Report recommends measures to maintain CPA training pipeline and meet future demand
As the only educator of CPAs in British Columbia, CPABC works to ensure that there are enough designated accountants to meet the needs of the provincial economy—it’s part of the organization’s primary mandate. Before we can meet the demand, however, we must understand it.
To that end, CPABC collaborated with Deloitte in 2019 to produce a labour market study and ensuing report entitled Accounting for Change: Assessing the Impacts of Evolving Business Needs, Changing Demographics, and Emerging Technologies on BC’s Accounting Sector. The project was funded by the Government of British Columbia and the Government of Canada through the Ministry of Advanced Education, Skills and Training’s Sector Labour Market Partnerships Program.
We undertook this critical work to better understand the demographics of the province’s accounting sector, including the industries and regions in which accountants work, and the typical CPA career progression. The study was also conducted to forecast labour demand by occupation over 10-year (entire sector) and five-year (designated accountants) horizons, based on demographics, career life cycles, and general economic growth. Additionally, the study was used to explore the potential impact of trends that may shape the future of the profession, such as technological advances.
Research was conducted through sector interviews and workshops, an employer survey, and labour market demand modelling and trends analysis, and the entire process was overseen by a multi-sector governance committee made up of:
- CPAs from small, medium, and large public practice firms in different parts of BC;
- Individuals from business associations representing small, medium, and large businesses; and
- Representatives from the technology sector, academia, and the CPA profession.
By incorporating different perspectives, the committee helped ensure a robust result.
In its report, Deloitte presented seven recommendations for the accounting sector’s consideration. These recommendations propose critical measures to protect the long-term health of the CPA profession, and although they were made before the advent of COVID-19, they remain highly relevant. We know the economic downturn has affected CPAs and their businesses/employers, and it’s possible that we’ll see a reduction in demand for accounting professionals over the short term. However, accounting is an essential service and the demand for CPAs remains strong, even in the midst of the pandemic.
Understanding the demographics
Working with senior accounting leaders and CPABC representatives, Deloitte developed an industry and occupational definition of the accounting sector that encompassed all accounting occupations and the majority of industries and occupations that require accounting training. This definition was not intended to capture all accountants working in the economy; instead, it targeted positions with an exclusive/almost exclusive accounting focus, and positions where accounting is a material aspect of the work—for example, public audit specialists, tax professionals, and financial reporting specialists.
Using these parameters, the study found a number of interesting stats about the size and vigour of the accounting sector in BC and about accountants in general:1
- Approximately 89,000 individuals in BC worked as accountants (designated and undesignated) across all industries in 2016. CPAs made up 35% of the sector, at 31,000.
- There were more than 11,000 businesses in the accounting sector in 2016, and they accounted for $16 billion, or 7.1%, of provincial GDP.
- The unemployment rate for accountants was only 2.6% versus 6.7% for all occupations in 2016, underscoring the fact that there were good employment options for those working in accounting roles.
- The largest age cohort employed in accounting occupations was aged 45 to 54.
- Immigrants accounted for 37% of BC’s accounting sector.
- 50% of accountants had a bachelor’s degree or above, but this share was higher in the Lower Mainland.
- Unsurprisingly, the majority of accountants (83%) were located in the Lower Mainland/Southwest and Vancouver Island/Coast regions; the other six regions accounted for 17% of employment.
Understanding the demand
Deloitte found that the top drivers of demand for designated accountants were economic growth, retirements, regulatory change/complexity, and automation and disruptive technologies. While the significant economic dampening in 2020 is likely to affect demand for the next year or two, the other drivers of demand are still influencing business decisions around hiring.
Looking at the 10-year horizon for the entire accounting sector, the report forecasts that there will be more than 43,000 openings between 2019 and 2028, with 58% of this demand coming from retirements and 42% coming from economic growth. Looking at the five-year horizon for CPAs, the report forecasts that there will be almost 8,200 openings between 2019 and 2023—approximately 1,600 openings for designated accountants per year.
