May 2000

Roundtable Addresses Auditor Shortage

While the number of public companies has grown in the last decade the number of auditors has stayed the same, according to AICPA studies, which also show fewer individuals entering the CPA profession. There is growing concern among many in the profession about the problem of reconciling the supply and demand of qualified auditors. These and related issues were discussed at an April 3 roundtable sponsored by New York University.

The two-hour discussion included representatives from NYU, NYSSCPA, AICPA, Independence Standards Board, and several accounting firms. The group discussed the growing shortage of quality auditors in the United States and touched on educational requirements for the profession, competition from other careers, and salary and other compensation issues.

Bea Sanders, AICPA director of academic and career development, said the problem started years ago.

"While the number of hires in the accounting profession has remained steady, the number of candidates entering the profession peaked in the early 1990s, then declined," Sanders said. "The shortage we are talking about now is something that has been coming for some time."

The discussion examined the role that a booming economy may have played in the shortage of auditors. Participants commented that in the surging world of stock options as compensation and perceived opportunities at get-rich-quick dot-com companies, more and more students now choose financial careers other than auditing.

"Our best students have turned to finance," NYU Professor Paul Brown said.

Other participants questioned the role of the 150-hour educational requirement that many states have instituted or will soon institute for individuals to become CPAs. The additional educational requirement is one of the provisions of the Uniform Accountancy Act proposed by the AICPA and the National Association of State Boards of Accountancy.

"It has put more pressure on us and more tension into the system," said Jerri Calle, a human resource executive with KPMG LLP.

In discussing what firms can do to address the auditor shortage, the roundtable explored compensation issues, questioning whether it will take higher entry-level salaries, and whether accounting firms have the necessary funds.

"'Why don't accounting firms pay more?' is the wrong question," said AICPA Chair Robert Elliott, a partner at KPMG LLP. "I think the right question is 'Why isn't accounting worth more?'."

The group also discussed various initiatives to attract students to the profession such as the NYSSCPA Career Opportunities in the Accounting Profession (COAP) program, which recruits minority high school juniors to participate in a college residency that exposes them to CPA careers. The AICPA also offers several grants and scholarships to students.

NYSSCPA President Alan E. Weiner, a partner with mid-sized CPA firm Holtz Rubenstein & Co. LLP, represented the Society at the event and urged the roundtable to broaden its perspective. He pointed out that although he was the only CPA attendee from a firm other than the Big Five, the majority of future CPAs will not work for the Big Five.

"This group would not have had a representative from a small or medium-sized firm if not for me being there," Weiner said, after the event. "Of the 335,000 CPAs in the AICPA, it is estimated that about 65,000 are with the Big Five, leaving 270,000 CPAs unaccounted for. Certainly the idea of the roundtable was valid, and many of the ideas that were put on the table were on point, but the thrust of the discussion was from the standpoint of the Big Five."

The roundtable ended without a solid solution but with an acknowledgment that the profession should further study the shortage of qualified auditors.

"We have been in business for over 100 years and we would like to stay in business," Elliott said. "We are methodically thinking about this issue." *