Accounting Grads Flood the Job Market

Employee-hungry accounting firms have a lot more to feast on as the most graduates in at least 36 years hit the streets.
Marie LeoneMay 8, 2008

Accountants may not be the big men on campus yet, but they’re getting there. A new survey on the supply of accounting graduates — and the demand for public accounting recruits — says that more than 64,000 students graduated with bachelor’s or master’s degrees in accounting during the 2006-2007 school year. That’s a 19 percent increase since the 2003-2004 school year, the last for which the survey was produced.

And while accounting has still not made the list of 10 most popular majors compiled by college prep and research company Princeton Review — or appeared on Campus Grotto’s top-10 list of college majors — this year’s tally is the largest number of accounting graduates in the 36 years the American Institute of Certified Public Accountants has been tracking the data.

The AICPA predicts the bump in accounting graduates is only the beginning of a surge. Indeed, more than 203,000 students enrolled in accounting programs at both the undergraduate and graduate levels during the survey period, also a 19 percent increase from 2004. “The years in the aftermath of Sarbanes-Oxley have spotlighted the critical role the accounting profession plays in our capital markets system,” noted Denny Reigle, AICPA’s director of academic and career development. “One fortunate result of SOX was greater interest in accounting on the part of students, as this report attests.”

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The survey, which polled 242 colleges and universities and 639 accounting firms — including the Big Four — across the United States, found that schools expect enrollment to climb during the 2008-2009 school year. In fact, 60 percent of the colleges that responded to the survey say enrollment in bachelor’s accounting programs will increase, while 63 percent expect a rise in enrollment at the master’s level.

In general, accounting-major enrollment jumped by nearly 30,000 students in the three years between survey periods. The only degree program tracked by the AICPA survey that showed a decline — among bachelors, masters, and doctorate programs — was the master’s degree in taxation, where enrollment was down about 9 percent to 3,240. That is the only non-accounting degree included in the survey.

Of the 16,560 master’s degrees awarded in 2007, 75 percent were in accounting, 16 percent in taxation, and 9 percent were MBAs with an accounting concentration — a share that continues to decline, says AICPA.

Who’s Hiring

Public accounting firms continue to be the primary employer for new graduates, hiring 34 percent of the students with bachelor’s degrees in accounting and 70 percent of master’s-degree recipients. Total hires — by both public and private accounting firms — during the summer of 2007 reached 36,110, an 83 percent jump over the 2004 count.

The firms hiring new accountants are ready to shell out a good starting salary, according to another survey released by the National Association of Colleges and Employers. Accounting majors from the class of 2008 are being well paid, says NACE, enjoying an average offer set at $49,085 annually, which the survey says is one of the top salaries for new grads. New accountants trail new engineers, however, the latter hauling home average offers of $56,114.

But accounting firms are not just looking for accountants. The AICPA points out in its survey that non-accounting degree hires are up at CPA firms, reaching 25 percent in 2007 from 17 percent in 2004. Those hires were a mix of students with degrees in computer management, law (mostly tax law), finance, and liberal arts. Meanwhile, the percent of new hires with accounting degrees dipped slightly to 61 percent in 2007 from 63 percent in 2004 at the same firms. New hires with master’s degrees in accounting also dropped, to 14 percent in 2007, from 20 percent three years ago.

The largest firms in the AICPA survey, those with more than 200 members, hired more master’s degree holders (35 percent) as a percentage of their total new hires; but that percentage is increasing for firms of all other sizes, except those with less than 10 AICPA members. About 380 firms in the survey had fewer than 10 members, while 24 had more than 200.

All-size firms expect hiring numbers to remain steady or increase in the 2008-2009 time period, with 67 percent of the largest firms predicting a boost in their workforce numbers. Those largest ones expect to hire as many or more non-accounting majors, with 58 percent saying they would hire about the same number, and 33 percent claiming they will be hiring more non-accountants.

The AICPA reports another interesting trend. With the number of accountants in the United States poised to rise, it is curious that fewer graduates are taking the CPA exam than in the past. In 2003, for example, 109,872 accountants sat for the exam. That number dropped precipitously to 44,513 in 2004, the first year the exam was offered as a computer-based test. The tally rose to 69,259 two years later in 2006.

However, the sharp decline may be a simple accounting error. The AICPA explains that prior to 2004, when the paper-and-pencil test was administered, candidates who took the exam in both May and November were counted twice. But the double-booking was eliminated when the computerized format was introduced. Each candidate is counted only once per year now. So, it is likely that while the number of CPA candidates may have decreased over the last few years, the decline is much less pronounced than the survey indicates.