When the CPA Pipeline Slows to a Drip, How Do You Get the Flow Going?

by David D. Wagaman, CPA, and Jerry J. Maginnis, CPA | Jun 10, 2020
Pennsylvania CPA Journal
One of the top issues facing the accounting profession is talent – the acquisition and retention of those who will grow our future. The good news is enrollments in accounting programs nationwide are at or near all-time highs. Nevertheless, in percentage terms, fewer graduates of accounting programs are proceeding to become CPAs. Our CPA “pipeline” has slowed and needs to be addressed.

The challenges are daunting. The traditional college age population (ages 18 to 24) has been flat or declining since 2011, and it is projected to drop by 4 percent through 2022.1 It is becoming harder for many families to finance the cost of higher education, and an improved labor market in recent years has resulted in a decline of nontraditional students (those over the age of 24) returning to college. Consequently, many institutions of higher education are in the throes of enrollment declines. These developments could result in a decline in the number of accounting majors, and the timing could not be worse. The AICPA expects that 75 percent of currently active CPAs will retire within the next 15 years.

Another important consideration is the imminent shift in the population of the United States. The U.S. Census Bureau projects that by 2044 we will become a majority-minority nation. That is, the non-Hispanic white population will comprise less than
50 percent of the nation’s total population. Among those under the age of 18, this shift has already occurred. Being able to appeal to a more diverse group will be essential to attract students to accounting and fill the pipeline.

The effort that will be required on the front end is absolutely necessary, but it can’t stop there. The next challenge will be to retain greater numbers of future accountants and to motivate them to become CPAs. In this article, we will explore the CPA Exam quandary, diversity and related issues, and retention practices. We will then discuss some concerns that could hinder the profession’s efforts.

CPA Exam Quandary

In recent years the AICPA has been monitoring the gap between the number of recent college graduates with accounting degrees and the number of new candidates sitting for the CPA Exam. Enrollment in accounting programs and hiring by public accounting firms of accounting graduates are at record highs, but the number of new exam candidates and exam sections taken is flat. In August 2015, 67 percent of accounting majors had planned to become a CPA upon graduation, but only 70 percent of those sat for the exam.2 That means less than half of accounting graduates take the exam. Now factor in the dropout rate: 14,000 candidates drop out annually, with 10,000 of those before passing a single section of the exam.3 When all is said and done, about one in three accounting graduates pass the CPA Exam.

In October 2015 the AICPA announced a multipronged approach to lead candidates into the CPA pipeline. In November 2016 the National Association of State Boards of Accountancy (NASBA) announced its three-pronged initiative to enhance the CPA candidate pipeline. These initiatives are excellent and, if followed, will certainly help the cause. However, it seems like we have been up this stream before.

In these very pages in 2006, J. Andrew Weidman posed the question, “Are We Failing the Exam?” Enrollments in accounting were burgeoning, yet many graduates were not pursuing the CPA credential. Part of the reason was a dramatic drop in CPA candidates that accompanied the introduction of the computer-based exam in 2004. Ignoring the 2004 effect, through 2014 the total number of unique candidates for the exam has never reached pre-2004 levels.

In the 2006 article, Weidman provided the following reasons for why recent graduates were not taking the exam:

  • Not enough time, specifically time to prepare for the exam
  • Accounting graduates do not believe certification is important or that it is aligned with their career goals
  • The change to the computerized exam
The first two reasons are mentioned in virtually every current analysis. Weidman cited an AICPA survey at the time that found only 47 percent of new staff members felt it was very important to pass the CPA Exam. Remember, although 67 percent of current accounting majors plan to become CPAs upon graduation, only 70 percent of those sit for the exam. Interestingly, that comes to 47 percent. So it seems there has been no change between 2006 and 2015 in the percentage of new staff who feel it is important to pass the exam.

