Fraud occurs in an environment where misconduct is easier to commit and harder to detect. Could fewer qualified accountants in the job market ultimately lead to more financial fraud?

Like many of my peers in the accounting profession, I have spent much of the past year talking with clients about one challenge that seems to arise in every meeting, regardless of their industry: finding and retaining CPAs and qualified accounting professionals to fill accounting and finance positions within their organizations.

Controllers tell me they cannot fill senior accounting positions. CFOs describe months-long recruiting efforts that produce few qualified candidates. Audit committees express concern about turnover, institutional knowledge, and increasing workloads. For the past several years, public accounting firms have been competing aggressively for talent as universities reported declining accounting enrollments.

The loosening of CPA licensing pathways will help in time, and as universities retool their curriculum to embrace artificial intelligence (AI) in accounting, interest in the profession will return. But what is in store for companies now as they continue to manage the current shortage of qualified accountants?

At first glance this appears to be a workforce issue, but I believe it may become much more dangerous. As a forensic accountant, I investigate financial statement fraud, asset misappropriation, and failures of internal control. One observation has remained remarkably consistent over three decades: fraud rarely occurs because someone suddenly becomes dishonest. More often, fraud occurs because organizations unintentionally create an environment where misconduct becomes easier to commit and harder to detect. AI can help. Increased ethics training at the undergraduate and graduate level wouldn’t hurt. Neither can wholly solve the problem.

The current accounting talent shortage has me wondering: could fewer qualified accountants in the job market ultimately lead to more financial fraud?

The Profession Is Shrinking

In addition to the decline in accounting graduates over the past few years, many experienced professionals are retiring. It’s a big demographic exit that doesn’t have a corresponding influx. At the same time, businesses face increasingly complex financial reporting requirements, rapidly evolving technology, expanding regulatory expectations, cybersecurity risks, and growing demands for timely financial information.

The result is simple mathematics – there is more work than there are experienced people available to perform it. Many organizations have responded by asking existing employees to do more with less. Month-end closes are compressed. Finance teams become leaner. Internal audit departments postpone projects. Vacant positions remain open for months. Each decision may be reasonable individually. Collectively, however, they can slowly weaken an organization’s control environment.

Fraud Thrives Where Oversight Declines

Nearly every major fraud investigation I’ve participated in has revealed some variation of the same story. Someone stopped reviewing reconciliations. Segregation of duties gradually disappeared. Journal entries were approved without sufficient scrutiny. Management became increasingly reliant on a trusted individual because no one else understood the process. These weaknesses rarely occur overnight. They accumulate slowly until a meaningful impact is felt and remediation is required.

When accounting departments become understaffed, routine control activities often get viewed as administrative tasks rather than essential safeguards. Unfortunately, those very activities – reconciliations, accounting analysis, variance investigations, approval reviews, and documentation – are frequently what detect accounting anomalies and fraud before it becomes significant. When fewer people perform more work, the opportunity of errors and intentional misconduct will find its way in as water through cracks in a dam.

Experience Matters More than Headcount

The shortage is not simply about the raw number of CPAs; it’s about experience. Many organizations are replacing retiring professionals who possess decades of institutional knowledge with younger professionals who are exceptionally talented but understandably lack years of practical experience. Replacements also occur with offshoring and AI agents, which also lack practical experience. That transition creates risk.

Experienced accountants often recognize unusual transactions, almost instinctively. They know which fluctuations deserve additional questions and which journal entries “just don’t look right.” Those instincts are difficult to teach and impossible to replace overnight. Fraudsters often recognize this reality before management does.

History Offers Important Lessons

Significant financial reporting failures seldom stem from a single breakdown. Perhaps none is more striking than the recent case of Rita Crundwell, the longtime comptroller of Dixon, Ill. Over a 22-year period, Crundwell embezzled about $53.7 million – widely regarded as the largest municipal embezzlement in U.S. history – by creating and controlling a secret bank account that escaped detection for decades. Her scheme was not uncovered through a routine audit or sophisticated forensic technology, but only after another employee assumed her responsibilities while she was on vacation and questioned transactions that did not appear legitimate.

