I’d like to anonymously report that Grant Thornton is conducting another round of layoffs, affecting approximately 150 employees, primarily within the tax division. This comes amid broader concerns about the firm’s direction and workforce strategy. All impacted have been notified but this comes less than six months since 350 were laid off surrounding PE deal.

A quick Reddit search to see if we could find anyone talking about layoffs at GT gave us this:

Grant Thornton Layoffs
byu/HarryNobz inAccounting

Alright, confirmed. We should have written this up Friday night, alas did not and WSJ scooped us. It happens. Some details WSJ received:

“Grant Thornton has made targeted staffing decisions to best meet the needs of the clients, markets and industries it serves,” the firm said in a statement.

The affected employees will receive their full salary and benefits through the end of the calendar year and a severance package, Mark Margulies, national managing principal for U.S. tax services, said in a memo to tax staff reviewed by The Wall Street Journal.

The cuts are primarily focused on “meeting market demand and reallocating capacity from where growth has slowed to areas where growth is accelerating,” Margulies said in the memo.

*insert jerk-off hand motion here*

The post-PE deal layoffs referenced by our tipster happened in May. Catch up on that here:

TLDR: In May, two months after the majority sale to New Mountain Capital was announced, GT laid off about 3.5% of the workforce across all service lines. This on top of the three percent they laid off the prior spring and about 200 people axed last November. As far as we know, GT US’s headcount is around 9,700.

Here’s a bit WSJ didn’t report, courtesy our tipster:

Less than a month ago, they sent all of the partners and managing directors to the Bahamas for a firm meeting to celebrate our 100th year of the firm.

Nice. Of course they did. They were probably also celebrating the impending merger with Grant Thornton Ireland, a deal that was backed by — you guessed it! — New Mountain Capital. Allegedly GT Ireland’s 45 equity partners were looking at payouts around €6.5 million ($6.9 million USD) in cash for the GT US deal.

Grant Thornton US had supposedly been waving New Mountain Capital’s money around hoping to have a three-way merger between them, Ireland, and GT UK however GT UK appeared to want nothing to do with this unholy threesome and went with a different private equity firm in their own deal.

According to FT’s sources, Grant Thornton UK was able to get bidding up to approximately £1.3 billion ($1.6 billion USD) in an auction organized by Rothschild, only slightly short of the £1.5 billion partners were hoping for. GT UK revenue for 2023 was £654 million with operating profit of £146 million ($183 million USD). These PE firms have lost their minds.

The Bahamas trip is of course unconfirmed but we wouldn’t be at all surprised. We’ll see if we can dig up more, get in touch if you have anything to add.

Chipman69, you know what to do.

The post Grant Thornton Partners Partied in The Bahamas Before This Latest Round of Layoffs (Allegedly) appeared first on Going Concern.

Wrote FT of GT UK’s deal:

Grant Thornton UK, the country’s sixth largest accounting firm by revenue, has agreed to sell a stake to the buyout group Cinven, marking the most significant private equity investment to date in the UK accounting sector.

Cinven beat rival offers from other private equity groups including Sweden’s EQT, and from Grant Thornton’s sister firm in the US, which had proposed a transatlantic merger.

Specifics of the deal are not known at this time and the firm told FT in a statement that the terms “remain confidential.” FT said a source told them bidding for the firm in an auction organized by Rothschild had reached approximately £1.3 billion ($1.6 billion USD), a little short of the £1.5 billion partners were hoping for. For fiscal 2023, GT reported revenue of £654 million (growth of +7%) and operating profit of £146 million. Wait, is that right? And they were able to get private equity to bid up to £1.3 billion? Send those Times shills a nice Edible Arrangements bouquet for their hard work.

“Having evaluated the external landscape, we have agreed initial terms with an investor, who we feel is best placed to support our accelerated growth in the medium term,” said GT to FT.

The deal isn’t official quite yet, Grant Thornton’s 200-some partners still have to ratify it.

It seemed pretty clear when Grant Thorntons US and Ireland announced a merger a few weeks ago that the UK business was not joining them in the mid-tier threesome floated as a possibility back in July. The GT US/Ireland deal was assisted by New Mountain Capital, the private equity firm that bought a majority stake in GT US in March. Apparently GT Ireland’s 45 equity partners were looking at payouts around €6.5 million ($6.9 million USD) in cash for the GT US deal.

This is really starting to feel like 1999 except instead of Pets.com and dudes on motorcycles who can deliver condoms and DVDs within an hour it’s professional services firms. What could go wrong!

The post Grant Thornton UK Picks Private Equity Over Merging With Its US Cousins appeared first on Going Concern.

On Friday, we prompted the readership to speculate about which mid-tier accounting firm was going to announce a private equity investment on Monday after a Reddit post teased an imminent announcement. Our money was on Carr, Riggs, & Ingram and a tip that came in shortly after publication confirmed that suspicion.

Imagine our surprise when the first press release of Monday morning wasn’t CRI but PKF O’Connor Davies. PKF announced they were getting cozy with Investcorp and Public Sector Pension Investment Board, one of Canada’s largest pension investment managers.

Was our intel wrong? No! CRI just hadn’t gotten around to announcing their deal first thing Monday morning. More like first thing Monday afternoon.

Like PKF, CRI struck a deal with not one but two outside capital firms:

Centerbridge Partners, L.P. (“Centerbridge”), a global alternative investment manager with approximately $40 billion in assets under management as of September 30, 2024, and a focus in the financial services, technology, industrial and healthcare markets, and Bessemer Venture Partners (“Bessemer”), a venture capital firm with more than $18 billion in assets under management primarily invested in the consumer, financial technology, enterprise, and healthcare markets. This first-time investment of institutional capital for CRI recognizes the firm’s exemplary track record of growth and creating value for its clients and is intended to help accelerate the firm’s innovation initiatives and expansion strategies.

The private equity deals in accounting are coming so fast they’re dropping on the same day now. WHO’S NEXT?

Earlier:

The post Private Equity is Picking Up Accounting Firms By the Handful Now appeared first on Going Concern.

Welp, they’re announcing a PE deal
byu/User0273649362539506 inAccounting

Text:

Welp, they’re announcing a PE deal

Not looking forward for what’s to come. We are currently very hybrid. Love the current firm culture but now I’m afraid that will change. Does this ever end in a positive light? Public accounting stinks.

These comments are a joy.

Some people are speculating it’s Crowe. I’d say possibly CohnReznick since there’s a rumor they’ve got a PE deal in the works but I don’t think they meet the culture requirement, by all accounts that place is a dumpster fire.

Crowe wasn’t listed as one of the two firms in the top 25 exploring private equity investment in Forbes‘ September piece “Why Private Equity Is Rushing To Buy Up Accounting Firms.” Carr, Riggs, & Ingram is though and it’s been rumored for months that they’re close to making a private equity deal official. The only other firm Forbes listed as “just looking” is Armanino whose minority investment from Further Global Capital Management quietly made the news a few weeks ago.

We’ll see if OP updates. Feel free to speculate in the meantime.

Update: Tips are saying it is in fact Carr, Riggs, & Ingram and that an external announcement will be made Monday.

Update #2: It appears that intel was good. PKF O’Connor Davies announced a deal of their own on the same day.

The post Let’s Speculate Wildly About Which Mid-Tier Firm is About to Announce a Private Equity Deal (UPDATE) appeared first on Going Concern.

In “Offshoring for CPA firms: The hows and whys,” JofA throws out some figures on outsourcing — both foreign and domestic — based on responses from its MAP survey and sticks to the official line about how the CPA talent shortage is forcing these poor firms to look elsewhere for talent. We’ll ignore how much cheaper offshore talent is compared to their onshore counterparts. We’ll also ignore that firms are laying tons of people off in the US while greatly increasing their headcounts in other countries and not even trying to hide it (see: Firms Really Aren’t Helping This Pipeline Problem, You Guys). Anyway, the AICPA numbers:

Of the more than 1,100 firms that participated in the AICPA’s 2023 National Management of an Accounting Practice (MAP) survey, about 30% said they outsourced domestically and 25% said they outsourced to offshore workers. Another 14% said they planned to start outsourcing domestically, and 12% said they planned to start offshoring.

The CPA talent shortage and an increase in demand for accounting services in the United States are prompting many firms to go beyond their traditional hiring practices and explore the global talent pool and staffing across time zones.

As evidenced by the article’s title, it’s mostly advice for firms on outsourcing best practices. Blah blah. But at the very bottom there’s a sort of case study about a firm in Atlanta that consisted of five employees when they started offshoring “part of its expanding load” in 2018. At first they used a third-party vendor in India which meant this vendor handled the hiring and training of offshore staff, starting with one person and eventually expanding to three.

The firm’s team members, who were used to working virtually, understood the importance of setting up workflows, processes, and controls before pushing tax return billable hours offshore. The approach proved successful, and within months the firm had offshored enough work to India to keep three people there busy.

Would really love to hear from the firm’s team members here.

But then…

One year into the contract, the vendor experienced turnover. The firm initially switched to offshoring project by project and then decided to become the employer of record for its India staff. The firm hired one employee in India they had worked with the year before who was groomed to become team leader, recruited eight others, and took over onboarding, training, and managing the offshore employees.

Man, that leader was really putting in work eh? So fast-forward to current day and they’ve got eight staff of their own in India. And they’re offshoring 12,000 hours to India per year. The offshore staff are doing the preliminary work of gathering documents and drafting emails to clients requesting any missing data that is then pushed back to the onshore manager who communicates with the client and ultimately completes the tax return.

According to 20 seconds of Googling, the median salary for a tax accountant in India is ₹ 600,000 ($7,109 USD). Meanwhile, the average for a tax associate in Atlanta is $61,866 a year. Would ya look at that, 61,866 divided by 7,109 is approximately 8.7. Tell us again how this is because of the CPA shortage when the shortage itself was caused in large part by consistently pathetic pay.

Related: Cheap-Ass Firms Are Loving This Outsourcing Thing

The post One Quarter of Firms Say They’re Offshoring, Another 12 Percent Plan to Start appeared first on Going Concern.

That firm? Allegedly it’sIPA Top 100 #47 Cohen & Company of Cleveland (revenue of $153,896,588). We’re told they did an internal announcement today and will make the news of a minority investment from Lovell Minnick Partners public tomorrow.

Of themselves and their investment strategy Lovell Minnick says:

Lovell Minnick Partners (“LMP”) invests in growth-oriented companies. We partner with founders and leadership teams to accelerate value creation through organic growth and strategic acquisitions, positioning their businesses for long-term, sustainable success.

Along with our own deep operating experience, we leverage a robust network of value creation team members, riverguides, our Advisory Council members, and third-party consultants to drive our distinctive value creation playbook with essential planning that starts pre-investment.

Since our inception in 1999, we have raised over $5+ billion of committed capital, invested in over 50 companies and completed over 200 add-on acquisitions. LMP invests in growth-oriented, middle-market companies in the financial services, financial technology and business services sectors.

LMP’s portfolio here. It seems they really, really like the asset management space.

Before you grab the pitchforks and bemoan the slow death spiral of public accounting as we know it, our tipster seems to think this deal isn’t a bad one (“I have a great deal of respect for the firm. They are good people,” our tipster said) and is primarily a growth strategy. We’re told the partners will of course be getting a little cash out of the deal but that this is not a senior partner “f you I’m out” cashout like we’ve seen with, uh, other firms. In addition, our tipster says that staff will be getting bonuses themselves as part of this deal. Nice.

Cohen & Co. ranked #25 on the most recent Most Prestigious Accounting Firms ranking from Vault and has about 800 professionals in 12 offices across seven states.

Staff and partners are welcome to reach out anonymously via email or text. We’ll update should a press release make an appearance.

Update: Aaaand here it is:

Cohen & Company, a nationally recognized assurance, tax and business advisory firm is pleased to announce a strategic growth investment by Lovell Minnick Partners (LMP). LMP is a private equity firm focused on investments in financial services, business services and financial technology companies. This investment will help meet the growing needs of Cohen & Company clients across the firm’s many key industries and geographic markets, and provide capital for important investments in technology and expansion of service offerings.

“LMP will be a valuable strategic partner, offering a unique perspective on our industry and the clients we serve, along with a dedicated focus on human capital, which is crucial to our growth strategy as an employer of choice,” says Cohen & Company CEO Chris Bellamy. “We are proceeding with conviction into this new chapter, motivated to work harder than ever for our stakeholders — our clients, our employees and our communities — to honor their trust in us and deliver value to these critical relationships.”

“Cohen & Company’s vision for the future and its longstanding reputation as a premier accounting, tax and advisory firm make them an ideal partner,” says Jason Barg, partner at LMP. Tom Hutchins, principal at LMP, adds, “We are excited to collaborate with Chris, the management team, employees and clients to continue to build on their successes and support their growth trajectory.”

This event marks the first institutional capital investment for Cohen & Company. The investment is expected to close on December 31, 2024, at which point the firm will also substantially increase the number of employee equity holders. “We are extremely proud to reward our exceptional team for the successes that have brought us to this point,” says Bellamy. “The increase in equity holders, combined with substantial reserves for future equity-based incentives, will further strengthen alignment as we work together to achieve our strategic goals.”

The post Cohen & Co. Confirms a Private Equity Investment From Lovell Minnick Partners (UPDATE) appeared first on Going Concern.

Posts from the big4
community on Reddit

Well now Financial Times is reporting a bunch of people got swept up in a wave of CPE policing centered around their taking multiple courses at the same time during EY Ignite Learning Week in May. “We all work with three monitors. I was hoping to hear new ideas that I could bring to the table to separate myself from others,” said one of them to FT. Mission accomplished?

The recently shitcanned “did not believe they were violating EY policy and were just trying to take advantage of interesting sessions that ranged from ‘How strong is your digital brand in the marketplace?’ to ‘Conversing with AI, one prompt at a time’,” said FT.

As we know, the EY organization is extra sensitive to cheating after they received a record $100 million fine from the SEC in 2022. In that instance it wasn’t so much the cheating itself that got the SEC so worked up but the fact that EY knew of it happening and failed to inform the SEC of such when the SEC asked “are your people sharing answers?” Also that they weren’t just sharing answers on CPE, they were using an exploit that would give out a passing score even if you only answered one question right. “Many professionals acknowledged during the firm’s investigation that they knew their conduct violated EY’s Code of Conduct, but they cheated because of work commitments or an inability to pass training exams after multiple attempts,” read the SEC’s order. Hmm, we’re sensing a theme here.

Apparently the firm did warn staff not to take multiple sessions at once in this most recent case — some of the former EYers speaking out disputed this — but whether they did or not, staff were just demonstrating that go-getter culture of the Big 4. “EY ‘breeds a culture of multitasking’, said one of the axed employees to FT. “If you are forced to bill 45 hours a week and do many more hours of internal work, how can it not?”

“I know a partner who will do two [client] calls and switch their camera on and off depending on who he is talking to. If this is unethical, then that is unethical, too,” said another. Are we sure the partner isn’t overemployed?

Would giving people two weeks off to complete their required 40 hours of CPE perhaps begin to address this pervasive issue once and for all?

EY fires staff who took multiple online training courses at once [Financial Times]

The post Studious EY Employees Just Trying to Grind Out CPE Get F**king Fired appeared first on Going Concern.

Grant Thornton UK has begun sounding out private equity firms over a potential deal that could see them buy into the business, which is jointly owned by more than 200 partners.

Grant Thornton UK, which employs more than 5,000 people, said it was not “actively engaged” in a transaction but that it “continually evaluates” the business landscape.

The firm is said to be working with advisers from Rothschild, which declined to comment.

Shortly after that, out came a story suggesting that Grant Thornton US was in the market to buy their Brit and Irish cousins across the pond. This is from “Grant Thornton explores three-way merger,” published by Financial Times in the latter half of July:

Under the three-way merger plan, the current partners of the UK and Irish firms would become shareholders in an international holding company led by Grant Thornton’s US private equity owners and partners. Relative valuations of the firms had yet to be discussed and the UK and Irish firms could decide to pursue different deals or none, according to people familiar with the matter.

