CPA Shortage: What It Means for Your Business
The CPA shortage is a structural, multi-decade problem: the number of people entering the accounting profession has fallen sharply while demand for financial expertise keeps climbing. The result is fewer licensed accountants competing for more work, longer hiring timelines, capacity-constrained firms that turn away clients, and rising risk of delayed reporting and weakened internal controls. For mid-market finance leaders, understanding the root causes and practical consequences of the accounting talent shortage is the first step toward addressing it.
Why Is There a CPA Shortage? The Root Causes
The accountant shortage did not appear overnight. Several converging forces built up over roughly a decade and are still playing out.
A Collapsing Graduate Pipeline
The most concrete signal is the drop in accounting degrees. According to the AICPA and NASBA 2025 Trends Report, U.S. institutions awarded 55,152 accounting degrees in 2023-24, a 6.6% decline from the prior year and the lowest total in roughly 20 years. Master’s-level completions fell 15% year-over-year alone. Fewer graduates entering the pipeline means fewer CPA candidates, which means fewer licensed practitioners over the following decade.
The CPA exam reflects the same trend. New exam candidates peaked around 2016, then fell more than 30% through 2023. The transition to the new CPA Evolution exam format in 2024 added turbulence: new candidates dropped to 28,082 in 2024, compared with 42,626 the year before. Trend lines for 2025 show some recovery, but the profession is nowhere near closing the gap.
The 150-Hour Barrier and Licensure Friction
One widely cited structural barrier has been the 150-credit-hour requirement: candidates historically needed a 120-hour bachelor’s degree plus an additional 30 hours (typically a master’s degree or extra coursework) before sitting for the exam and earning a license. The cost and time involved lead many talented accounting graduates to pivot to adjacent fields, particularly finance and data analytics, that offer similar pay without the added educational investment.
In May 2025, the AICPA and NASBA boards approved model legislation for a new licensure pathway that allows candidates to earn a CPA license with a bachelor’s degree (120 credit hours) plus two years of professional experience and passage of the CPA exam. This third pathway sits alongside the traditional 150-hour path and a graduate-degree path. As of 2026, adoption has moved quickly: roughly 44 states have enacted a 120-credit alternative pathway, with many already in effect and the remainder phasing in through 2027. The change will not immediately refill the pipeline, but it removes one of the most frequently cited friction points in recruitment.
Demographic Pressure: Retirements on the Horizon
Supply from new entrants is not the only problem. A widely cited AICPA estimate holds that roughly 75% of currently licensed CPAs are at or near retirement eligibility. This figure is an industry estimate rather than a codified statistic, and it has been referenced in various forms for several years, so treat it as directional. NASBA reported about 653,000 actively licensed CPAs in the U.S. in 2025. As experienced practitioners retire, they take institutional knowledge and client relationships with them, and there are not enough incoming CPAs to replace them one-for-one.
Perception and Competition for Talent
Accounting competes for graduates with technology, finance, consulting, and data science, all of which have aggressively raised entry-level compensation and improved their brand image with younger workers. The accounting profession, by contrast, still carries a reputation for long hours during busy season and comparatively modest starting salaries for the credential investment required. Surveys consistently show that prospective students perceive the path to becoming a CPA as difficult, time-consuming, and not commensurate with starting pay, which is a recruiting challenge the profession is actively trying to reverse.
How the CPA Shortage Affects Your Business
For most mid-market companies, the effects of the accounting talent shortage show up in operational friction rather than dramatic headlines. However, the aggregate impact is significant.
Longer Hiring Cycles and Higher Compensation Costs
Recruiter data suggests finance roles requiring CPA credentials now take an average of 73 days to fill, about 41% longer than comparable roles without the designation, per an analysis by executive search firm Talentfoot. For growing companies, an open controller or senior accountant seat does not just slow reporting, it forces existing team members to absorb the work, increasing error risk and burnout. Meanwhile, compensation benchmarks have risen sharply as employers compete for a shrinking pool of candidates, pushing total cost of finance headcount higher.
Audit Delays and Reporting Backlogs
When your external auditing firm faces the same talent constraints, the impact arrives on your calendar. Industry surveys report that a substantial share of companies have experienced delays in financial reporting linked to accounting staffing constraints. Stretched audit teams take longer to complete engagements, which can push loan covenant reporting deadlines, investor update schedules, and board presentation cycles into friction. For companies seeking debt financing or preparing for a transaction, audit delays can materially affect deal timelines and lender relationships.
Internal Controls Under Pressure
The downstream consequence of understaffed accounting departments is not just slower closes. Audit research has repeatedly flagged a shortage of qualified accounting personnel as one of the leading root causes of material weaknesses in internal controls over financial reporting, and analyses of recent filings show that staffing- and expertise-related weaknesses have trended upward since 2021. Smaller and mid-market companies face this risk acutely because they typically have fewer redundant controls than large enterprises.
Firms Turning Away Work
Capacity constraints are not limited to your own team. In the 2026 Accounting Talent Index, a global survey of roughly 500 accounting leaders across the United States, United Kingdom, Australia, and Canada published by Advancetrack, 73% of firms said they had turned away potential clients because they lacked the staff to deliver services. Although that survey is international rather than US-only, the same capacity pressure is visible in the US market. This has a direct effect on smaller mid-market companies, which often cannot match the client fees or perceived prestige of large enterprises and therefore get deprioritized when an overwhelmed firm trims its roster.
The Bureau of Labor Statistics projects about 115,300 annual openings for accountants and auditors each year on average from 2025 to 2035, driven by both new positions and replacement demand, with the median annual wage at $83,680 as of May 2025. Supply is not growing fast enough to close that gap in the near term.