The case is a powerful reminder that effective financial oversight depends on more than trust; it requires adequate staffing, segregation of duties, independent review, and experienced accounting professionals who have the time and authority to challenge what does not look right.

Recent SEC enforcement actions also illustrate how important strong accounting oversight remains. In January 2026, the SEC charged Archer-Daniels-Midland Co. (ADM) and several former executives with manipulating the reported performance of its nutrition segment through improper intersegment pricing adjustments designed to meet operating profit targets. According to the SEC, the adjustments resulted in misleading financial reporting and highlighted deficiencies in internal accounting controls. While the case was driven by alleged management misconduct rather than staffing shortages, it serves as a reminder that when financial reporting controls are weakened – or experienced accounting professionals are unable to provide sufficient challenge and oversight – the risk of financial statement fraud increases. ADM was a control issue. But if organizations continue to operate with fewer experienced accountants reviewing complex estimates, journal entries, and management assumptions, the very controls designed to prevent similar misconduct may become increasingly difficult to maintain.

These failures did not occur because organizations lacked accountants. However, they demonstrate an important principle: when oversight weakens, financial reporting becomes increasingly vulnerable. Today's shortages may unintentionally produce similar conditions if organizations fail to respond.

Technology Is Helpful, But Not a Substitute

AI, automation, continuous monitoring, and advanced analytics are transforming finance organizations in remarkable ways. These technologies should absolutely be embraced. However, technology does not replace professional skepticism.

An automated reconciliation can identify an exception. It cannot always determine whether the exception represents fraud, error, aggressive accounting, or simply an unusual business event. Likewise, artificial intelligence can summarize transactions, identify anomalies, and improve efficiency, but organizations still depend upon experienced professionals asking the right questions.

What Executives Should Be Asking

Rather than focusing exclusively on staffing numbers, boards, audit committees, and executives should be asking broader questions.

• Have key financial reporting controls changed because of staffing shortages?
• Has the segregation of duties been compromised?
• Are reconciliations being completed on time?
• Has management assumed additional approval responsibilities that previously belonged to multiple individuals?
• Are employees working excessive overtime during reporting periods?
• Has internal audit adjusted its risk assessment to reflect staffing challenges?
• Are whistleblower reports increasing in finance or accounting functions?

These questions may identify emerging risks long before financial statement issues become public.

A Forensic Accountant's Perspective

One of the more common themes I encounter during investigations is that warning signs existed months – or even years – before the fraud was discovered. These themes include reports that someone noticed unusual activity, questioned reconciliations, or expressed concern about workload or inadequate review. Unfortunately, those observations were often dismissed because everyone was simply trying to keep up.

The accounting talent shortage does not create dishonest people. Rather, it reduces the number of experienced professionals available to recognize when something does not look right. That distinction matters.

Looking Ahead

The accounting profession has successfully adapted to enormous change before, and it will again. Technology will continue to improve efficiency. Universities, firms, and professional organizations are actively working to strengthen the pipeline of future accountants. New career paths will emerge, and finance organizations will evolve.

In the meantime, organizations should resist the temptation to view accounting departments solely as cost centers. Strong accounting functions are among the first lines of defense against financial reporting failures.

As finance teams become leaner, leaders should invest even more in internal controls, continuous monitoring, ethics programs, and experienced financial professionals. After all, the cost of hiring an additional accountant is almost always far less than the cost of investigating one significant fraud.

The profession's current talent shortage should not simply prompt discussions about recruiting. It should also prompt conversations about risk. Because when oversight declines, opportunity for fraud often increases – and history has repeatedly shown us what can happen next.

Frederick J. Kohm Jr., CPA, CFF, MBA, is a Partner in the Forensic Advisory Solutions Practice and Head of Services Industry, with Grant Thornton Advisors LLC in Philadelphia. He can be reached at frederick.kohm@us.gt.com. 

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Statements of fact and opinion are the author's responsibility alone and do not imply an opinion on the part of the PICPA's officers or members. The information contained herein does not constitute accounting, legal, or professional advice. For actionable advice, you must engage or consult with a qualified professional.