The CPA Pipeline

How Florida colleges and universities supply the accounting profession

By Brenda Hubbard, Director of Academic Relations & Student Initiatives

In Fall 2012, Florida had about 8,200 fourth- and fifth-year accounting students, based on data the academic institutions reported to the FICPA Educational Foundation. Public universities are the major supplier of accounting graduates to the profession with around 6,400 – or 78 percent – which is higher than the national average of 66 percent. Florida also has 80 Ph.D. students.

Florida is home to several schools with “jumbo” accounting programs such as Florida Atlantic University (more than 1,400), the University of Central Florida (more than 1,000), and Florida State University (more than 700). The University of South Florida, Florida International University, Nova Southeastern University, and the University of Florida aren’t far behind in current enrollments.

Last year, Florida graduated 3,775 students in accounting: 2,575 bachelor’s; 1,075 master’s/Ph.D.s; and 125 MBAs. Of those, 794 – 21percent – passed their fourth section of the exam. The Florida Board of Accountancy licensed 1,208 CPAs in 2012, and not all of them were students.

What happened to the remaining 79 percent of graduates? Some began their fifth year or masters’ program but many entered the workforce in areas such as industry, public accounting firms, government and non-profits and academia.

Where students in public accounting work

Many of the students who become CPAs chose to begin their careers in public accounting, often with the Big 4 or other national firms. The 2011 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, a biennial survey published by the AICPA, shows the following hiring segments by CPA firms:

[Pie chart]
Figure 1: Hiring in all CPA Firms

* Accounting/Auditing remains the most common area of assignment for new graduates at CPA firms. Although this segment has been growing, it has not kept pace with other areas of assignment such as advisory services.

“There is a need for specialization within the accounting profession such as forensics, business valuation and IT,” said Scott Moore, AICPA director of academic and career awareness. “The demand in these areas is rapidly increasing.”

In Florida, many colleges offer specialty tracks such as tax, audit, IT or forensics as part of their accounting education.

CPA exam performance data in Florida

Since 1985, the National Association of State Boards of Accountancy (NASBA) has compiled and published data on the CPA exam. This information comes from individual candidates, the state boards of accountancy and the AICPA. Here are interesting findings that illustrate Florida students and academic institutions from the 2012 Uniform CPA Examination Candidate Performance. Although NASBA made reasonable efforts to ensure accurate and current information, the data is for information only and is not represented to be error-free. Also, data are reported only for institutions with five or more exam candidates.

Figure 2: Overall CPA Exam Performance

Overall Performance

All Jurisdictions

Florida

Unique Candidates

92,839

2,754

New Candidates

40,963

1,268

Total Sections

245,193

6,833

Passing 4th Section

26,152

794

Sections per Candidate

2.64

2.48

Pass Rate

48.9%

54.9%

Average Score

71.7

74.1

How do Florida candidates compare to the rest of the U.S.? Florida exceeds the national average on the passing rate and average score. Also, Florida candidates take slightly less sections, meaning the first-time pass rate is higher.

Figure 3: Top Ten Florida Institutions by Number of CPA Exam Candidates

Rank

Institution

Candidates Total

No. of 4th
& 5th Year

1

University of Florida

200

419

2

Florida State University

110

793

3

Florida International University

96

681

4

University of Central Florida

92

1,022

5

University of South Florida

86

508

6

University of Miami

76

196

7

Florida Atlantic University

65

1,414

8

University of Tampa

41

164

9

University of North Florida

31

229

10

Nova Southeastern University

29

766

Public universities in Florida hold the top nine spots (86 percent) for the number of students sitting for the CPA exam in 2012. As expected, CPA firms in public practice recruit more students at the top five institutions.

“At FSU, we strongly encourage all accounting majors to become licensed CPAs, and most do” said Bud Fennema, Florida State University accounting department chair and a member of the Florida Board of Accountancy. “To me, being a CPA is the natural culmination of their book education. It also opens the door to the job that will begin their accounting-practice education.”

Has allowing exam candidates in Florida to sit for the CPA exam at 120 hours made a difference in the number of candidates? Not really, according to Fennema.

“I don’t believe the recent change in the law has significantly increased the number of graduates sitting,” he said. “It has, however, made it easier for students to start working toward their CPA licensure in a timelier manner.”

Figure 4: Top Ten Institutions by CPA Exam Pass Rates – First Time

Rank

Institution

Candidates Total

Percent Pass

1

Rollins College

6

86.7

2

University of West Florida

16

81.1

3

University of Florida

200

78.0

4

Stetson University

10

77.8

5

University of Miami

76

70.0

6

Florida State University

110

67.1

7

Florida Atlantic University

65

65.8

8

University of South Florida

86

57.1

9

Jacksonville University

5

55.6

10

Florida Gulf Coast University

12

54.2

Florida is ninth in the U.S. by average pass rate. This figure lists the institutions with the highest exam pass rates, counted for each time a student passes a section of the exam for the first time. The pass rate is calculated by comparing the number of sections passed to the total number of sections taken. The average pass rate in Florida ranged from 12.5 percent to 86.7 percent with an average of 54.9 percent.

Schools with larger accounting programs are expected to produce more successful candidates. By looking at the pass rates, one can see that smaller programs also are producing successful candidates. Rollins College has an exceptional pass rate that every college would love to have. Their rate partially is explained by the fact that there were only six exam candidates and they had an average age of 39.

