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The top of KPMG US says the business urgently must make it simpler and cheaper to change into an accountant, to move off a “brewing disaster” within the career.
With the numbers of US college students taking accounting programs falling sharply, Paul Knopp turned the primary head of a Massive 4 agency to publicly again scrapping the requirement for a fifth 12 months of upper schooling on prime of the standard four-year undergraduate diploma.
In an interview with the Monetary Instances, Knopp backed an “apprenticeship” mannequin to switch the fifth 12 months of schooling.
“We now have a brewing disaster proper now, with the variety of college students going to school and the quantity going into accounting, and we have to completely deal with it within the very close to time period,” he stated.
“I can’t over-emphasise, it’s not simply the Massive 4. We want extra accountants in firms and outdoors of the Massive 4. The business that we’re in is systemically necessary to the functioning of the capital markets.”
The accounting career is within the midst of a generally fractious debate about how you can lure children who’ve more and more sought careers elsewhere, in industries resembling monetary providers or know-how which have looser academic necessities and have raised beginning salaries extra lately.
Some firms have began reporting a scarcity of accountants as a danger of their monetary disclosures, and native governments and a few small companies throughout the US have complained of the problem find companies prepared to tackle low-cost audit work.
Knopp stated the Massive 4 — KPMG together with Deloitte, EY and PwC — nonetheless had their choose of graduates, however demographic adjustments would proceed to make the issue extra acute.
The variety of US accounting undergraduates has fallen to the lowest stage in 15 years, in line with authorities information, thinning the pipeline of potential new licensed public accountants when 75 per cent of present CPAs are at or close to retirement age.
The variety of folks taking the CPA examination fell from a peak of greater than 100,000 in 2016 to a 17-year low of simply above 67,000 in 2022.
An uptick in 2023 was the results of college students dashing to take the examination earlier than the introduction of a brand new curriculum and numbers have been set to renew their decline within the quick time period, in line with the AICPA, the skilled affiliation.
“The price of turning into a CPA has change into too excessive, each the price of the additional schooling and the chance value of spending an additional 12 months at school,” Knopp stated.
“We predict we will speed up growth of expertise by having them begin their apprenticeship with us earlier — actually beginning work, not unpaid internships,” he stated.
He acknowledged that different elements have additionally deterred college students from accountancy, and stated KPMG has raised salaries and lower the variety of late nights and weekends required of audit workers by smoothing work all through the monetary 12 months.
To qualify as accountants within the US, college students should at the moment have the equal of 5 years of schooling and one 12 months of labor expertise, in addition to move the CPA examination.
The foundations are set on the state stage, that means any effort to vary them needs to be accepted by 50 separate state legislatures. The AICPA beforehand opposed change, saying a piecemeal method risked chaos, the place somebody licensed in a single state couldn’t work in one other.
Underneath strain, it modified its place this 12 months and now proposes changing the fifth 12 months of schooling with a 12 months of “competency-based expertise” by which the brand new worker’s accounting agency has to certify that they’ve acquired a particular listing of technical {and professional} expertise. One other 12 months of normal work expertise would nonetheless even be required.
KPMG is ready to advocate for states to undertake a less complicated model, the place two years of supervised work is sufficient. “Conversations throughout the nation are a step in the correct route in that they recognise the consensus for change, however the particulars matter,” a spokesperson stated.
