The Disproportionate Effects of Declining Interest Within Different Accounting Fields

One of the more significant crises currently facing the accounting field is the large and long-term year-over-year decline in the number of college students majoring in accounting. The AICPA’s 2023 Trends Report notes that from 2021 to 2022, there was a 7.8% and 6.4% decrease in the number of bachelor’s and master’s degrees, respectively, granted in accounting. This comes after a consistent decline of 1-3% per year, which has persisted since the 2015-2016 academic year, as shown in Exhibit 1 (http://www.nysscpa.org/2023-trends). The lack of entrants into the accounting profession comes at an inopportune time, as a large pool of accountants are concurrently retiring or leaving the workforce (L. Ellis, “Why So Many Accountants Are Quitting; Even Some Accounting Majors Don’t Want Accounting Jobs,” Wall Street Journal, 2022; J. Constantz, “There Are 340,000 Fewer Accountants, and Companies Are Paying the Price,” Bloomberg News, 2024). Furthermore, despite the departures, the total number of accounting and auditor jobs in the US has increased nearly 10% since 2020 (Bureau of Labor Statistics OEWS Surveys, https://www.bls.gov/oes/tables.htm). In short, the demand for accountants is increasing at a time when fewer students appear interested in pursuing accounting careers, resulting in a serious deficit.

Many authors have discussed the declining pool of accounting graduates and its potential impact on the profession (M.C. Dawkins and M.T. Dugan, “An Update on the Future of Accounting Education,” The CPA Journal, Sep/Oct 2022, pp.20-25; H. Pitstick, “What Everyone Can Do to Strengthen the Next Generation of CPAs,” Journal of Accountancy, vol. 234, no. 3, pp.28–33, 2022; A. Reinstein, and S.E. Kaszak, “Addressing the Shortage of Accountants: Suggestions for Academe and the Profession,” Journal of Accounting Education, vol. 66, p.100888, 2024). As this decline in new hires has a significant impact, it becomes crucial to understand the reasons for the decline. This way, practitioners and academics alike can better utilize resources to stall—or better yet, reverse—the decline. So far, many initiatives have attempted to address the decline in accounting graduates (and subsequent new hires). For example, firms have increased salaries and benefits for new hires, expanded support for the pursuit of a CPA (such as paid time off to study or mentoring groups), and provided many scholarships and other student support (Pitstick 2022; AICPA-CIMA, “Over $1 Million in AICPA Scholarships Available for Students and CPAs in 2023,” 2022, https://tinyurl.com/msy4fbnh). A more specific example comes from EY, which has recently announced that it plans to invest $1 billion in compensation and technology over the next three years to improve the experience of early accounting professionals (EY, “EY US to Invest $1 Billion In Compensation and Technology to Improve the Attractiveness of the Accounting Profession,” 2024, https://tinyurl.com/bdtkyzbd).

While these pursuits are worthwhile, they are very broad in nature and do not necessarily target areas of direct need. In fact, little research has been done to identify what areas of the profession are most deeply affected by the shortage of new accounting graduates. Studying what areas of accounting (e.g., private vs. public, audit vs. tax) have been hit the hardest by the decline will provide important insights. This, in turn, will help the profession to craft policies and procedures that can effectively address the decline in accounting students and subsequent graduates.

To obtain internships, accounting students often make decisions early in their academic program that have a large impact on their career direction, leading to the famous private vs. public and audit vs. tax decisions that students face (D.W. Dalton, S. Buchheit, and J.J. McMillan, “Audit and Tax Career Paths in Public Accounting: An Analysis of Student and Professional Perceptions,” Accounting Horizons, vol. 28, no. 2, pp.213–231, 2014). Therefore, we can examine trends in employment data from the Bureau of Labor Statistics (BLS) and the AICPA to draw inferences in order to help better understand these decisions and how they may be related to declining accounting enrollments. We find that, while there has been an overall decline in accounting graduates, this decline seems to be most heavily impacting employment in tax and other non-audit and non-financial professions, such as valuation and forensics.

