What UK firms should learn from the US accountant shortage

At the end of 2022, news broke that more than 300,ooo accountants and auditors in the US had left their jobs – a 17% decline. More worrying was the dwindling number of students in education coming into the field to fill the gap.

The reasons for the shortage are multifaceted. There is significant pay gap between accounting and other careers as one of the key deterrents for entering the profession. For instance, from 2017 to 2021, accountants aged 25-29 had a median salary of $56,000, compared to financial analysts who earned around $74​,000. Furthermore, the perception of accounting as a tedious field, coupled with long working hours and a stressful environment, has contributed to the shortage​​​​.

The shortage is also not limited to tax accountants but extends to those involved in financial planning, auditing, and other accounting tasks​​. Even large firms with substantial recruitment resources, such as PwC are finding it challenging to hire accountants​​. This situation is especially burdensome for middle-market companies, which rely heavily on accurate financial reporting and auditing​​.

While the shortage has not get rippled across the Atlantic as severely, some of the challenges the US market are facing, are also being experienced among firms in the UK.

Addressing the challenges and learning from the US experience

To address these challenges, US accounting firms have adopted various strategies. Technology has been one facet of this.

Automation is being increasingly used to alleviate the workload on accountants, enhancing manual human-required work, and providing relief for overwhelmed teams​​​​. It also helps in achieving compliance more efficiently and reduces the need for paper​​. This technological shift not only addresses immediate challenges but also positions firms for future success​​.

Additionally, automated solutions provide a clear, digital audit trail, making it easier for companies to achieve Sarbanes Oxley (SOX) compliance. According to the CPA, auditors can do their work in as little as two or three hours, as opposed to the days or weeks they would typically spend auditing accounting by sifting through file cabinets and chasing paper.

Many firms are also turning to outsourced preparation services, allowing them to handle increased workloads and take on more clients without adding full-time staff​​. The market for outsourced preparation services has expanded in recent years due to the growing shortage of in-house accountants. “Partial outsourcing,” in particular, has grown in popularity. With partial outsourcing, vendors handle the busy work and pass skilled labour to in-house employees.

The benefit to this arrangement is that outsourced vendors prepare returns as an extension of your firm. They use the same tax software and follow any special notes or instructions you provide. Their team will collaborate back and forth on each return until your firm is ready to sign off on a review. This improved efficiency is good for your firm and can allow you to increase capacity and profitability without increasing headcount. It can also help you improve efficiency within your firm and be pulled into the hiring cycle less frequently.

Remote employment options are also becoming essential for attracting and retaining talent, as they offer flexibility and access to a wider talent pool​​​​. Many firms are focusing on a return-to-office policy, tilting the scale in favour of those with more flexible employment options.

A survey from  The Conference Board finds that 54% of companies are requiring, or strongly encouraging workers to report to the office. At the same time, 28% of workers whose employers are instituting such a mandate say their intent to stay with their employer has decreased in the previous six months.

Keeping the staff you have

In the UK, there has long been a view that the accounting profession is not the most ‘thrilling’. It lacks some of the sexiness of other financial services roles, and often is overlooked by professionals entering the workforce.

Many accountants are leaving to be Financial Planning & Analysis (FP&A) analysts. If an accounting team is solely focused on recording activity, consider getting them involved in financial modelling and planning. Training in other areas of accounting and finance is a great way to keep your accountants engaged.

Recent evolutions within the industry to adopt more digital and sophisticated tools has helped to stem this bad image problem, and also opened up the talent pool to a more diverse set of candidates for many firms; data analysis is one tool in particular that has helped to boost engagement.

But it is still more important than ever for firms to hold onto the talent that they already have. Peak season burnout is part of the reason many tax professionals are leaving the profession. Unskilled labour is as demoralising as it is time-consuming and can lead to costly turnover.

Perhaps the most simple, and often overlooked, metric is to simply talk to your accountants about their perspective. Engage in open and honest communication. Not every business will have the same problems. Quite often, the reason people leave is because they do not feel valued or are unsure of their role. This is not said enough, but every employee within a firm should understand their role in the big picture.