Back in 2004-2005, the third reason could be attributed to fear of the unknown. However, the computerized exam may still be an issue because of the increased time and costs to pass the exam. Scheduling the four parts of the exam today is more of a double-edged sword than years ago when one knew the exam was administered over two and one-half days on the first consecutive Wednesday, Thursday, and Friday in the months of May and November. More options offer more opportunities for delays and rescheduling. Today, application fees can cost over a $1,000, not including the cost of a review course. Finally, there is the matter of the 150-hour requirement, which is an indirect, but significant, factor.

How do we reverse the trend? Weidman focused on the role of educators and accounting firms. Many educators have enthusiastically promoted the benefits of becoming a CPA, but more can be done. Students should be informed frequently that becoming a CPA is a springboard for a number of exciting careers. Given today’s increased costs of becoming a CPA, perhaps educators should emphasize the financial rewards: over the course of a 40-year career, a CPA can earn as much as $1 million more than a noncertified accountant.4 Certainly, promoting the “$1 million advantage” to becoming a CPA cannot hurt. Educators also need to advise students to be ready to sit for the exam as soon after graduation as possible. Life happens. As one gets busy at work and possibly gets into a serious personal relationship, it becomes much more difficult to devote the time and maintain the focus necessary to complete the exam. Ideally, a candidate should pass at least two parts of the exam before he or she starts a full-time position.

Weidman also suggested that all CPA firms clearly communicate to new staff members the importance of becoming a CPA, and to consider implementing some or all of the following:
  • Pay the fees for candidates to sit for the exam the first time they take it.
  • Pay for a review course.
  • Give staff members paid time off to sit for the exam.
  • Let staff members study in the office during work hours if they are unassigned.
  • Recognize new CPAs in your firm with a celebration.
  • Mentor your staff to pass the exam.
  • Incorporate attaining the CPA designation into the annual review process.
  • Track staff members’ progress.
  • Establish a “study-buddy” system among coworkers.
These recommendations are being championed by many in the current efforts to increase the pipeline.

There are new ideas on how to deal with the challenge too. NASBA is working with the AICPA to identify why candidates drop out during the examination process. NASBA is also conducting a gap study to determine the reasons why more accounting graduates do not take the CPA Exam. In 2016, the AICPA issued CPA Candidate Success Research Findings: Implications for Accounting Education and the CPA Profession as part of its multipronged strategy. The intent of this initiative was to gain insights and identify the best practices employed by institutions with high sit and pass rates on the exam.5 These best practices, if emulated by other accounting programs, may increase the number of students sitting and passing the CPA Exam.

Diversity and Related Initiatives

Demographic trends make it clear that the profession’s ability to maintain and grow its pipeline of new members in the coming decades will depend, in part, on an ability to attract a higher percentage of ethnic minorities, many of whom have historically not pursued careers in accounting. This is not a new topic. In 2011, the PICPA published a paper titled More Clients, More Talent, More Revenue: The Business Case and Toolkit for Diversity in Accounting. This document was updated in 2015 and can be accessed at www.picpa.org/diversity. So, how is the profession tackling the challenges presented in the PICPA paper and similar studies, and what have we done since 2011? Here are several initiatives:

  • Foundation High School Scholarship – This program offers financial assistance to high school seniors who are attending an accredited two- or four-year college or university and plan to major in accounting.
  • Junior Achievement Finance & Accounting Cluster – This partnership provides resources at a national level to middle and high school students participating in Junior Achievement programs. It introduces students to opportunities and foundational concepts of becoming a CPA.
  • Accounting Career Awareness Program – Created by the National Association of Black Accountants, this summer development program brings high school students from underrepresented ethnic groups into a week-long residency where they are exposed to professional opportunities in the business and accounting fields.
  • Academic Champions – This program is currently being piloted at 19 campuses, including six historically black colleges and universities and Hispanic-serving institutions. Participating faculty members are provided with welcome kits and “pro-CPA” materials to encourage students to stop by their offices to discuss the CPA profession.
  • Two excellent websites targeted at high school (StartHere-GoPlaces.com) and college (ThisWayToCPA.com) students contain a wealth of resources about the profession and how to take and pass the CPA Exam.
In addition, the PICPA has launched the Pennsylvania CPA Foundation, a new entity founded to inspire future accounting students. Other state societies also sponsor legacy scholarship and student essay competitions designed to raise awareness about the profession and to help finance the cost of an accounting degree. While not offered solely to ethnic minorities, those groups often benefit from these programs.