The UK firm has already hired Rothschild to explore options for its business. Bankers have begun seeking expressions of interest from private equity firms that could provide an alternative to a merger with the US firm.

Our take on that: Grant Thornton Wants to Have a Threesome?

In the weeks and months that followed, several more stories came out about this alleged heated battle to buy (literally) Grant Thornton UK’s heart. We don’t need to link them all but here’s a recent one. Sky News put this out on October 15:

A trio of buyout firms have been shortlisted to buy a stake in the UK operations of Grant Thornton, one of Britain’s six biggest accountancy firms.

Sky News has learnt that Cinven, EQT and New Mountain Capital – the backer of Grant Thornton’s US business – have made the cut in a process that could value the UK firm at more than £1.5bn.

Other contenders, including Permira and Carlyle are said to no longer be in contention, although insiders cautioned that the list was subject to change.

Oh my God just sign something already. It sounds to us like someone or someones at Grant Thornton is/are desperately trying to seed rumors of a bidding war among private equity firms vying to be the lucky one to win a piece of Grant Thornton. No other firm has dragged out this song and dance, they do the thing and move on. Please try that, GT.

Related:

The post Sh*t or Get Off the Private Equity Pot, Grant Thornton appeared first on Going Concern.

INSIDE Public Accounting released a batch of facts and figures they’ve collected from their industry-leading survey of the country’s accounting firms — about 600 participated in 2024 — and this bit stood out to us as of particular interest to our audience given that a majority of our readers are under age 50.

See if you agree:

Employees aged 60 and older account for 11% of staff across all revenue bands, down from 12% last year. Fifty-five percent of staff are under 40 with 30% of staff under 30. Recruiting costs as a percentage of net revenue are less than 1% for firms at all revenue sizes.

With the oldest millennials having crossed the threshold of 40 a couple years ago, this means more than half of staff at accounting firms are millennial or younger. Some of the under 30s are millennials as well, we’ll have to wait until Gen Z starts turning 30 in the year 2027 for that figure to exclude millennials.

Generation X will not be surprised to see they’ve been ignored in the figures IPA chose to share. Sorry, mid-40s to late-50s. You’re used to it.

• 60 or older: 11% (down from 12% in 2023)
• Under 40: 55%
• Under 30: 30%

There’s a bunch more at the link below, things like how many firms have a formal process to cull clients, how many firms offer business development incentives to staff and/or partners (a lot actually), and what percentage of firms are exploring AI versus what percentage are taking the watch and wait approach.

IPA Data Dive: Snippets From the INSIDE Public Accounting Internal Operational Reports [INSIDE Public Accounting]

The post Gen X? Never Heard of Them! Accounting Firms Are Overrun by Millennials and Gen Z appeared first on Going Concern.

There doesn’t appear to be a press release about this nor is Armanino listed on Further Global’s companies page. Of their “differentiated capital approach,” Further Global says:

Our objective is to be the Capital Partner of Choice to the financial services industry. We seek to be a differentiated form of capital and consider ourselves experts in constructing creative, bespoke solutions within our target universe. In this process we endeavor to take a highly collaborative approach with the management teams behind which we invest, ensuring proper incentive alignment and an open line of communication. We seek to partner with firms in which we can create value by leveraging our extensive network, industry knowledge and operational expertise to assist with business, financial and product strategies on both an organic and inorganic basis.

We target equity investments of $75 to $200 million and have the ability to execute significantly larger transactions through co-investment. While we typically seek to take control positions, we are very comfortable operating in minority positions, given appropriate alignment and governance rights.

Armanino is currently #20 on the INSIDE Public Accounting Top 100 with revenue of $640,448,684.

All we could find about this deal other than the AT article published today is this bare bones September 30th post on MergerLinks: Further Global Capital Management to invest in Armanino. It’s been rumored for a few months now that Armanino was very close to striking a deal with someone for a minority stake so none of this is surprising.

If anyone has more info get in touch.

Armanino takes on minority investment [Accounting Today]

The post Add Armanino to the List of Top 20 Firms in Bed With Private Equity appeared first on Going Concern.

CohnReznick has $150 million of EBITDA, they said. The firm is currently sitting at #16 on the INSIDE Public Accounting Top 100 with $1,052,365,413 in revenue.

In June, Financial Times ran a teaser story that named three firms very close to inking private equity transactions — PKF O’Connor Davies, Carr, Riggs & Ingram, and Aprio. Aprio’s private equity deal was leaked ahead of an announcement shortly thereafter, CRI hasn’t made a deal yet as far as we know but is exploring options, and who cares about PKF O’Connor Davies.

A CohnReznick deal would mean six of the country’s top 20 accounting firms have taken private equity investment. In descending order by revenue size those firms are BDO (6), Grant Thornton (7), Baker Tilly (10), EisnerAmper (17), and Citrin Cooperman (19).

If anyone in the know feels like talking, get in touch via email or text. Tips are always anonymous.

CohnReznick said to review PE investment interest by early 2025 [PE Hub]

The post CohnReznick is Allegedly Exploring a Private Equity Deal appeared first on Going Concern.

FT wrote:

Richard Moriarty, chief executive of the Financial Reporting Council, wrote on Thursday to the bosses of the UK’s top accounting firms, saying the regulator was not “in principle” against private equity investment in the sector but there were “important risks that will need to be carefully managed”.

The intervention signals the regulator’s concerns that private equity investment could erode audit firms’ rigour and independence in auditing the accounts of large companies — key to maintaining investor confidence in the accuracy of companies’ accounts.

To be clear, the FRC isn’t wholly against private equity investment. “The FRC is not in principle against a greater participation of external private capital in the UK audit market.” said the letter dated September 26, embedded below in its entirety if you want to read the whole thing. “The FRC’s role is to protect the public interest and support growth. We are primarily concerned with outcomes and behaviors by audit firms such as delivering high quality audits, upholding high standards of ethical conduct, and fostering a culture towards always acting with the public interest in mind.”

“We recognize that access to external private capital could, in the right circumstances, have potential benefits for the UK audit market,” the FRC said. “However, there are important risks that will need to be carefully managed. As with any other major change within an audit firm that has the potential to affect its leadership and culture, a change in ownership structure via external private capital must be able to maintain and enhance over time the important public interest dimension of audit. It must also be able to protect independence as required by law and allow for any threats to that independence as a result of conflicts to be effectively safeguarded.”

On the expectation to rat themselves out, the FRC said that “a firm that is interested in, or considering, a change of ownership to introduce private capital should engage with the FRC (in addition to its Recognised Supervisory Body) at an early stage and with full candor, assured that all such discussions will be treated in strictest confidence.” In other words, the FRC wants firms to come to them well before any deal is struck. “We would also welcome engaging directly and in confidence with any investors considering entering or expanding into the UK audit market to help explain the regulatory framework and expectations,” they said.

Being the ignorant Americans that we are, we’re curious if the FRC can actually require firms to do this without official rulemaking or if this is them overreaching their authority under the banner of “we’re the regulator and we say so”? The letter does mention the public interest — both in fact and appearance — which certainly falls under the jurisdiction of the FRC. “Like for any other significant change relating to a UK firm, any party interested in a change of ownership by introducing external private capital must be able to continue to provide assurance that it will be able to support the public interest, the independence dimensions of audit and all applicable regulatory expectations,” the FRC said. “It is important to demonstrate that the legal requirements, including those pertaining to control, are met both in substance and in form.”

In the US, firms that have taken private equity investment have thus far dodged any independence concerns by forming two entities operating under one banner — the PE-backed one doing advisory and tax work, and a siloed assurance entity that’s independent from outside capital (in theory).

In its annual audit quality report issued last month, the FRC warned that private equity investors “may lack a deep understanding of audit practice objectives, and the public interest incentive to deliver audit quality. A lack of clarity or long-term thinking regarding PE exit strategies also raises concerns about maintaining audit quality and public interest motives over future years.”

The post Brit Audit Cops Want Firms to Snitch if Private Equity is Sniffing Around appeared first on Going Concern.

But are they? Are they really? Sure, demand for consulting services is down as businesses clench their buttholes in anticipation of a significant economic downturn — sphincters have been getting a workout for like two years now and so far a spectacular crash hasn’t come — but how do you explain all the audit cuts? The official line from firms is “lower than expected attrition” on top of “business conditions” but there’s got to be more to it than that.

More importantly, how can these firms look people in the eye as they recruit on college campuses and go into high schools to preach the joys of a career in accounting when you have headlines like this followed by large layoffs just two months later?

A total coincidence, surely.

Last year BDO told the Financial Times it was the accountant shortage that was driving them to double its offshore workforce. “We are seeing a tremendous talent shortage in the profession,” said BDO USA CEO Wayne Berson to FT. “While it would be nice to just hire domestically, you have got to be open to the notion that maybe someone else has something that you don’t have, that you can buy.”

In early 2023, BDO laid off about 125 people and then leadership hopped on a plane to India to party. Bad optics to say the least.

“Accounting is stable,” the peddlers of the profession say. We say it too. I was working in CPA review back in 2007 when the economy began to sour and as the shit was unceremoniously introduced to the fan in 2008, business was booming. Accounting and government, those are the two industries that consistently hired throughout the financial crisis. Perhaps the only two. Stability has always been the profession’s biggest

Sure there were layoffs back then. Offers occasionally got rescinded, incoming classes of associates were slimmer than the fat years that had come before. But on the whole, unemployment in the sector remained low.

What’s different now in 2024 compared to 2008, besides needing to Klarna your groceries, is that outsourcing was practically unheard of back then. In 2010, less than 2% of PwC UK’s audit work was performed offshore. We’ve heard of firms with as much as 60-70% of work being done needfully these days.

I don’t want to hear shit about an accountant shortage anymore.

The people have told firms what needs to be done to get students interested in accounting, meanwhile firms are thumbing their noses at the idea of paying people with five years of education what they’re worth and holding out for a near future where AI can effortlessly do the work of 25 interns, supervised by offshore seniors getting paid 1/6th of onshore ones. Firms are doubling and tripling down on offshore staff, stretching their tentacles into smaller cities in India because, get this, rent’s too high in Mumbai. This is Reuters in July 2023:

The world’s major accounting firms are stepping up investments in new Indian facilities away from bigger cities as global demand for cheaper back office operations grows and smaller towns move up the economic value chain.

…

Business service exports have become a critical part of India’s economy but the sector has been hit by a slowdown in global demand for software and challenges in big urban centres such as rising costs, high attrition and slow progress in getting workers to return to the office after the pandemic.

And then you’ve got The Powers That Be who, in their infinite wisdom, are opening up the gates so that foreigners don’t even have to leave their town to be licensed as a Certified Public Accountant in this country. Some 300,000 workers in the Philippines currently answering customer service calls for US businesses are about to be put out of work by AI, that’s a whole lot of bodies to throw at accounting grunt work. The outsourcing industry has its own training programs that can turn an unemployed call center worker into an offshore associate for a US-based accounting firm in a matter of months or even weeks. See where this is going? Nothing against offshore workers, this isn’t their fault.

Of course students aren’t buying what the profession is selling. Look at what the biggest, most profitable accounting firms in the country — and world, really — are doing.

Lemme loop in this comment quick:

Comment
byu/Tiny_Basis1852 from discussion
inAccounting

The experience is being offshored as well. What’s the next generation going to learn if all the work they used to do to cut their teeth is sent overseas?

Maybe in five or ten years when excessive offshoring starts blowing up in firms’ faces things will change for the better. Or maybe that’s a quixotic position to take and we should all start being extra nice to the offshore team because they’ll be the managers some day in the not-so-distant future.

See also:

The post Weekend Discussion: Firms Really Aren’t Helping This Pipeline Problem, You Guys appeared first on Going Concern.

According to INSIDE Public Accounting, ATA will retain majority control and no leadership shakeups are expected. “Through its partnership with Copley Equity, ATA will enhance its talent, technology and internal operations as well as continue its long-term plan of exploring strategic acquisition and growth opportunities,” IPA said. According to ATA’s website, the firm has 25+ partners and 200+ staff in multiple offices across Tennessee, Kentucky, Arkansas, and Mississippi.

“In planning for our future, ATA sought a capital partner who could help the company expand our service offerings, grow into additional markets, and continue to improve our tools and people resources. We are very excited to partner with Copley Equity, which brings a strong track record of supporting the growth of the companies with whom they partner,” said John Whybrew, ATA managing partner at ATA since 2016.

“Combining deep technical expertise with strong community relationships, clients choose to work with ATA year after year,” said Peter Trovato, managing director of Copley Equity. “These attributes have made ATA a leading growth platform in the attractive accounting services market. We are excited to support ATA as it continues to recruit top talent, invests in technology solutions, expands into new geographies and broadens its service offerings.”

“Our investment in ATA is the culmination of a multi-year search for a partner in the accounting services space,” said Sean Sullivan, vice president at Copley Equity. “Among the hundreds of opportunities we reviewed during that process, ATA was a clear standout. We look forward to working with ATA across a range of strategic initiatives in the coming years.”

Copley Equity says it takes an “industry agnostic” approach and focuses on lower middle market companies. Specifically:

• Private companies generating $2 to $25 million in earnings or free-cash flow
• Typically founder owned and operated with strong management
• A stable revenue base often with recurring characteristics

Terms of the deal weren’t disclosed but Copley says on their website they invest $5 to $75 million in equity per transaction so we assume it’s somewhere in that large window. They’ll throw the right company some money for growth capital, owner liquidity, acquisition financing, or debt retirement. It appears this is the first accounting firm in their portfolio.

“Our unique capital base allows us to invest in companies that do not fit the venture capital template and are typically ‘too small’ for traditional middle-market private equity firms,” says the 12-year-old private equity firm. Pitchbook profile here should anyone care to do a deeper dive.

The post A Sub-$41 Million Firm We’ve Never Heard of Has Let Private Equity In appeared first on Going Concern.

Wrote SFC:

The deal comes after KPMG in March moved to extend its lease at its current office at 55 Second St., which it has occupied since 2003, on a short-term basis of less than three years. Its future home is located two blocks south, near Salesforce Park.

“Our planned move not only reaffirms our longstanding commitment to the city of San Francisco but also demonstrates our dedication to investing in both our people and capabilities to deliver the most innovative solutions to our clients,” said KPMG’s Chris Cimino, a managing partner in San Francisco, in a statement. “This new building, including nearly 100,000 square feet of space for our teams, will provide a superior in-office experience and foster collaboration and creativity.”

The new office will be 100,000 square feet at 505 Howard St, pictured here on Google Street View:

Look how much cleaner those curbs are at the new spot. We wouldn’t recommend eating off of them — it’s San Francisco after all — but they sure are surprisingly sparkly for downtown.

A spokesperson told the paper the new, smaller space is “consistent with market trends” and “best suited for our people and our clients.”

As far as we know, most of KPMG is operating a roughly 3-day in office hybrid model. The 1,000 people working at KPMG San Francisco will be building neighbors with Intuit, who will be taking possession of about 36,500 square feet in January 2025.

Terms of the lease weren’t disclosed.

Bonus Google reviews of KPMG San Francisco since we happened to be on Google Maps anyway:

KPMG is downsizing its San Francisco office. Here’s where the accounting giant is moving [San Francisco Chronicle]

The post KPMG Is Ditching 38,000 Square Feet in San Francisco appeared first on Going Concern.

They’re seeking a corporate controller with a bachelor’s in accounting or finance, a minimum of 10 years’ experience, and the usual Office proficiency one would expect in a controller with at least a decade in the biz.

Additionally, it’s a “fast-paced environment” which we know translates into “dumpster fire” because no one can do their fucking job and therefore yours is constantly harder.

