As the flow of young people into the profession slows, and more and more old accountants are leaking away, Sue Coffey, the CEO of public accounting at the AICPA, and Lexy Kessler, chair of the National Pipeline Advisory Group, share what’s being done in the short term and the long term to address this major problem.
Transcription:
Dan Hood (00:03):
Welcome to On the Air with Accounting Today. I’m editor-in-chief Dan Hood. If you ask anybody, they’ll tell you, accounting has a people problem. At a time when accountants are more in demand than ever, nowhere near enough people are studying accounting, and even fewer are following through and becoming CPAs. This has become sort of an all-hands-on-deck crisis for the profession, and here to talk about it — and now the profession is looking for solutions for it — are Sue Coffey; she’s the CEO of public accounting at the AICPA. Sue, thanks for joining us.
Sue Coffey (00:26):
Oh, thanks for having me, Dan. Happy to be here.
Dan Hood (00:29):
We also have with us Lexy Kessler. She’s the Mid-Atlantic leader at Top 100 Firm Aprio, as well as — perhaps more importantly for this conversation — chair of the National Pipeline Advisory Group that’s been set up to look for long-term strategic solutions for this big issue. Lexy, thanks for joining us.
Lexy Kessler (00:43):
Thank you, Dan. Looking forward to it.
Dan Hood (00:45):
Excellent. Alright, let’s take a quick look backwards if we can for a second. Sue, do you have a sense of what’s driving the slowdown in the pipeline or why we’re not getting as many people as we need to come into accounting?
Sue Coffey (00:58):
Yeah, thanks, Dan. Great question and not one that there’s one simple answer to because there are a number of things I think that are creating that issue. The first is just demographics. I mean just ongoing declining birth rates in the United States that started occurring years ago. That’s finally catching up to us and that’s creating fewer people that are going to university because there’s a much smaller population of people to pick from, and that’s of course impacting professions all across our country. So we’re not alone in this situation from the start, but there’s also a lot of data that we’ve been kind of parsing through to determine other root causes of the talent challenges we’re having. And we’re finding that there are leakage points in a couple of key areas that are kind of driving our focus as part of this initiative. One is in the college to graduation group and about 208,000 on any given year declare an accounting major, but then by the time they graduate, only 50,000 are graduating in accounting.
(02:10)
So there’s something going on in that declaration of a major to graduation and university. Another area we’re finding relates to retention and how retention in firms is impacting the beginning of the funnel and the desire for people to come into our profession. And so that one to five year group of professionals that are within a firm and tend to leave within that period and may not have a good experience are impacting what, for example, high school and college students think about our profession and that’s creating pipeline challenges. And when you dig even deeper just in those two categories, and there are others, don’t get me wrong, but in those two categories, there are reasons for that. So for example, in the college to graduation bucket, the principles of accounting course tends to be dry. It doesn’t tend to focus on the things that we as a profession necessarily do.
(03:15)
That’s exciting, the exciting things that we do. And those courses don’t tend to be taught by the most engaging instructors. So if you think about that, that might be an area that we can look at for solutions in the retention area. We’ve been talking about the S issue for many, many months now, right? Starting salaries are not where they need to be in our profession, and those young adults and young professionals see more opportunity elsewhere for higher pay. We also have issues of culture in the workforce. We have periods of time during the year where we overwork our people and that’s having a direct impact on the younger generation’s desire to come into our profession. So there’s a whole host of reasons. There’s not just one reason. There are many reasons, which means that the solutions have to be multi-pronged.
Dan Hood (04:07):
This is one of the reasons why the pipeline metaphor is good, because it’s not just the flow into the pipeline. There’s leaks throughout it and all kinds of different stages of it. I want to just quick, Lexy, as chair of the group, can you tell us a little bit for those who aren’t familiar with the National Pipeline Advisory Group, can you tell us a little bit about it?