Retaining Talent

Much has been written about the staffing challenges that millennials present. Members of previous generations will occasionally criticize their work ethic and do not understand their career aspirations. Experts agree that millennials crave work-life balance and flexibility, need to feel like they are making a positive contribution, want to know that they are on the right track, and want to receive recognition for their accomplishments. They desire opportunities to advance, and want to feel like their work has a positive impact on the world. These attributes can be channeled in a positive way. The sooner firm leaders can embrace and effectively manage millennials, the more likely recruitment and retention will improve.

The following recommendations may enhance a firm’s recruitment and retention practices:

  • Be transparent – Be clear about the purpose of your organization. Describe the firm’s mission and use it in all firm communications. Establish ambitious, attainable, and measurable goals based on input from all levels within the firm. Let people see how their role fits into the firm’s purpose and goals. Inform recruits about the firm’s performance review process and, once hired, provide them with ongoing feedback.
  • Create a sense of belonging – Employees, especially millennials, want to feel they are part of a team and contribute to its success. Arrange office space to encourage collaboration and teamwork. Schedule office or firmwide social events. Promote diversity among backgrounds, outlooks, and experiences. Provide ongoing education that champions inclusiveness and teaches about the unconscious biases that can undermine diversity initiatives.
  • Develop mentoring programs – There are myriad potential benefits to the mentee, mentor, and the firm. Perhaps the most notable of these is increased retention. The PICPA has a podcast on the value of mentoring, which can be found at www.picpa.org/mentoringpodcast. Also, see “How to Start and Run a Mentoring Program” in the Journal of Accountancy.6
  • Reward and recognize milestones and achievements – A celebration for newly awarded CPA credentials in your firm or office is just one effective example.
  • Eliminate or reduce “lockstep” promotions based on start dates – Rethink assigning responsibilities on the basis of experience. Rather, provide growth opportunities by assigning responsibilities on the basis of talent and potential.
  • Embrace a truly flexible work environment – Perhaps the biggest factor that will influence recruitment and retention is work-life balance. As long as people respond in a timely fashion and work gets done at the quality desired and within budget, should it matter where the work is done?
This certainly is not a comprehensive list of recommendations. It does not, for instance, specifically address the unique issues present in retaining and promoting women. However, the list above is a good way to start improving the retention of young professionals in general.

Concerns and Questions

University of North Carolina professor James Johnson, PhD, focuses on the changing U.S. demographics and its effect on the employment market. According to Johnson, talented minority students who attend elite schools are in such high demand that they can work almost anywhere they want, making it difficult for recruiters if these are their only targets. But forward-thinking and discerning employers will find many talented young people at schools that maybe don’t carry such recognizable names.7

Unfortunately, these talented minority students attend public universities where spending on higher education has been cut by a collective $8.7 billion a year since the last recession, according to the Center for Budget and Policy Priorities. Those spending cuts hit minority-serving schools and nonflagship state universities the hardest, resulting in tuition increases and higher levels of debt. The Institute for College Access and Success reports that 70 percent of students in Pennsylvania now graduate with debt that averages $33,264. This is a public-policy issue, but it also has the potential to disrupt the CPA pipeline in the future.