Figure 5: Top Ten Institutions by CPA Exam Average Score

Rank

Institution

Sections Total

Average Score

1

Rollins College

15

83.1

2

University of Florida

495

81.0

3

University of West Florida

37

80.6

4

Stetson University

18

79.9

5

University of Miami

190

78.8

6

Florida State University

216

77.3

7

Florida Atlantic University

111

76.3

8

Florida Gulf Coast University

24

74.9

9

University of South Florida

154

74.9

10

Jacksonville University

9

74.7

Florida is sixth in the U.S. by average exam score. Given the number of exam candidates and sections taken, the larger universities are doing very well in preparing their students to take the exam. The average score in Florida ranged from 55.7 to 83.1 with the average being 74.1.

The Demand for Accountants

The accounting profession continues to offer solid employment and jobs for students. The demand for accountants and CPAs is increasing in Florida and throughout the nation. The U.S. Department of Labor (DOL), Bureau of Labor Statistics predicts that employment of accountants and auditors is expected to grow by 16 percent between 2010 and 2020. This is about as fast as the average for all occupations.

The DOL attributes the increased focus on accounting to corporate scandals and recent financial crises. Stricter laws and regulations; an increase in the demand for audits; and the continued globalization of business has led to more demand for accounting expertise and services. Accountants and auditors who have earned professional recognition, especially as CPAs, will have the best employment prospects.

According to EmployFlorida.com, the number of accountants employed in Florida is projected to grow an average of 2.4 percent between 2011 and 2019. This is faster than the 1.6 percent growth rate for all occupations in Florida.

The 2013 Salary Guide for Accounting and Finance by Robert Half® reports that in the South Atlantic region (Delaware, D.C., Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia and West Virginia), the fastest growing industries for accountants include: 1) manufacturing; 2) healthcare; 3) nonprofit; 4) government; and 5) medical. The top financial positions for this region are: 1) senior accountant; 2) staff accountant; 3) financial analyst; 4) senior financial analyst; and 5) controller.

Faculty and capacity

Capacity constraints continue to be a concern in accounting programs. According to the 2011 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, thirteen percent of the Association to Advance Collegiate Schools of Business (AACSB) each rejected 165 qualified students on average. This is an increase from 6 percent of programs rejecting an average of 134 candidates in the 2009 survey. This increase most likely is caused by the economic conditions universities currently face and the shortage of academically qualified professors.

Florida still faces a pending shortage of accounting faculty. Within the next several years, accounting faculty will retire at a rate faster than they are being replaced.

“The average age for tenured, full-time faculty is 58,” said James Hasselback, Eminent Scholar at the University of West Florida. “Of these, 47.5 percent are 60 and older, and the average age of a person retiring or leaving teaching is 64. By comparison, the average age of a person getting a doctorate is 35.”

We need to encourage practitioners to return to the classroom as full-time, non-tenure track faculty and share their wealth of knowledge and experience of the accounting business with our students. Recently published faculty guidance from the AACSB supports using a broader range of faculty with different skill sets, just as practitioners have.

Another idea being discussed in academia is for two-year state colleges to offer bachelor’s degrees in accounting. Because some students enter the workforce with four-year degrees and don’t aspire to become CPAs, it essentially would open seats in four-year institutions for students striving to meet the 150-hour educational requirement.

Can accounting enrollments continue to climb if there aren’t enough faculty to teach students, and colleges and universities are limited by budget and space constraints?

 “I don’t believe Florida accounting programs have a capacity problem,” Fennema said. “We face budget problems and we’ve had to make adjustments, such as using more non-tenure-track faculty and sometimes increasing class sizes. Going forward, I don’t see anything prohibiting us from producing enough high-quality accounting graduates to support the profession in Florida and throughout the country.”

Recommendations

A goal of the FICPA’s Relations with Accounting Educators Committee is to provide FICPA educator-members with access to valuable tools and career guidance to support Florida student success, such as:

  • Bringing the practice of accounting into the classroom.
  • Promoting Florida firms and businesses as viable employers of students.
  • Being role models for the CPA profession.
  • Acting locally as essential links in the supply chain (educators to students to professionals in Florida).
  • Providing more opportunities for participation and networking between educators and practitioners.

To increase the number of CPAs in the pipeline, we all need to more actively promote the CPA brand. Students must better understand the value of the designation and the respect, trust and career advancement it brings. You can:

  • Provide student internships in your firm or business, and promote them to students using the FICPA’s new Internship Opportunity Engine. www.ficpa.org/Content/Members/Tools/Internships.aspx
  • Encourage students to join the FICPA as student members (FREE) and learn more about the CPA profession.
    http://www.ficpa.org/public/join/MemberApp.aspx;
  • Conduct a student event or invite students to a special meeting at your local FICPA chapter.
  • Encourage younger CPAs to interact and network with college students

For more information about college outreach, contact Brenda Hubbard at (800) 342-3197, Ext. 419 (in Florida); (850) 224-2727; or hubbardb@ficpa.org.

FICPA members may purchase the 2012 Uniform CPA Examination Candidate Performance bookfrom NASBA at a 10 percent discount.Visit www.nasbareport.com and enter coupon code FLICPA1. The discount will be valid through Dec. 31, 2013. For more information, contact Matthew Wilkins at mwilkins@nasba.org