Lexy Kessler (04:23):
Sure. So the group was actually formulated as a result of a resolution by council this past May and looking to what are the things that we can be doing as a profession to increase this pipeline issue or challenge, I should say, hurdle. I think that’s where we decided to use now is hurdles, but it’s 22 individuals that really represent, we tried to have, I guess it was formed to try to represent as much as we could from the professions perspectives to be able to bring that to the conversation. They’re from academia, regulators, big four, smaller firms. What else am I forgetting? Well, anyway, you get an idea. It’s
Dan Hood (05:03):
Broad, it’s rock. You covered almost everybody here,
Lexy Kessler (05:04):
Broad section. And so first of all, it’s an amazing group of individuals. I’ve learned so much about the different perspectives that we need to be thinking about. We are focusing on the data as Sue said, and really trying to look at that as opposed to, I’ve heard this or I’ve heard that. And to try to identify those root causes. The group has jelled in this amazing way in that there is trust in the room that nothing is off the table. We will talk about the elephants in the room, including the one 20 and one 50 substantial equivalency mobility, what does that mean to each of these areas? But we’re not stopping there. We also actually just had meetings with several states, society CEOs and their board chairs to hear from them what their concerns are around substantial equivalency and mobility. And to also hear from aaa, NABA and so forth. We’re going to be doing focus groups. We’ve done some polling already. So we’re really trying to gather as much input as we can to then be able to formulate some possible solutions.
Sue Coffey (06:12):
If I could just add one thing to what actually maybe emphasize something that Lexy said, data-driven is really important. When council adopted the resolution asking us to do this, it was very important to them that it was data-driven because there’s a lot of opinion out there and a lot of opinion out there by individuals that we’re not trying to attract. We’re trying to attract middle school, high school, college age young adults into our profession. Their opinions are really important, but there’s also a lot of opinions by others. So data-driven is super important. And then the other is we’re working towards a national strategy and in order to have a national strategy, you need to have as many stakeholders as part of the profession engaged in this as possible. And so the process that we put together is designed to make sure that we get as many perspectives and views as possible in developing potential solutions and then testing those solutions and then retesting those solutions as we go through the development phase. So it’s been a really interesting process so far. We’ve got ways to go, but so far we’ve done some amazing work.
Lexy Kessler (07:29):
And I would say also one more thing is that the role of the advisory group at this point is to listen. We are really listening to what the challenges are from different stakeholders perspectives and trying to incorporate as much as we can in coming up with those proposed solutions, but it is truly listening.
Dan Hood (07:48):
Gotcha. Let me ask you too, you talked about the national strategy and formula, national strategy, and I think you’ve given us a hint of a lot of what I’m going to ask about from your description of what’s causing the problem, what’s causing the pipeline issues. But when you look at that strategy or the potential strategy, and obviously as you said, we’re listening now, so you’re formulating it, but you’re certainly probably thinking about the long-term strategy as you listen, do you have a sense of areas that are going to be priorities for action? I mean, I think you described some of them when you were talking about the problems, but are there specific things you’re going to be focusing on?
Sue Coffey (08:20):
Yeah, so I think based on what we’re seeing in the research that we’ve been going through is that the pre-college is certainly an area we need to focus on. I mean, that’s the top of the funnel and the more people we can get interested and just even thinking about our profession, that’s great because then you can start to convert them. The second is that college to graduation group, where we’re seeing that huge leakage and we need to figure out exactly why and work with partners in order to find solutions and start to solve that. We’ve also seen getting over the CPA finish line. So once somebody actually graduates with an accounting degree, how do we then get more people to sit for the CPA exam and pass the CPA exam because a leakage point, and that should be something that don’t want to say that’s necessarily easy to do, but I mean those are people who, they’ve got a degree, right?
(09:15)
Let’s see if we can get them over the finish line and reduce some of the complexity that it takes to get there. Diversity, equity, inclusion and broadening our broadening the group of individuals from more diverse communities is certainly something that we see as something that we need to tackle. And then that one to five years of employment and retention, we have to be able to retain these individuals if we can do that wonderful and tackle the reasons why they’re leaving. Because when they leave, they go on social media. If they have a bad experience, they talk about their bad experience and that impacts what the pre-college and the college to graduation group thinks.
