[Reporter’s Notebook] Why the Financial Services Commission Must Reduce the Number of New Accountants

Inevitable Reduction in New Accountants
A Necessary Step to Enhance Audit Quality

This year's Certified Public Accountant (CPA) exam underwent a major overhaul for the first time in 14 years. To take the exam, candidates are now required to complete at least three credits of IT courses at university, and the proportion of IT-related questions in the second-round audit subject has also been increased. The core direction of these reforms, aimed at enhancing accountants' IT skills, was set in 2020.

However, the world has changed far more rapidly than the plans made four years ago anticipated. Today, accountants are expected not only to possess IT skills such as data analysis and programming, but also to utilize artificial intelligence (AI). While the system has failed to keep pace with social and industrial changes, the newly revised recruitment standards have already become outdated.

As a result, accounting firms are unable to recruit talent suited to this rapidly changing era, and existing junior accountants are being pushed aside by AI. The workforce structure at accounting firms is now in urgent need of a major transformation. This reality is reflected in the fact that large domestic accounting firms affiliated with global firms are under pressure from their headquarters to reduce the number of junior staff.

On top of this, as companies cut audit costs during the economic downturn, accounting firms are engaging in fierce price competition to secure business. Consulting demand has plummeted, and major mergers and acquisitions (M&A) deals have disappeared, leading even the Big Four (Samil, Samjeong, Anjin, Hanyoung) to fiercely compete over small and medium-sized deals. As a result, reducing the number of new accountants is no longer a temporary adjustment, but has become a structural and irreversible trend.

Given the current industry reality, there is no time to lose. Already, about 200 out of the 1,200 newly selected accountants each year have not been assigned to training institutions as stipulated by the CPA Act, resulting in a cumulative total of about 600 unemployed accountants. This is the case even though the Big Four and other accounting firms are accepting more trainees than they need.

Excess manpower ultimately leads to a decline in audit quality. There is a greater incentive to win contracts even by lowering fees, which in turn leads to the deployment of relatively low-cost junior accountants to audit sites in order to cut costs. In fact, the reason why the audit fee rates at the Big Four are currently lower than those at mid-sized accounting firms is due to the structural problem of having an excessive number of junior accountants at the Big Four.

To improve audit quality, the composition of audit teams should be reorganized to focus on experienced senior accountants, and the time allocated to audits should be increased. All of this is only possible if the number of recruits is controlled at an appropriate level in line with future industry prospects. The financial authorities' demand for enhanced audit quality can only be realized in an environment where the number of new recruits is reduced.

The Financial Services Commission is expected to decide on the minimum number of new CPAs to be selected for next year as early as next week. This is not simply a matter of numbers. In a situation where society and technology are changing at a breakneck pace, this decision could be a critical turning point that determines the future of the accounting industry and audit quality. The authorities must no longer neglect the issue of about 200 unassigned accountants each year. It is time to acknowledge the errors in demand forecasting for accountants and to expedite the reduction of new recruits.

This content was produced with the assistance of AI translation services.