CPA and well-known accounting author Edward Mendlowitz laments the demise of public accounting. Trends in the industry show more and more people with accounting degrees leave to become private accountants, meaning a business hires staffers to oversee the finances of just one company or a set of companies. Why are so many CPAs leaving the public side of the industry?
People who work in public accounting often work long hours, especially during tax season when returns need to be filed with the IRS. Firms should implement fair overtime pay, reduce workload and monitor boring busy work to keep accountants more engaged during weeks of long hours and high stress. It might not hurt to allow employees a few weekends off between March and April.
Public accounting is a great training ground for people who want to own their own businesses. Accountants may have better insights into a company's finances, revenue streams and profits. People trained in accounting have a vested interest in keeping their own company's books in order so the business doesn't flounder or go under due to bad accounting practices. Accountants-turned-entrepreneurs can also pinpoint red flags long before a company reaches a bankruptcy point.
Partners in accounting firms might become disgruntled and unhappy about the way the rest of the company's leaders run the place. Although this is a minor issue in public accounting, firms must keep in mind a younger workforce that eventually replaces seasoned veterans when they retire. Firms must learn to deal with the concerns of millennials moving forward.
Lack of Mentoring
CPAs leaving public accounting because of unhappiness might stem from a lack of mentorship. This comes from a perceived intergenerational conflict at firms with older, seasoned partners. Mentoring programs should attract the best accountants right out of college, but many firms fail to see this benefit. When there is a lack of mentorship at a firm, young accountants may look elsewhere for better career growth opportunities.
Statistics show the Big Four accounting firms hire around 70 percent of people who graduate with accounting degrees, but then 90 percent of these graduates leave the public area of the industry within three years. Accountants earn their experience in a public setting before falling into a private accounting position. Overall, these statistics mean 63 percent of all accounting graduates switch from public to private accounting within three years of graduation. Public firms need to do something to retain great graduates because current methods may not be working.
Working in the public's view can be a very rewarding experience that gives new graduates a taste of what everyday accounting is like. Once these younger people get some years in the industry, they seem to switch to private accounting. That's not necessarily a bad thing, but it might diminish the quality of public accounting over the long term. Firms should do something soon to prevent losing valuable clients.
Photo courtesy of Edinburgh City of Print at Flickr.com