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Bridging the Skills Gap

September 30, 2018

As we outlined in our VSCPA2025 report, technological advances are forcing changes in the accounting industry. Artificial intelligence is encroaching upon many tasks traditionally performed by accountants, both in public accounting and corporate finance. That has created an opportunity and a challenge, depending on how you look at it, for entry-level accountants.

The reason for the challenge? Companies are looking for different competencies from entry-level accountants. As The Wall Street Journal put it in 2015, the “plain vanilla accountant” is falling out of favor. With traditional accounting functions increasingly performed by artificial intelligence, companies are placing higher standards on their new employees, and they’re not always finding candidates that possess those skills. Hence, the skills gap.

The most telling research on the skills gap came in 2015 from Competency Crisis, a coalition of finance professionals, employers, students and professors affiliated with the Institute of Management Accountants (IMA) and assisted by the American Productivity and Quality Center. That survey found large gaps between the competencies organizations required and those possessed by entry-level management accounting and finance professionals (defined as those holding a bachelor’s degree and less than three years of work experience).

The survey asked participants to rank 25 skill areas by their importance to the success of entry-level professionals and the degree to which candidates for those positions currently possess them. Non-technical skills represent most of the biggest gaps — leadership (the top gap overall), strategic thinking/execution, change management, process improvement and business acumen.

“I can go out and find a good accountant,” Competency Crisis spokesman Ben Mulling said at the time. “But I’m not looking for that. I’m looking for someone who’s going to fill manager roles in three to five years, somebody who thinks the right way.”

IMA President & CEO Jeff Thompson echoed Mulling’s statements, telling The Wall Street Journal, “They’re prepared for entry-level jobs in audit and tax, but not for long-term careers in management accounting.”

The skills gap is a big enough issue that it touches three of the four bold strategies the VSCPA identified as part of the VSCPA2025 initiative: “Create a culture of learning,” “Drive innovation and vision” and “Influence students to become CPAs.” Enhancing non-technical skills is also a major priority for the VSCPA’s LEAD initiative.

As we wrote in our VSCPA2025 report, “To remain viable, CPAs must shift their value proposition from reporting on past financial data to providing insight into future strategy and future-focused business intelligence. Services will be more consultative business development, risk management and advisory services. CPAs have an opportunity to become change agents for themselves, their organizations and their clients. New CPAs will need to understand soft skills and master leadership within themselves.”

While the leadership gap was ranked as a top concern by the Competency Crisis survey respondents and called out in the VSCPA2025 report, it’s not the only factor in the skills gap. The current perceived gap reflects where the profession’s most vital future lies. Providing strategic, future-focused advisory services isn’t just an idealized future for CPAs — it’s an essential focus for the profession.

Innovation was a word that came up repeatedly in VSCPA2025 planning sessions, both in terms of training CPAs on new technologies and helping younger CPAs develop leadership skills. Some of the bigger public accounting firms have made major pushes into artificial intelligence, such as KPMG’s use of the Watson computer, and the accountants of the future will need the skills to interpret data and find the correct path forward for their employers.

“There's a tool that allows for the analysis of large sets of data, and it allows our professionals to search for hidden risks and insights in client data,” said VSCPA member Dan Hudgens, CPA, partner at Deloitte in Richmond. “While individuals will continue to need core skills around auditing standards and accounting standards, it also is going to require them to understand how to utilize those tools to find those hidden risks and insights.”

Among other organizations, the IMA has been a major leader in identifying and mitigating the skills gap. Last year, it released its Management Accounting Competency Framework, which identified five main sets of competencies necessary for successful management accountants:

  • Planning and reporting
  • Decision-making
  • Technology
  • Operations
  • Leadership

Some of those skills can be developed to a point in high school or even at home, but it’s college where students really have the opportunity to leap ahead. Many colleges and universities are already incorporating those skills into their accounting curricula, with some being emphasized in classes that fulfill general education requirements.

“Accounting students at the University of Richmond are steeped in the liberal arts, in addition to acquiring the technical skills needed for success in accounting or finance,” said VSCPA member Dr. Nancy Bagranoff, CPA, professor of accounting and dean of the University of Richmond’s Robins School of Business. “The ability to think critically, argue a point of view and communicate effectively are all skills that our students acquire through their four years of a broad-based liberal arts education seeded with a professional course of study.”

But more can be done to prepare accounting students for the roles they’ll be filling.

I think we, as educators and as a profession, do have a lot of work to do to make sure that we are providing opportunities for students to develop the soft skills,” said VSCPA member Jill Mitchell, an accounting professor at Northern Virginia Community College in Annandale. “They really need to learn how to communicate verbally, written communication, and really develop those research skills as well. It's promising, but we do have a lot of work to do not just to teach the technical skills, but to really give them the skills to be professionals.”

Accounting curricula is just one factor in the widening of the skills gap. Corporate finance-minded employees themselves must push to acquire the skills they need, even if they start out their careers by earning their CPA and working in public accounting. And employers must be aggressive in identifying and developing young talent, with a clear rubric for success.

The 2015 survey presented several questions employers can use to assess their hiring and training practices for entry-level employees:

  • Has finance raised its competency requirements for entry-level jobs to unrealistic levels?
  • Does finance need to increase its willingness to invest in developing entry-level hires?
  • Are there too few entry-level management accounting and finance professionals in the labor market in part because organizations lack — or fail to publicize — clear career paths?
  • Is finance underestimating the non-technical competency deficiencies among entry-level talent?
  • In considering entry-level competency gaps, does finance adequately consider interventions designed to lessen the problem (like defining career paths, mentoring, offering internships, developing relationships with professors, etc.)?

On an organizational level, those questions can help employers find the right balance in expectations, assessment and on-the-job training. But preparing accounting students for the leadership and management positions they seek requires a mix of tactics that must begin before they find their first internship.

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