Will future CPAs start their accounting careers in industry?

Conventional wisdom holds that after graduation most CPAs get jobs with large CPA firms, stay a couple of years and then move on to industry, government or other areas. Things are changing, however, and there may be less space on that career path in the future. Why? CPA firms are being pressured by their clients to hire auditors who can do more than audit.

Clients are smart consumers of audit services. They want cost-effective audits and object to firms' sending 22-year-olds to obtain on-the-job training at their expense. An Ernst & Young study found clients believed inexperienced staff added to the cost of an audit because of the need to correct their work. They also objected to the "churning" of engagement staff because they wanted to know the staff and be able to talk with them about problems. In short, the clients surveyed wanted a CPA firm's staff to add value as part of the audit process.

KPMG Peat Marwick recently told accounting educators it planned to reduce dramatically the number of graduates it hires directly from traditional accounting programs. During 1995 the firm will hire about half the number of new graduates for its assurance, tax and performance improvement practices. Further, it emphasized that the reduction in its hiring was neither a "temporary condition" nor a policy "driven by the economy."

How are CPA firms going to find staff who can add value to the audit function? There are only two options: select very carefully from new graduates and keep them, or hire experienced people. Several firms already have signaled their intention to be more selective by limiting campus recruiting to a smaller number of schools that have demonstrated their curriculums prepare students to serve the needs of clients well. Firms will focus on students who have shown energy and leadership in addition to an ability to get good grades. Those with business experience and graduate degrees will have a much higher probability of getting job offers from CPA firms.

There are serious implications for accounting educators if the recruiting plans of KPMG Peat Marwick become the standard for all CPA firms. Accounting faculty will do some serious soul-searching if several firms stop showing up on campus. Good faculty view both students and recruiters as their customers. When one's customers change the way they shop, it is time to consider reengineering the products.

One strategy may be suggested by the results of a joint study by the Institute of Management Accountants and the Financial Executives Institute. According to What Corporate America Wants in Entry-Level Accountants, "Corporate America believes universities are doing a less than adequate job of preparing people for entry-level work in management accounting."

The majority of respondents to the survey said corporate accountants should have at least 150 semester hours of education. But many of them believed education beyond the baccalaureate degree could be gained while the accountant was employed. Keith Bryant, Jr., IMA president, said, "We strongly support additional hours of education after, rather than before, the entry-level accountant begins employment."

Providing students with a business orientation. Since accounting firms say they need to hire auditors who have experience, does the IMA/FEI study suggest that both CPA firms and industry would be better served if the traditional career track of CPAs was reversed?

Such an approach is fully compatible with the 150-semester-hour requirement for new CPAs. It would give students who want to become CPAs the option of gaining business experience while completing their education. The American Institute of CPAs' long-standing position on the 150-hour requirement specifies only that the full 150 hours should be completed before a candidate takes the Uniform CPA Examination--not before he or she starts working.

Accounting faculty should seriously consider focusing their curriculums on corporate accounting. By doing so, they might make a major contribution to the education of future CPAs; the IMA/FEI survey results encourage accounting students to start their careers in corporate accounting and continue their education while working. This would serve the needs of both CPA firms and students who desire to practice public accounting because it would give the students the opportunity to gain experience and continue their education, two essentials for getting started with CPA firms in the future.