In this role, the experienced and stress-free controller will be expected to manage the day-to-day activities of the accounting department (is there an actual department or just one mature woman doing payroll who cries herself to sleep while cuddling a bottle of wine every night?), develop policies and internal controls (which means there aren’t any so have fun cleaning up that mess on your first day), rendezvous with the external auditors, review payroll and AP/AR (“review” probably means “do”), create budgets and forcasts/projections, ensure the business is complying with tax regulations and filing requirements (again, this likely translates into filing them but at least then you’ll know it was done and properly), and conduct financial analysis with all the copious amount of free-time you have left.

Oh and you will be promoting a positive work culture for the accounting team. Good luck with that because Barbara in payroll reached and surpassed the end of her wit long ago. It will be your job to lecture her on the dangers of mixing benzos with that nightly bottle of pinot grigio. Daily. While she sobs like a Sim with a perpetually blood-red plumbob.

Salary: $30,000 to $48,000 a year. I’m not joking.

Benefits: “competitive salary and bonus structure.” They really wrote that.

I sincerely hope this is a typo.

The post Look, We Know Accounting Salaries Are Low But This Has to Be a Joke appeared first on Going Concern.

“Face-to-face working is hugely important to a people business like ours, and the new policy tips the balance of our working week into being located alongside clients and colleagues,” said PwC UK managing partner Laura Hinton in a statement to Bberg.

Anyone at PwC UK who’s angrily polishing up their resume this afternoon after receiving this news should read this: Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit.

In July, Financial Times broke the news that raises and bonuses were stingy at the King’s PwC this year, too. At least for some teams/service lines. They also axed the popular half-day summer Fridays, actions that when considered in the aggregate would compel a reasonable person to assume they really do hate you and want you to leave. See also: Comp Season PSA: If You’re Disappointed, It Might Be Because They Want You to Quit

Attrition must still be too high. Much like PIP distribution. Almost as if all these things are connected…

PwC UK, perhaps more so than other Big 4 firms or maybe it only appears that way because they keep getting stories about it in the news, is highly motivated to maintain an appearance of business as usual despite challenging market conditions. When they did a round of voluntary separations in June, the firm told staff to fib about their departure even though people talk and news of silent layoffs had been hanging in the air for weeks by the time people started abruptly disappearing.

Getting a bunch of people to leave because they don’t want to be in the office for at least 60% of the week is far cleaner than having to quietly usher another batch of people out of the back door before anyone notices.

Update: Financial Times followed up on this RTO news with a bit more info: the firm let everyone know they’ll be tracking them like cattle to ensure compliance with the new policy and that location data will be sent to staff career coaches.

In a memo sent to staff on Thursday, seen by the Financial Times, managing partner Laura Hinton said that the firm would begin sending staff their working location data every month, adding that employees must now spend “a minimum of three days a week” in the office or at client sites.

“We will start sharing your individual working location data with you on a monthly basis from January as we do with other data such as chargeable hours,” Hinton wrote in the memo. “This will help to ensure that the new policy is being fairly and consistently applied across our business.”

This applies to 26,000 people working at PwC UK.

Big Four Accounting Firm PwC UK Orders Staff Back to the Office [Bloomberg]

The post PwC UK Orders the Troops Back to the Office For Three or More Days a Week (UPDATE) appeared first on Going Concern.

The Philippines is experiencing a shortage in accountants, a predicament that will likely worsen given the declining number of students taking accounting-related courses coupled with other emerging trends that seem to be taking a chunk out of the talent pool of traditional accounting firms.

Marvin Galang, co-founder of financial mobile app built for freelancers called Beppo, said on Friday that they found alarming the results of a survey showing that there is a 41-percent decline in student enrolment in local accounting programs.

“Subsequently, we also saw a decline of 35 percent in the number of [certified public accountant] examinees from 2019 to 2023,” Galang said during a conference focused on the local accounting industry.

Check out this response to my tweet of that article:

I would strongly disagree and suggest some fact checking. As the second largest employer of accountants in the Philippines we get over 4000 applications a month. A bit of scare mongering….

— Nick Sinclair (@nickqsinclair) August 22, 2024

I wrote about a potential shortage of accounting talent in the Philippines way back in 2023. That article contains a couple figures that were up-to-date as of publication time: namely a decrease in candidates sitting for the Philippines certified public accountant exam, a notoriously difficult exam with a pass rate below 35%. No worries though, Filipinos can now sit for the US CPA exam without even getting on a plane. Please, contain your rejoicing.

In both our article and the Inquirer one, there’s an important distinction when the word “shortage” is used. That is, onshore firms in the Philippines are having trouble finding talent. And it’s pretty clear why if you do the math. If you’re a Filipino who knows your debits from credits then you’re far better off working for an offshore outlet than you’d be working for a Philippines firm because your salary is double or more. Compare a starting salary of ₱15,000 (about $267 USD) at a Philippines firm to Php 45,000 ($800 USD) doing grunt work for a firm in the US, UK, or Australia. And the outsourced offices have karaoke!

Anyway, yesterday I saw this Bloomberg article on Twitter: The World’s Call Center Capital Is Gripped by AI Fever — and Fear. The headline pretty much gives it away but the gist is that AI is quickly embedding its capable tendrils into the robust business process outsourcing industry in the Philippines. Because of course businesses that are already paying poverty wages to people in poorer countries are going to save even more money not having to pay wages at all. Did we expect any less?

Avasant, an outsourcing advisory firm that works extensively in the Philippines, estimates that up to 300,000 business process outsourcing (BPO) jobs could be lost in the country to AI in the next five years.

“This poses a once-in-a-lifetime risk and opportunity for the industry in the Philippines,” said Akshay Khanna, managing partner at Avasant, whose analysis estimates AI could also create up to 100,000 jobs in new roles like training algorithms or curating data. “It’s not all doom and gloom.”

It’s hard to overstate the importance of the BPO sector to the Philippines. It’s the country’s biggest source of private sector jobs and the biggest sectoral contributor to gross domestic product. Socially, the centers are a source of decent money for non-university-educated Filipinos that doesn’t require them to work abroad. The government had been banking on the industry to help it move up the value chain, propel its 100-million-plus citizens into the middle class and kickstart the creation of other white-collar jobs. But AI arrived before that’s happened.

You see where I’m going with this?

According to Glassdoor, the average salary for a BPO in Manila is ₱18,612, so only slightly more than an entry level job at a Philippines accounting firm (LOL, of course working at a call center pays better…of course it does). Lack of education isn’t a problem because the companies outsourcing to US firms offer their own training programs and can have ex-call center grunts hitting the spreadsheets in months or even weeks.

Yeah, they’re not going to have any problem finding warm bodies to throw at US bitch work. And you know the firms will be more than happy to send it over there while continuing to charge clients US fees.

The post There’s About to Be a Ton of Warm Bodies to Throw at Offshore Accounting Outlets in the Philippines appeared first on Going Concern.

Just a few months after #28 IPA Top 100 firm Sikich announced a $250 million capital injection from Bain Capital, the firm has grabbed the basically unknown Saggar & Rosenberg of Rockville, Maryland. Well, Sikich Co-Managing Principal Antony Nettleton knows who they are.

“Over the last 25 years Sandy Saggar has built an impressive company that dovetails nicely with our own offerings and specialized services to non-profits and the government sector, where we have a strong presence,” he said. “We look forward to leveraging the expertise of his team, who are delivering comprehensive, enterprise-wide financial solutions to clients across the country. We will serve our collective clients together, with the integrity and quality our companies are known for, while taking advantage of emerging opportunities in the market.”

The federal government also knows the name Saggar & Rosenberg. According to USASpending.gov, an official website of the US government, S&G has won at least 33 government contracts totaling 1.2 million bucks. This deal gives Chicago-based Sikich an even stronger foothold in Washington, a “hyper-focused” growth plan zeroed in on federal government work that’s been underway since they acquired Halt, Buzas & Powell in 2019. Three years after that they bought Cotton & Company and last year they snapped up CliftonLarsonAllen’s entire federal government practice.

Saggar & Rosenberg founder Sandy Saggar made sure to mention the other clients in his press release quote, not just the federal ones. “Over the years, Saggar & Rosenberg has experienced significant growth serving a wide range of sophisticated clients who are demanding an increasing set of diverse services. We want to support those clients with a broader set of offerings as they navigate change and do so in a way that ensures the excellent service they’ve come to expect from us,” he said. “This expectation is what attracted us to Sikich, with their track record, strategy for growth and people-first mindset. Given the latter, I believe we have found a like-minded organization that will allow our employees to expand their skills and explore opportunities for growth.”

In the press release, Sikich made sure to mention that unlike those other PE-backed firms, they’ve retained majority control.

In May, Sikich secured a minority growth investment of $250 million from Bain Capital to help fund its robust acquisition strategy, enhance operational excellence and cement its professional services leadership position. The transaction, in a departure from traditional private equity deals in professional services, leaves Sikich with majority control of the company and is testament to its track record and growth strategy.

Three years since the first major private equity deal in accounting and we’re already talking about tradition? OK. They’re not wrong though, just look at recent deals by Baker Tilly and Grant Thornton. We’re told Doeren Mayhew’s private equity deal announced just last week is also a majority stake but that remains unconfirmed.

Quoting what we said when Bain Capital announced their investment in Sikich in May:

Time for Sikich to snag themselves a big fish instead of these firms no one’s heard of. We’re watching with great interest, so much so we’re adding a “Sikich” tag for the first time in the 15 years since this website was founded. Don’t let us down.

We’ll be waiting.

The post PE-Backed Sikich Buys an Accounting Firm, Subtly Smack Talks Those “Other” PE-Backed Firms appeared first on Going Concern.

Doeren Mayhew out of Troy, MI sold out to private equity on Wednesday. Press release coming soon. Junior partners are furious.

Lo and behold, this press release appears on Doeren Mayhew’s website. It’s dated August 23 but wasn’t there when we searched for it late Friday.

Doeren Mayhew, a national CPA and advisory firm, has entered into an alternative practice structure with Audax Private Equity (“Audax”), an alternative investment manager and capital partner to middle market companies, to support the firm’s future innovation and growth. Terms of the transaction, expected to close in September, were not disclosed.

Our tipster tells us it’s a majority stake but has no specifics other than that. What they lack in transaction details, our tipster makes up for in juicy gossip:

Non-voting shareholders were left completely in the dark and only told by email today. The voting partners haven’t even bothered to show their faces in the office since the sale. Non-voting shareholders were offered an insulting bonus that won’t be paid unless they stick around for 5 years.

And of those bonuses they added:

Non-voting shareholder bonuses vary from person to person. Unrelated to book size. They’re basically just playing favorites. People who they probably don’t care if they leave get the minimum. People they want to stay get more even if they have no book of business.

Doeren Mayhew is #53 on both the Accounting Today Top 100 and INSIDE Public Accounting Top 100 with $137,400,000 in revenue. And growing fast according to them:

Doeren Mayhew has demonstrated significant growth in the last decade, securing the No. 53 spot on INSIDE Public Accounting’s Top 100 listing of the largest U.S. CPA and advisory firms. With roots dating back to the 1930s, Doeren Mayhew’s more recent growth over the past two decades has been attributable to continuous talent development, expanded service offerings, and added technical depth, achieved organically and through mergers and acquisitions.

Audax’s investment provides additional capital to help Doeren Mayhew accelerate its growth and invest in enhancing the firm’s service offerings, technology infrastructure, and overall employee and client experience. Through the investment, Doeren Mayhew will also look to broaden the firm’s geographic footprint via continued acquisitions. The firm’s current leadership team will remain in place and continue to manage operations as well as provide the strategic direction for the firm.

As with other firms who’ve told the private equity vampire “sure, you can come right in through that window,” Doeren Mayhew will operate an alternative practice structure with Doeren Mayhew Assurance handling the audit side and Doeren Mayhew Advisors, LLC for business advisory, tax, and non-attest services. Both entities will operate under the Doeren Mayhew brand.

“The firm has demonstrated a strong track record of driving both organic and inorganic growth,” said Adam Abramson, a Partner at Audax Private Equity. “We look forward to partnering with them to continue building on their momentum.”

Anyone feeling some type of way about this deal is welcome to contact us to chat (anonymously). Text 202-505-8885 or send me an email.

The post A Bottom 100 Firm Signed a Private Equity Deal, We’re Told Some People Aren’t Happy appeared first on Going Concern.

Thus I went digging around in our archive and revisited the story I wrote about their getting in bed with private equity on September 14, 2021: Private Equity Is Now Dipping Its Toes In Public Accounting Firms

What I found there made me cringe into another dimension.

You see, I’ve written 3,792 posts on this website over the last 15 years. I’m old so my memory isn’t what it used to be and what it used to be already sucked so I can’t possibly remember everything I’ve written. Regular readers of Going Concern will know my approach to anything accounting firms say is usually cynical, perhaps overly negative, and dotted with profanity.

For some reason, I threw skepticism out of the window for the EisnerAmper private equity deal and like an absolute fool I naively believed the PR line at the time which was that private equity investment would give accounting firms necessary funding to make big investments in talent and technology. And unlike bad takes of years past, I can’t say I was drunk when I wrote it because I no longer drink. Excerpt of the old article in italics:

Per the press release:

TowerBrook’s significant capital infusion will help drive EisnerAmper’s long-term growth initiatives, which include accelerating the evolution of service offerings, investing considerably in talent and technology, and strategically expanding via organic growth and targeted mergers and acquisitions—all directed at exponentially enhancing client service.

We can safely extrapolate from this bit that Eisner understands it will take more than squeezing clients for every dime billable hours to compete in the ongoing (and escalating) talent war.

Fucking idiot. Naive nitwit. What was I thinking? Why did I, for once in my life, blindly believe an accounting firm’s flowery press release? This was right about the time ‘The Great Resignation’ was well underway and Wall Street Journal jumped on the accountant shortage train, pushing out article after article about how dire the situation was becoming and would be in the near future. I suppose I believed firms were panicking about the talent thing and would take appropriate measures to recruit and retain talent. YOU ABSOLUTE FOOL.

Someone even called it out in the comments at which point I should have deleted the post in shame but we don’t do that so it forever remains a reminder of how naive I can be despite my deeply embedded cynicism toward the motives of accounting firms.

And another one.

Sigh. Look at Miss Cleo up here knowing what’s up. It shouldn’t have been difficult for me to foresee either, firms had been headed that direction for more than a decade by that point and I’ve been observing them for long enough to know all too well how they operate (that’s where the cynicism comes from, after all). At least now they’re being honest about what they’re using private equity for.

Boomer Partners Selling Out To Private Equity And Riding Off Into The Sunset
byu/ConcentrateMedical61 inAccounting

I can admit when I’m wrong and in this case, I was embarrassingly wrong. Wrong. More wrong than I’ve been on anything else.

I promise to be more skeptical of obvious bullshit in the future.

The post I Was a Naive Fool to Think Firms Wouldn’t Be Money-Grubbing Pricks appeared first on Going Concern.

Several PIE and non-PIE audit firms in the UK have entered into private equity (PE) deals, and larger firms have also been approached periodically for discussions. We are closely monitoring this situation through our PIE Auditor Registration team and our supervisory engagement discussions with firms.

Historically, audit firms have been funded by their equity partners, supplemented by traditional bank financing. Recently, there has been a notable trend in the UK and internationally of PE investors acquiring substantial equity stakes in smaller audit firms, which through consolidation have moved into the top 30 firms by turnover. PE investment might drive growth and innovation in the UK economy, but there is a risk that PE investors may lack a deep understanding of audit practice objectives, and the public interest incentive to deliver audit quality. A lack of clarity or long-term thinking regarding PE exit strategies also raises concerns about maintaining audit quality and public interest motives over future years.

PE investment could have the potential to offer opportunities in the audit market, but it is essential to avoid conflicts of interest that may impair auditor independence or undermine the resilience of the market.

Ya think?

