Ask a Pennsylvania firm leader what makes hiring new graduates hard, and the answer usually has little to do with technical work. The accounting is fine; new hires passed the same courses that their managers did. The concerns that come up are harder to teach: how to question a number that looks wrong, when to stop typing and pick up the phone, and knowing when to escalate.
The data says the same thing. In PICPA’s 2025 Insights Precision Hiring study, the skills employers most often found lacking in recent graduates were critical thinking and professional communication. Technical accounting knowledge ranked below both, and so did the technology skills that tend to dominate much of the conversation in the industry today.
The problem is less about what new graduates know than about how they work and build professional instincts. In the past, the instincts grew through gradually increasing responsibility, starting with routine, basic tasks. Now that AI and automation handle much of the routine work, new hires are starting higher on the expectations ladder, but without the skills they would have honed when starting on a lower rung.
What can firms and colleges do about this skills gap? This year, the PICPA has set out to answer that question.
The Insights Precision Hiring study put numbers to a level of frustration that had mostly been shared through anecdotes. It surveyed 202 firms across the country in 2025, asking hiring leaders to name where recent graduates fell short. The list that came back wasn’t about debits and credits.
Critical thinking was at the top, with 59.7% of firms reporting a deficit. Professional communication followed at 57.2%. After these two came technology proficiency (46.3%) and technical accounting knowledge (45.3%). Work ethic, business sense, and interpersonal skills filled out the rest. Read in order, the findings point away from the curriculum and toward what surrounds it: judgment and the habits of a working professional.
The same firms were candid about what they reward once someone is hired. Asked which competencies matter most in day-to-day practice, they put the ability to build client relationships and to pull insight from data near the top. Communication, a skill they often found missing, sat lower on the list of what they actively develop. So the skills gap widens in two directions at once: between what is taught in school and what the work demands, and between what firms say they need and what they develop once a new hire is in the door.
A second pattern complicates the story about technology. Firms aren’t short on digital natives. Most say recent graduates arrive comfortable with software and are quick to pick up new tools. What they question is whether those same hires could tell when a tool had handed them a wrong answer. Eighty percent of firms rated awareness of responsible, ethical AI use as the most important AI-related competency for a new hire, ahead of prompt-writing or any particular platform. They want a level of judgment to govern the tools’ uses more than raw fluency with them.
For all the clarity in diagnosing the problem, the study found firms are doing relatively little to test for it. Communication and critical thinking lead the list of missing skills, yet structured assessments were uncommon in the hiring process. Firms know what they are short on, yet most haven’t rebuilt the interview to catch it.
There is a cost angle that sharpens the point. Firms aren’t answering the skills gap by lowering their standards. If anything they’re raising them, and paying for it. In the same study, more than half of the responding firms said precision hiring had pushed their cost per hire up and lengthened the time it takes to fill a role, and a majority expected to lean harder on this kind of selective, data-driven hiring over the next three years. Firms are spending more to find those graduates who already have the judgment they want instead of building a development process once people are in the seat. The trouble with this approach is arithmetic: there are only so many of those graduates to go around, and every firm is bidding for the same ones.
Every number in the Precision Hiring study came from one side of the desk. Those answering were partners, hiring managers, and firm leaders describing graduates they’d brought on. Nobody asked the graduates.
While not a knock on the research, it is a real blind spot. A hiring-side survey answers hiring-side questions, but it can only report how firms experience the gap. It can’t tell you whether the people coming in experience the same thing or would point somewhere else entirely.
Picture how differently the two sides might describe the same first 90 days. A manager remembers a new hire who wouldn’t get on the phone. The new hire remembers a week with no one to ask, a client who assumed knowledge they had never been handed, and an instinct to get it right on their own before admitting they were stuck. Same 90 days, two stories. The space between those stories is where most onboarding succeeds or fails, and it is exactly the space a one-sided survey misses.
Listen to enough firm-side accounts, and the same handful of themes keep surfacing. Communication comes up first and most often: the soft skills of professional interaction, not the technical side of the work. Then judgment calls: sensing when a result looks off and knowing when a question is worth raising before a deadline slips. Partners describe people who can project-manage a task without quite understanding the accounting underneath it or a professional skepticism that hasn’t fully switched on yet. Lately, they describe a newer one: a habit of trusting a tool’s output a beat too quickly.
This year, the PICPA set out to balance the one-sided equation. The new research puts the same questions to both groups (the firm leaders who hire and the early-career professionals in their first five years) so the answers can be set side by side. Where a firm rates a graduate’s readiness in a given area, the graduate rates their own. The goal is a picture that neither a firm nor a school could draw alone: where the gap actually sits, and whether both sides even agree there is one.
The side-by-side view matters for a practical reason. If firms and new professionals agree on trouble spots, the fix is mostly logistics: build the training and make the time for it. If they disagree, the divergence of opinion is the finding, and it points to something onboarding has been missing on both ends. Either way, you can’t design a solution until you’ve heard from both sides of the desk.
The AI piece deserves its own look, because it is where the gap turns around and points toward the firm.
Accounting firms have been clear about what they want. Recall that seven in 10 firms believe new graduates are better positioned than veteran CPAs to work with AI tools. In fact, 80% named responsible AI use as the top competency for a new hire. Together they set a high bar: show up AI-fluent and use that fluency with judgment.
