Tax Season Is Coming, and These Firms Can’t Find Enough Accountants in the U.S.

A national shortage of accountants is prompting small and midsize firms to hire overseas for the first time as they seek workers to audit U.S. companies’ books and prepare Americans’ tax returns.

Large firms such as KPMG LLP and PricewaterhouseCoopers LLP have long hired international accountants to support client work. Now, with tax season poised to kick off, small and midsize accounting outfits that serve family businesses, individuals and smaller companies say they are offshoring jobs as local recruiting pipelines dry up and accountants leave the profession in droves.

Dan Geltrude, founder of an accounting firm in Nutley, N.J., hired a 10-person tax team in Ahmedabad and Bengaluru, India, last year and plans to expand to 15 workers.

"This would have been a crazy idea for us 10 years ago. Now, this is absolutely part of our operations, he said. There’s no other way for us to meet the demand."

More than 300,000 accountants and auditors have quit in the past two years, according to federal data, and many companies say the turnover has left them unable to meet customers’ needs for services such as annual business audits and preparing tax returns.

Some firms say they have stopped performing external audits for businesses altogether because they are unable to staff those projects, several managing partners and presidents of firms that employ fewer than 50 people said. For small organizations, the cost of a basic audit or regulatory compliance is rising fast.

Several certified public accountant firms in Muskogee, Okla., have stopped preparing organizational audits in recent years, citing staffing shortages and the challenges of keeping up with regulatory requirements, said Kathy Hewitt, one local firm’s managing partner. The audits for nonprofits that her firm serviced usually cost about $3,000, but she had to increase the price to around $10,000 to deal with the heavier workload and additional hours required to comply with new regulations. In 2021, her firm stopped performing them altogether. Now, Ms. Hewitt said her past clients tap Tulsa CPA firms for their audits, which can cost as much as $15,000.

Mr. Geltrude’s overseas group performs entry-level work, such as preparing tax returns and inputting data, thus freeing up managers to assign entry-level U.S. accountants to review those efforts and find tax-savings opportunities for clients, he said. While salaries for his overseas workers aren’t significantly less than U.S. employees in real dollar terms, his firm does save money by using a third-party contractor to hire the workers, which pays for the benefits and training.

Dan Geltrude, founder of Geltrude & Co., said workers in India complete entry-level work like inputting data so that U.S. employees can focus on finding tax-savings opportunities for clients.

“We’re filling the gap as much as we can with India,” Mr. Geltrude said.

Staff members cannot bring their cellphones to work in the India office, which also has no printers, so that records appear only on office computer screens, Mr. Geltrude said, adding the so-called clean room setup keeps customer data secure.

Jo Barsa, managing partner of AccuVisors, Inc., a San Diego-based CPA firm, said she hired two certified accountants in the Central Luzon area of the Philippines before the pandemic and now has six, with plans to add more. The hires, full-time employees, work year-round at salaries that are between a quarter to a third of the $75,000 to $125,000 that her firm pays U.S. accounting staff.

The employees in the Central Luzon area import transactions from QuickBooks and prepare monthly financial statements for customers, Ms. Barsa said. They work on data entry and provide analysis after training on AccuVisors’s processes and clients. Within two years she expects newly hired workers to begin preparing American tax returns, which will require hiring a U.S. CPA to train her workers there.

Pacific Accounting & Business Services, which does international staffing for smaller U.S. accounting firms, said it hires people who already have tax-work experience, local certifications and software expertise. The employees still need guidance on state-specific regulations and tax law, said John Bugh, the firm’s chief revenue officer.

Workers in this office in India cannot bring electronics inside to protect client data.

Photo: Pacific Accounting & Business Services

Makosi, a New York-based professional services staffing company, said it hired more than 1,000 accountants last year, most based in South Africa, for work for American, British and Australian public accounting companies.

International staff “can pretty much do 90 to 95% of an audit,” said Darren Isaacs, Makosi’s chief executive. “Not only are our guys going to do good work, but they are also probably going to outperform what your full-time employees are doing.”

Clients’ two biggest concerns are how to work across time zones and whether employees know how to conduct American audits and understand General Accepted Accounting Principles (GAAP).

Makosi requires employees to work their clients’ business hours for the first several weeks of an engagement, which can mean overnight shifts. The company shares videos of individual workers with the clients they will be assigned to demonstrate their language proficiency.

A five-day virtual training covers topics ranging from U.S. regulations to cultural differences in email writing. (Americans, the instructors warn, are often curt.

International accounting talent is in such high demand that it, too, will run thin, Mr. Isaacs said.

Tapping international accountants for more strategic work such as complex tax work is on the rise, because there is no other short-term way to fill the U.S. talent gap, said Calvin Harris Jr., chief executive of the New York State Society of Certified Public Accountants.

“For us to have the same number of accountants in the future, just five years from now, as we do right now is very unlikely,” he said.

Marty Abroms, managing shareholder of the 25-employee Abroms and Associates in Florence, Ala., said he isn’t willing to hire foreign accountants, but has had to turn down dozens of clients in recent years.

His firm, about 100 miles northwest of Birmingham, primarily serves small and midsize private companies, and he also does those owners’ individual tax returns. He estimates that the lost business over the past three years likely cost the firm more than $430,000 in revenues, but he worries about overworking, and losing, his current staff.

Turning down work “breaks my heart,” he said. “It’s all we can do to keep up with our really good clients right now.”

Originally Publish at Wall Street Journal