FRC Annual Review of Audit Quality [PDF]

The post “There is a Risk That PE Investors May Lack a Deep Understanding of Audit Practice Objectives” appeared first on Going Concern.

Amid GCC boom, Big Four in India are boosting hiring of ‘tech architects’

This should be good.

If you don’t know the GCC acronym, you certainly know the concept. GCCs, or Global Capability Centers, are the offshore warehouses where they stuff all the people who work cheaper than you (the average cost of a full-time equivalent at a GCC was $22,939 including salary and other overhead, we’ll cover that in a moment below). Except GCCs aren’t like the cramped back alley cube farms where scammers named “Patrick” attempt to rip off your grandma, many of the offices look a lot like yours. GCCs could be worth more than $110 billion by 2030.

Last year, Reuters reported that Big 4 accounting firms were going to spread their tentacles out from big cities in India — Mumbai, Delhi and Bengaluru, for example — to so-called “tier-two” cities because the big city operations are starting to cost too much:

The world’s major accounting firms are stepping up investments in new Indian facilities away from bigger cities as global demand for cheaper back office operations grows and smaller towns move up the economic value chain.

…

Business service exports have become a critical part of India’s economy but the sector has been hit by a slowdown in global demand for software and challenges in big urban centres such as rising costs, high attrition and slow progress in getting workers to return to the office after the pandemic.

Said EY in its Future of GCCs in India – a vision 2030 report published June 2023 [PDF]:

In India, the focus cities for GCC set-ups continue to remain Bengaluru, Hyderabad, Chennai, Mumbai, Pune and Delhi NCR. However, tier-II cities such as , Jaipur, Vadodara, Kochi, Chandigarh are becoming popular for new set-ups owing to its improving infrastructure, favorable state policies, and lower real estate and talent costs. The total number of new GCC set-ups every year can jump up to 115 by the year 2030.

In that report, EY said the cost per full-time equivalent at the approximately 1,600 GCCs currently in operation in India has increased by 27% from 2019 to 2023. That figure is expected to increase by 30% from 2023 to 2030. 85% of that is salary, the rest is travel and other overhead. EY estimates the current headcount of 1.9 million at Indian GCCs will surge to 4.5 million by 2030. For the moment, GCCs account for only about one percent of India’s GDP.

But let’s discuss the matter at hand: the latest on Big 4 firms hungry for tech architects in India:

Deloitte India has over 500 such architects and the company says there is a growing demand for them across the consultancy’s clients.

“With the overall demand for architects across our clients growing at 20-25 per cent, Deloitte India has robust hiring plans in place to meet these growing demands,” said Deepti Sagar, chief people and experience officer at Deloitte India.

Purushothaman KG, partner and head – Technology Transformation & Telecom, KPMG in India said that they have also increased the hiring of these architects. “Our hiring strategy has been domain specific and platform specific,” he said.

Ranjan Biswas, EY India leader for Technology, Media and Entertainment, Telecom (TMT) and South region, said, “Our proposition for GCCs is a strong combination of business consultants and technology architects who work together to solve their business problems and, in many cases, lead their end-to-end transformation needs.”

EY India’s team servicing GCCs, including tech architects, has grown almost three times to about 11,000 people in 2023-24 from 4,200 in 2020-21.

The EY report mentioned in this article is embedded below for anyone who would like to read it.

Amid GCC boom, Big Four in India are boosting hiring of ‘tech architects’ [Business Standard (India)]

The post Big 4 Firms Have Specific Hiring Plans in India appeared first on Going Concern.

The current state of audit technology is not static. With a number of different solutions rapidly becoming available — some of them containing more advanced technologies such as generative AI (GenAI) — audit firms are looking to adopt new tech for a number of reasons that come down to one overarching theme: doing work faster, but at the same or better quality.

Indeed, according to the survey, technology adoption benefits cited by at least half of respondents include improving efficiency, freeing up an auditor’s time to address more complex issues, streamlining processes, and improving quality. “Audits of the size we perform are high in hours and low [in] recovery based on the high level required to meet compliance standards that provide little value to the audited client,” said one survey respondent. “It would be beneficial to have tools to increase the efficiency of audits.”

The issue is, however, that efficiency is needed for a number of different use cases. When respondents who said they use AI or GenAI and were asked how they were using the technology, they responded in a number of different ways. Some said their efforts were focused on back-end, internal data management and processing. Others said they were more client-focused, with risk management and customer support. Still others said they were looking to be more forward-thinking with the technology, using predictive analytics and modeling.

Here are some of the things the 180 audit professionals in the US, Canada, and UK surveyed are using — or plan to use — AI for at their firms:

Almost half of respondents (44%) said their firm has implemented or is starting to implement progressive tech while 36 percent said their firms are considering it but haven’t taken action. Peep this though: 21 percent or about one out of five respondents said their firms either haven’t even considered it or outright ruled against it. Best of luck to them.

Let’s revisit this quote from earlier: “Indeed, according to the survey, technology adoption benefits cited by at least half of respondents include improving efficiency, freeing up an auditor’s time to address more complex issues, streamlining processes, and improving quality.” That bit about freeing up time to let professionals focus on more complex issues comes up a lot whether it’s audit or tax. Here are just a couple excerpts that show up in a cursory Google search:

• AI frees up accountants to think strategically and focus on high-level tasks such as preparing assets and capital account entries. [BankBeat]
• With AI and machine learning in place, these tasks have been automated, freeing up accountants and bookkeepers to focus on higher-value tasks. [New Jersey Society of CPAs]
• AI can automate repetitive tasks such as data entry, invoice processing and reconciliation. This frees up accountants to focus on more strategic activities. [University of New Haven]
• AI is a tool that streamlines tasks, freeing up accountants to focus on higher-value activities and strategic decision-making… [Accounting Today]

This may be why 54 percent of respondents to the survey said their firms are looking specifically for staff with critical thinking and problem-solving skills. Anyone who’s dabbled in AI will tell you neither of those are the technology’s strong suit. Then again, those traits can be hard to find in auditors, too. “It may seem that audit teams want to use these new technologies, but they might not have the personnel to do a full rollout,” wrote TR.

To get around this issue, the report suggests the following:

Firm leaders and managers can look for the most time-consuming, repetitive tasks being done by their audit professionals — such as data entry, data cleansing, reviewing documents, and more — and determine for each task whether technology could provide a way to do the job quicker, at the same (or better) quality, in order to free up personnel for more client-centric tasks.

As for the top challenges facing audit firms, the headline of this post spoiled it. Attracting and hiring skilled professionals (58%) and retention of staff (41%) dominate the list.

Anecdotally, we’ve been hearing from recruiters that audit is becoming increasingly difficult to staff beyond the usual “there’s a shortage of accounting graduates” talking point. These days, auditors seem to be bailing out in large numbers and trying to pivot to regular accounting work, even if it’s way outside of the scope (no pun) of what they’ve always done. Hell, even firms are bailing out of audit. This is an interesting phenomenon that could potentially be disastrous not just for firms but to capital markets unless the technology suddenly gets really, really good at doing the work of dozens of human auditors. Just something worth mentioning. If any audit refugees would like to share their story of why they got out and where they landed, please get in touch.

Beyond talent both new and experienced, here’s a breakdown of how many respondents listed the following topics as top challenges:

We can see at least two or three items on that chart that can be effectively made less of a challenge by existing AI technology without too much hassle, how many do you see?

Audit firms have hiring challenges — Is this where technology can help? [Thomson Reuters]

The post Attracting and Retaining Staff Are By Far the Biggest Problems at Audit Firms appeared first on Going Concern.

Aprio (or the “Company”), a leading business advisory and accounting firm, today announced that it has received a strategic investment from Charlesbank Capital Partners (“Charlesbank”), a middle-market private investment firm with more than $18 billion of capital raised since inception, to accelerate innovation and growth of the business. The transaction represents the first investment of institutional capital into Aprio.

“As our profession continues to rapidly evolve, our partnership with Charlesbank is an important leap forward in our ability to bring state-of-the-art solutions to top business leaders, while making investments that will benefit our team, clients, and communities. We are building the business advisory firm of the future, and Charlesbank shares our vision and commitment,” said Richard Kopelman, CEO. “Aprio is poised to advance to the next level, and we are excited about the opportunity to best serve our clients and fast-track our growth with a widely respected partner.”

The terms of the transaction were not disclosed. If anyone cares to leak them, you know what to do.

Earlier:

The post It’s Official, Aprio Inked a Private Equity Deal appeared first on Going Concern.

Grant Thornton UK has begun sounding out private equity firms over a potential deal that could see them buy into the business, which is jointly owned by more than 200 partners.

Grant Thornton UK, which employs more than 5,000 people, said it was not “actively engaged” in a transaction but that it “continually evaluates” the business landscape.

The firm is said to be working with advisers from Rothschild, which declined to comment.

Yeah, that sounds real deal-y. “As all businesses do, we continually evaluate the external business and economic landscape and explore various avenues that will drive growth for our firm,” said GT UK in a statement. “This enables us to make informed decisions about what’s best for our people, our clients and our firm. We are not actively engaged in any such transaction.”

Meanwhile, a spokesperson at Grant Thornton Ireland told The Times they too are “exploring strategic options” but nothing solid yet. “In light of ongoing developments in our profession, we are constantly exploring strategic options to assess what is best for our clients, our people, and our firm,” the spokesperson said. The UK and Irish spokesfolks must have compared notes before making any statements to the media. Or copied each other’s homework.

In their article, The Times went on to bring up two huge regulatory fines the King’s Grant Thornton earned in recent years for shoddy audit work which is a hilarious use of article space.

Earlier:

Grant Thornton explores sale to private equity [The Times]

The post Having Watched Their American Cousins Sell Out, Grant Thornton UK Might Be Exploring a Private Equity Deal appeared first on Going Concern.

UK-based accounting firm RSM’s U.S. arm is planning to more than double its India workforce to 5,000 over the next three years, a top executive said.

“The expansion is driven by the tremendous talent base in India. Compared to the last 10-15 years, the talent now is very superior in the market,” Prasad Balakrishnan, India Principal of RSM US LLP, told Reuters.

The world’s No. 6 accounting firm’s U.S. arm employs 2,000 of its 17,000 employees in India, and is creating more consulting, audit and tax roles in the country to cater to its North American clients as a part of its global capability centre (GCC) expansion plan. [Ed. note: RSM Global clocks in at 57,000 staff in 860 offices and 120 countries around the world]

India’s evolution from a low-cost back office location to a high-value innovation hub has encouraged many multinational companies to set up local offices and boost hiring, a trend that is expected to gain more traction in the coming years.

Reuters describes the GCCs as supporting “their global parents in daily operations, finance, research and development, and product development functions.” About a year ago, they wrote about Big 4 expansions in India and said Deloitte planned to add 50,000 more people to its India headcount of 100,000 over three years, KPMG wanted to hire 20,000 over the same period, and PwC hired 12,500 people in India in fiscal 2022 with plans to hire the same number of people the following year. Last summer, Deloitte South Asia CEO Romal Shetty said 30 percent of the firm’s total workforce would be based in India by 2027. If it isn’t clear to you yet, firms are going all-in on India (not an EY pun).

There are unfortunately no salaries listed on RSM’s India job openings page but we did find this:

10 lakh = about $13,333 USD. 50 lakh = about $67,500 USD.

And here’s Glassdoor. Note these salaries are listed in rupees, not lakh (150,000 rupees = 1.5 lakh). ₹398K (rupees) = $4,766 USD. Dear reader is welcome — nay, encouraged — to double-check our math because no one around here is a mathlete.

Related:

The post Within Three Years, RSM US Will Have Twice as Many People Working for Them in India appeared first on Going Concern.

To tide you over until we can do that deep dive, the good folks at TR just published an article on tax firms’ top strategic priorities. Talent continues to influence the obsessive thoughts that bubble over in firm leadership’s brains when they’re trying to fall asleep every night however growth, pricing, and efficiency are of significant importance, too. Depending on what size firm you ask.

Here’s a handy chart:

Says the full report:

• Small firms (1-3 people) tended to lean in the direction of maintaining the status quo, preferring a more balanced approach to prioritization.
• Midsize firms (4-29 people) were much more likely to pursue talent development as a priority and drive efficiencies through streamlined workflows and aggressive use of automation.
• Large firms (30-plus people) had the resources to pursue multiple priorities at once, including talent development and growth through efficiencies found using more sophisticated technology and automation. Large firms were also more likely to explore different pricing strategies for the broad range of business services they offer.

On the topic of pricing, Thomson Reuters says this is the first time ever it has appeared in the top priorities list. Ron Baker and the rest of the Death to the Billable Hour gang will love this part:

…largely because the wisdom of hourly billing is being questioned by both clients and their firms. Many clients don’t like hourly billing because it is unpredictable; hence the rise in flat-fee and project-based pricing, among other alternatives types of pricing. Firms, too, have come to realize that hourly billing doesn’t necessarily capture the true value of their services, particularly in the areas of business consultation, tax strategy, and decision support.

This makes a lot of sense when you think about how popular advisory services are these days. Don’t expect this change to happen as rapidly as automation, they’ve been debating this for like 15 years and the old-timers are really having trouble letting go. Here’s Ron Baker’s value pricing pitch from almost ten years ago:

A big problem with hourly billing is it’s an internally focused metric. It looks at our costs and our inputs. It doesn’t look at our outputs and outcomes. There’s nothing in the hourly billing formula that looks at client value.

The other problem with it is it limits an accounting firm’s income. As more and more firms are moving to the cloud, a lot of labor that CPAs used to do is now being automated. If you’ve got a business model that says, “I sell time,” and the time it takes you to do more work is being driven down because of all these technological changes, unless your hourly rates are increasing faster than productivity, your income is going to suffer, and your profitability is going to suffer. And our hourly rates have not been increasing faster than our productivity. So it’s a very limiting business model.

But back to the report. Comparing 2023 to 2024, we see efficiency still dominates the list, talent is once again a headache (note: retention is now the word of the day when we talk talent which should not be confused with the pipeline problems that get all the headlines), and growth has slipped a bit.

“Growth may have slipped down the priority list; but then again, lack of growth hasn’t been a problem for most firms either,” says the report. “Indeed, a majority of firms reported an average revenue increase of 24% over the past 12 months. So whatever firms are doing, it’s still working.” Mid-size firms interpret growth as expanding their client base while the larger firms see implementation of automation as the best way to grow. In other words, “growth” means different things to different-sized firms.

We’ll do a deeper dive into the report later, hopefully this has whet your appetite.

Survey Methodology:
Surveys for the 2024 State of Tax Professionals Report were conducted in the first quarter of 2024.* The survey involved 500 respondents from tax & accounting firms of all sizes, although a bit more than half (51%) of respondents were from midsize firms (4-29 people), and 38% were from small firms (1-3 people). By region, slightly more than half (51%) of respondents were from firms in the United States; the rest were from firms in the United Kingdom, Canada, Australia, Brazil, and Argentina. Also, 60% of the respondents were male, and the age range of all respondents was represented relatively equally by decade, from under 40 years old to over 60 years old. The vast majority (85%) of respondents reported having leadership roles in their organization, and almost half (48%) were either partners or principals.

The post Let’s Talk About This Year’s Strategic Priorities at Tax Firms appeared first on Going Concern.

Here it is, in full color:

That figure is surprising, no? Maybe public accountants aren’t disloyal as we thought, it’s just that their employers suck.

CPA Talent Retention 2024: Keeping Your Best Performers [PIPCA]

The post A Surprisingly High Number of People Actually Want to Stay at Their Current Firm appeared first on Going Concern.

If you prefer, you can watch the episode on YouTube.

If we can understand the why of the shortage, we can take steps to fix it. In this article, we’ll talk about that why but also how. How accounting firm leadership can do their part, that is.

The Value Proposition: It’s a Bit Meh, Isn’t It?

