At a Glance
In the past few years, the number of accountants and auditors in the U.S. has plummeted by almost one-fifth since 2019, according to Forbes Magazine. As of 2021, the U.S. Bureau of Labor Statistics (BLS) reported that nearly 136,400 new openings in the profession are created each year. Most of these openings are due to those retiring or transferring to different occupations.
Driven by a 4% decrease in those earning degrees in accounting, AI advancements, and a hefty retirement rate, the Great Accountant Shortage poses significant challenges for business financial reporting. Unable to hire skilled accountants, many companies are struggling with internal controls related to financial reporting, resulting in mistakes that can affect their performance and reputation.
Understanding the impact of the accountant shortage on your organization and how outsourced accounting services help you maintain compliant, accurate financial reporting is necessary to determine the right solution for your business.
What is the Great Accountant Shortage?
The Great Accountant Shortage refers to the severe reduction in skilled accountants in the U.S. in the last several years. From 2019 to December 2022, there has been a 17% decrease in the number of employed financial auditors and accountants in the country.
The ongoing shortage is attributed to two main factors: an aging workforce and the industry’s historical difficulty in attracting new talent.
- Lack of new accountants. Business and accounting experts like Steven Kachelmeier noticed a decline of 20% to 40% in the number of accounting majors in recent years. Along with the BLS-reported decline of 4% nationally, the trend indicates fewer people are pursuing accounting careers.
- Aging workforce. According to the 2021 AICPA Trends Report, almost 75% of the CPA population reached retirement age in 2020. Hundreds of thousands of certified public accountants have reached the end of their careers and are leaving the workforce.
How the Shortage of Accountants is Affecting Company Financial Statements
The Great Accountant Shortage has had considerable effects on companies of all types, sizes, sectors, and industries since 2019. Without access to qualified accountants, a company faces increased risks of material weaknesses.
A material weakness in a company’s internal control over financial reporting are deficiencies that can prevent a company from detecting or correcting fraud or errors in its financial statements.
Accounting staff shortages are among the most common causes of material weaknesses in financial reporting.
What an Accountant Shortage Can Mean for Your Business
Material weaknesses due to a staffing shortage or lack of experienced personnel can affect your company in many ways. Some of the risks of the accountant shortage include:
- Inaccurate financial statements. Inaccuracies resulting from material weaknesses increase the risk of errors in your financial statements, undermining their reliability and transparency. These uncertainties can erode investor confidence in your company’s financial health, potentially restricting your ability to attract investments and support growth.
- Legal and regulatory issues. Material weaknesses make your company more susceptible to financial reporting fraud and violating accounting standards or regulatory requirements. This exposure opens the door to legal liabilities, fines, and sanctions from regulatory authorities, putting your financial stability and reputation at stake.
- Damaged reputation. Disclosure of material weaknesses can damage your company’s reputation, impacting crucial relationships with customers, suppliers, and partners.
- Loss of competitive advantage. Addressing material weaknesses may divert valuable time and resources from core business activities, hampering your competitiveness and limiting growth opportunities.
- Management burden. Material weaknesses burden your management team, diverting their attention from critical strategic planning and day-to-day operations, which can hinder company growth and performance.
- Operational inefficiencies. Material weaknesses can lead to inefficient financial reporting processes, causing delays and errors in preparing crucial financial information and impacting decision-making and operational effectiveness.
- Increased audit scrutiny. Material weaknesses attract greater audit scrutiny, resulting in additional costs and time spent on external audits. This can strain your financial resources and shift your focus from other essential business activities.
- Limited access to capital. Material weaknesses may deter potential investors and lenders who seek accurate financial reporting, limiting your access to capital and impeding your company’s ability to fund expansion plans or new projects.
How Outsourced Accounting Services Can Help
Whether your company faces accountant staffing shortages or has recently implemented mitigation plans, finding and training qualified staff is an ongoing challenge.
At Windes, we understand that minimizing the effects of the accountant shortage is among your top priorities. Our firm’s services can help you reduce the risk of late reporting and eliminate inaccuracies in your financial reports.
We offer a range of business audit, tax, and outsourced accounting services to ensure your business can always access qualified and highly-skilled accountants. Our team can help you strengthen your financial planning, produce accurate financial reports timely, and help your business become more profitable.
Windes’s outsourced accounting services include:
- Outsourced CFO plans offer a cost-effective solution to achieve your financial objectives and build an efficient growth strategy.
- Our outsourced controllers are fully qualified to ensure regulatory compliance, strengthen your business’s internal controls, and produce accurate financial reports.
- Outsourced bookkeeping staff and accounting supervisors are an excellent solution for improving day-to-day cash management and ensuring timely filings and payments.
Connecting with us and taking advantage of our outsourced accounting service plans can help you save up to 50% compared to the cost of a full-time employee.
Ensure Strong Financial Reporting with Windes
Windes can help you address internal control weaknesses, strengthen your internal controls over financial reporting, and help your company become more profitable. Our outsourced accounting services are designed to help you achieve your financial objectives and benefit from the experience of a qualified team.
We can provide support to your business regardless of its sector. Our team includes experts specializing in industries from the automotive sector to construction, manufacturing, technology, and nonprofit organizations.
Contact us today for more information regarding our Audit & Assurance Services and our outsourced accounting plans. Windes can review your company’s internal controls and help you stay compliant in the face of the current accountant shortage.