What Finance Leaders Can Do About the Accounting Talent Shortage
The accounting talent shortage is not a problem any single company will solve, but there are concrete strategies that reduce your exposure.
Rethink the Build-vs-Buy Calculus
For many mid-market companies, building a full in-house accounting team is a longer-term and more expensive undertaking than it was five years ago. Outsourced accounting and client accounting services give companies access to seasoned professionals, scalable capacity, and continuity without the friction of individual hiring cycles. Similarly, a fractional or outsourced CFO model can provide strategic finance leadership during growth phases or ownership transitions without the risk of a full-time executive search in a tight market.
Prioritize Retention of Existing Talent
In a market where experienced accountants receive frequent outreach from competitors, retention matters more than it did a decade ago. Structured career paths, transparent compensation bands, flexible work arrangements, and investment in professional development, including support for CPA exam costs and continuing education, all reduce turnover and the associated replacement costs.
Leverage Technology to Extend Capacity
AI-assisted accounting tools, automated reconciliation software, and modern ERP platforms can allow a smaller team to handle work that previously required more headcount. The caveat is that technology extends the capacity of qualified accountants; it does not replace the judgment required for complex transactions, audit preparation, or regulatory compliance. The firms and finance teams that are best positioned are those that use technology to handle repetitive volume so that human talent can focus on higher-value work.
Engage Your Audit Firm Early and Often
In a constrained market, auditors allocate their capacity to clients who communicate early and reduce engagement friction. Submitting prepared-by-client materials on time, minimizing information requests during fieldwork, and maintaining organized workpaper documentation all make your engagement more efficient, which matters when audit teams are stretched. Audit and assurance engagements completed with firms that use structured, technology-assisted workflows tend to move faster and require less back-and-forth, which is a real operational benefit in the current environment.
Watch the Licensure Landscape
The new AICPA/NASBA 120-hour CPA pathway will not fill firms overnight, but with roughly 44 states having enacted a 120-credit alternative as of 2026, it should gradually expand the pipeline of candidates entering the profession over the next several years. Finance leaders who understand where their states stand on adopting the new pathway can make more informed decisions about hiring recent graduates who are on the new track, setting realistic expectations for credentialing timelines, and evaluating whether candidates pursuing the alternative pathway fit their organization’s experience requirements.
The Outlook: How Long Will the CPA Shortage Last?
The honest answer is that the accounting talent shortage is unlikely to resolve in the near term. Most projections extend the shortage through at least 2029, with some analyses pointing toward the mid-2030s before supply and demand approach equilibrium. The 2024-25 academic year showed two consecutive semesters of 12% year-over-year growth in accounting enrollment, which is a genuine positive signal. However, the lag between enrollment growth and licensed practitioner supply means the practical benefits to employers are still years away.
In the interim, the companies that manage best are those that treat finance talent strategy with the same intentionality they apply to other scarce operational resources: proactive planning, strategic sourcing, retention investment, and technology enablement.
Frequently Asked Questions
Why is there a CPA shortage?
The CPA shortage stems from several converging factors: a multi-year decline in accounting degree completions (55,152 awarded in 2023-24, roughly a 20-year low), a 30%-plus drop in new CPA exam candidates since 2016, a large cohort of licensed CPAs at or near retirement (an AICPA estimate commonly cited at about 75% within 15 years), and competition from adjacent fields like finance and technology that offer comparable pay with lower credentialing burdens. The former 150-credit-hour barrier also deterred candidates who weighed the added cost against expected starting salaries.
How does the accountant shortage affect my business?
The accountant shortage can affect your business through longer hiring timelines (CPA-required finance roles average 73 days to fill), delayed financial reporting, increased risk of internal control weaknesses, and difficulty securing audit capacity from external firms that are turning away clients due to their own staffing constraints.
Are accounting firms turning away clients because of the shortage?
Yes. In the 2026 Accounting Talent Index, a global survey of about 500 firm leaders across the US, UK, Australia, and Canada, 73% of accounting firms said they had turned away potential clients due to insufficient staff capacity. Smaller and mid-market clients are disproportionately affected because larger engagements tend to be prioritized when capacity is limited.
What is the new CPA licensure pathway approved in 2025?
In May 2025, the AICPA and NASBA boards approved model legislation for a third CPA licensure pathway that allows candidates to qualify with a 120-credit-hour bachelor’s degree in accounting plus two years of professional experience and passage of the Uniform CPA Examination. The traditional 150-hour path (bachelor’s plus 30 additional credits plus one year of experience) remains available. As of 2026, roughly 44 states have enacted a 120-credit alternative pathway, with many already in effect and the rest phasing in through 2027.
Will AI replace accountants and solve the shortage?
AI and automation are reshaping accounting workflows, but they are not solving the shortage. The BLS projects about 115,300 annual openings on average from 2025 to 2035 even accounting for automation trends, and 5% employment growth over that decade, with technology shifting accountants toward advisory and analytical roles rather than replacing them. The shortage is a supply-side problem driven by reduced entrances into the profession, not an excess of supply being displaced by technology.
What can my company do to reduce exposure to the accountant shortage?
Key strategies include exploring outsourced accounting and fractional CFO services to reduce dependency on full-time hiring, investing in retention of existing finance staff, adopting technology tools that extend team capacity, and building stronger working relationships with your external audit and advisory firm so you receive priority capacity allocation. Planning ahead rather than reacting to vacancies is the most effective single change most finance leaders can make.
Filed under: Firm & Profession Trends