Dan Hood (10:04):
Absolutely. Excellent. So now those are, those priority areas make a lot of sense. And it says specifically when you look at the long-term causes of the pipeline issue, but one thing that’s worth pointing out, right, there’s the advisory group you all are working on, but the AHB already has a pipeline acceleration plan in the works, and it’s, I’ve seen different presentations from 12 to 15 different elements. It’s a big sort of sweeping plan with a lot of parts to it. Lexy, do you have a sense of how the advisory group’s strategy will differ from the pipeline acceleration plan or is there a different approach, a different thought about it?
Lexy Kessler (10:42):
Yeah, I think I viewed as two different things kind of in my mind. I view some of the current initiatives as being short-term meaning within two, three years. Whereas what the pipeline group is doing is really focusing on the strategy for the long-term, right? When we’re talking about focusing and trying to get high school students engaged and understanding what accounting is, that’s a long-term, right? They’re not going to be in the job market for at least five years. So we view it that way and it’s really very deliberate strategy. What we really need to do is taking an approach. We’re modernizing our profession, we’re modernizing the image of it. I mean, as you’ve heard Sue some of the things that she’s talked about, there’s multiple things that are involved in this. It’s not just one thing. So the pipeline advisory group is looking to take those, which is why we’re talking to all these stakeholders and gathering all this data and focusing on that to try to identify what’s the good long-term plan. So I kind of view it in those two buckets, but there absolutely is overlap and there is working together and building off of some of the things that have already been started as well.
Dan Hood (11:47):
Excellent. It certainly makes a lot of sense and as we keep reinforcing, this is such a huge issue with so many different pieces to it that it certainly makes sense to come at it from a couple of different angles. There’s a lot more, I want to talk about this a lot more questions I got to ask because there is so many different pieces to it. But we’re going to take a quick break before we do. Alright, and we’re back. We’re talking with Sue Coffey and Lexy Kessler of the AICPA’s National Pipeline Advisory Group, talking about all the different ways they, they’re working to fill the pipeline and close some of the leaks in it both in the short term and long term. We have mentioned Lexy, I think you mentioned some of the, we won’t call it controversy, but the hot button issue, the big elephant in the room with 150 hour rule and it’s potential ramifications in zoo.
(12:36)
I want to ask you about this because it’s, a lot of people talk about it and we’ve made it clear that there are a million different causes of this. Certainly the 150 hour rule isn’t the single cause, but a lot of people point to it and a lot of people are concerned about it and people have talked about possibly rejiggering it or even eliminating it. The AICP and others, NASPA and other groups have pointed out that I could have serious negative repercussions around mobility, around equivalency and other really valuable things for the profession that have taken decades to put in place. Can you envision any solutions or possible solutions that involve changes to the hundred 50 hour rule?
Sue Coffey (13:14):
So first, let me start out by saying when council issued their resolution, they were pretty explicit about the importance of mobility and seeking ways that would preserve mobility. And I talked to a lot of firms, Dan this on a very regular basis and they’ve all expressed to me how critical mobility is for their ability to serve clients in the public. So I want to just kind of start there, but does that mean there isn’t a solution that involves changing things? Absolutely not. And Lexy said that everything is on the table. We have a working group that’s looking at substantial equivalency, which are the three E’s education, examination experience, and how those three E’s fit together and they’re exploring whether there are ways that we can kind of change that mix and still preserve mobility or change that mix and have minimal impact to mobility that could be acceptable to many, many.
(14:09)
So that working group has been talking to stakeholders to understand the differing and creative views and ideas that they may have. Lexy mentioned that we’ve been meeting with several of the state societies that are exploring flexible pathways. We’ve been working with NASPA and the state boards who actually own the licensure requirements. So it’s really important that we connect with them and work with them. And we’ve been seeing what’s in the art of the doable here. At this point, we don’t know what’s going to happen, but we are very committed to exploring, I think Lexy mentioned that we’re going to be having a national survey where we’ll be exploring some solutions and asking some questions. And for sure we will have some questions on the 1 21 50 substantial equivalency and the three Es in that survey.
Dan Hood (15:03):
Very cool. As we say, even if there are, they do come up with tweaks to 150 hour rule. It’s only going to be one of many parts of a solution to this issue. So very, absolutely.
Sue Coffey (15:14):
Absolutely.