Broken down further, these 1,600 openings equate to roughly 700 entry and junior-level positions and 900 middle and senior-management positions, all of which will need to be filled annually in BC over the next five years. Many of the 900 management positions will be filled by promotions, so the 700 entry and junior-level positions are a better indicator of the minimum number of newly designated CPAs needed each year.
Deloitte built economic downturns into its model, and the historical time series on which the forecast was based included the 2008-2009 recession. Although the current downturn may have deeper and more widespread ramifications than the 2008-2009 recession, we believe the forecast is still reflective of future needs, as the financial acumen of CPAs will be critical for business going forward.
Report recommendations
Based on the study findings, Deloitte made the following recommendations, which we’ve updated in light of COVID-19:
- Continue to attract talent to meet demand
The study found that demand for CPAs is expected to increase even with robust technology adoption. Accordingly, the first recommendation highlights the need to continue to attract talent in order to meet demand, with an emphasis on effective messaging. Going forward, the profession must clearly communicate how strong the demand side is to prospects and underscore the fact that technology will not replace accountants.
Update: The need to inform potential prospects about careers in accounting has not diminished in the wake of COVID-19. We know from past experience that interest in accounting programs increases during times of recession, and we know that demand for CPAs remains strong. However, the current crisis may have a negative impact on the number of training positions available, and that’s something the profession will need to monitor closely.
- Address work/life balance needs
The second recommendation addresses work/life balance needs. According to the study, the desire for greater work/life balance will likely increase employment needs in the sector and is already strong among younger generations of workers. To attract and retain talent, employers should continue to explore ways to increase flexibility for workers, and they should communicate their flexibility options when hiring.
Update: The many employers who’ve had to adopt more flexible work arrangements due to COVID-19 are now well-positioned to make these options permanent. This is something they should definitely consider, given that flexibility will almost certainly prove a valuable recruitment and retention tool in a post-COVID economy.
- Foster a culture around reskilling, with particular emphasis on developing technology and data analysis
The study found that employers increasingly need accountants with strong technology and data analysis competencies, and that automation may lessen the need for traditional accounting skills over time. Accordingly, the report urges the profession to embrace the need for reskilling, communicate the opportunities for CPAs to provide value-added services amid automation, and support reskilling over the long term as new technologies are developed.
This is a critical recommendation that aligns with the CPA profession’s ongoing work on digital transformation, including the national Foresight project.
Update: Over the past several months, the use of technologies, especially information and communication technologies (ICT), has increased out of necessity due to COVID-19, and many CPAs have pivoted to technologies they were not previously using. CPAs have also led organizations and businesses in adapting to COVID-19. We expect these trends to continue for the foreseeable future, and CPABC will be doing everything possible to continue supporting member needs.
- Increase training for critical thinking and leadership
The fourth recommendation is for the profession to increase training for critical thinking and leadership skills. Roughly 78% of survey respondents said they expect the scope of accounting roles to include more strategic activities over the next five years, and this means going beyond financial reporting and due diligence into areas such as risk assessments, financial forecasting, and strategic planning.
The report encourages educators and training providers to continue incorporating critical thinking, management, and leadership skills into accounting training programs, noting that students will need this training earlier in their careers. The report also recommends that such training be made available to experienced accountants, as—much like reskilling—it would be beneficial to those looking to advance their careers.
Update: The CPA role began to shift to a more strategic function well before COVID-19. Like ICT adoption, however, this shift has been accelerated by the pandemic. Thus far, the profession has supported the transition by making important changes to the competency map for the CPA Professional Education Program and creating additional professional development opportunities for more experienced leaders. You can expect these efforts to continue.
- Adopt a regional lens when addressing accounting sector needs
The study found significant differences in the makeup of the accounting sector in Vancouver and Victoria compared to the rest of BC. Accordingly, the fifth report recommendation is for the profession to adopt a regional lens for programs and policies to make sure they address the needs of CPAs and employers in other parts of the province, where the risk of automation may be higher and the talent supply may be more limited.