Those already inside the accounting profession know the value their work provides to clients and capital markets but to students looking in from the outside, the message they’re getting blasted at them on social media like a firehose is that spending your career tied to a desk at an accounting firm is as fun as a trip to the dentist. Except unlike the dentist chair, sometimes you’re there for 60 hours a week.

While a career in accounting opens all kinds of doors, tends to be stable even in economic downturns, and isn’t such a bad way to spend your life, the value proposition leaves a lot to be desired for those who don’t even know what being an accountant is like. As Jeff so eloquently puts it, “Our value proposition needs a facelift.” Translation? We need to shake up the damn “we’ve always done it this way” snowglobe if we want to attract top talent.

• Fix it: So, how do you give your value proposition a much-needed makeover? Pay more (you’re probably not at market rates for talent), make work more flexible and meaningful, and stop caring where your next hire lives–embrace remote talent!

Then make sure you’re offering ample perks. Ask yourself — and be honest with yourself because we’re being real here — if you’re bringing enough to the table. Better yet, ask your last four employees the honest reason why they left and start there. That should give you insight into where you might be coming up short.

The Battle Royale for Talent: Let the Games Begin

It’s not just other accounting firms we’re competing against – it’s a veritable Hunger Games of talent acquisition. We’re talking consulting firms, tech giants, the whole shebang. And they’re pulling out all the stops to woo potential hires. If you want to have a chance against these attractive employers, you have got to bring your A-game. You don’t just need better perks than the firm down the street, you need the best perks on the entire block.

• Fix it: To win the talent war, think outside the box and offer perks that your competitors and other companies can’t match. If you’re not paying at or above market, you can’t get in the game. If you are, keep reading–Think: paid sabbaticals, flexible work arrangements, profit-sharing, and bonuses or raises based on results not years in a seat.

Show ’em why you are a great leader, communicator, and how your role is first to make sure THEY have what they need to be successful. By creating a workplace that’s as fun as it is rewarding, you’ll have candidates lining up at your door (or inbox).

Let’s Crunch Some Numbers… and Dreams

Now, let’s crunch some numbers and see what the data has to say. According to Jeff, we’re facing a pretty hefty gap between the number of jobs available and the number of warm bodies to fill them. It doesn’t take an accountant to understand the job market doesn’t balance so really, we don’t need to crunch numbers at all.

• Fix It: Jeff’s biggest piece of advice: focus on what we can control. Whether it’s offering flexible work arrangements, investing in employee training and development, or revamping your hiring processes, there are plenty of steps you can take to turn the tide in our favor. Which one to start with you ask? “Stop asking me and ask your team,” said Jeff, sarcastically. “They will tell you.”

Looking Ahead: What’s on the Menu for Future Episodes?

Get ready for a smörgåsbord of topics in the next few episodes of the Accounting Talent Podcast. From domestic remote work policies to top-grading initiatives for rising leaders and beyond, consider it another great stop for all things talent management in the accounting world. Stay tuned as Jeff and Rob discuss real-life case studies from organizations that have cracked the code on talent acquisition. By learning from their triumphs (and maybe a few missteps), we can all learn to chart our own course. And if you have a talent question for Jeff you’d like to see answered on a future episode, feel free to reach out.

Let’s Get this Party Started

It’s time to roll up our sleeves and dig our way out of the talent problem. The road ahead will definitely be bumpy, but with a healthy dose of getting out of your own way and a sprinkle of humor, we can conquer it.

Working with Accountingfly

If you’re interested in a regular flow of pre-screened candidates with no hassle and no upfront cost, you can get more information and register for Always-On Recruiting on our website. 

We also offer dedicated searches and freelance/contractor placements and are generally a lot of fun to work with. Click here to schedule a call or get more information.

The post Why’s There a Talent Shortage and How Firms Can Do Their Part to Fix It appeared first on Going Concern.

Hate to say we told you so but…scratch that, we do enjoy saying that. WE TOLD YOU SO. On August 9, 2022 we published “Where TF Is the IRS Supposed to Find 87,000 Agents?” and you don’t even need to read it to get the gist. Here are some highlights anyway:

So the IRS is struggling with recruitment and retention just like every other business and firm with a need for accountants in the last two years. In 2019, 74,454 people worked for the IRS. And they think they’re going to double that number in this market? With all due respect, HOW??

…

On top of its aging workforce, the IRS has struggled to stay competitive salary-wise. Mind you they are competing with Walmart in some cases.

…

Tell your nearest conservative uncle not to worry, there’s no way the IRS is going to find this many agents.

In “Qualified Applicants Aren’t Jumping To Work For the IRS,” VP of Research for the National Taxpayers Union Foundation (NTUF) Demian Brady breaks the news:

The Internal Revenue Service (IRS) is struggling to hire a workforce commensurate with the super-sized budget expansion that it recently received. According to a report from the Treasury Department, qualified candidates just aren’t jumping forward to work for the tax cops. It’s yet another example of how the IRS’s budget boost was hastily implemented, poorly designed, and dangerous for taxpayers.

To be fair, the Inflation Reduction Act-sponsored hiring plan is on a 10-year timeline. As Forbes columnist and friend of GC Peter J. Reilly commented on our earlier article, “It is a ramp up going out to 2031. So some of them are not in high school yet.” And the IRS isn’t looking only for experienced agent types who have better options post-public accounting, rather the agency planned to fill the majority of new positions with people to answer phones (cue PTSD groaning from #TaxTwitter) and process individual returns. New hires in the IRS Criminal Investigation category were supposed to make up less than 1% of the total tens of thousands of employees, adding about 300 more IRS-CI special agents to the agency’s existing 2,100. For more on that see: Anyone Looking Forward to a Highly Militarized IRS SWAT Team is Going to Be Sorely Disappointed.

Demian continues:

Government Executive reports that even though the IRS has been given “expedited hiring authority” to provide more flexibility in filling positions, it is actually taking longer to fill an IRS position than the average for the federal government. But the situation is even worse than that.

The Treasury Inspector General for Tax Administration (TIGTA) recently found that the IRS has encountered significant hurdles in attracting qualified candidates for roles it planned to fill. TIGTA notes that even the first wave of specialists the IRS hoped would spearhead its crusade against the wealthy have yet to be hired and onboarded, as applications have been “far below the IRS targeted goal.”

From that TIGTA report [PDF] dated March 11, 2024:

The two completed milestones are:

• Unified, enterprise-wide recruiting strategy developed. (Initiative 5.2)
  The IRS has completed this milestone. An enterprise-wide recruiting strategy for revenue agents was developed and shared with the Human Capital Office and business units. Additionally, the IRS developed an enterprise-wide FY 2024 Strategic Recruitment Plan and is developing a Recruitment Guide outlining methodology, roles and responsibilities, and recruiting capabilities and
  channels for key recruiting stakeholders.
• Recruitment and hiring plan developed. (Initiative 5.5)
  The IRS has completed this milestone. The IRS presented the finalized version of the FY 2024 Specialized Data Employee Recruitment and Hiring Plan to the Chief Data and Analytics Officer and Objective 5 Lead as well as key business unit stakeholders.

As of two years ago, the IRS was losing about 10,000 employees per year. They’d hoped to hire 10,000 employees by the end of fiscal 2023 and another 10,000 this year. But as we can see, that’s moving slow even by government standards.

The post As Prophesied, the IRS Is Struggling to Hire All Those New Agents appeared first on Going Concern.

IPA published a whole thing about it that explains non-equity partnerships are a good way to keep people who may not be great at the hand-greasing of traditional equity partners and definitely not just a consolation prize for the awkwards.

The accounting profession is adding far more nonequity partners to its ranks than equity partners, which means power is concentrated among fewer owners but stand-out pros are getting the opportunity for more responsibility, more autonomy and more money.

To give a real example of how this approach is working in their article about this trend at Top 100 public accounting firms, they spoke to Pennsylvania’s Kreischer Miller.

OK you know what, who cares. Close enough for horseshoes. Writes IPA:

For example, at Kreischer Miller of Horsham, Pa. (FY23 net revenue of $42.3 million), the number of nonequity partners has increased from 12% to 59% of all partners since 2019. The numbers represent a shift in thinking, says Christopher Meshginpoosh, who goes by the title of managing director because partners are called directors at his firm.

At Kreischer Miller, equity directors are more involved in bringing in business than nonequity, but beyond that, there’s very little difference between the two. Both types serve clients the same way, sign reports, lead industry groups or service lines, and serve as thought leaders. Nonequity directors don’t vote, but there aren’t many issues that need to be voted on anyway, Meshginpoosh said.

The issue of non-equity partners appeared on our radar in earnest about ten years ago. See: Let’s Discuss: Non-Equity Partners in Accounting Firms. One figure thrown out in that 2015 article is a fact from CPA consultant and industry-leading Rosenberg Survey founder Marc Rosenberg:

Nearly half of multi-partner firms now have non-equity partners, almost double the number of 10 years ago.

So he’s saying in 2005 only about a quarter of multi-partner firms had non-equity partners, got it. Another item we learn from Marc is that prior to 2015, it wasn’t entirely clear that the AICPA Code of Conduct even allowed this practice. Despite the lack of clarity at that time, “firms by the thousands” were embracing the non-equity partner concept. No worries though, the AICPA revised the Code of Conduct on December 31, 2014 after which time it read:

Definition of a partner. A proprietor, shareholder, equity or non-equity partner…or any individual who is held out by the firm to be the equivalent of any of the aforementioned.

This conversation will probably be relevant as we move forward into the PE-owned future of public accounting, let’s shelve it for now and revisit later. Is the traditional CPA partner dead?

Accounting Firms Embrace Nonequity Partnerships: A Win-Win for Talent and Growth [INSIDE Public Accounting]

Related:

The post The Era of the Non-Equity Partner Is Upon Us appeared first on Going Concern.

The natives are restless pic.twitter.com/F21X8uzzI3

— Going Concern (@going_concern) June 12, 2024

Lifted from Reddit here.

This isn’t about one particular firm — though individual firms are doing a great job shattering trust among their own people in recent weeks (see: PwC, GT) — rather, it’s about how all of this looks to students, people in the first few years of their career, and the public. For a profession that’s supposedly super stable even in economic downturns, things sure aren’t looking very stable right now.

Something else of interest I saw on Twitter:

More thoughts on Private Equity (PE) and Public Accounting firms.

The Grant Thorton private equity (PE) deal closed on 5/31/2024. New Mountain Capital LLC is the PE firm.

As usual, the auditing practice was spun off.

Prior to purchase, Grant Thorton was the 7th largest…

— Mike Sylvester, CPA (@MikeSyl36625988) June 14, 2024

Why does it feel like something really bad is about to happen?

The post Weekend Discussion: Fear and Loathing in Public Accounting appeared first on Going Concern.

• The Firm Leadership portion of the survey is designed for completion by one person for each accounting and consulting firm — usually the Managing Partner or a top HR professional. Those leaders are asked to provide information about their firm’s remote and flex work practices.
• The Team Member survey is open to anyone currently working in an accounting and consulting firm and multiple team member responses per firm are welcome.

On the individual team member side, your confidential responses can be useful intel for firms, particularly the ones open to improving the state of their firm based on feedback from people working in the trenches. Now’s your chance to sound off on what’s working and what isn’t from behind the safety of aggregated data.

Here’s the pitch:

We believe the combination of firm-level data and team member insights will provide firms with a unique opportunity to impact the mindset and strategic direction of firm leaders in our profession. Given how important the talent pipeline is to the success of accounting overall, hearing team members’ thoughts on these important cultural elements and flex and remote benefits is a must.

Participation in the ATAWW Survey allows firm leaders to benchmark their current flex and remote offerings against other accounting and consulting firms of all sizes around the country. Survey participants will have access to the full survey report which includes an executive summary, detailed reporting on survey results, and best practices and strategies to drive successful adoption of remote and flexible work practices. Non-participants will have easy download access to the executive summary at no cost or can purchase the full survey report.

We’ll also share a quick overview when results come out in November if you prefer to wait for the CliffsNotes.

Get more info and find a link to the survey here.

The post Hey, Take This Survey appeared first on Going Concern.

He also discussed hiring, saying they’ve been seeing a slowdown in hiring across the board (he means outside of the firm), “particularly in professional services” (so, in the firm). He then talks about how consulting firms, including EY, have begun pushing back new hire start dates due to the state of the economy. “It really has nothing to do with ChatGPT…YET,” he said. “It has to do with the fact that many companies were hiring based on attrition rates that were much higher a year ago, a year and a half ago post-Covid, you know, people were leaving, The Great Resignation. Those attrition rates, for example for ourselves, went from 20, over 20 percent, down to 12, pretty suddenly.” This tracks with everything we’ve been hearing surrounding layoffs and layoffs-that-aren’t-layoffs (a.k.a. Death by PIP), firms are seeing much lower attrition rates than they budgeted for AND a slowdown in client demand, leading to cuts.

“So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he continued.

It was around this time that firms started launching soft return-to-office guidance (not to be confused with hard return-to-office mandates) to which many said “if they require in-office, I’ll quit!” Well, sure. That’s what they want. They knew you’d quit. See: In Shocking Blow to Pro-Office Leadership, People Will Quit If You Force Them Back Into the Office about a Deloitte financial services survey that indicated 66 percent of FSI leaders would quit if their company required them to return to the office five days a week.

Now a new survey from BambooHR confirms what we all suspected: executives and HR managers used RTO to pump those turnover numbers up. At least among the 1,504 full-time salaried employees — including 504 HR professionals with a manager title or above — surveyed.

Nearly two in five (37%) managers, directors, and executives believe their organization enacted layoffs in the last year because fewer employees than they expected quit during their RTO. And their beliefs are well-founded: One in four (25%) VP and C-suite executives and one in five (18%) HR pros admit they hoped for some voluntary turnover during an RTO.

Bad news for them though:

By using RTO mandates as a workforce reduction tactic, companies are losing talent and morale among their employees. Nearly half (45%) of the employees who have experienced RTO report significant talent loss within their organizations—talent that was highly valued and wished to be retained.

Moreover, the discontent with return to office policies is strong among employees, with more than one in four (28%) stating they would consider leaving their positions if subjected to such mandates. This level of dissatisfaction could lead to a further drain of talent, affecting not just morale but also the stability and innovation potential of the workforce.

So the obvious problem here is that unlike targeted layoffs, RTO mandates don’t put only the unwanted castoffs out to pasture but also risk the talent companies want to keep. But duh, they should have known that would happen too.

There’s more in the survey if you want to check it out:

THE NEW SURVEILLANCE ERA: Visibility Beats Productivity for RTO & Remote

The post Survey Confirms What We Already Knew: RTO Mandates Were Intended to Get People to Quit appeared first on Going Concern.

So FT ran this yesterday: ‘Private equity groups poised to own one in three top US accounting firms‘ and in it, they paraphrased people familiar with the matter as saying “ten of the 30 largest US accounting firms could soon be in private equity hands.”

The article goes on to say:

The acquisitions by financial buyers of those two top-10 firms by revenue opened the floodgates to other deals, the people said, positioning private equity to increase its influence over the US accounting profession dramatically.

One top-30 firm, Atlanta-based Aprio, was planning a deal to sell a majority stake to the private equity firm Charlesbank Capital, according to people familiar with the situation.

Two more — New York’s PKF O’Connor Davies and Carr, Riggs & Ingram of Alabama — had engaged bankers to run sale processes, they said.

The two top-10 firms they’re talking about are Grant Thornton and Baker Tilly.

FT has some details on each of the firms mentioned, such as Carr, Riggs & Ingram shopping themselves out to three suitors and using “premier global boutique” investment bank William Blair to advise on the deal. And PKF O’Connor Davies working with Capstone Partners. Both firms failed to respond when FT reached out for their piece.

Aprio did respond but hit ’em with a no comment. We’re told by a tipster Aprio is in the middle of a private equity deal that is “all but finalized,” information that was passed along to staff in a town hall yesterday. This Reddit comment co-signs that story:

Comment
byu/Designer-Can-5891 from discussion
inAccounting

There’s also apparently some drama with the IT team getting ousted but we need to dig into that some more.

