As the saying goes, everyone makes mistakes, but in the accounting world, the price of unintentional errors and lack of oversight (due to talent shortages and/or strained capacity at the senior management or executive level) can be especially costly — financially, operationally and reputationally. Thankfully, organizations have ways to help prevent or correct problems created by the shortage of certified accountants.
Learn more about how co-sourced accounting can help offset the Certified Public Accountant (CPA) shortage while making an organization more responsive and nimble compared to their competition.
How the Accountant Shortage Is Affecting Businesses
Many companies find themselves without the in-house knowledge and/or skill set at the executive level to perform oversight of the vital finance, planning and accounting (FP&A) functions. This, in turn, leaves them vulnerable to omissions and misstatements.
Making Financial Reporting Mistakes
Over the past two years, we have seen companies, including some large public companies, make key errors such as:
- Pivotal U.S. Securities and Exchange Commission (SEC) deadlines missed
- Unintended draft information or notes left in the final published reports
- Misstatements identified as part of the audit that are basic in nature
- Errors and omissions in vital qualitative and quantitative information leading to material weakness
All these missteps are due to a lack of in-house, qualified and experienced CPAs or accessibility to them via third-party relationships. This shortage of skilled in-house CPAs, also referred to as “bench strength” in the key process areas, is leading to basic miscalculations in their public earnings reports, so much so that companies are starting to disclose the material weakness in Internal Controls Over Financial Reporting (ICFR) due to the turnover and lack of qualified replacements in fundamental accounting positions as the root cause.
Spending Resources on Fixing Errors
This accounting shortage has a downstream effect as well.
The additional time and resources required to remediate and/or restate any incorrect financial statements pull the company’s current resources and accounting staff away from their responsibilities, thus trapping a company in this continuous loop of not being able to attract and retain enough qualified CPAs to effectively and efficiently perform their duties to management, stewards of the company and the public shareholders.
Such incidents shake public and investor confidence, unsettle current colleague members and can even lead to hefty fines levied against the company.
What Is Causing the Accounting Shortage?
It is clear the above mistakes are due to a shortage of accountants. Fortune.com recently published some figures and reports suggesting that the U.S. may be down around 340,000 CPAs going into 2025, but was is causing this scarcity of labor?
The accounting workforce is expected to keep shrinking as fewer young people choose to join the industry in favor of what may be perceived as better careers, both in pay and work-life balance. Changes to the CPA exam has also made it harder for interested candidates to receive the necessary certification. Additionally, older, more experience professionals have been exiting the workforce at a faster pace as more Baby Boomers opt for retirement.
It’s clear that the CPA shortage will not be rectified anytime soon, so it is vital businesses find alternatives to help cover the gaps.
Co-Sourcing: A Flexible, Cost-Effective Solution To Combat Talent Shortage
Fortunately, there is a solution available — one that can help organizations replace missing qualified CPA labor, minimize risk and restore confidence in the financial markets in the process. That solution is co-sourcing, which is the cornerstone of our approach at Cherry Bekaert.
Increased Oversight
Co-sourcing enables a company’s internal staff, from Chief Financial Officer (CFO) to senior accountants, to work side-by-side with qualified external CPA professionals as one team, providing best practices while executing based on the management’s timeline of key accounting and operational functions.
This gives the company’s CFO or controllership office the capacity and knowledge to address its corporate accounting and reporting needs while still maintaining a high degree of control over essential processes and functions.
Streamlined Scalability
Co-sourcing also offers the flexibility to scale support up or down according to the demand of the company, making it especially attractive for organizations whose needs tend to fluctuate throughout the year.
In practice, this means having the bench strength to cover critical reporting periods, audit matters or significant transactions occurring throughout the year, along with the option to control costs by reducing support when things are less busy.
Experienced Strategization
Beyond adding strength to your bench with a qualified CPA, the right co-sourcing partner also brings powerful industry subject matter knowledge to the table. This includes helping build strategies to achieve the objectives management has determined and considered to be successful for various planned accounting projects throughout the year.
It also includes developing the appropriate level for remediation plan(s) to address concerns around operations and controls that may lead to omissions and misstatements of financial information reported to the public.
Reduced Reporting Errors
As the recent increase in high-profile reporting mistakes has underlined, having access to qualified CPAs has never been more essential to every organization’s success. Without them, the risk of costly, time-consuming errors in how transactions are processed, accounted for and reported rises exponentially.
Yet, at the same time, the accounting talent shortage is making recruiting and retaining these CPAs more challenging than ever. It is very possible that there could be a shortage of CPAs long-term unless changes are made to an assortment of contributing factors. In the meantime, co-sourced accountants can help your organization with its financial reporting needs and better ensure accuracy.
How Cherry Bekaert Can Help
Cherry Bekaert’s co-sourcing solutions are specifically designed to give companies the capacity and capability to augment their in-house teams. We can assist on multiple levels, from managing unexpected resourcing constraints at the leadership level, providing technical accounting and tax support on day-to-day transactions to the more complex areas, to streamlining the remediation process to eliminate a repeat of the error(s) or misstatement(s) and providing ongoing regulatory compliance.
Our CFO & Accounting Advisory practice has the knowledge and experience to help your finance and accounting functions deliver true value for your business and shareholders — both now and in the future.
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