What is the future of accountancy with AI?
A CFO is somewhat more likely to be replaced after financial-reporting deficiencies are uncovered—even if the accountant shortfall may be to blame
The ongoing shortage of skilled accountants is creating a ripple effect that directly impacts CFO stability and organizational financial health. While some argue that replacing CFOs is a necessary step to address financial-reporting deficiencies, this approach often ignores deeper systemic problems within the company’s overall management and internal controls. Addressing the root causes—like enhancing entry-level salaries and reducing barriers to entering the profession—may offer a more sustainable solution than merely changing leadership at the top.
Nicolai Thompson, CEO Jenesys
Summary
The investigation explores how a shortage of skilled accountants is linked to increased CFO turnover due to financial-reporting deficiencies. Companies citing insufficient accounting personnel for material weaknesses in financial controls experience a higher rate of CFO replacements compared to those without such weaknesses. The lack of accountants has led to delayed or restated financial reports, affecting CFO job security.
Data from Hudson Labs indicates that nearly 640 U.S.-listed companies reported financial weaknesses due to inadequate accounting staff over the past year, with about 28% of these companies replacing their CFOs, compared to 22% turnover for those without such issues. Opinions differ on whether replacing CFOs effectively addresses the problem; some see it as a way to improve controls, while others argue it unfairly shifts blame and neglects broader management issues.
Several companies, including Tupperware Brands, Advance Auto Parts, and Sanmina, illustrate the trend where CFO changes follow accounting deficiencies. These organizations faced challenges in retaining skilled accountants, resulting in financial misstatements and auditor changes. With the shortage of accountants expected to persist due to low entry-level salaries and certification hurdles, companies and accounting firms are attempting to bridge the gap by increasing salaries and hiring temporary help.
Read the full story: The Wall Street Journal