If you’ve got more info, you know what to do. Anonymous tips can be sent by email or text.

Update: There’s a Reddit thread about this situation worth sharing with you. The fear and uncertainty is not unexpected but unpleasant to read regardless.

Private Equity Buyout at Aprio
byu/Intelligent-End-8973 inAccounting

The post We Think We Know Who’s About to Do a Big PE Deal (UPDATE) appeared first on Going Concern.

Here’s what Journal of Accountancy had to say about this latest batch of results:

Finding qualified staff was far from the only staffing-related issue that’s top of mind for accounting firms, the survey found:

• The two largest firm categories (11–20 professionals and 21 or more professionals) listed “retaining qualified staff” as their No. 2 issue.
• Small to midsize firms listed “developing the next generation of firm leaders” as a top five concern or higher.
• The largest firms named “effective staff utilization and management” and “staff compensation and reward programs” among their top five concerns.
• Firms with 6–10 professionals also recognized the aging of owners/partners as a top five concern, a ranking that also reflects the need for firms to focus on leadership development.

They’ve conveniently laid the results out in this chart:

It’s encouraging to see staff compensation on the board for at least one category of firm. They might be *this close* to figuring out how closely that factor is tied to their talent problems.

Comparing this to 2022’s PCPS top issues at CPA firms, “Finding qualified staff” hasn’t changed in importance for the 11-20 and 21+ professionals groups but is now increasingly troubling the 2-5 and 6-10 groups. And you’ll see “Retaining qualified staff” made a big jump for the 11-20s while it remains in the same spot for firms comprised of 21 or more professionals. They changed the colors around from 2022 to 2024 so you may need to do some reading to decipher any other ranking changes.

Do you ever wonder if firms report talent as a top issue not because they’re really suffering but because they’re reading too many articles about the talent shortage and preemptively bugging out? 2021/22 is right about the time the “real” media outlets latched on to the accounting talent shortage and started cranking out article after article about how bad it is out there. Not to say the talent shortage isn’t real. Maybe just a bit overdramatized. If you pay more than the competition and don’t make people come into the office five days a week, you shouldn’t have that big a problem.

Finding qualified staff tops ranking of CPA firm top issues [JofA]

The post Accounting Firms of All Sizes Care Less About IRS Headaches and More About Finding and Retaining Staff, Says AICPA Survey appeared first on Going Concern.

As mentioned in this week’s news brief, the Institute of Chartered Accountants in England and Wales (ICAEW) put together a snazzy little report on the state of mid-tier firms based on a survey of managing partners. Keeping in mind that these are specifically mid-tier firms across the pond but the Brits are basically us with funny accents, bland food, and an unnecessary vowel littered throughout their words ending in -or. The biggest difference between our firms and theirs is that their advisory practices seem to be struggling even harder to secure work if frequent layoffs at large firms are any indication.

Without further blabbering, let’s get into the report.

Mergers & Acquisitions

As we predicted two years ago, firms of this size and under are merging — and acquiring — like crazy. We tend not to cover these stories because they’re not relevant to our predominantly US and Big 4-focused audience but I definitely see tons of them in my news feeds on a weekly basis. Says the ICAEW report:

While some accountancy firms favour lower-risk organic growth, the mid-tier has been active in using M&A for growth to meet client demand. The majority of respondents (64%) confirmed that their firm had acquired another in the past and 17% had been part of a merger. Of firms that had experienced fee growth in the past year, 21% was attributed to M&A.

And:

Whatever the approach, growth is an important item on firms’ agendas, with 29% of firms describing the culture of their firm as ‘growth led’. Looking ahead, using M&A to achieve rapid growth and build capacity appears set to continue in the mid-tier. More than one-fifth (21%) of respondents stated that their firm would look to merge with another in the next three years, and more than half (55%) are looking to make an acquisition. This propensity towards M&A was reinforced by respondents when asked for the key opportunities for their firm’s future, with 19% listing it among their top three.

Let’s add in here that now is a great time to absorb a practice or five because so many boomers who think succession planning is for bitches or who just assumed they’d get a ton of buyers at inflated prices are desperate to cash out. See also: The Old Guys Want to Cash Out. According to the most recent Rosenberg survey, 25 percent of all partners are over the age of 60, and 60 percent are over 50. It is, without a doubt, a buyer’s market and the mid-tiers are buying.

Private Equity

Move over talent, private equity is the profession’s hottest topic of 2024. Although the ICAEW’s research shows that only 12 percent of respondents had secured private equity investment, and 80 percent of those in the preceding three years, 57 percent of respondents ranked PE investment as a top three macro trend impacting the profession. 19 percent of firms said PE is attractive to them and 12 percent said it’s a top three opportunity (versus 7 percent who ranked it a top three challenge).

When discussing the opportunities around PE investment, respondents cited the ability to invest in technology, particularly artificial intelligence (AI) and automation, and the opportunity for growth. With 93% of firms surveyed looking to make further
investments in technology, capital injections from PE investors could be a great enabler and allow firms to get ahead of the curve.

As we’ve seen on our side of the pond, firms have said outright that private equity opens the door for them to make acquisitions. We saw this just the other week with Baker Tilly buying Seiler to gain a strong foothold in the tech-rich Bay Area within a few months of their private equity deal — that deal is rumored to be 50 percent of the firm and worth a billion dollars. Expect many more acquisitions to come.

So private equity is a hot topic and some mid-tier firms are interested but…

Close to two-thirds of respondents (62%) said that PE was “not [or] not at all attractive” to their firm. Furthermore, 17% of respondents saw remaining independent as an opportunity.

This is a valid concern. While firms appear to be getting around independence requirements by creative restructuring of their firms and quarantining off their audit practices, it’s certainly something to be cognizant of. SEC Chief Accountant Paul Munter directly flagged independence concerns related to PE deals in a recent statement:

Audit firms have also sought investments from third parties, such as private equity firms, that have not been subject to the same independence and ethical responsibilities as auditors. Depending on how those investments are structured, they could lead the firm’s professionals to question the firm’s commitment to both independence and high-quality audits. Firm leaders need to be sensitive to the message such arrangements could send and stand ready to correct any such misimpressions.

Calling it now, at least one of these PE’d-up firms is going to catch a fat independence violation within the next two or three years because they got sloppy about their post-PE restructuring.

Some visuals from the ICAEW because we love pictures:

We predict that chart will look very different two years from now as the “not attractive at all” crowd watches their competitors grow their practices in ways that wouldn’t be possible on billable hours alone. The “Not attractive at all” column will shrink but that won’t necessarily mean large numbers of firms start jumping into PE. They’re comprised of risk-averse accountants after all.

That said, many firms in the ICAEW survey are understandably concerned that PE will do a Red Lobster on their firm. It’s rumored — rather, people with eyes and brains are postulating — that Grant Thornton’s recent layoff of 350 people is due to PE-related housekeeping. No doubt more PE-aligned firms will be trimming fat as their investors seek ways to streamline the business. Firms that are already a hot mess will be gutted and sold off in parts.

And there’s another concern: the personal touch. It’s the family-owned grocer versus Wal-Mart.

Conversely, maintaining independence may support firms in upholding their unique identity, values and client approach, which some firms believe could be jeopardised under external ownership. More than one-fifth of respondents (21%) described the culture of their firm as ‘family-like’, and a further 17% as ‘traditional’, which may not be seen as a natural fit for PE investment. One respondent suggested that there were already “disgruntled clients” unhappy with accountancy firms taking on PE investment, and that remaining independent was an opportunity for their firm.

So this is interesting. When news of EY splitting its audit and consulting practices hit the news, we saw their competitors championing their “multidisciplinary private partnership model” as superior to the chopped up service lines EY was debating. See: Deloitte Global CEO Joe Ucuzoglu Just Mic Dropped EY’s Messy Split Drama and PwC Plans to Poach Unhappy Senior Managers From EY. In both of the linked examples, EY’s direct competition was quick to plant a seed in clients’ minds that their way of doing business was superior to what EY would have going after the split. We should expect to see similar behavior with non-PE firms versus PE-funded ones.

Brace yourselves for a bunch of corny “wE’rE a FaMiLy” marketing from firms that are morally opposed to private equity investment.

OK, but there’s another concern at these firms. While private equity is touted as a band-aid solution to the talent shortage (theoretically, private equity cash can help fund better salaries and efficient technology), some firms think it is more con than pro.

Comments from those looking to remain independent highlighted a sentiment that a PE model did not value people in the same way as traditional partnership structures. One respondent stated that staying away from PE was an “opportunity to recruit good staff that PE-backed firms underappreciate”. Another cited their firm’s desire to: “…retain a ‘traditional’ people-focused practice model which, in the light of increased private equity involvement in other practices, may make us more attractive.”

We have no doubt this will be the case. The public accounting model is shitty enough already without adding another layer of profit bloodletting to it.

A third respondent said: “We remain a privately owned network of businesses. [We see an] opportunity to attract other like-minded firms who wish to avoid PE funding and all that goes with that.”

Again, can totally see that. Aspiring retirees with their practices on the market may prioritize a culture match over a quick sale. Depends on how desperate they are to cash out I suppose.

Choice quote from this section:

Oh fuck off, firms can afford outsourcing without PE. That’s the whole point of doing it, you scrub.

This article is already long enough so we’ll stop here and hit part two on talent and technology tomorrow.

The post Here’s How Mid-Tier Accounting Firms Are Feeling About Private Equity and M&A appeared first on Going Concern.

Sad prediction:

AI and offshoring are going to wreck the accounting profession in the next decade.

Combine that with the pain every company has with this function and it’s a recipe for economic disaster.

— Michael Girdley (@girdley) May 14, 2024

There are two types of people: those who don’t find this sad (only accountants fall into this category) and those outside of the profession who think bookkeepers and payroll clerks (RIP) are what make up “the accounting profession.” The latter are definitely on the endangered species list.

We can tell which category this guy is in without even checking his username.

Y’all keep promising this, and we keep begging y’all to make it come true…

— Jeremy Wells (@JWellsTax) May 14, 2024

Of all the responses (“It can’t come soon enough” was my favorite), it’s this one I want to flag.

The desire to enter the profession in the first place is on the decline as well.

There is still a need (likely always will be) for the expertise at the top end of the profession.

But how do you get people through the pipeline to the top end?

For a profession that instills…

— Jason Turnwald, CPA (@JasonTurnwald) May 14, 2024

Text:

The desire to enter the profession in the first place is on the decline as well.

There is still a need (likely always will be) for the expertise at the top end of the profession.

But how do you get people through the pipeline to the top end?

For a profession that instills trust & confidence in the market…your concern is extremely valid.

In all the talk about AI and offshoring eliminating accounting as we know it, one aspect not talked about enough is the first 1/4th of the pipeline. We’re so worried about getting enough fresh meat into it and not thinking about the people who’ve recently entered it.

AI and tremendous amounts of offshoring appeared seemingly overnight — we went from about one-to-two percent offshoring in 2010 to as much as 60 percent or more now — and as such, little thought was given to what happens to the onshore young people coming up through the pyramid structure. A fresh-faced batch of youngsters come in every spring and winter, learn the ropes, and those who stick around pay it forward to another batch of not-yet-bitter youth. On and on, year after year, so goes the machine. Now the tasks they used to cut their teeth on are being sent overseas to underpaid associates or given to algorithmic models that never bitch about busy season or leave in the middle of it. Meanwhile, India has been not-quietly gathering up all that knowledge. See: India’s answer to Big Four firms could be in the works: Here are the details in Business Today.

Can India have a home-grown mega sized CA firm that can go global and compete with the Big Four firms? It may be in the works. The Institute of Chartered Accountants of India (ICAI) and the Ministry of Corporate Affairs are laying down the ground work for this.

“We have made a Committee for Aggregation of CA firms. It is working very effectively on how to frame guidelines for networking, multidisciplinary partnership, international networking, merger and demerger and advertisement. We are working on these five fronts so as to empower Indian firms to become global,” said ICAI President Ranjeet Kumar Agarwal.

In an interaction with BT, Agarwal said ICAI is working on these five fronts to empower Indian CA firms to become global. It is also going to make a presentation before the ministry of corporate affairs on this. “The ministry is also very keen on how Indian CA firms can grow big,” he said.

Did we really think they would be content to do our bitch work for 1/5th of the price forever?

“We want to leverage and we want to allow them to merge so that they can become bigger. For merger, they need some incentives, policies and tools on which we are working,” said Agarwal, underlining that Indian firms have the capacity to grow big and become global but they need some handholding.

“India has no dearth of talent. A large number of Indian CAs are also working abroad,” he highlighted. Out of a total of 400,000 CAs in the country, about 160,000 are practicing professionals.

At least a few people are talking about this future problem of onshore associates missing out on solid foundations. See this year-old thread: AI won’t take our jobs, but Outsource will

Comment
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See also: I didn’t beleive [sic] it! Big 4’s ultimate goal is indeed to offshore!

I remember a time many years ago when we were asking what if 20 percent of audit work is performed offshore as if this were a ridiculous scenario that could only be dreamed up on the fifth day of Burning Man (i.e. you’d have to be high as balls to think it could ever happen).

A 1997 paper entitled Challenges confronting accountancy in the 21st century by Carolina Koornhof [PDF] basically predicted the future we live in now.

There’s little to be done about it now other than the same reactionary freakouts the profession has engaged in for as long as I can remember. Just like the talent shortage thing that was building up for a DECADE before people really started freaking out. I mean, we were freaking out but that’s only because we’re overly negative and enjoy pointing out potential disasters on the horizon as well as current ones.

Guess we should be extra nice to the Indians, we might be working for them in the not-so-distant future.

Related:

The post Accountants Will Go Extinct in the Next Decade, Says Guy appeared first on Going Concern.

Bain Capital’s PR people announced this morning that BC is putting $250 million into Top 30 firm Sikich (which we always want to type out as Sickish), an investment only slightly less than the Naperville, Illinois firm’s last reported revenue of $316,397,417 (per the IPA Top 500). That’s quite the growth bet.

Sikich will maintain majority control.

The press release is everything you’d expect it to be and more:

Founded in 1982, Sikich has been on a path of rapid growth under the leadership of [CEO Christopher] Geier, who assumed the CEO role in 2017. During this time, Sikich has grown revenue nearly 300% and expanded its geographic reach, now serving clients in all major U.S. markets and around the world with nearly 2,000 employees.

“This is an incredibly exciting time for our organization. We’ve been executing an ambitious growth and diversification strategy to capitalize on unique and favorable market conditions within an evolving professional services landscape, more than doubling in size over the last five years alone,” said Mr. Geier. “Partnering with a leading global investor like Bain Capital is a testament to our strategy and provides us with additional meaningful resources and extensive knowledge to advance our mission and deliver on our value proposition to employees and clients.”

Bain Capital Special Situations partner Cristian Jitianu had nice things to say, too. Particularly about the firm’s supreme leader. “We have watched Sikich thrive under Chris and his talented team’s leadership as they continue to set the industry standard across their leading accounting, technology and advisory solutions,” he said. “As competition for talent and clients remains high, Sikich’s differentiated business model has enabled the company to gain share in a fragmented market. We are excited to support Sikich’s continued growth strategy, focused on acquisitions and strategic partnerships, with a tailored structure that maximizes value creation while allowing Sikich to retain majority control of the business.”

Oh my God, it keeps going.

“Bain Capital has already proven to be a collaborative and solutions-oriented partner, confirming what we know to be a great cultural fit between our two organizations,” added Mr. Geier. “We’ve held firm to our vision for Sikich over the last several years and, with their support, I am confident in this next chapter of our journey and what we can accomplish.”

