CIA-III test prep - The Certified Internal Auditor Part 3 Updated: 2024

Dive Brief:

• More than 73% of accounting students count on external financial support to gain a license as a certified public accountant, and many students view the 150-credit-hour requirement for certification as “not worth the time,” according to an association of CPAs.
• Students seeking a CPA license expressed a need for a mentor, help finding their first job, support in test preparation and weak understanding of a CPA’s job opportunities, the Pennsylvania Institute of Certified Public Accountants found in a survey aimed at identifying the causes of a persistent CPA talent shortage.
• “The pipeline of qualified candidates entering the CPA profession is running dangerously low,” PICPA said, reporting on a survey of 763 accounting students in 47 states. “Looking at the data overall, the PICPA believes that the human capital situation facing the profession will only worsen in the near term.”

Dive Insight:

The number of students who graduated at the end of the 2021-2022 academic year with a degree in accounting plunged 7.4% compared with the prior period, accelerating a six-year trend of declining entrants into the profession, according to the American Institute of Certified Public Accountants.

The number of graduates who received a bachelor’s degree fell 7.8% compared with the 2020-2021 period, while those earning a master’s degree declined 6.4%, the AICPA found.

Given the shortage of CPAs, “audits are more expensive and more difficult to complete in a timely manner,” PICPA CEO Jen Cryder said in an email response to questions. “Some firms are leaving the audit sector in bulk because of the risks and lack of staff.”

Several trends crimp the talent pipeline: a decline in both the U.S. birth rate and college enrollment, the rising cost of college tuition, the falling number of students earning accounting degrees and the decreasing number of candidates taking the CPA exam, PICPA said.

In addition, the accounting industry faces a challenge recruiting so-called Generation Z, or those born between 1996 and 2010, the association said. They “have different concerns and priorities today, communicate differently and get their information from more varied sources than many currently in the accounting profession.”

Compared with millennials, Generation Z is more pragmatic, holds a less positive world view than earlier generations and lacks the social and emotional well-being of earlier generations, PICPA said, citing a study by McKinsey. The age group next year will make up 27% of the workforce.

“Younger generations hold different values than professionals who are farther into their careers,” Cryder said.

The accounting industry must try harder to understand the mindset of Generation Z and their communication habits, the association said.

“The current generation of students is looking for meaning and emotional connection in their work, and they are finding it elsewhere,” PICPA said.

More than one out of five students majoring in business administration said accounting is less appealing than other fields, and 14% said starting salaries are much lower compared with other careers, the association said.

The accounting industry needs to reach out to would-be CPAs in high school, before they select their college majors, according to PICPA.

“In order to reshape the narrative of the accounting profession, we have to find fun, engaging ways to appeal to high school students before they select majors in college,” Cryder said.

“There is an issue of perception with the younger generations who may view accounting as a less appealing career option because of a variety of reasons — primarily the pay is higher in other industries and the work is not as engaging,” she said.

Accounting firms that “are unwilling to adapt, refresh their culture and change the narrative on the accounting industry will struggle to bring in fresh talent,” according to Cryder.

The accounting industry cannot rely on just in-person events and mail to reach candidates, PICPA said.

“Social media, community engagement and unique educational events are going to be hugely important when recruiting at the high school level,” Cryder said.

A few years ago, when Jeff Kuntz was newly retired and considering how to spend his free time, United Way of Greater Cincinnati’s Free Tax Prep service checked two important boxes: “I enjoy working with numbers. And I enjoy helping people,” the Alexandria resident says.

He now does both as one of the trained, IRS-certified volunteers who provide free tax preparation and filing services for low-to-moderate-income taxpayers—saving each client approximately $300 in tax preparation fees. During tax season, Kuntz volunteers at Free Tax Prep sites in Northern Kentucky. There are about 40 sites throughout the Greater Cincinnati region.

Kuntz has an accounting degree and a financial background, but neither is necessary to become a Free Tax Prep volunteer. Volunteers just need to be personable and friendly, comfortable working with diverse clients, willing to ask questions, able to use a computer, open to learning new skills, and willing to adhere to high ethical standards. UWGC provides training and ongoing support.

Before becoming a Free Tax Prep volunteer, Kuntz had prepared tax returns only for himself and his family. Helping others, however, brings its own rewards.

Dayle Newman (left) and volunteer Kenneth Bibb

He recalls reviewing the tax return of a couple who have a child with a disability. It was important they get the full refund they deserved. In fact, they were due a refund, but Kuntz noticed that federal taxes had been withheld from their Social Security payments. That figure had not been entered on their return.

“So, I entered it, and they got a [refund of a] couple thousand dollars more. Maybe it would have been caught by the IRS, but it just felt good that I was able to catch that,” Kuntz says.

