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AICPA and NASACT Call for More Competitive Pay for Government CPAs

By:
Karen Sibayan
Published Date:
Oct 17, 2024

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State and local governments are experiencing a shortage of accounting professionals, making it sometimes hard to hire staff CPAs who can prepare critical financial information or hire outside firms to conduct audits.  

The American Institute of CPAs (AICPA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT) released a joint report titled “Public Sector CPA Resources: The Current Landscape and Recommendations for the Future” to address this issue. Tackling this problem will require a multidimensional approach that includes educating legislative bodies regarding the CPA’s value, offering competitive salaries to CPAs in government and comparable fees paid to outside auditors and reexamining the thresholds that trigger certain kinds of audits. 

“We have a talent shortage in accounting that affects business as a whole, and many of the pipeline initiatives the profession is putting in place will help the public sector as well,” noted Susan Coffey, the AICPA’s CEO of public accounting. “But accountants who do government work face unique challenges that require more specialized solutions. The public deserves to know its tax dollars are being spent as intended—and that requires strong government finance teams and experienced auditors.” 

The report found that a critical issue is that government and private sector accounting and auditing standards usually differ. Thus, CPAs working in the public sector require specialized expertise. However, despite this more demanding requirement, salaries and audit fees in the public sector are usually much less than those in the private sector. State and local governments also seldom see the value CPAs bring to finance teams and the audit process. Hiring is usually based on cost savings instead of the qualifications of an experienced staff accountant or outside auditor. 

Here are some of the report’s recommendations: 

• Make the government more competitive with the private sector. Government entities should utilize available data to benchmark salaries for CPAs. They must also consider options for remote or hybrid work and flexible hours. External auditors' evaluation should also take into account a CPA firm’s qualifications. Government entities must also consider eliminating geographical limitations on permissible firms to broaden the potential auditor pool. 

• Align and simplify standards. Regulators should lessen differences between government and private sector accounting and audit standards. Standard setters should more routinely inform smaller governmental entities on the effect of proposed standards. Federal and state governments should periodically review audit threshold requirements and consider offering audit alternatives for smaller governmental entities that would still provide accountability. 

• Provide support for smaller governmental entities. States should consider providing local governments with accounting and auditing resources and/or financial assistance for timely audits. State governments should develop a program for legislative bodies and government officials to explain the CPA’s value, the need for qualified, competitively paid accounting, auditing and finance functions and the risks of not making that investment. 

• Get accounting graduates interested early in government work. Colleges and universities should increase the number of classes about governmental topics and build relationships with government entities to be more visible on campus. State and local governments should support internships, mentorships and financial incentives for accountants who want to work in government and pursue a CPA.

• Get buy-in from audit firms. CPA firms should emphasize to staff that working in the government practice is a good career path and adopt a staffing model that allows staff to specialize in governmental audits year-round without working added hours during busy season. 

“We’re urging a renewed investment in public-sector accounting and auditing by state and local governments and CPA firms,” stated Kinney Poynter, NASACT’s executive director. “Trust in government requires governments to prepare clear, consistent financial data that is backed by a strong audit function. It’s essential we make this a priority.” 

Aside from its work with NASACT, the AICPA is working on many initiatives dealing with the CPA pipeline. Earlier in 2024, an independent panel convened by the AICPA, the National Pipeline Advisory Group, delivered a series of recommendations on accounting’s diminishing talent pipeline. 

 

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