Dan Hood (15:16):
I wanted to, you had mentioned in your review of the long-term history of where the pipeline problem came from. You talked about the different groups, different groups in accounting and different groups that need to be reached out to. Are there pools of potential CPAs that appear more promising for engagement or reengagement? And I throw out those words because one, we know that technology is luring away accounts as luring away potential accountants, the finance, all kinds of banking industry are drawing away the sort of ideal candidates that they used to flow into accounting in greater numbers. But then there are also all kinds of unrepresented groups who never flowed into accounting in terms of race, in terms of economic background, all kinds of things, areas where they just weren’t coming to accounting for a bunch of different reasons. When you look at it, are there particular groups you say, well, this we, this is a group to focus on and obviously we want all those people to come to the profession, but are there groups to say, well, we can re-engage with these guys or we can reach out to this group more quickly? Are there groups that are targeted for engagement more quickly than others maybe?
Sue Coffey (16:19):
Yeah, so there are a few. If you recall, Dan, we’re launching a new CPA exam in January and the reason why we restructured the exam, so we changed the entire exam, it’s got a new structure, it’s going to be a foundational core, and then the candidate can choose one of three disciplines. And one of those disciplines is around information systems and controls. So you mentioned technology in your question, and we are becoming a profession of technologists, candidly. I mean, we cannot do what we do without a deep knowledge of technology. So I would say that technologists or those that are pursuing certain areas of technology or a group of individuals that we can target and that new CPA exam helps those individuals see our profession in what they love to do. So that would be one group. Another group you mentioned diversity, the diversity of our profession does not match the diversity of our population and our country is becoming more and more diverse by the days, and businesses are becoming more and more diversely owned.
(17:33)
And so we need to better match our profession with business in our population. And so I think we have to have some very specific initiatives that focus on broadening the diversity of our profession and being more inclusive of individuals in different socioeconomic areas of our country. Many individuals in our profession, were first generation college and we’re just one of those countries that immigration and changing demographics is kind of part of our fabric. And I think that is something that we can focus on as well in helping individuals in different socioeconomic groups come through our pipeline funnel.
Dan Hood (18:23):
Gotcha. Alright. We can talk about this for a long, long, long time. It is a big question with a lot of moving parts as we’ve discussed. Unfortunately, we’re running short on time, so I want to take a quick step back and maybe just real quick and Sue, you can kick us off, but then Lexy, I want you to weigh on it as well. Very quickly, what do you think success looks like for whether for the advisory group or for the Persians all maybe in the short term and long-term? Do you have a quick description of what success looks like to you?
Sue Coffey (18:50):
Yeah, I’ll just say a couple of things, and these are more short-term than long-term, but certainly more interest in the top of the funnel, right? Including more individuals that represent the diversity of our population. If we can get more graduates that have declared an accounting major and increased that one in four number to two in four, that would be a big win for us. And certainly moving individuals from that graduate degree to passing the CPA exam, even small percentages there will increase our percentages exponentially.
Dan Hood (19:23):
Makes a lot of sense. Lexy, for you, what does success in this area look like?
Lexy Kessler (19:27):
I think that it’s changed the narrative in our broader community, where it is in academia, it is in the firms, whether it be business and industry or public accounting. We need to celebrate success, we need to change how we look and all these pieces have to fit together to work successfully in the longer term. From a public accounting perspective, I can speak to that. That’s been most my whole career is we really need to look at the business model. And it’s been the same business model since I began just shy of some decades of service. We call it that. And it hasn’t changed much, and it really does need to because the reality is this is a new generation that’s coming in. How we do business has completely transformed and as a profession, we need to be doing that as well. So part of our role is to help create some solutions to help get us there faster.
Dan Hood (20:23):
Excellent. Alright. I said we could talk about this forever. There’s a lot to unpack, but we’re going to have to close it off there for now, I want to thank Sue Coffey and Lexy Kessler of the National Pipeline Advisory Group for joining us. As we say, there’s a lot to do, but it sounds like you got a very clear vision for it. So thank you both.
Sue Coffey (20:40):
Thank you, Dan.
Dan Hood (20:42):
And thank you all for listening. This episode around the air was produced by Accounting Today with audio production by Kellie Malone. Ready to review us on your favorite podcast platform and see the rest of our content on accounting today.com. Thanks again to our guests, and thank you for listening.
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