small business owners ourselves, it kills us to turn away good business.