Sickish Sikich has been on quite the acquisition spree in recent years. Just a few highlights from their press releases:

Sikich acquires human resources technology consulting business – Sikich LLP

Sikich grows Chicago-area presence with acquisition of accounting practice – Sikich LLP

Sikich expands accounting, tax and audit team with acquisition – Sikich LLP

Sikich expands into Washington, D.C., area with acquisition – Sikich LLP

Sikich expands presence in Milwaukee market with acquisition – Sikich LLP

Sikich boosts advisory services with acquistion – Sikich LLP

Sikich expands in St. Louis with acquisition of Hochschild, Bloom & Company – Sikich LLP

Sikich expands central Illinois presence with acquisition of Heinold Banwart – Sikich LLP

Sikich expands digital transformation services with acquisition of quality management and insurtech consultancy – Sikich LLP

Sikich adds to accounting practice with Stanfield – Sikich LLP

Sikich LLP expands into Southern California – Sikich LLP

The most recent for them appears to be buying up CliftonLarsonAllen’s federal government practice in DC. The whole thing including 70 employees and four principals. They first elbowed their way into Washington in 2019 when they bought Halt, Buzas & Powell. Three years later, they acquired Cotton & Company.

Sikich fed government partner Steven Koons gives them 5 stars.

Time for Sikich to snag themselves a big fish instead of these firms no one’s heard of. We’re watching with great interest, so much so we’re adding a “Sikich” tag for the first time in the 15 years since this website was founded. Don’t let us down.

Technology-Enabled Professional Services Firm Sikich Secures $250 Million Minority Growth Investment from Bain Capital [Bain Capital]

The post Sikich Is the Latest Firm to Take an Outside Capital Injection appeared first on Going Concern.

Their research polled two distinct groups of professionals — entry- and mid-level CPAs nationwide who have left their firm or the profession within the last five years (“Career Changers”) and Pennsylvania CPAs with 3-10 years of experience who are still on the grind (“Current Talent”). The goal? To find out what made the first group dip out and what keeps the second group not only at their current firm but in the wider profession.

“The findings from our latest report emphasize the complexity of talent retention and the necessity for firms to adopt innovative strategies that address both individual and organizational needs,” says Jennifer Cryder, CPA, MBA, CEO of PICPA. “We want to make sure that the ‘Current Talent’ group does not become ‘Career Changers’. This report aims to guide accounting firm leaders towards effective strategies that we believe, when properly implemented, will enhance both retention and firm performance.”

You’ll recall it isn’t only the scary “75% of current CPAs will retire by 2035” AICPA figure nor plummeting accounting enrollments and low CPA exam numbers that the profession is worried about but also a significant number of experienced professionals leaving accounting completely. See: Job Security Isn’t Enough to Keep Many Accountants From Quitting from Wall Street Journal (published Sept. 22, 2023). So making current professionals “stickier” should be as high a priority as recruiting young people into the profession at the high school and college level. So far it’s the pipeline that’s getting most of the attention.

Notable findings from the 323 professionals in the Career Changers group who have 0-15 years of public accounting experience and have left their firm or profession within the past five years:

• When asked to complete this statement “My desire to stay at my previous firm or in the accounting field would have increased if…” the leading response was higher salaries (39.7%).
• Other top responses were: “there were more flexible work options” (35.6%), “entry- and mid-level employees were more valued” (33.5%) and “there were better benefits offered” (30.4%).
• When provided the same statement but specific to work-life balance, the leading response was: “there were more flexible work options around hours and location” (35.6%).

We’re giggling at the inclusion of people with 0 years of experience. Washouts!

And key findings from the 449 Pennsylvania CPAs with 3-10 years of experience in the Current Talent group:

• The majority of respondents (56.7%) stated they have a higher desire to stay in public accounting, with 73% stating they would like to stay with their current firm.
• Career development is a critical factor for retention with 85% of respondents saying their firm actively supports their career development, and 78% saying their firm offers interesting career opportunities.
• Still, the number one response to the question “What would increase your desire to stay at your firm in the accounting field?” was “there were higher salaries” (46.9%), followed by “my working hours were capped” (42.3%) and “there were better benefits offered” (37.4%).

PIPCA’s suggestion is not to pay everyone more. Rather:

With over 70% of CPAs nearing retirement and a notable decrease in accounting graduates and CPA exam takers, the need for firms to fundamentally move away from the traditional “pyramid” model to a more robust “pentagon” model, better leveraging automation, AI, and outsourcing is critical to long-term success. [emphasis ours] This shift reduces reliance on a broad base of entry-level talent, allowing firms to focus on hiring fewer, but better retained staff while fortifying the middle managers with higher compensation and more diverse career opportunities. The PICPA believes this approach not only can help meet client needs effectively but also aligns with salary expectations and improves work-life balance, ensuring high-quality work without compromise.

Petition to use a five-pointed star model instead of a pentagon.

Reading between the lines, or rather the words in the above paragraph as it’s all plainly laid out, they’re suggesting firms move away from the cattle calls of young, disloyal talent that will leave within two years and pivot instead to automation, technology, and compartmentalized outsourced talent to replace them along with “fortifying the middle managers” who’ve been loyal thus far with better pay and career opportunities.

Are we finally living in the disruptive future we were promised?

The post CPAs Would Probably Stick Around If Firms Paid Them More, Let’s Just Outsource Instead appeared first on Going Concern.

Among the #TaxTwitter trends we’ve witnessed of late — like enforcing proper onboarding and not proceeding with the relationship if the prospective client can’t bother to complete it — a new one is emerging. Faced with staffing shortages, firms are taking the unconventional approach of turning away work that isn’t worth the trouble.

Exhibit A:

Sucks for clients but great for the overworked professionals who serve them. Don’t say you weren’t warned, clients.

The post Confidential to Clients: You Better Act Right, You’re Getting Graded Now appeared first on Going Concern.

The survey of decision makers and influencers at accounting, tax and bookkeeping firms revealed that nearly 60 percent of respondents identified their firms as slow adopters of new technologies like AI. The firms that consider themselves more advanced in tech adoption reported increased revenue though, as much as 39 percent more per employee. Maybe that’ll get the Luddites’ attention.

More takeaways as outlined by Rightworks in the press release:

Slow tech adoption evident in a recent survey of nearly 500 US-based accounting firms. 43% of respondents reported that less than 75% of their apps and data had been migrated to the cloud, indicating firms are missing out on the critical security, collaboration and efficiency benefits of a secure cloud environment.

Despite low adoption, the accounting profession has a positive outlook on the benefits of technology. 88% of respondents indicated that technology positively impacts workplace efficiency and client services. The top benefits cited were the ability to support flexible/remote workers and heightened firm and client data security.

In a profession that suffers from technology adoption challenges, embracing AI will likely take longer.

Ya think??

A bit more insight into accounting firms’ tech aversion can be found in the survey results:

Diving further into the subject of AI, the study found that 65% of respondents reported being only slightly comfortable or not comfortable at all with their firm using AI technology. That comfort level may be driven by a lack of understanding, considering 69% of total respondents reported being only slightly knowledgeable about AI or not knowledgeable about it at all.

Moreover, while 73% of respondents indicated that they are not currently using AI in any way, a notable 35% reported having no plans to incorporate AI. Within this group, the most popular reason provided in the open-ended responses for avoiding AI altogether was an admitted lack of understanding about it and how it would benefit their business. Additionally, respondents cited concerns about cost, trust and AI replacing jobs. Some stated that they are taking a “wait and see” attitude to AI adoption.

Rather than taking the view that accounting firms are tech-challenged, reactive not proactive, and slow to adopt even the most basic technology (they are), we could view these results a different way. All of those things may be true but what could also be true is that leadership and decision makers at accounting firms are more likely to be truthful when asked how familiar they are with AI. Which is to say, not much. For now.

Meanwhile, KPMG’s recent survey of 220 US-based C-suite and business leaders representing organizations with an annual revenue of $1 billion makes it look like leaders across the business spectrum are jumping all in on generative AI:

• 97% of leaders are investing in GenAI over the next 12 months, with 43% of leaders saying their organizations plan to invest $100 million or more.
• 51% of leaders are currently measuring GenAI-related ROI through productivity gains, followed by employee satisfaction (48%) and revenue generated (47%).
• Many organizations have already or are planning to provide mandatory GenAI skills training for both employees (75%) and leaders (77%) in the next 12 months.
• 54% of leaders expect new business models to support their growth strategies in the next 12 months, followed by new product and revenue streams (46%), productivity (39%) and profitability (31%).

We buying that? Sounds more like CEOs who don’t want to appear out of touch. Since when is this group broadly eager to jump into brand new tech?

We’ll give accounting firm leaders the benefit of the doubt here and take a guess that they’re open to AI but waiting for the more revolutionary, less cagey industries to adopt it first. Just in case it blows up their businesses or something.

The post Accounting Firms Will Not Be Leading the AI Revolution appeared first on Going Concern.

McKinsey is offering to pay hundreds of its senior employees to leave the firm and look for work elsewhere, the latest attempt by the consulting giant to reduce staff amid a sector-wide downturn.

Managers at the UK side of the business are being given the chance to spend up to nine months “on search”, an internal phrase referring to employees who are spending their time looking for a new job, rather than working on client projects.

While they’re on the job hunt, staff marked for deletion will still get their full salary and have even been offered help polishing up their CVs. But if they can’t secure a new job when the nine months is up, they’re out.

Per The Times, a similar initiative is underway here in the US:

Managers at the US firm have received similar offers but the period of time allowed to search for work may differ, according to those familiar with the situation. It is understood that hundreds of employees between the two firms will be weighing up these proposals, although final numbers are still being worked out.

It’s said McKinsey is contending with lower-than-expected attrition along with low demand for whatever it is they do, much like their counterparts at Big 4 firms here and across the globe. The UK consulting market is even drier than our own; Deloitte, EY, KPMG, and PwC have all logged their own cuts of hundreds of staff in the past year.

Why McKinsey is paying staff to leave [The Times]

The post Business Is So Slow McKinsey Is Paying Managers to Find a New Job appeared first on Going Concern.

For the TLDR gang who can’t be bothered to read articles, here’s a screenshot of the article we’re going to discuss. For readers of words, continue on.

This article from Accountancy Age could possibly be a poorly disguised ad for AdvanceTrack’s services but just in case it’s not, it has some figures we can refer to in 2030 when all the work has been offshored and regulators are scrambling to figure out who should pay for mistakes made because of it.

Figures show an significant rise in firms choosing to outsource their accounting services, with a near 40% increase in global spend and a 20% surge in interest over the last five years. [emphasis ours]

Vipul Sheth, Managing Director of AdvanceTrack, one of the UK’s fastest-growing outsourcing accountancy firms, likens the rapid ascent of the outsourcing industry to the revolutionary impact of generative AI in 2023.

“The surge in popularity is because people are looking for high levels of service at a cost-effective price point,” Sheth explains. “Add to this the lack of a strong pipeline of talent coming through, and it’s understandable to see outsourcing swiftly gaining momentum.”

“Figures reveal ‘enormous’ rise in firms choosing accountancy outsourcing as industry faces ‘pivotal’ moment,” Accountancy Age March 26, 2024

Wow he really said the quiet part out loud. The article talks a lot about “operational efficiency” and “cost savings,” actually. It’s Vipul Sheth’s belief that more than half of companies will be outsourcing some or even all of their accounting work ten years from now. Let’s hope India and the Philippines don’t run out of accountants before then (see: The Philippines is Running Low on Accountants and US Firms Should Be Worried).

Nothing to worry about here.

Figures reveal ‘enormous’ rise in firms choosing accountancy outsourcing as industry faces ‘pivotal’ moment [Accountancy Age]

The post Cheap-Ass Firms Are Loving This Outsourcing Thing appeared first on Going Concern.

Shortly after the KPMG news came out, the AFM asked the other large firms in the country — BDO, Deloitte, EY, Mazars, and PwC — to do their own internal investigations to sniff out answer-sharing among their staff. Deloitte hasn’t announced the result of theirs but Chief People and Quality Officer Rob Bergmans did resign last year related to it. “Given the facts which have emerged during the investigation, it would not be in the interests of the organisation if I remain on the board or as partner,” he said on his way out the door.

While nothing definitive has been announced yet, Mazars Netherlands has now strongly alluded to some cheating in its most recent annual report. Here’s what they said:

Misconducts on exams
At the end of 2022, the audit profession was startled by both national and international signs regarding
misconducts on exams. Based on this development, we started our own investigation on potential
misconducts on trainings with exams, amongst others resulting from the request of the AFM to Mazars, as well as all other PIE audit firms. The investigation is currently ongoing and final results are expected within the upcoming months. The Supervisory Board is strongly involved in this investigation. Misconduct in this domain contradicts with our values and Code of Conduct, our professional values and position in society. We will act accordingly in the investigation and the outcome of the investigation.

Later in the report, Mazars reveals the two whistleblowing reports the firm received for fiscal 2022/23 were related to “potential misconduct” on exams.

“So why is this news on an American website?” I can’t hear you asking because I blew my hearing out at too many concerts in the 90s. Well, because the PCAOB is still digging around and this could end up a whole thing given how aggressively they’re fining firms these days. Said NL Times:

The American regulator PCAOB is also involved in several investigations. American law allows the regulator to fine accountants in other countries that audit the books of companies listed in the U.S. The Americans’ involvement is one of the reasons why the investigations into exam fraud are taking so long, according to FD.

Yeah, that’s gonna be a biggun.

In late 2022, the PCAOB levied millions of dollars against KPMG Colombia and KPMG UK for sharing answers (among other things like altering audit documentation and providing altered documents to the PCAOB but whatever). PwC China and PwC Hong Kong were hit with a $7 million fine for “improper answer sharing” (cheating) last year. PwC Canada staff were sharing answers during mandatory, open-book internal training assessments for four years and not only didn’t see a problem with it, they “viewed sharing answers as part of a collaborative culture at PwC and because the assessments were open book” per a CPA Ontario order hand-slapping them for cheating.

So this is a pervasive issue across the globe. Regulators might use words like “shocking” in press releases but really it’s not because everyone does it and everyone knows everyone does it. Look at KPMG and Mazars in the Netherlands, one person at KPMG and two people at Mazars reported cheating to their superiors. Everyone else just went along with it.

On the surface this seems to be strictly a discussion on ethics but the conversation must acknowledge the plague of overwork that hangs over accounting firms everywhere. One of the partners caught backdating workpapers at Deloitte Canada recently specifically said “she recalled doing so as a mechanism to manage time constraints and volume of work” so it’s not just early-career auditors sharing answers on bullshit internal training to grind it out. Let’s meditate on that before even more fines come pouring down the pipe.

Related:

The post Mayo-on-Fries Mazars Might Join KPMG and Deloitte in the Exam Cheating Hall of Shame appeared first on Going Concern.

According to earlier reporting, the property in Gray, TN (pop. 1,342) could have been turned into a school. Instead it will be filled with the glorious sound of dozens of accounting firm staff with earbuds in hoping no one talks to them once the space is ready for Blackburn Childers & Steagall PLC to move in.

Per a building permit pulled by Channel 11, a local construction company will be doing $265,000 of demo work first.

The current office is in one of those beige professional parks that make you question what you’re doing with your life when you pull into the parking lot every morning so this will be a nice upgrade.

Why is this news? Because sometimes we like to hear about what the little guys are doing. It is also a strong signal that the littler firms are going all in on return-to-office and getting their staff under one roof these days. The MP literally said that. “We feel like being under one roof is going to help us give better client service and be more efficient with our work and gives us plenty of room to grow into the future,” said managing partner Andy Hatfield to WJHL. There’s another 75,000 square feet in their new building, no tenant has signed for now.

BCS is #244 on the esteemed INSIDE Public Accounting Top 500 with $18,594,028 in revenue.

Accounting firm preps for move into Citi building [News Channel 11]

The post The 244th Largest Accounting Firm in the US Is Getting a Big New Office appeared first on Going Concern.

