- A shortage of accountants has intensified pressure and ramped up workloads for accounting teams at U.S. companies while hindering recruitment and retention, according to 78% of audit partners surveyed by the Center for Audit Quality.
- In an effort to overcome a talent shortage, about one in three companies are increasing compensation and workplace flexibility, the CAQ said Wednesday. Cyberattacks, price pressures and tightening government oversight also pose potentially high costs.
- “Audit partners see challenges ahead for businesses as inflation remains above historic levels, new regulations affect compliance costs and cybersecurity threats remain high,” Julie Bell Lindsay, the center’s CEO, said in a statement. The CAQ surveyed 748 audit partners at eight of the largest accounting firms about conditions for their clients.
Accelerating a six-year shrinking of the talent pool, the number of students who graduated at the end of the 2021-2022 academic year with an accounting degree in the U.S. plunged 7.4% compared with the prior period, according to a survey by the American Institute of Certified Public Accountants.
Fewer than 1% of small- and medium-size CPA firms can find enough qualified U.S. candidates for employment, according to a survey of 250 top CPA firm executives by alliantTALENT.
More broadly, about 1.65 million accountants and auditors were employed in the U.S. last year, 15.9% fewer than in 2019, according to Bureau of Labor Statistics data. More than 300,000 accountants quit their jobs between 2019 and 2021.
U.S. companies also consider new regulation, compliance costs and regulatory risk growing challenges, the CAQ said, citing 74% of survey respondents.
Stricter rules for disclosure of risks from climate change is a leading concern for U.S. companies, the CAQ said, cited by 65% of audit partners.
Climate disclosures in the U.S. and Europe “are expected to be subject to rigorous regulations that are likely to result in enhanced reporting requirements, potentially increasing costs of compliance and requiring changes in business operations,” the CAQ said.
Cybersecurity has grown as a C-suite worry during the past year, identified by 52% of audit partners as an economic risk for U.S. companies compared with 32% during a 2022 survey, the CAQ said.
The Securities and Exchange Commission in July released a rule requiring companies to disclose cyberattacks and annually report on cybersecurity risk management, strategy and governance.
Nearly one out of every three U.S. companies use artificial intelligence in financial reporting, the CAQ said, citing the survey. Yet when deploying generative AI, companies face challenges in ensuring data integrity and security, and in hiring experts in the technology.
Survey respondents believe the economic landscape has improved, the CAQ said.
Pessimism about the economy among audit partners plunged 30 percentage points during the past year, declining to 27% of those surveyed from 57%, the CAQ said.
Still, 67% of audit partners believe that the current inflation cycle will influence their leading industry sector for more than 12 months, according to the CAQ.
The center in September and October surveyed audit partners serving companies capitalized at a range from less than $700 million to more than $50 billion.