Schone Walker, who has relied on Free Tax Prep for several years, takes comfort in knowing the volunteers are knowledgeable about the latest tax laws so she doesn’t have to be. “It takes the worry off your shoulders,” she says. “I trust the volunteers 100 percent.”

Walker’s taxes were prepared by Doug Becker, a retired airline pilot from Anderson Township who has been a Free Tax Prep volunteer for nearly a decade. “There are a zillion [volunteer] opportunities,” Becker says, “but sometimes you feel like you’re not really contributing. Free Tax Prep is direct, one-on-one. I know I’m helping this person.”

For the 2022 tax year, United Way volunteers assisted with 7,600 returns; refunds and savings totaled nearly $11 million.

If you’re interested in helping for the 2023 tax season, there is still time to sign up. To learn more about volunteering for UWGC’s Free Tax Prep program, click here.

The new year is upon us, and it's a great time to plan for your financial future. Here are five financial resolutions to consider for 2024.

Get a high-interest savings account

Interest rates are still high on savings accounts right now, especially high-yield online savings accounts.

Some accounts are offering more than 5 percent annual percentage yield, which is 10 times more than the national average on savings accounts. Take advantage of this "free" money by opening a new account with a high rate or upgrading your current one.

Just make sure you avoid fees as much as possible, and choose a bank or credit union that is easy for you to access, either through remote customer service or in person.

Focus on student loan repayment

For many, student loan payments resumed in 2023. If you're feeling anxious or uncertain about how much you owe, it's best to face the numbers head-on and see if there's any way you can reduce your payments.

For example, if you earn less money now than you did before student loan payments were paused, then updating your income in your student loan portal may change the amount of your income-driven repayment.

There's another way you might be able to reduce your payment if you're on an income-driven repayment plan: If you have a retirement fund, you may want to consider putting some money away as a way to reduce your student loan payment.

"If you put your money in a pre-tax retirement account, that lowers your taxable income for the year," said Jen Mayer, an accredited financial counselor and founder of the Brooklyn, New York-based firm Fully Funded. "The percentage that you're paying for income-driven repayment is going to be lower."

Build your financial knowledge and set some goals

Though personal finance isn't a standard part of an American education, there are plenty of ways to learn more about budgeting, saving and investing.

Whether you browse reputable sites online, check out finance books from your library, or talk to a certified financial planner or other licensed expert, there are lots of people who are eager to impart their financial know-how.

As you learn more about personal finance, you might find yourself getting inspired to create your own financial goals. Perhaps you want to retire early, save for a down payment on a house or build a healthy emergency fund. Once you've nailed down your goals, you can determine how much money you'll need, then set a timeline for saving it.

Try using AI for your finances

In 2023, artificial intelligence chatbots such as ChatGPT and Bard became popular tools for research and advice. In 2024, you can experiment with using them for your finances.

You can supply a bot specific prompts, such as "My salary is $50,000, and I want to save $5,000 by the end of the year. How can I do that?" and it can do the math for you, calculating what you need to save and suggesting how to cut back on different expenses.

You can also instruct a chatbot to find you good deals for things like groceries, school supplies, gifts and more.

Just remember that AI pulls information from various sources, and those sources may not always be accurate. Be sure to double-check any information you receive by doing the math yourself, checking with an expert or going to a reputable website to learn more.

Set up recurring donations to a nonprofit

Recurring donations provide reliable income to nonprofit organizations, which allows them to plan their budgets more easily. If you're interested in setting up recurring donations for a particular nonprofit, there are several ways you can do this.

Check with your employer to see if they match donations and if they have an online portal to do so. This can be an easy way to make your donations go further.

If you're donating on your own, you can typically do so through a nonprofit's website, but Shavon Roman, a personal finance expert and founder of Heal. Plan. Invest., says there are ways to make it even easier.

"Most charities will supply out their information so that you can wire donations from your bank account or send them through Zelle," Roman said. "You can automatically transfer a certain amount of money on a regular basis, and it's within a system that you control. During tax season, you can also see exactly how much money you donated when you want to file a tax deduction."

Before you make any donations, you may want to do an internet search for the organization to confirm that it is a 501(c)(3). These organizations are considered tax-exempt by the U.S. government, so you'll be eligible to write off these donations when you do your taxes.

This column was provided to the Associated Press by the personal finance website NerdWallet. Chanelle Bessette is a writer at NerdWallet. Email: cbessettenerdwallet.com. Twitter: crbessette.

1. GET A HIGH-INTEREST SAVINGS ACCOUNT

2. FOCUS ON STUDENT LOAN REPAYMENT

3. BUILD YOUR FINANCIAL KNOWLEDGE AND SET SOME GOALS

4. TRY USING AI FOR YOUR FINANCES

5. SET UP RECURRING DONATIONS TO A NONPROFIT