The harder question is whether firms are ready to teach the judgment half of the equation. Plenty of firms are still working out their positions on when AI belongs in client work, what has to be checked by a person, and how much a young accountant is allowed to lean on it. A new hire who asks whether or not it is OK to use a given tool for a given task is often asking something the firm hasn’t settled for itself. Yet, the expectation lands on the graduate. In reality, the structure to support AI sits with the firm, and at a lot of firms that structure is still being built.
To illustrate, let’s say a new hire pulls a clean-looking summary out of an AI tool and confidently turns it in without the instinct to ask where a number came from or whether the tool simply made it up. That gap in skepticism would close with the judgment firms have always taught, though now aimed at a faster and more convincing source of wrong answers. However, a new hire will only pick up this professional skepticism from someone with the time to look over their shoulder, which is exactly the time firms are cutting.
Two developments from the field make this more pressing than it sounds. First, several firms have been thinning the roles that used to absorb this work. Learning-and-development staff, internship coordinators, and the senior associates who once walked new hires through their first few months are being cut or stretched thin. More new professionals are arriving with less support, exactly when the judgment gap is widening.
Second, the recruiting calendar has shifted. Firms now want to line up interns two to three years ahead of a start date, while many students don’t start thinking seriously about where they’ll work until roughly a year out. By the time a student is ready to choose, the most structured pathways often have already closed. The students most likely to miss that window tend to be the ones who had the least guidance to begin with.
None of this surfaces if you only manage skills. It surfaces when you look at the system around the new hire: who hands off the work, and whether anyone has time to field the questions that follow. That system is what the two-sided research is built to examine, with the AI question running straight through it.
Colleges work with their graduates up to the day they leave, but rarely after. They don’t watch the first project, help with the first hard call, or explain the first review that comes back covered in red ink. A firm sees all of that, but only for its own hires and only at its own size and culture. Each party holds one piece, and no one sees the whole picture.
The PICPA sits where the pieces meet. The PICPA talks with sole practitioners, regional firms, and large firms all the time. It works with graduates from well-resourced programs and from programs running on a fraction of the budget. It hears the partners’ version of the new hire experience and the second-year associates’ version of the same first 90 days. That cross-section is hard to assemble, and it is why this research can do something a national average can’t: show how the gap differs for a 12-person firm in Harrisburg and a national firm in Philadelphia.
The timing helps too. The AICPA has its own effort underway to define the competencies the profession expects of new entrants, with draft materials expected over the coming year. The PICPA’s research is designed to sit alongside that national work and feed into it. Where a national framework names the skills, the Pennsylvania research aims at the next questions: what closes the gap once someone is on the job, and how does the answer change with the size of the firm? The plan is to map the local findings onto the national framework as it takes shape.
State by state, the same gap may look a little different. A perspective grounded in the firms and graduates the PICPA works with every day gives members something no national number can: guidance shaped to firms like theirs.
The PICPA will publish new guidance built on this year’s research, written for both sides of the gap. The firm-facing work lays out what readiness looks like in concrete behavior across a new hire’s first days, which development efforts firms are trying, and how the answers shift between small, midsize, and large practices. The work facing students and new professionals turns the same research into practical guidance for the first months of a career.
For firms, that means the specifics nobody writes down: what a realistic first week looks like, what should be in writing before a new hire touches a client file, how to set AI ground rules that a young accountant can actually follow, and who fields the questions when an assigned mentor is buried in a deadline. For students and new professionals, it means the other half of the same picture: how to read the recruiting calendar, what firms actually mean when they say readiness, and how to show judgment with tools rather than just fluency.
None of it will rank schools or grade any program, and it isn’t a new competency framework. The areas covered are the ones Pennsylvania firms name most often.
The value will be in the specifics: what the gap looks like at a practice your size, and what firms like yours are doing about it. A national report can tell you the gap exists. This work is built to show you what to do about it.
The findings will also feed PICPA’s developing effort to connect colleges and firms more directly. The first pieces arrive later this year.
None of this is a verdict on young accountants. The graduates walking into firms today are more technologically capable than any class before them, and they are stepping into a profession that has never been more central to how businesses make decisions. Companies still need advisers who can stand behind a number and explain it. The person who can do that is a CPA, and that doesn’t change because the tools change.
The gap firms describe is made of specific, teachable things: when to escalate, how to question a result, and how to run a powerful tool and still own the judgment behind it. Those are learnable in the first year on the job, especially among people who are already most of the way there. The work is sorting out who teaches them, when, and how, then building that into the way firms bring people in.
A firm does not have to wait for that guidance. It can start by looking at its last three new hires’ first 90 days: who handed them the work, who they asked when they got stuck, and what happened the first time a number looked wrong. Most firms already know where their version of the gap sits. What they have not done is put it in writing and hand it to the next person who starts. Doing that much is the difference between managing skills and managing the system around them.
This is a problem the profession can solve together, and the people closest to it, including the firms and the graduates they hire, have a stake in solving it.
Lee Rogers, PhD, is director of strategic research and insights at the PICPA. He can be reached at lrogers@picpa.org.