The Supply and Demand for Accounting

By Sager, William H. | The National Public Accountant, August 1994 | Go to article overview

The Supply and Demand for Accounting


Sager, William H., The National Public Accountant


The American Institute of Certified Public Accountants, through its Academic and Career Development Division, has for the past 21 years conducted an annual study on the supply and demand for accounting graduates.(1) Based on data contained in the 1993 survey (conducted in the fall of 1992), it would appear that there are more accounting graduates in the supply pipeline than there are accounting jobs available. In this regard, the 1993 survey is similar to those of earlier years.

According to the AICPA 1993 survey, about 53,000 accounting graduates received baccalaureate degrees, a decrease of approximately 1% from the previous academic year. However, the number who received master's degrees in accounting was approximately 7,000, a whopping 28% increase from the previous year.

Obviously, a post-graduate degree in accounting facilitates entry into the profession. However, another factor influencing post-graduate degree work should not be overlooked and that is the influence of the 150 semester hour law, which looms on the horizon in about 30 states. If a student can afford a fifth year of college, the effort should be directed to an advanced degree that becomes a valuable bargaining chip when the student seeks to enter the job market.

On the demand side, public accounting firms hired 22,500 of the new graduates including 2,650 graduates with masters degrees. This is an increase of about 2,000 over the previous year. The number of new hires with master's degrees increased by 51%.

Just under 20,000 of the undergraduates were recruited by public accounting firms. While this represents 5% more than were recruited the previous year, it is still only about 30% of all undergraduates. According to the survey, about 27% of the undergraduates went into private sector employment, 9% went to government employment and other employment areas, 7% went to graduate school and 28% are "unknowns," about whom we shall speak later.

The percent of accounting undergraduate hires has steadily declined during the past decade. Whereas surveys of the mid-1980s showed that one-third of undergraduates were recruited by CPA firms, that percentage has now decreased to about 30%.

WHO ARE "THE UNKNOWNS"?

The 28% of accounting graduates who are classified in the survey as "unknowns" are not "unknown" to NSPA. They are the graduates who, unable to find employment with a CPA firm, will most likely enter practice as non-certified (that is, unlicensed) accountants. Accordingly, as we have remarked on numerous occasions, there are an increasing number of well-qualified and well-educated independent practicing accountants, unlicensed and unregulated, who are in public practice on their own because there is no demand for their employment in a CPA firm.

Moreover, even if a number of these non-CPA-employed accountants took and passed the CPA examination, it is unlikely that they would receive permits to practice as CPAs. An individual who passes the CPA examination may receive a certificate but not a permit to practice public accountancy until the state's experience requirement is fulfilled and, since there is no demand for their employment in a CPA firm in order to complete the statutory experience requirement, graduates who majored in accounting are destined to remain unlicensed independent practicing accountants, even if they pass the CPA examination.

The NSPA 1991 Income and Fees Survey of Accountants in Public Practice showed that 55% of NSPA's members had a baccalaureate degree or equivalent and an additional 21% have done post-graduate work. …

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