All 50 states have instituted the 150-hour educational requirement to become a CPA. This requirement increased the time and cost required to pursue a CPA path for most students, and critics argue this has helped contribute to the pipeline challenges faced by the profession, particularly among those from economically disadvantaged backgrounds. Proponents contend that CPAs should embrace high standards and aspire to be members of a “learned profession,” such as law or medicine. Realists acknowledge both viewpoints, and stress the need for more programs and initiatives designed to defray or subsidize the additional costs of meeting the 150-hour requirement for those who need the help. It is fair to describe this issue as both a challenge and an opportunity.

When it comes to starting salaries, there are many fields that require the same level of educational commitment but pay significantly higher entry-level salaries. This is especially true in health-related fields. Perhaps this is acting as a disincentive among the best and brightest students.

There has been a revival of nonaudit services among large accounting firms in recent years. In fact, advisory and consulting practices are growing faster than other service lines in most firms. Becoming a CPA is generally not a requirement to advance in consulting practices. If the strategic thrust of firms is the continued growth of these practices, it could be a disincentive to pursue traditional service lines and become a CPA. What’s more, advisory and consulting may be more attractive to many millennials. They may see the work as more interesting and feel they have a better opportunity to make a real difference in a client’s business.


The challenge and opportunity of maintaining a qualified and strong pipeline of future CPAs is the responsibility of all of us. While the different constituencies within the profession can each take unique steps to help achieve our goals, we all have a role to play. Here are suggested actions for each group:

  • Individual CPAs – Whether you work for a firm, in industry, or in the nonprofit sector, you can and should make the time to visit a local high school to speak with students about the opportunities an accounting degree and CPA credential can provide. If every PICPA member did this once, we would reach hundreds of thousands of young people and likely encourage thousands to consider and evaluate a CPA path. The PICPA has some great resources to assist you with a high school visit. Contact Lesley Brown at lbrown@picpa.org for more information.
  • CPAs in academia – Those who spend a significant amount of time on college and university campuses are well positioned to coach and mentor prospective CPAs. They should make it a priority to “get the word out” about the benefits of passing the CPA Exam.
  • Firm leaders – Incorporating a commitment to diversity into an organization’s strategy and culture will help create an environment that is welcoming to young professionals with a variety of ethnic backgrounds. This philosophy needs to be embraced and practiced by CEOs, managing partners, and other leaders so it will take root.
  • Professional associations – Groups like the PICPA and AICPA play a significant role in educating, raising awareness, and rolling out initiatives designed to address the pipeline challenge. Of course, these organizations need the active participation of their members to support and execute those initiatives.
We are all fortunate to be members of a terrific profession, and most of us have experienced rewarding careers and benefitted from the lifelong learning and growth opportunities available to CPAs. We hope that you will make it a priority to identify, educate, and encourage young folks to consider becoming a CPA. It is a great way to give back and help solidify the future of our profession. 

1 Forecast by the National Center for Education Statistics.
Journal of Accountancy, August 2015, p. 9.
3 https://media.nasba.org/files/2011/04/NASBA-Annual-2016-Pipeline-Discussion-002Dan-Dustin.pdf
4 http://www.becker.com/cpa-review/resources/career-opportunities/what-you-can-earn-as-a-cpa
5 http://www.aicpa.org/InterestAreas/AccountingEducation/NewsAndPublications/DownloadableDocuments/19635-824_CPA-Candidate_success-research-findings_WEB.PDF
6 Drew, Jeff, “How to Start and Run a Mentoring Program,”
Journal of Accountancy, March 2014, pp. 34-39.
7 http://www.journalofaccountancy.com/news/2013/oct/20138920.html

David D. Wagaman, CPA, is an associate professor of accounting at Kutztown University in Kutztown and outgoing chair of the Pennsylvania CPA Journal Editorial Board. He can be reached at dwagaman@kutztown.edu.

Jerry J. Maginnis, CPA, is a retired managing partner of KPMG, an executive in residence at Rowan University in Glassboro, N.J., past president of the PICPA, and a member of the
Pennsylvania CPA Journal Editorial Board. He can be reached at jerrymaginnis@outlook.com.
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