The Accountant Shortage is Showing Up in Financial Statements announces a recent Wall Street Journal article.

Here’s some of what the article, written by Mark Maurer, has to say:

• The widening shortage of accountants has begun showing up in financial statements.
• U.S.-listed companies such as car-parts provider Advance Auto Parts, electric-air-taxi firm Joby Aviation and German biotech company Evotec in recent months have disclosed efforts to address material weaknesses due at least in part to a lack of accounting staff. These names are larger than the typically smaller companies that historically might have had trouble attracting accounting expertise.
• Companies must disclose a material weakness in their internal control over financial reporting, or ICFR, if there is a reasonable possibility that a material misstatement could occur and couldn’t be prevented or detected by them on a timely basis. Such flaws are one of the key predictors of restatements, both major and minor, and generally lead companies to address the problems and improve their controls.
• The disclosures come as fewer people are pursuing degrees in accounting and entering the field, resulting in more positions open and for longer periods of time. What’s more, academics say, the shortage will likely be compounded as more accountants retire without a robust pipeline of replacements.
• Smaller companies in need of accounting staff often decide not to fill the jobs because they either can’t afford to or can’t justify the cost-benefit trade-off, while their bigger counterparts might be unable to find the right people, said Andrew Imdieke, an assistant professor of accounting at the University of Notre Dame.
• “This is an economic shock where larger companies are not able to fill these roles as opposed to choosing not to fill these roles,” he said. “It’s definitely a cause for concern.” 

The article closes on a suggestion for alleviating the situation:

• One solution for companies is to offer accountants more lucrative pay packages, said John Coffee, a professor at Columbia Law School. Accounting has been long viewed by people in the profession as underpaid and undervalued, compared with positions in tech and banking. 
• “Higher salaries are coming for in-house accountants whether management likes it or not,” he said.

An earlier Wall Street Journal article on the topic of accounting’s fading appeal made the same point about salaries, as well as opining that “the accounting profession must take steps to make itself seem more glamorous and appealing…(and) to combat its public profile as being dreary, tedious and sad.” That might be easier said than done though, given that the ideas offered were for more films like Ben Affleck’s The Accountant, or for “glitzy Super Bowl halftime commercials for one of the major accounting firms” featuring the likes of Miley Cyrus. But as I wrote at the time, the issue isn’t that the accounting profession “must take steps to make itself seem more glamorous and appealing” but that it actually needs to be more glamorous and appealing. Higher salaries might incrementally help, but someone who has their mind set on a career in accountancy won’t not do that because they might make out a bit better in another field. Sometimes I think that the very term “accountant,” with its outdated connotations, has become a burden, and should be replaced with “enterprise reporting specialist,” or suchlike (I’ll have a counter-argument to this in a couple of weeks’ time). But that wouldn’t solve the apparent underlying problem, that much of what’s asked of accountants increasingly isn’t satisfying enough to spend one’s life on.

If accountancy is in a supply and demand crisis, it seems ill-advised to focus entirely on how one might increase the supply, and not at all on the other side of the equation, of reducing the demand. Perhaps the new wave of AI will take over much of what’s currently done by actual people; or perhaps the impact of that, like that of offshoring and other tech revolutions before it, will be less than (or at least, different from) what’s anticipated. On the other hand, cooler-seeming new forms of corporate reporting, such as the coming wave of sustainability reporting, may further reduce the pool of people available to do the old stuff. At some point soon (and I know I’ve said this kind of thing before) we may just have to roll back our hyped-up expectations for audit quality and control, to recalibrate our risk tolerance, to stop responding to every accounting profession misstep by issuing further punitive notices and bulletins and rules. It used to be said (and maybe still is somewhere) that high-quality reporting lowered a company’s cost of capital; maybe then we collectively accept a little more aggregate risk in the quality of that reporting (for example, by removing much of the information in the notes from the scope of the audit) and just suck up the incremental increase to cost of capital, if any. That line of thinking may sound ridiculous, but if the accounting profession doesn’t proactively manage and communicate the impact of its ongoing skill shortage, then it’ll end up playing on perpetual, shaky defense.

The opinions expressed are solely those of the author.