Update: Due to the COVID-19 pandemic, CPABC has begun producing more online content, which has generated positive feedback from members in regions outside the Lower Mainland. Going forward, we will need to continue monitoring how regional economies and CPAs living outside of the Lower Mainland react, adapt, and innovate through the pandemic, and what service changes could become permanent.
- and 7. Develop information on and awareness of automation technologies, and monitor technology adoption
The last two recommendations focus on the need to drive awareness and adoption of automation technologies (such as blockchain and artificial intelligence), as well as the need to monitor outcomes. The study found that there’s both a lack of understanding about automation technologies (due to time and financial constraints) and a lot of uncertainty about the potential impact of these technologies.
The report advises the profession to educate talent at all levels (CPAs, candidates, and students) about the importance of automation technologies, and to monitor the use of these technologies by employers through regular surveys and consultations.
Update: In the era of COVID-19, information about relevant technologies—particularly those that increase efficiency and productivity—is more important than ever. And this trend will continue after the pandemic as well, as consumers will continue to expect innovative technology solutions. So it is critical that businesses continue to evolve. What does this mean for the CPA profession? We may see a pronounced increase in technology adoption within public practice firms and other employers in the near future, and continued monitoring will help us better understand the impact of this evolution and how the profession can better support members along the way.
Understanding the government’s role in economic recovery
Although not included in the labour market study and report, it is worth mentioning the important role the government can play in bolstering BC’s economic recovery by driving efficiency, increasing productivity, and supporting workers. CPABC recently made policy recommendations in support of these goals in two submissions to government:
- Temporary Professional Experience Grant
The first submission focused on how the government could better assist the CPA profession through British Columbia’s $1.5-billion Economic Recovery Fund.
CPABC recommended that a portion of this fund be used to establish a temporary “Professional Experience Grant” to support students enrolled in professional programs where work experience is required for certification. This would help to protect the training pipeline for professionals.
Overall, the program could provide up to $40 million over two or three years, depending on the pace of BC’s economic recovery. Students could pre-apply for a one-time grant of $10,000, access to which would require proof of employment, and they could let potential employers know ahead of time that they have access to the grant, which would serve to partially offset their wages.
- Measures to support technology adoption and reskilling
Presented during the provincial government’s budget consultation process, CPABC’s second submission supports many of the recommendations in our 2019 labour market study with regard to technology adoption and the reskilling of the labour force. As mentioned in the July/ August cover story,2 CPABC recommended that the BC government:
- Provide input tax credits for business investment into ICT over the next three years and consider providing small and medium-sized enterprises (SMEs) with additional targeted financial support to invest in and maintain ICT;
- Build from the B.C. Business COVID-19 Support Service to create a permanent “Technology Concierge Service” that helps SMEs identify and implement new technologies within their organizations;
- Work with stakeholder groups to promote the availability of government programs, and consider ways to make it easier to apply for these programs through the proposed Technology Concierge Service;
- Establish a temporary “COVID-19 Education Grant” targeted at displaced workers looking to reskill and/or rejoin the workforce; and
- Expand and promote the B.C. Employer Training Grant program and the B.C. Access Grant to help businesses fund their employees’ training for in-demand occupations and programs that advance ICT skills.
Focusing on the long term
While the future may be uncertain, one thing is clear: CPAs are needed now, and they will be needed in the future. It’s the profession’s responsibility to make sure we keep the numbers up to meet the demand.
Kerri Wilcox is the vice-president of external affairs and communications for CPABC.
Originally published in the September/October 2020 issue of CPABC in Focus.
Footnotes
1 The demographic data used to inform the report was taken from the 2016 Census and was the most recent data available.
2 “Building the Road to Recovery: BC Responds to Unprecedented Economic Challenges,” CPABC in Focus, July/August 2020, p. 16.
