The accounting profession is grappling with a profound challenge—a shortage of qualified professionals. This shortage is not just a workforce issue; it has far-reaching implications for business operations, particularly increasing the risk of fraud or financial misstatement.
The Root Causes Behind the Accountant Exodus
A combination of factors contributes to this shortage. Seasoned accountants are retiring en masse, leaving significant knowledge gaps in the workforce. Simultaneously, fewer students are pursuing accounting degrees due to misconceptions about the field’s career potential and the demanding nature of the work. As of 2024, approximately 75% of CPAs are a part of the Baby Boomer generation and are approaching retirement age. However, the need for accountants is projected to continue growing. This is creating a shortage in qualified accountants, and also a skills gap between new graduates and experienced accountants.
A 2023 Wall Street Journal report highlights a stark decline: enrollment in accounting programs has fallen by over 10% in the past decade. This trend threatens to destabilize an already fragile pipeline of talent, creating a domino effect on corporate financial integrity.
Fraud Risks in a Shorthanded Accounting World
Without adequate accounting staff, internal controls weaken, leaving businesses vulnerable. Critical control activities such as such as transaction review and approval, system access reviews and account reconciliations may be deprioritized, allowing irregularities like unauthorized payments or inflated invoices to go unnoticed. A 2024 Gartner survey showed that, alarmingly, one-third of accountants admit to making “at least a few financial errors every week” due to capacity constraints.
According to the Association of Certified Fraud Examiners (ACFE), organizations with weaker controls are twice as likely to experience significant fraud. The shortage exacerbates this vulnerability, making it essential for businesses to fortify their defenses.
Steps to Mitigate Fraud Amid the Shortage
At Riverway, we understand how critical it is for organizations to maintain robust internal controls, especially in the face of the accounting shortage. Drawing on decades of experience in enterprise risk consulting, we help organizations mitigate the risk of fraud and financial misstatement by assessing financial and technological processes and controls, identifying vulnerabilities where fraud could occur, providing best practice, pragmatic remediation recommendations and assisting management with remediation activities until the control environment is secure.
If your accounting and finance department is running lean and you have concerns about the risk of fraud or financial misstatement, give our professionals at Riverway a call!
