Although emerging technologies have disrupted the entire accounting ecosystem in recent years, the education realm has been one of the areas hardest hit. Declining enrollments and decreased numbers of CPA candidates have presented formidable challenges for institutions of higher learning. The authors give their perspective on the root causes underlying today’s negative trends and their recommendations on how the profession and its institutions can transform, adapt, and survive.
Disruption and transformation continue throughout the accounting profession. Such disruptions impact the entire accounting ecosystem in one way or another. According to Aldredge et al. (2021), “Technology and businesses are changing and evolving rapidly, as are the expectations for accountants. Advances in automation and machine learning, artificial intelligence, data analytics, and blockchain are examples of current technology disruptions in the accounting industry” (M. Aldredge, C. Rogers, and J. Smith, “The Strategic Transformation of Accounting into a Learned Profession,” Industry and Higher Education, vol. 35, no. 2, pp. 83–88, 2021, https://journals.sagepub.com/doi/pdf/10.1177/0950422220954319).
Exhibit 1 presents examples of current accounting profession disruptions, transformations, and challenges. In this context, the central question explored by this article is, “What does the future hold for accounting education?”
The Accounting Profession: Disruption, Transformation, and Challenges
This article extends the authors’ previous work about the future of accounting education concerning the forces disrupting the accounting profession and the associated impact on accounting education (M. Dawkins, M. Dugan, S. Mezzio, and J. Trapnell, “The Future of Accounting Education—In-Demand Skills, Workplace Readiness, the 150-Hour Requirement, MAcc Programs, and the CPA Exam,” The CPA Journal, September 2020, pp. 28–35, https://www.nysscpa.org/201012-fae). These disruptions and related challenges are framed in the context of trends in the CPA firm profession, collegiate accounting education, and CPA candidacy. This is followed by critical questions related to economic and competitive factors bearing on the current state of collegiate accounting education. Finally, the authors propose a “call to action” to counter negative accounting enrollments and CPA candidacy trends. Such calls to action are presented in the spirit of recognizing accounting education as a crucial area of study and a vital component of the learned profession of accounting, with its obligation to protect the public interest, honor the public trust, and demonstrate commitment to professionalism, including its contribution to the efficient and reliable functioning of the capital markets.
Higher Education and Business Education Enrollment and Degree Trends
After decades of rising tuition costs and relatively little innovation at many institutions, COVID-19 sparked widespread disruption in the higher education sector. According to McKinsey (2022):
Education systems globally, and at all levels, have faced much disruption over the past couple of years. The pandemic caused a global learning crisis; technologies changed learning, teaching, and assessment, and higher education costs continue to rise to unsustainable levels for some students. (https://www.mckinsey.com/featured-insights/themes/whats-next-for-education)
Due to demographic trends and the above issues, enrollment in higher education is trending downward. For example, enrollment in higher education dropped nearly 5% in 2021/2022 compared to 2010/2011 (https://educationdata.org/college-enrollment-statistics).
In the wake of COVID-19, higher education stakeholders (e.g., parents, students, policymakers) have increasingly questioned the value proposition of college degrees. Examples include the high costs and the need for loans, the unnecessarily long duration for completing degrees, inconsistent patterns of job-placement success, and the inadequacy of starting salaries after receiving a college education. As a result, greater demand exists for online program options; accelerated paths to undergraduate and graduate degree attainment, including three-year undergraduate degree programs and one-year master’s programs; lower-cost degrees; greater emphasis on post-graduation jobs with good starting salaries; and workplace readiness.
One bright spot is business schools; despite declining enrollment trends in higher education overall, business degrees remain the most popular undergraduate degree in the United States. For example:
- ▪ Business degrees represent 19.1% of the top four conferred undergraduate degrees (http://educationdata.org/college-enrollment-statistics).
- ▪ Business undergraduate degrees conferred increased by 27.7% during 2021/2022 versus 2010/2011 (Department of Education, National Center for Educational Statistics, Integrated Postsecondary Education Data System).
- ▪ Business master’s degrees increased by 30.1% in 2021-2022 compared to 2010/2011 (Department of Education, National Center for Educational Statistics, Integrated Postsecondary Education Data System).
Yet, despite growth in collegiate business education degrees, enrollments in accounting programs and conferred accounting degrees have decreased substantially. Why is this?
The Current State of Accounting Education
Accounting education has been disrupted in material ways. Factors include material changes to the CPA exam content; new skill sets required to succeed in the workplace; the increased emphasis and demand for science, technology, engineering, and mathematics degrees (STEM); and alternative business school degrees outside of accounting (e.g., fintech, data analytics, supply chain management). Consequently, statistics indicate declining enrollment in accounting degree programs nationally, while business school degree enrollments and degree conferrals are growing. This declining trend is particularly worrisome because accounting degree enrollments and degree conferrals have dropped substantially, exceeding the overall drop in higher education enrollment.
