We can’t say it’s not been a long time coming, but the skills crisis facing our industry is very much here.
It was once a casual, theoretical, and academic discussion about engaging the younger generation in accounting, frequently aired in industry discussions, at universities, and on podcasts. But these have taken on a new urgency as the consequences of inaction become starkly apparent.
One notable example of this deepening crisis is Tupperware, a company renowned for its long-standing reputation. In high-profile news stories, the brand was recently forced to delay its critical financial disclosures due to ‘significant attrition’ in accounting, resulting in ‘resource and skill set gaps, strained resources, and a loss of continuity of knowledge’. In plain English, many team members have left!
This situation highlighted deep-seated challenges within the sector, characterised by a dwindling pool of expertise and eroding institutional memory. It’s sure to ring true to many of accountancy’s biggest players. The situation is alarmingly common, a concern my team and I have explored through extensive dialogue with numerous organisations.
It’s safe to say these delays do more than inconvenience. They initiate a string of negative effects: whether it’s disrupting operations, creating uncertainty among investors, or, in the case of Tupperware, potentially leading to severe consequences. It’s certainly not an isolated problem, but a symptom of a pervasive issue affecting the accounting field globally. For instance, this year has seen a notable increase in the number of U.S. companies delaying their annual reports, with an increase of 40% compared to the previous year.
Accountants play a critical role in the business world. They’re akin to referees in sports, key in their role of ensuring accuracy and fairness. However, the scarcity of accountants is becoming critically acute, with implications that extend far beyond the profession itself. Problems in our industry often have knock-on impacts for global economic structures.
Our team at AdvanceTrack is preparing to publish a major report into the global state of accountancy, pinpointing critical shortages and exploring what accountants and businesses are doing to address these challenges. While we are still finalising the report, the preliminary findings confirm a dire situation: the demand for qualified accountants substantially exceeds the supply, with no improvement in sight. The shortfall is projected to be in the tens of thousands.
The reasons behind this crisis are numerous and complex. A flurry of experienced accountants are retiring, leaving a gap that is hard to fill. Simultaneously, the profession is losing its appeal to younger generations, deterred by the long educational requirements and relatively low initial pay. The combination of a retiring workforce and insufficient new entrants is painting a bleak future for the field.
Artificial intelligence (AI) also plays a significant role in this scenario. While it offers some relief by automating routine tasks and alleviating workforce shortages, it also introduces concerns about job security and the evolving role of accountants. The perception of AI as a potential barrier may discourage young people from entering the profession.
It’s important to recognise that while AI can enhance human capabilities, it cannot replace the critical judgment and ethical insight that are hallmarks of the accounting profession. The real challenge is to leverage AI effectively while maintaining the irreplaceable value of human expertise in ensuring accurate financial reporting, compliance with regulations, and strategic financial planning.
Given these challenges, it’s crucial that we engage with governments, industry leaders, and influential stakeholders to reinforce the critical role that accountants play in maintaining the integrity and accountability of financial systems. Without a robust sector to oversee financial transactions, tackle regulatory complexities, and ensure compliance, the stability of modern commerce is genuinely at risk.
Failing to proactively address the root causes of the shortage of accountants will lead to more disruptions similar to the Tupperware situation. Such incidents serve as urgent reminders of the need for substantial reform within the profession.
While the solutions are not exhaustive (or yet identified), significant strides can be made by investing in the development of accounting talent, rethinking recruitment approaches, and promoting the essential role of accountants in supporting economic stability. I also think that the profession has done a poor job of portraying what an accounting professional does. No-one has corrected John Cleese’s portrayal of an accountant!
By promoting this role better, we can work towards a future where the accounting profession is not only sustainable but thriving. Neglecting these steps could leave the wider business world susceptible to disorder and unpredictability—consequences too severe for a global economy to bear, let alone one already in such a volatile moment.
Vipul Sheth is Managing Director of accountancy and audit offshoring firm AdvanceTrack.