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NextGen Magazine


Gauging the Strength of the CPA Pipeline

Zach Simeone
Published Date:
Oct 23, 2018

CPA pipeline

The choice to become a CPA is a significant one. Weighed against the time, expense and hard work involved in taking the CPA exam are the many benefits of the profession: becoming qualified for high-level accounting, auditing and tax-preparation positions; improved salary prospects; and the prestige and public service aspects of the profession.

But some accountants have recently found remunerative work—say, as consultants and tech specialists—without becoming CPAs. This development has prompted many leaders of the profession in recent years to worry about the stability of the CPA pipeline—the population of candidates who are in the process of taking the CPA exam—and whether the supply of CPAs will continue to meet the demand.

In the past few years, as prominent CPA organizations began decrying a shrinkage in the CPA pipeline, their concern focused on the fact that there are some roles that only CPAs can fill. And with 75 percent of CPAs expected to retire in the next 15 years, according to the American Institute of Certified Public Accountants (AICPA), they wondered: Will the next generation of accountants be able to fill that gap?

For example, in the Illinois CPA Society’s (ICPAS) 2016 report, “Pipeline Disruption: The Search for Solutions to the Weakening Supply of CPAs,” ICPAS President and CEO Todd Shapiro said,”Yes, there are more accounting majors than ever before, but 49 percent of those accounting majors will never sit for the CPA exam, and one-third of those who do sit for the exam will never complete it. As a result, only one-third of accounting majors ever pass the exam.”

And in 2015, AICPA President and CEO Barry C. Melancon said, “[W]e’ve continued to see a slight widening of the gap between the number of students who are graduating with accounting degrees and the number of candidates sitting for the CPA exam, although the growth of the gap has slowed.“

The most recent statistics reveal that passing rates for the exam saw a spike in 2016, as did the number of candidates sitting for it. A subsequent drop in the number sitting for the exam last year suggests that students were rushing to take the old exam before a new version was released in April 2017. Still, the number of candidates has been rising over the past five years, and AICPA leaders believe the pipeline is in good shape.

A deeper dive into recent statistics

In the past two decades, accounting continued to be a popular major, even throughout the financial crisis of 2008 and the recession that followed. After a small downturn in the late 1990s, the total number of students enrolling in undergraduate accounting programs has been steadily increasing: from 127,960 in the 1999–2000 academic year to 216,482 in 2015–2016. These were the findings of “2017 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” the latest in a series of biannual reports issued by the AICPA on enrollment, hiring and CPA exam trends that dates back to 1971.

According to that report, issued in October 2017, as accounting student enrollments reached an all-time high in 2015–2016, the number of new CPA exam candidates increased by 13 percent between 2015 and 2016, and the number of CPA exam candidates who passed their fourth and final section of the exam increased by 7 percent in the same period. Although CPA firm hiring slowed in 2016, the report found future hiring expectations to be positive.

This past August, the National Association of State Boards of Accountancy (NASBA) reported that in 2017, 95,654 candidates sat for the CPA exam—down from the previous year’s 102,323. Yet, according to NASBA’s 2017 Candidate Performance on the Uniform CPA Examination, the number of candidates has also been rising steadily, from 92,830 in 2012 to 95,654 last year. Thus, the overall trend appears to be positive.

Reasons for the past downturn

So, if majoring in accounting remains popular, what was causing the decline in the number of new CPAs in past years? After all, it certainly pays to go the extra mile to become a CPA. As the ICPAS observed in its “Pipeline Disruption” report, “Literally, a CPA could earn $1M more over their career than non-CPAs.” Moreover, CPA firms have enjoyed a robust growth in revenue in recent years, as documented in The Rosenberg Survey, an annual report on firm revenue and profitability.

One explanation has been that students are seeking lucrative consulting work, which does not require the CPA credential. AICPA Vice President of Examinations Michael A. Decker said that “the growth in public accounting firms is more on the consulting side than on the audit side, so there are lots of accounting graduates going into consulting,” which does not necessarily require the CPA license.

He added, “They’re requiring it on the audit side, and in some cases, the tax side, which is supporting the current pipeline, but not necessarily growing the current pipeline. So, the growth in consulting is not growing the [number of CPAs], because they’re not hiring CPAs. They’re hiring data analysts, and statisticians, and lawyers, and economists. And in some cases, they’re hiring industry experts in whatever area they’re consulting in.”

This development has caused some accounting students to question whether they even need to take the CPA exam, said Priscilla “Penny” Z. Wightman, a member of the New York State Board for Public Accountancy and a longtime accounting professor at Hartwick College.

 “The better students are really attracted to the notion of consulting and advising,” Wightman said. “So, working hands-on with companies, and the variety of experience they would get in that consulting environment, rather than being in a niche like auditing or taxation, has a huge amount of appeal.”

Another possible obstacle to becoming a CPA has been the requirement that candidates take 150 hours of accounting courses for which they’ve received college credit. This amount increased from 120 hours in 2009.

“The 150 hours has been around long enough now that the folks who want to be CPAs have accepted that notion,” said Wightman. “But I’m still on the fence as to whether or not we’ve done a good service to the public by adding those extra hours. I’m fearful about the numbers—have they been frightened away [from becoming CPAs], or has the market diversified enough that they’re going away for other reasons?”

An additional potential reason for the decline in CPAs was that CPA firms were not doing enough to encourage their staff members to take the exam. The ICPAS reported in “Pipeline Disruption that only 12 percent of Chicago’s 25 largest public accounting firms offered employees financial assistance for CPA exam prep courses or the cost of the exam, and another 12 percent offered only financial assistance for a prep course. In addition, only two out of the 25 offered financial assistance for taking the exam more than once, even though the average candidate needs at least two attempts to pass some sections.

