Los Angeles is well positioned to become a major accounting industry hub with dividends to the local economy through high-paying jobs.
The accounting industry and, to be more precise, accounting firms, are facing a significant scarcity of qualified candidates as those with experience are retiring in greater numbers. At the same time, succession planning is a rarity in the industry and too few midlevel accountants are available to ascend into management positions. In fact, a recent study conducted by the National Society of Accountants reports that more than two-thirds of accounting firms have no plan for succession, yet the need to fill the skills-and-experience gap within the workforce continues to grow.
The California Employment Development Department estimates the accounting and auditing industry will experience an employment growth of 15.8 percent statewide and 18.8 percent in Los Angeles by 2020. The data predicts Los Angeles County will add an estimated 8,130 jobs to this field, the largest increase in the state – evidence the region offers significant upside for accountants.
With substantial employment growth in the accounting industry, there is great demand for young accounting professionals. And those professionals who possess disciplines and skills across multiple business fields will have greater career opportunities. For example, those who have experience in technology are poised to benefit considerably.
According to Intuit’s 2013 Future of Accountancy Report, a bellwether report on the industry, accounting professionals will need to embrace new technologies quickly, understand the best way to incorporate those technologies into the small-business process and proactively guide clients through to full adoption. The risk is that other less competent providers like Internet firms and software companies will seek to fill the gap.
In addition to market influences, the California Society of Certified Public Accountants has also required 150 hours of education for candidates seeking a Certified Public Accountant license in California after Jan. 1. This change adds 30 semester units to the previous California requirement of only 120. Thus, CPA candidates will be required to complete a bachelor’s degree of approximately 120 semester units, plus 30 semester units prior to becoming licensed as a CPA.
This will put California alongside 46 other states with these heightened requirements, and permit California CPAs to service and represent clients in those states. In conjunction with the new requirements, California accounting firms will need to institute a training approach that prepares for succession, diversifies services and adheres to new regulations governing the industry.
I expect the demand for accounting professionals who possess new skills, knowledge and standards to intensify significantly. In light of these market forces and new requirements, the L.A. business community should encourage young people who seek to enter the accounting industry to consider three actions when it comes to preparing to enter the field:
• Specialize. Understand increasing business complexities, regulatory and legal changes, and new client expectations. According to the NSA report, “Specialization will lead to increased collaboration and partnering among accounting firms and other financial professionals, both domestically and internationally.”
• Possess broader skills. CPAs will be expected to also be consultants and financial advisers who can provide performance management, decision support, IT advice and similar services, with less emphasis on audit and tax preparation.
• Offer a greater breadth of services. The L.A. business community should expect and encourage a more robust scope of services from accountants. CPAs will need to offer added services to their capabilities, including technology-enabled compliance services due to California’s regulatory environment. A CPA with management training will be better equipped to counsel a company or executive about compliance and business concerns.
California and the L.A. region have the potential to offer much to those who aspire to the highest levels in the accounting industry. I believe graduate accounting programs have a role in preparing accountants for future industry demands and industry requirements through a comprehensive approach to business, while helping them meet the hourly training regulations. There is potential for growth and advancement, as well as a demand for accounts. It is up to the L.A. business community to want and expect more from their accounting services.
Donald R. Rudkin is a practitioner faculty member of accounting at Pepperdine University’s Graziadio School of Business and Management in Malibu.