Exhibit 2 presents trends in accounting education, CPA exam participation, and CPA firm hiring. Business degrees remain the most popular collegiate option selected by higher-education students. Yet, the accounting discipline has lost market share within business schools. Why is this happening?
Trends in Accounting Education Enrollments, CPA Exam Participation and CPA Firm Hiring
Although numerous complex and interdependent factors negatively impact accounting enrollments, CPA exam candidates, and CPA firm hiring, Exhibit 3 focuses on the root causes contributing to the decline in demand for accounting degrees in the United States. Exhibit 4 presents the authors’ recommendations to be considered in trying to increase the demand for accounting degree programs.
Top 10 Root Causes of the Decline in Demand for U.S. Accounting Degrees
Recommendations for Increasing the Pipeline for Accounting Degree Programs
Trends: Public Accounting Talent Demand Exceeds Accounting Student Supply
How serious is the problem of declining enrollment in accounting degrees? According to the Controllers Council, “As for whether the shortage of accountants and CPAs will continue into 2023, all current signs point to the answer being a resounding “yes” (https://controllerscouncil.org/the-continued-cpa-and-accountant-shortage-in-2023/). Part of the problem is retention challenges, aging workforce resignations, declining enrollments in accounting programs, negative perceptions concerning a career in accounting (e.g., it is not a STEM profession, work-life balance concerns, relatively lower starting salaries).
The following key questions are grouped into several critical areas: the pipeline of accounting majors and supply of accounting graduates, the accounting education process and student experience, and employer demand for accounting graduates. These questions and subsequent recommendations from the authors are focused on contributing to reversing the decline in accounting enrollment and, in turn, increasing the supply of work-place-ready accounting graduates.
Crucially, these and other questions and recommendations must be addressed holistically and collaboratively by the many diverse and disparate cohorts comprising and influencing the entire accounting profession ecosystem. This accounting profession ecosystem includes CPA firms and other employers of accounting graduates; accounting faculty and their related universities; and organizations such as the AACSB, SEC, PCAOB, AICPA, NASBA, Institute of Management Accountants (IMA), the Center for Audit Quality (CAQ), state societies, and the American Accounting Association (AAA). Each constituent should have an influential seat at the table, work to achieve consensus on necessary actions, and assign leaders to implement specific measures.
Take a Fresh Look at the Branding of Accounting Careers
Key Question: Is being a CPA perceived in the marketplace as an engaging, exciting, financially rewarding, and socially responsible career path comparable to other learned professions (e.g., law, medicine)?
Discussion: Anecdotal feedback from students and young professionals indicates that a career path in a CPA firm, and perhaps other roles, are less appealing than other options (e.g., finance roles, tech companies) for several reasons: accounting roles are not STEM-designated (particularly important for international students); starting salaries are relatively lower than other fields; the market has sent negative signals concerning work-life balance; there is a lack of awareness that accounting is a learned profession with a socially responsible mission; and accounting is considered to have a less appealing socially responsible mission compared to other learned professions (e.g., law, medicine).
Recommendation: Market studies should be conducted on current perceptions to develop a proactive branding campaign that clearly and consistently signals that the accounting profession is an engaging, exciting, financially rewarding, and socially responsible career path. Such a study should include all existing and potential stakeholders (e.g., prospective students, high school guidance counselors) and involve representatives from each cohort comprising the accounting profession ecosystem.
Reimagine the Undergraduate Introductory Accounting Courses in Business Schools
Key Question: Are the introductory accounting courses required to be taken by all students majoring in business degrees, including accounting majors, engaging students, conveying the socially responsible mission of accounting, including the essential role of accounting in protecting the public interest and promoting interest in accounting careers?
Discussion: For all business majors, two undergraduate introductory accounting courses (e.g., financial accounting followed by managerial accounting) are required in most business schools. These courses are generally taken during the sophomore year.
These introductory accounting courses provide accounting faculty access to a large number of business students spanning every business degree major, as well as students who have yet to declare a major. This represents a unique and compelling opportunity for accounting educators to promote the accounting profession and engage students in the critical role of accounting in business, including protecting the public interest.