The primary goal of this article is to raise awareness of the disparate effects of the accounting shortage. One reason often given about the accounting shortage is the general “unattractiveness” of the profession (e.g., salaries and work/life balance). The disparate effect on tax and audit suggests a more nuanced story, however; that the attractiveness of the profession is different for tax and audit. Unfortunately, there is currently very little research examining this difference. The authors believe that the importance of this topic has never been greater and encourage future research to improve understanding of early career choice decisions, leading to a better understanding of the underlying problems. While this paper focuses primarily on the diagnosis of this issue rather than the potential treatments of the decline, following its main analysis, it will offer some suggestions regarding potential solutions.

Analysis of the Audit vs. Tax Career Decision

One of the early career decisions that students make is between subareas of accounting, such as audit, tax, managerial, and forensics. Exhibits 2 and 3 present statistics relating to different subareas that new hires are placed into, as reported by the AICPA in their annual Trends Report. Exhibit 2 reports the nominal amounts, and Exhibit 3 reports the percentages.

The top line shown within Exhibit 2 represents the total number of accounting graduates in the United States hired by CPA firms. Consistent with prior findings, the total number of accounting graduates hired into public accounting does appear to display a continuous negative trend after 2016. This is consistent with declining student interest in accounting, and thus with a smaller number of potential new accounting hires (i.e., a shrinking pool of new talent entering the industry). Additionally, Exhibit 2 examines all three subareas: audit, tax, and “other” (i.e., financial forensics, business valuation, management accounting, and transaction services). The ongoing decrease is largely concentrated in tax and other fields. When comparing the 2020 to the 2014 total graduates, it reveals that audit experienced a 7% increase (from 19,310 to 20,662), while tax experienced a 34% decrease (from 11,093 to 7,292) and “other” experienced a 77% decline (from 10,682 to 2,431). Exhibit 3 examines percentages of the same data. The audit line clearly increases, as a greater percentage of new hires in public accounting start as auditors.

In summary, total hiring for public accounting has decreased, largely from tax and other accounting professions, but not from audit. The “other” category has historically been a much smaller category, where relatively few new graduates start. The decline in the “other” category could mean several things, including the fact that there is a smaller need for these positions, or that firms prefer to hire initially into audit or tax, which have historically been the main areas emphasized in public accounting.

In addition to examining the differential effect of the shortage on the various fields in accounting, the authors also examined where students begin their careers: in public or in private accounting. Private accounting typically involves working in the accounting department of a specific company, wherein the work performed benefits the company itself (e.g., working in the accounts receivable department). In contrast, work in public accounting is performed for anyone in the public who is willing to pay the fees. Thus, an accountant working in the public sector will perform various services for a wide array of companies. Public accounting often requires accountants to obtain their CPA license, and the experience gained in public accounting is typically considered valuable for more advanced and higher paid accounting jobs. Traditionally, many accounting graduates would begin their career in public accounting and eventually transfer to private accounting.

Given the shortage in new hires, it is important to examine whether the “traditional” starting point for accounting careers is also experiencing an uneven shift in terms of supply of fresh accounting graduates. Exhibit 4 analyzes the public versus private decision by examining the number of people hired into public accounting as a percentage of all accounting student graduates. These figures are sourced from the AICPA’s annual trends reports. Graduates that do not choose to work in public accounting are considered to work within the private sector. Exhibit 4 shows the number of new hires into public accounting as a percentage of both bachelor’s degrees and total degrees (i.e., bachelor’s and master’s) in accounting. Higher percentages indicate more students are choosing public accounting, while lower percentages indicate more students are choosing private accounting. This exhibit shows that the number of accounting graduates starting in public accounting has been in decline since 2014, decreasing from 55.4% in 2014 down to 38.1% in 2020 based on total degree information, and decreasing from 77.6% in 2014 down to 52.9% in 2020, using only bachelor’s degree information. This decreasing trend would suggest that the traditional career path of starting in public accounting and transitioning to private is potentially changing alongside the new hire shortage. From looking at new graduate data alone, it appears that the shortage is hitting public accounting harder than private accounting. Private will undoubtably be impacted as well since public accounting experience is often considered beneficial when entering into higher level positions in the private sector.

