Accountancy sector experiences skills shortage as the industry faces turbulent times

The accountancy sector is facing a skills crisis as firms reveal talent has plummeted, with leaders blaming competition from other industries.

According to a new survey by outsourcing specialists Advancetrack, almost half (45 per cent) of firms are “severely” or “significantly” affected by skills shortages.

Three-quarters (74 per cent) of respondents said that compared with three years ago the shortages within the sector have got significantly worse.

The report said reasons for this ranged from more competition for talent from commerce firms to the effects of the Covid-19 pandemic and an ageing workforce.

The survey revealed that 61 per cent of respondents thought the Covid-19 pandemic had made an “appreciable difference” to accessing industry talent.

It highlighted that smaller firms are especially bearing the brunt – largely unable to compete against the salaries and prestige offered by mid-tier accountancy firms and the Big Four – with the latter also struggling to compete against other industries.

Vipul Sheth, founder of Advancetrack said: “Given these challenges, it’s crucial we engage with governments, industry leaders, and influential stakeholders to reinforce the critical role that accountants play in maintaining the integrity and accountability of financial systems.”

The news comes as firms are starting to see the effects of the new UK Government’s tougher visa requirements came into force.

Last month it was revealed that KPMG had to revoke job offers from foreign graduates as its graduate salary does not match the new minimum salary requirement for a skilled worker visa in the UK.

However, as the accountancy sector struggles with the talent crisis, a recent report sounded the alarm on auditors failing to perform one of their core functions.

A report published on Monday by think-tank, the Audit Reform Lab, revealed that three in four audit reports failed to raise the alarm on companies on the brink of collapsing. This report analysed audit reports of the largest 250 publicly traded companies that collapsed between 2010 and 2022.

The UK Government pledged major reform of the audit regime after a series of high-profile accounting scandals, however, it shelved those plans late last year. It was revealed by City A.M. in February that the business secretary Kemi Badenoch was under pressure from a top City group to revive the sweeping shake-up of audit rules.