Studies and anecdotal evidence suggest, however, that some students may have negative experiences with introductory accounting courses. Consider the following example:
Students’ experiences in introductory accounting can confirm or dispel prior opinions about accounting, an important factor in deciding whether or not to major in accounting (Cohen & Hanno, 1993). The Accounting Education Change Commission (AECC, 1992) and others have emphasized how introductory accounting influences potential accounting majors’ perceptions concerning the accounting profession, aptitudes, and skills needed for successful careers in accounting, and different career opportunities in accounting. Introductory accounting courses are, however, frequently characterized by high failure and withdrawal rates. (E.R. Etter, S.L. Burmeister, and R. J. Elder, “Improving Student Performance and Retention via Supplemental Instruction,” Journal of Accounting Education, vol. 18, no. 4, pp. 355–368, 2000)
Recommendation: This is a unique opportunity for accounting faculty to introduce the compelling benefits of a career in accounting to large numbers of business school students—accounting majors, non-accounting majors, and undeclared majors. This includes, for example, conveying accountants’ roles as valuable business advisors and analysts, leaders involved in business decision making, and learned professionals with a socially responsible mission of protecting the public interest.
In this context, business school deans and accounting department chairs should ensure that faculty teaching introductory accounting courses are trained and incentivized to teach these courses practically and engagingly, and they should bring a mindset that accurately and enthusiastically promotes the benefits of a career in accounting. Faculty should enlighten students on the benefits of a career in accounting, particularly undeclared students and accounting majors.
Reconsider the 150-Credit Requirement
Key Question: What is the impact of the 150-hour requirement on accounting enrollment?
Discussion: The 150-credit hour requirement for undergraduate students majoring in accounting requires an additional 30 credits over the general 120-credit requirement for an undergraduate degree to receive a license to practice after passing the CPA exam. This results in additional costs for a master’s degree or expenses for the extra credit hours for an undergraduate degree, adding to the cost of becoming a CPA. The 150-hour requirement should be reconsidered for several reasons:
- ▪ Most (if not all) other technical or analytical business school undergraduate majors do not have this additional credit requirement.
- ▪ Some undergraduate business majors with no additional credit requirement (e.g., finance, analytics majors) also receive starting salary offers greater than accounting graduates with an additional 30 credits—even if those 30 are used for obtaining a master’s degree.
- ▪ Accounting majors have many compelling alternative career paths that do not require a CPA license, including internal audit and controller roles, as well as the not-for-profit and government sectors. Such positions also include certification opportunities without a mandated additional 30 hours of academic credit and the related high outof-pocket costs to the candidate for the additional 30 credits [e.g., certified management accounting (CMA), chartered global management accounting (CGMA), fundamentals of sustainability accounting (FSA), certified internal auditing (CIA), certified information systems auditing (CISA), certified fraud examiner (CFE) accounting].
- ▪ Increasing numbers of states are moving away from the 150-hour requirement, allowing accounting majors to sit for the CPA exam with a bachelor’s degree. In these states, however, the additional 30 credit hours are still required to earn a license to practice as a CPA.
- ▪ The courses needed to complete the additional 30 credits often do not need to be accounting courses, defeating the original premise of requiring an extra 30 hours to prepare students for the increasing complexity of the accounting field.
Recommendation: The authors believe that the requirement for an additional 30 credits beyond the undergraduate degree in accounting required to qualify for a CPA license should be eliminated. We acknowledge that some new approaches to fulfilling the 150-hour requirements have emerged recently. However, we assert that the expected benefits envisioned by the creators of the additional 30 credit hours (e.g., higher starting salaries, enhanced workplace readiness, improved preparation for the CPA exam) are not being fully realized and do not exceed the actual costs of the additional 30 credits (e.g., the extra time, extra tuition cost, foregone compensation from entering the workforce sooner).
Although the 150-hour requirement remains, the authors recommend that NASBA and the AICPA explore opportunities to accelerate the time it takes to complete the 150 hours, thus reducing the cost to students. We also suggest the development of a national model curriculum for the additional 30 credits that would facilitate workplace readiness and CPA examination preparedness while adhering to the 30-credit model curriculum during AACSB accreditation reviews.
Increase the Number of Accounting Programs Designated as STEM
Key Question: Will increasing the number of accounting degree programs with a STEM designation substantially increase student interest in accounting education?
Discussion: The U.S. Department of Education strongly emphasizes support for programs focused on science, technology, engineering, and mathematics (STEM). However, “business” as a broad subject area of study is not included in the standard list of academic areas that can earn STEM status. There is no prohibition against business schools and accounting programs redesigning their degree programs to achieve STEM status; many schools have done so (e.g., University of Illinois, University of South Florida, NSU–Florida). Such programs usually add a series of data science and analytics courses focusing on the accounting function and redesign the accounting content to accommodate the analytics classes. Some programs use the term preparing “financial engineers” for the profession.
Recommendation: Substantially increasing the number of accounting degree programs with a STEM designation will increase job opportunities, starting salaries, and student interest in accounting education. In addition, STEM-designated programs generally have advantages in recruiting international students, including priority status for obtaining educational visas and extended allowable work experience.
