Evidence – empirical and anecdotal – points to a shrinking size of the CPA profession by headcount. While the CPA profession has adapted over time, making it more accessible to women and providing education with a historically higher pass rate[1], membership in CPA Societies – now organized by their respective states – is declining. NASBA reports that in 2019, of approximately 1.4 million accountants 46% were CPAs. A year later, as per NASBA the rate drops to 30%, a marked drop of about 180,000 individuals with a current license. These factors are not coincidental with the evidence that CPA Societies are losing members.
Take for example, the number of CPAs in New York State: in 2018 there were 112,030 licensed CPAs, according to NASBA. However, in the same year the membership of the New York State Society of CPAs did not exceed 28,000[2]. This means that the adoption rate of CPAs in an organized Society is approximately 26%, or one in four CPAs that became a member of the Society in that state. New York is not unique: the second largest state society in 2023 was California, with approximately 42,000 members. However, in 2018 the number of CPAs in California was 148,500, or a 28% adoption rate.
So many CPAs: why aren’t they joining?
The reasons for the lackluster adoption of membership in the various CPA Society can be reduced to the value that these associations provide for incoming CPAs, and even to experienced and retired CPAs. For example, networking events – once achieved in professional conference – have shifted to professional networking groups solely focused on business development. Continuing professional education (CPE), is another example: anecdotal state societies charged an average of $40 per credit, while on-line providers charge as little as $10 per credit. This price gap makes the value in joining a state society less attractive to incoming CPAs.
Value of course can be best quantified as a ratio of benefit – a mostly intangible measurement – to the expense that the society member must pay to attain said benefit.
In dollars, we relied on publicly available information from Form 990s that various state society – ten in our sample – have reported. Occupancy expense, for example is a fixed overhead that appear consistently on Form 990 (line 16). The cost of leadership, however, is more nuanced and differ from state to state. For the cost of leadership we selected the highest paid employee, as disclosed on Form 990, as a measure of the most prominent portion of the fixed cost of human resources at the societies that were part of our sample.
The resulting analysis is as follows:
| 2023 Form 990 | |||||
| State | # of Members (from public sources), estimated | Highest paid employee | Highest Paid per member | 2023 Form 990 Line 16 Occupancy | Occupancy per member |
| California | 42,000 | $269,292.00 | $6.41 | $549,495.00 | $13.08 |
| Florida | 18,500 | $352,458.00 | $19.05 | $593,491.00 | $32.08 |
| Georgia | 13,500 | $335,884.00 | $24.88 | $546,215.00 | $40.46 |
| Illinois | 20,700 | $428,965.00 | $20.72 | $897,331.00 | $43.35 |
| Louisiana | 5,000 | $279,338.00 | $55.87 | $131,076.00 | $26.22 |
| Maryland | 10,000 | $210,734.00 | $21.07 | $257,365.00 | $25.74 |
| Massachusetts | 11,500 | $342,040.00 | $29.74 | $130,804.00 | $11.37 |
| Michigan | 17,500 | $225,555.00 | $12.89 | $318,803.00 | $18.22 |
| Minnesota | 7,500 | $242,883.00 | $32.38 | $309,139.00 | $41.22 |
| New Jersey | 15,000 | $385,031.00 | $25.67 | $354,909.00 | $23.66 |
| New York | 16,500 | $248,973.00 | $15.09 | $1,084,709.00 | $65.74 |
| North Carolina | 12,000 | $392,602.00 | $32.72 | $135,402.00 | $11.28 |
| Ohio | 85,000 | $551,169.00 | $6.48 | $153,189.00 | $1.80 |
| Texas | 23,819 | $433,122.00 | $18.18 | $348,741.00 | $14.64 |
| Virginia | 12,000 | $286,568.00 | $23.88 | $118,825.00 | $9.90 |
| Washington | 6,500 | $276,475.00 | $42.53 | $84,003.00 | $12.92 |
| Summary, Statistics: | |||||
| Median | 14,250 | $311,226.00 | $22.48 | $313,971.00 | $20.94 |
| Min | 5,000 | $210,734.00 | $6.41 | $84,003.00 | $1.80 |
| Max | 85,000 | $551,169.00 | $55.87 | $1,084,709.00 | $65.74 |
High variability, same results
In the sample above, consisting of four of the largest CPA Societies, and six other selected at random there is high variability of efficiency. For example, with respect to compensation of its highest employees Ohio leads the way in total compensation of $551,000 which is 60% higher than the median of $311,000. This is reasonable because Ohio has many members. However, Louisiana, with the smallest number of members, shows the lowest efficiency rate with a $55.87 cost-of-leadership per member which is more than double of the median for that ratio, $22.48.
Generally, the largest fixed costs are rent (occupancy) and insurance. The Societies also experience very high variability of efficiency with respect to fixed costs. For example, New York leads the way with inefficiency, of about $1.1m of rent or about $66 per member in 2023, while a similar sized state in the same metropolitan area – New Jersey, with offices in Trenton – pays about $24 per member in occupancy costs.
But is the variability of the expenses telling us a different story, too? It appears that some states like Ohio, California, Michigan, and others have been able to pay their executives and maintain a low overhead by adjusting to their reduced size. Other states societies did not adjust and the result of their overhead and executive compensation on a per-member basis is higher than the median: New York, Washington, Minnesota, and North Carolina lead the pack on the compensation side, New York (again), Florida, Minnesota (again), and Illinois on the fixed occupancy cost.
What can change?
Decisions about hiring and firing executives are not arrived at lightly. Leadership in general is mostly a fixed component of the branding of an organization, and high turnover sends advertisers, donors, and members to other organizations. The same can be said about occupancy costs that are tethered to leases, sometimes with favorable terms for renewal while moving offices can be expensive and disruptive.
So, a plan to increase the value to its members needs to be in the macro, over a period of time. State Societies will reasonably argue that additional cost-cutting with be detrimental to their operations and that they are already at their highest efficiency rate. This is likely a reasonable statement to which the imperative solution is the next step for increasing per-society efficiency: consolidation of multiple societies.
In its 2002 research on the consolidation curve[3], the researchers argue that any company can be successful if “Ultimately, a company’s long-term success depends on how well it rides up the consolidation curve” and concludes that “Most companies simply won’t survive to the endgame by trying to stay out of the contest, or worse, by ignoring it.” This conclusion, in light of the lack of adaptability by some State Societies in our sample, may be the canary in the coal mind that states the imperative: leaders, rising start executives and rank-and-file come and go, leases and offices can be modified or abandoned, but for an group of organizations such as the State societies of CPAs, adaptability to the changing adoption rate of membership is going to key for their survival.
[1] https://www.gleim.com/cpa-review/exam-pass-rates/
[2] https://www.nysscpa.org/about/about-nysscpa#sthash.n4Xx1H9F.dpbs
