Selecting and Deselecting the Audit Service Industry and CPA

Abstract

This master thesis investigated the decline of Certified Public Accountants (“CPA”) in the audit service industry in Denmark. The industry has seen a decline from 4.300 CPAs to 3.209 in 2020, with an expectation of declining with additional 200 CPA’s a year through the next 10 years solely due to retirement. Denmark has only on average graduated approximately 53 CPAs a year from 2014 to 2022. This led to the objective of the master thesis, which is to investigate: Which conditions are of significance when auditors select and deselect the audit service industry, and education to become a Certified Public Accountant. Furthermore, if there is a connection between these selections and certain personal characteristics. The thesis was based on binomial logistical regression analysis’ which examined potential significant independent variables for the above-mentioned dependent variables. Descriptive statistics were performed as well, to examine more indebt significant differences. The personal characteristics that the thesis was limited to were defined as; gender, age, civil status, family situation, living situation, experience, position, one’s intention of becoming a CPA, one’s intentions in the auditing industry, one’s satisfaction in the industry, and personality traits. The objective of the thesis has been answered through an analysis of previous empirical studies, combined with a questionnaire composed of questions that targeted current and previous auditors regarding their intentions to become an auditor, their satisfaction in the industry, their intentions of becoming/not becoming a CPA, basic personal questions, and a HEXACO personality test. Furthermore, previous auditors were also asked about the reasons they left the industry. The key findings of the analysis were that “Position”, “Age”, “Honesty/Humility”, “Satisfaction with leadership” and “Work-life balance”, had a significant influence with auditors’ decision to stay in or leave the audit service industry, whilst controlling for the defined independent variables. In terms of choosing to become a CPA “Age” and “Position” were defined as significant variables in the decision-making process, whilst controlling for the defined independent variables. The main reasons for becoming a CPA are a higher salary, increased opportunities in the industry, it’s prestigious, exciting, and challenging. The main reasons for deciding not to become a CPA were the level of stress and the time required.