In 2021, bipartisan legislation was introduced in the U.S. Congress titled the Accounting STEM Pursuit Act of 2021 to recognize accounting as part of school STEM programs (“Bill Would Make Accounting Part of STEM Education,” Michael Cohn, Accounting Today, https://tinyurl.com/4v5fzk2y). Progress on this bill has been slow. During the interim, the American Accounting Association (AAA) and others should explore and provide guidance on how to grow the number of accounting degree programs with STEM designation and include this in program promotion. In exploring this opportunity, revising master’s programs in accounting to meet STEM requirements should be expanded to enhance enrollments while providing accounting graduates with the advanced technical/analytical background demanded in many business areas.
Key Question: How will disruptive technologies like artificial intelligence (AI) affect accounting degree programs?
Discussion: Disruptive technology is a transformative innovation that significantly alters how consumers, businesses, or industries operate (Investopedia, https://tinyurl.com/5c89n7v5). The increasing use of disruptive technologies, such as AI-based ChatGPT, in business has made it imperative to determine how such technologies should be integrated into accounting degree programs (e.g., the CPA Evolution Initiative).
Accounting students and employers face increasingly higher expectations concerning their understanding of the impact of such technologies on business strategies, models, and operations generally, as well as their practical skills as accounting professionals specifically. The AACSB also has high expectations regarding how accounting program curricula will integrate such technologies into theoretical and practical learning. For example, in 2022, the AACSB made the following substantive modifications to the 2018 Accounting Program Accreditation Standards related to technology agility and faculty minimum qualifications:
List current or emerging technology deployed in each course (Related Standard: A5)
List minimum qualifications or credentials for faculty assignment to each course (Related Standard: A6) …
Describe the extent of the depth and breadth of coverage of the technology outlined above in the accounting programs. Explain how the coverage of current and emerging technologies in accounting aligns with the unit’s mission, strategies, and expected outcomes. Describe the unit’s goals concerning technology and strategies for achieving these goals.
Provide exemplars of how the unit covers the leveraging of technology to solve accounting problems. (AACSB, https://tinyurl.com/yck5tjnz)
Recommendations: Emerging disruptive technologies, such as ChatGPT and AI, present business schools and accounting program leaders with compelling learning opportunities (e.g., critical thinking, learning), as well as formidable challenges (e.g., increased plagiarism, cheating). In this context, we echo the recommendation by the AACSB in 2022, “business school leaders must think more strategically about technology investments, adoption, and innovation; they must also clearly define and act on new pathways to learner success” (https://tinyurl.com/habp3eh9). Faculty awareness and skills in this domain will be a critical success factor.
ESG and Sustainable Business
Key Question: What will be the effect of ESG and sustainable business practices on accounting degree programs?
Discussion: The ESG movement is sweeping through organizations spanning size, sector, and geography—transforming business strategies, business models, operations, products, and services, as well as financial reporting and assurance. The need for greater awareness and competencies in ESG impacts all business school majors. CPA firms and the CFO functions in businesses (including controllership, accounting, FPA, internal audit, and financial reporting) play a crucial role in this ESG movement.
Recommendations: AACSB Standard 9, Engagement and Societal Impact, calls for business schools to incorporate ESG values into their curricula. Employers are increasingly expecting new hires to have a basic foundation of knowledge concerning the intersection of ESG and business. NASBA states: “As ESG reporting continues to grow, professionals who possess these skills will become increasingly more valuable to companies” (https://tinyurl.com/m2mmvdrk). In this context, the authors echo the following call-to-action advanced by the IMA:
Responsible leaders agree that time is running out to address climate change risks and that management accountants must provide leadership and expertise to address the challenges. To meet this challenge, higher education must integrate ESG accounting into the accounting curriculum. (https://tinyurl.com/2dkpxx2j)
Adapting to Disruption
Transformation continues throughout accounting, disrupting the entire ecosystem of the profession. In the education realm, this disruption has resulted in declining enrollments in accounting degree programs and decreased numbers of CPA Examination candidates. These trends have proven a challenge for institutions of higher education and hiring organizations.
This article presents the authors’ perspectives on some of the root causes and recommended actions to reverse such negative trends. The root causes, however, are numerous and complex. How to fix the problems is equally complicated. The authors acknowledge the limitations of the recommendations advanced in this article.
Accurately and comprehensively identifying the full spectrum of root causes and associated mitigating actions will require coordination and consensus from representatives of all the cohorts comprising the accounting profession ecosystem. These cohorts include, but are not limited to: accounting faculty; business schools; the AACSB; CPA firms; CFO organizations; other employers of accounting graduates (e.g., public companies, private companies, governmental entities, nonprofit organizations); the AICPA, NASBA, IMA, CAQ, state societies, and AAA. To address and harmonize these issues, every constituency within the accounting profession should have a seat at the table.