Potential Reasons for Decline

These results suggest that the current accounting shortage is affecting tax versus audit, and public versus private, in different ways. As such, anyone interested in addressing the shortage needs to focus their attention on the differences between these areas, including the determinants of the audit-tax decision and the public-private decision. For example, one of the most notable determinants of career choice is compensation, which can differ between fields. National salary information indicates that, on average, tax pays more than audit and there is some evidence that this difference is growing. The Robert Half salary guide for 2019 reports the median difference in early salary to be approximately $5,500 higher in tax than in audit. In 2025, this difference reportedly grew to $7,500 (https://tinyurl.com/2brv4uyf). Similarly, Glassdoor reports the average difference as approximately $8,000 as of June 2024. Of course, these figures are national averages, and there could be regional variations. This difference in salaries is interesting; to the extent that salaries drive the audit-tax decision, one would expect more students to begin their careers in tax as the pay is higher. Yet the data shows the opposite trend to be true, where more associates are choosing to start their careers in audit rather than tax, despite differences in salary growth (with tax outpacing audit). While increasing salaries may eventually “fix” the unequal number of new hires, it is important to consider factors beyond salary to more comprehensively address the problem; factors that are apparently considered valuable enough to cause students to choose to avoid tax, even with additional monetary incentives. Other than salaries, what might have caused the tax field to experience a greater overall decline?

Unfortunately, relatively few studies have examined the audit-tax decision in any depth. One exception is a study conducted by Dalton et al. (2014). They find that students who plan to pursue the audit-track believe that they will have more client interaction, better future job opportunities (i.e., private accounting, or industry positions), and greater knowledge of business processes. Comparatively, students who plan to pursue the tax track believe that they will have a more stable daily routine, develop more specialized skills, and build more collaborative client relationships. Interestingly, these survey results also indicate that students perceive that there are more opportunities for subsequent career growth outside of public accounting for those that specialize in audit, but not necessarily for tax (Dalton et al. 2014). The logic is that audit better trains one in understanding the rules for preparing financial statements, and most businesses need to prepare financial statements in some form. In contrast, not all businesses have a tax department, so students are choosing audit as a stepping stone to higher paid careers in the future. There is a perception that audit will more easily allow a student to find job opportunities outside of public accounting. This (real or imagined) lack of opportunity could be driving students away from the tax field and highlights the importance of communicating to students the future career opportunities available within tax for both private and public accounting. Of course, the Dalton et al. (2014) analysis is over a decade old, and what drives the audit-tax decision could have shifted significantly since then. Both academics and practitioners could benefit from a regular collection of this data from new hires in various fields of accounting. This data collection point could become part of the regular onboarding process that occurs within firms, or as a part of graduation surveys conducted at institutions of higher education.

Compared to the audit-tax decision, the rationale for the public-private accounting decision is more frequently cited. One of the more commonly discussed differences between public and private accounting is the number of hours worked, particularly during busy season. Private is more commonly thought of as an area which provides better work-life balance compared to public (Dalton et al. 2014). While public accounting is frequently sold to students as a great start to a career, most new graduates indicate that they do not plan to stay in public accounting longterm, specifically due to the long hours during busy season. M. Hart, J. Kremin, and W.R. Pasework (“Growing Up: How Audit Internships Affect Students’ Commitment and Long-term Intentions to Work in Public Accounting,” Issues in Accounting Education, vol. 32, no. 2, pp. 47-63, 2017) surveyed accounting students before and after their audit internship. They found that nearly 60% of the interns changed their views regarding how long they planned to work in public accounting, with the majority of respondents decreasing their expected time in public accounting after their internships.

Shedding Light on Decision-Making

This article highlights that the declining interest in accounting is disproportionately found in tax, not audit. We believe differences in audit and tax careers, both real and imagined, shed light on the fundamental causes of declining interest in accounting careers. For example, the perceived lack of an exit strategy may be contributing to the decline in interest within taxation, which affects the total number of students interested in obtaining an accounting degree. When looking at the public-private decision, it seems that fewer new graduates appear to be starting in public accounting, instead choosing to immediately go into private practice right out of school. Future research would benefit from examining the audit-tax decision in greater detail. For example, which is better positioned for remote and part-time work, which requires longer hours, and whether busy seasons begin and end at the same time. Tax returns have deadlines, but they can be extended. In contrast, a publicly traded firm is not going to want to delay the issuance of their financial statements, suggesting that deadlines may be more fixed for audit. These differences should be analyzed and communicated to students early in their education so they can make an informed career path decision.