Yet another possible explanation for the recent decline in the number of CPA candidates may have been the CPA exam itself. As of April 2017, the exam requires 16 hours of testing—up from 14—over the four parts, which must be completed within 18 months, along with countless hours of studying. According to the AICPA, only 27 percent of candidates pass all four parts on the first attempt. The average number of attempts it takes to pass all four sections is 6.5.

Sean Mullen, vice president of sales for Surgent CPA Review, said in a 2017 interview that the CPA exam may be “in crisis.” He noted that, with the sheer volume of exam content increasing regularly, and many students already working as associates at accounting firms, there’s a generational component to the issue.

“I think millennials look at the quality of life and work-life balance way more than the baby boomers did,” Mullen said. “So, they’ll get their résumé stamped working at an accounting firm, but getting their CPA license doesn’t mean as much. So, they’ll go work at Macy’s, or Johnson & Johnson, or Comcast.”

Impact of new CPA exam

In her introduction to the AICPA’s “2017 Trends” report, Yvonne Hinson, AICPA senior director of Academic & Student Engagement, attributed the increase in the number of new CPA candidates between 2015 and 2016 to three factors. One factor was the launch of the new exam in 2017.

James Suh, director of Continuous Improvement & Analytics at NASBA, told NextGen that there have been two “notable spikes” in the pipeline in recent years, occurring as students rushed to take the exam just before new versions were released in 2011 and 2017.

AICPA spokesman James Schiavone echoed Suh’s sentiment in a 2017 interview. “The new exam is a big driver in increasing the number of exam candidates,” Schiavone said. “Basically, whenever there’s a change, it’s announced far in advance, so candidates are aware, and as such, people [decide], ‘I’m going to try as hard as I can to finish before the exam changes.’”

NASBA’s 2017 numbers seem to back up this assertion.

But Hinson also listed two other factors: “the efforts of state societies and the AICPA to encourage exam takers, and the efforts of the firms to encourage individuals to take the exam.”

Efforts to improve the pipeline

In recent years, as the AICPA and state societies have studied and issued reports about the shortfall in the CPA pipeline, they have also engaged in outreach to student members to encourage them to take the exam. There has been “a subtle but distinct shift in our outreach efforts to students, beyond just alerting them to all of the careers in accounting, and emphasizing the importance to take and pass the CPA exam and become a CPA,” said Schiavone.

When asked if the AICPA’s mission to encourage new exam-takers was influenced by reports of a diminishing pipeline, Hinson told NextGen, “I think all of our programs are in response to environmental factors, as well as being very research-based. … We definitely need to be working on the pipeline. We need to be making every effort there. We understand the demographics, and we want to ensure that we’re doing everything we can, especially with STEM coming along,” she said, referring to science, technology, engineering and mathematics curricula, and their increased emphasis in the field of accounting via tools like artificial intelligence. 

Hinson pointed to the AICPA’s Start Here, Go Places website for high school students, which includes the Accounting Pilot and Bridge Project, developed to help train high school teachers to develop college-level accounting curricula for their students;, for college students and CPA exam candidates; the #Real-CPA campaign, geared toward diversity and inclusion in the accounting profession; and campus visits to meet with prospective CPA candidates.

NYSSCPA Past President J. Michael Kirkland said, “Becoming a CPA offers a world of op portunities, and the Society is communicating the value of the CPA license all along the pipeline, particularly through our Career Opportunities in the Accounting Profession (COAP) program.”

With regard to the efforts of CPA firms themselves, Hinson said that the AICPA’s Private Companies Practice Section (PCPS) is now lending support to firms in the area of practice management, including supporting CPA candidates. She mentioned the launch of “a toolkit to provide a central hub from which firms can obtain resources on best practices for fostering a supportive CPA environment, as well as resources they can share with their exam candidates to assist them in their journey.”

Schiavone added that, since studying for and taking the exam is a very time-consuming process, “firms will find a way to acknowledge that their employees are also spending that time studying for the exam.”

In the AICPA’s “2017 Trends” report, Hinson wrote, “As technology advances, we expect that the largest firms may not need to hire as many new accounting graduates as entry-level employees.” She concluded, “When viewed holistically, projected firm demand is still in alignment with the supply of accounting graduates in the U.S.,” noting that “there are many opportunities for accounting graduates in business and industry.”


Diversity initiatives such as COAP seek to strengthen the CPA pipeline

The AICPA and many state societies have developed several outreach initiatives to welcome a more diverse population into the profession. The AICPA lists its diversity initiatives at

The NYSSCPA has, for more than 30 years, run its Career Opportunities in the Accounting Profession (COAP) programs for high school students of color. COAP is a unique learning experience developed to expose promising high school juniors from underrepresented minorities to accounting and business careers.

As part of these three-to-five-day immersion COAP programs, students take field trips to accounting firms; attend talks presented by CPAs in industry, education and government; and learn basic accounting concepts, along with overviews of cost accounting, forensic accounting and technology in business and accounting.

This past June, students attended COAP programs at five locations: Adelphi University, at the Garden City campus; the State University of New York (SUNY) at New Paltz; the Rochester Institute of Technology; SUNY Oswego; and Westchester Community College. For more information, go to


Looking at an alternative pathway

One possibility under serious consideration among the leaders of professional CPA organizations is an alternative pathway to the CPA license. Speaking at the AICPA’s annual Engage event in Las Vegas this past spring, President and CEO Barry C. Melancon said that as the skills demanded by the industry change, becoming a CPA may involve alternate paths that reflect the increasingly tech-savvy nature of the profession, while shifting away from simply being experts in accounting standards and the tax code. Melancon said that “maybe future candidates will take different parts of the exam based on the pathway they took to becoming a CPA,” and where they wish to focus their careers.