This morning we received a tip:

Grant Thornton with a “strategic partnership” with New Mountain Capital. All hands call at 12:30 CST to discuss

Before we had a chance to go digging around — we haven’t heard a peep about this until now — our tipster sent over a link to a fresh Financial Times report:

Grant Thornton US sells majority stake to private equity

The US arm of accounting firm Grant Thornton has agreed to sell a majority stake to the investment group New Mountain Capital, in the largest of a wave of private equity deals that are reshaping the sector.

The deal, which would be New Mountain’s second investment in a US accounting firm, was announced to Grant Thornton’s nearly 10,000 staff on Friday, according to people familiar with the matter.

Well. A thing like that.

FT doesn’t give numbers but says “it will be the largest of five private equity deals so far among the top 25 US accounting firms” which isn’t saying much as it’s only recently big deals are being made. And adds:

The cash from New Mountain, together with some debt financing, will be used to return capital to current partners, buy out retirement obligations to former partners and build a war chest for investment, according to people familiar with the plans.

If GTers would like to let us know what happens on that all-hands later please text 202-505-8885 or email because I’m dying to hear how they spin this.

Grant Thornton reported $2.4 billion in revenue for its most recent fiscal year ended July 31, 2023.

Grant Thornton US sells majority stake to private equity [Financial Times]

The post Private Equity Is Taking a Majority Stake in Grant Thornton appeared first on Going Concern.

Thankfully people with big mouths regularly speak to Financial Times which is how we now know about a survey in EY’s strategy and transactions business that accuses leadership of being as transparent as a lead wall. Staff still around after the last round of cuts used words like “shocked,” “defeated,” and “insecure” to describe how they feel after watching their colleagues get culled like unnamed tributes from a distant district.

FT:

Staff in EY’s UK deals business have hit out at the company’s management for the way recent job cuts were handled, saying “trust is broken” and that employees feel “deflated” as sales in the department slump.

In a survey, employees at a division of EY’s strategy and transactions business criticised bosses for a lack of transparency and for allegedly misleading comments about a recent redundancy round dubbed “Project Century”, according to an internal presentation seen by the Financial Times.

Some staff accused managers of using messaging that lacked transparency, saying they were told that jobs were not “currently” at risk before the cuts were announced.

One respondent said: “Trust is broken and as soon as the market improves I would [sic] jump ship.” Another said: “Still in shock, lack of transparency resulting in [a] lack of trust, the floor looks disconnected.”

Net revenues for deals are down about seven percent between the beginning of EY’s fiscal year in July and this past January compared to the year prior and gross margins have dropped almost 14 percent per FT per what they saw in the above-mentioned presentation. In the 12 months to EY’s FY23 year end in June 2023, deals revenues were up eight percent to approximately £635 million (~$811 million USD). Worldwide, EY’s consulting business saw 21.6% growth between 2022 and 2023 for $16.1 billion of the $45.5 billion global revenue take.

“This was an informal poll completed by 70 people, or 0.3 per cent of our UK workforce,” EY told FT. Oh, well, in that case NBD then.

We included a link to the FT story in the Monday Morning Accounting News Brief yesterday and received this note from a reader (hey, reader):

I was part of EY government practice till they laid me off last September because my EY partner lost the federal client. I’ve heard rumors about other EY government contracts. Low morale at EY is far beyond the EY strategy practice.

When PwC Canada sneakily laid off several dozen people last year we heard similar sentiment from an employee who watched their colleagues quietly disappear. “A coworker I knew very well was terminated from his position recently. However, there was no communication from the company regarding the situation or the rationale behind the let-go,” they wrote. “The rest of the team continued to act as if everything was normal. This left us uneasy, unsure of who might be affected next. It felt as though we were regarded as disposable resources, easily discarded during economic downturns.

“I must express that the Canadian PwC leadership lacks empathy and transparency in handling layoffs, especially when compared to many other prominent companies in Canada.”

The job market may suck right now and consultants may be reluctant to quit because of it but people remember being treated like this when things are bad.

The post It Just So Happens Firing People Isn’t Good For Morale appeared first on Going Concern.

Her comments are in response to recent reports that EY UK partners have been analyzing “anonymized ‘turnstile access’ data” and may be tying performance ratings to non-anonymized badge swipes.

Khaddage Bou-Diab believes the methods EY has adopted to encourage people back to the office are symptomatic of a wider cultural issue in global business.

Khaddage Bou-Diab said: “Right now, through their attendance monitoring, EY is showcasing exactly why people don’t want to return to the office. At the end of the day, monitoring turnstile data doesn’t create an environment employees would gravitate towards – and, because of it, these large firms, like EY, risk losing staff for good.”

She goes on to say that the work from home policy has “spiraled out of control” so she’s not exactly a champion of remote work here. “Given the knock-on effects of empty offices, namely decreased cross-department collaboration, productivity, innovation, and execution of deliverables, the C-suite needs to now take hold of the situation,” she said. Isn’t fostering an environment of paranoia and distrust the most effective way to achieve that?

This is not an HR problem, she said, rather it’s on leadership to set the tone. “It’s in their job description to create an organisation their employees want to be a part of,” she says of the C-suite. “But atmospheres dominated by control don’t quite fit that – they push staff into survival mode.”

Former EY leader warns against office attendance monitoring [Accountancy Today]

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Fortune has written up an Indeed survey of 1,500 employers and 1,500 workers in the UK that found two-thirds of workers surveyed have “ghosted” a prospective employer in the last year. Blowing off an interview isn’t the worst of it though:

A whopping 93% of Gen Zers told the global recruitment platform that they’ve flaked out of an interview.

Worse still, a staggering 87% managed to charm their way through interviews, secure the job, and sign the contract, only to leave their new boss stranded on the very first day.

Their reason for doing so? According to the survey, it makes them “feel in charge of their career”.

NGL you almost have to respect it.

Anecdotally, we’ve heard several stories of this happening at accounting firms recently. In fact, here’s a first day at the job ghosting story tweeted by someone in the #TaxTwitter gang. We wrote it up in the hopes the person would step forward and allow us to donate the fuck to give they are lacking.

A woman agreed to work for our firm. Did all the paperwork. Came in for first day of training. Took a break to “move her car.” Never came back. It’s become legend and a thing to tease the one guy she met with.

The woman later came crawling back to the firm asking for a second chance. Lame.

This isn’t the first time Indeed has tackled the emerging issue of ghosting by both employer and prospective employee or new hire. For December 2023’s “When Candidates and Recruiters Vanish: Indeed’s Ghosting in Hiring Report,” the job site surveyed 4,516 job seekers who admit to ghosting employers, as well as 4,517 employers who have been ghosted across the US, UK, and Canada. Here’s what they found:

Job seekers are also now more prepared to admit they’ve ghosted before: 78% say they ghosted an employer prior to 2022. In our 2022 survey, the percentage who admitted ghosting prior to 2021 was considerably lower, at 68%.

Employers share the sense that ghosting has increased: 77% say it became more common among job seekers during 2022 in comparison to previous years. In addition, more than half (57%) say it had never happened to them prior to the past 12 months. This is a notable increase from 54% who said the same in our 2022 survey and 45% in 2019.

All of this is leading large majorities of both US job seekers (75%) and employers (74%) to say that ghosting has become entrenched in the hiring landscape.

We would like to know how many of these employers who say they’ve been ghosted require one-way video interviews and/or excessively long aptitude or personality tests. Because NO.

This isn’t the first time we’ve covered ghosting either. Way back in 2018 we were compelled to discuss job ghosting from both sides after Journal of Accountancy published a piece on the phenomenon:

[JofA] just did a story about job candidates ghosting during the recruiting process that is essential reading for anyone on the receiving end of a ghost.

It’s happening more frequently: A hiring manager begins the recruitment process with a job candidate, only to have that candidate disappear or “ghost” them at some point — not returning calls, texts, or emails.

Pat Cassady, talent acquisition director at BKD CPAs & Advisors in the Kansas City area, can tell her fair share of stories her staff witnessed: a college student who went through a full round of interviews, and then stopped responding when a job offer was extended; an experienced professional with connections to an employer who stopped responding upon receiving an offer letter; and many others.

“What Is Job Search ‘Ghosting,’ and Why the Hell Is Everyone Doing It?,” GC October 9, 2018

So why is this happening at the scale it is? Luddites might argue that it’s due in part to the impersonal nature of the modern recruiting process (this also applies to online dating), that people aren’t just personally invested in the digital process. Maybe it is really a way for workers to feel they have control of a situation. It could be any number of things really but we know this for sure, it’s not going away any time soon.

The post The Job Ghosting Is Getting Out of Hand appeared first on Going Concern.

Drew Andrews, managing partner and CEO of Hartford-based accounting and consulting firm Whittlesey, said the main factor driving mergers is the significant number of smaller firms with aging partners who are looking toward retirement, but don’t have the “backup” on staff to fill their shoes.

Michael Sabol, a founding partner at MahoneySabol, said a recent survey by consulting firm Rosenberg Associates found 25% of all partners are over the age of 60, and 60% are over the age of 50.

Andrews said mergers have always been an industry option, but 10 years ago, it was more of a seller’s market. Today, it’s more of a buyer’s market. “There are probably 10 firms out there for every two people looking to buy,” he said.

The article also notes that the UConn School of Business accounting program has seen its enrollment drop from a peak of 160 in 2017 to 90 last fall, a decrease of 43.75%.

Sounds like a great time to pick up an accounting firm or two at bargain basement prices.

Earlier:

The post The Old Guys Want to Cash Out appeared first on Going Concern.

According to the press release, Baker Tilly has doubled its workforce in the past five years and the deal will help them continue to grow in all the ways a large accounting firm can.

The significant investment from H&F and Valeas provides the firm with access to additional capital and capabilities to accelerate growth through investments in talent, technology and further strategic acquisitions directed at providing best-in-class client services.

As part of this transaction, the firm will be restructured as two entities: Baker Tilly Advisory Group, LP will provide the firm’s business advisory, tax and other services with Jeff Ferro continuing in his role as CEO. Baker Tilly US, LLP, a licensed CPA firm, will provide the firm’s attest services, with Jere Shawver, Managing Partner – Risk and Assurance, stepping into the new role of CEO. Baker Tilly US, LLP will operate as a separate legal entity pursuant to regulatory and independence requirements. Following the restructuring, both firms will remain partnerships, with all partners holding equity alongside H&F and Valeas in Baker Tilly Advisory Group, LP.

The rest of the press release is just a bunch of quotes from the people at the heart of this deal, we can skip those.

The transaction numbers were not shared publicly though Financial Times found a drippy sieve to get details from:

A person familiar with its deal said that the two private equity firms would take an equity stake of about $1bn for just over 50 per cent of the firm, with more than $900mn coming from H&F. There will also be an undisclosed amount of debt financing provided by a group of private lenders including Blackstone Credit, HPS Investment Partners and Blue Owl Capital.

The money will predominantly be used to buy out retirement obligations to former partners and return capital to its 600 current partners, as well as to recapitalise the balance sheet and build a war chest for mergers and acquisitions.

Allan D. Koltin, CEO of Koltin Consulting Group, who provided counsel to Baker Tilly and Hellman & Friedman throughout the process said, “This investment is a huge step for Baker Tilly, and it will certainly put the firm in a strong position to lead the consolidation of the public accounting industry.”

Not to brag about being clairvoyant or anything but we sorta saw this coming last year. Get ready for a very flashy merger ahead.

The post Baker Tilly Just Did a Massive Private Equity Deal appeared first on Going Concern.

EY has announced plans to grow its Global Delivery Services (GDS) staff in Manila by 50 percent in the next two years, bringing the total from 5,000 to 7,500. These are the offshore staff working directly with EY member firms, half of whom do assurance work while the other half focus on tax and consulting.

Malaya Business Insight:

In a press conference, Andrea Catte, EY GDS Philippines tax co-leader and EY Asia-Pacific & EY Global Compliance and Reporting ( lead, said the company will boost staffing to 7,500 from the current 5,000.

Catte cited the English proficiency of workers as well as the rich talent pool of accounting and business graduates as an advantage of the Philippines, considered the second largest in EY GDS network globally after India.

Catte said EY GDS is focusing on technology including AI as well as in equipping the company’s workers with the right skills to remain competitive.

513 miles from Manila to the south, EY is also expanding its cyber operation in Cebu.

“Cebu is an excellent tech hub in the Philippines and is key to the growth strategy of EY GDS in the cybersecurity domain. We are truly excited to grow our presence in Cebu as well as in Manila and build upon our cyber skills and talents, further strengthening our services to support EY clients around the world,” said Maria Elizabeth “Maez” de Guzman, EY GDS Philippines Cybersecurity Leader.

According to De Guzman, EY GDS’ talent expansion plans are in response to the growing need for augmenting its pool of cybersecurity personnel, given the increasing occurrence of data breaches recently in the Philippines involving major national institutions.

According to the Philippine Daily Inquirer, EY’s Philippines operation has grown from 25 staff in 2015 to 5,000 as of 2023. The Manila GDS center opened in September 2019 followed by the Cebu City hub in October 2023. There are no current plans to open any new GDS centers in the Philippines that we know of.

The post EY Is Going on a Hiring Spree in the Philippines appeared first on Going Concern.

While this may seem like a scary statistic on its face, perhaps it’s a good thing. CPA Trendlines says it’s a “big ouch” for firms putting in work (and marketing costs) into bringing clients in only to have to turn them away. Yes, they wasted that effort but shouldn’t some consideration be given to scoring good clients and not just the most of them?

As a respondent to our own 2024 survey said the other day:

Let’s get that number up.

SURVEY: 42% of Accountants Turn Away Work Over Staff Shortages [CPA Trendlines]

The post Stat of the Day: 42% of Firms Are Turning Down Work Because There’s No One to Do It appeared first on Going Concern.

Municipalities across the US are at risk of having their credit ratings downgraded or withdrawn by S&P Global Ratings because staffing shortages have delayed financial disclosure documents.

S&P has placed 149 long-term, underlying and program ratings on a negative credit watch this year because the ratings company hasn’t received 2021 financial statements from the issuers. That’s the most since at least 2018, and materially higher than the prior five-year average of 95 such moves, according to S&P data.

Ten months after that story, here’s a specific tale out of Wyoming.

Said the Sheridan Press today:

The city of Sheridan and Sheridan County’s FY2023 audits will come in after the state-mandated deadline.

Both the city and county utilize the services of Porter, Muirhead, Cornia and Howard (PMCH) — a certified public accountant based in Casper — for their audits. The firm works with the local governments to compile information for the audit throughout the year.

Holding up the audit this year, Duff said, is short-staffing at PMCH, as the firm competes with other accounting firms across the nation for employees. He also said the county’s audit has been delayed previously for the same reason.

PMCH’s hometown of Casper is 149 miles from Sheridan, a town with a population of 18,737 just south of the Montana border.

The late audit was due on the 31st of December. NBD on the county’s end though, Sheridan County Administrative Director Cameron Duff told the Press the lateness is fine as long as they have an engagement letter with a CPA firm which they do. “We have that on file with the state. So, we’re good on that aspect because we are not the ones holding up the audit,” Duff said. Burn.

On the billing side, the Press said Sheridan County will pay PMCH about $86,000 for the services; the city of Sheridan was billed $127,000. This is, of course, only a ballpark and could end up higher if a bunch of out of scope services get tacked on. The city of Sheridan is set to pay the firm about $127,000. The actual cost will be determined once the final audits are submitted. According to city of Sheridan treasurer Karen Burtis, they were billed an additional $20,000 by PMCH this year due to the city changing its accounting software and the firm updating its records.

Sheridan County will engage PMCH again next year, they said, but it’s not like they have much of a choice. According to the Press, there are only two firms in the entirety of Wyoming that can do government audits. The other appears to be ClingerHagerman, LLC of Laramie which offers “2080 hour contracts with paid overtime or the option to be used as paid time off” to staff according to LinkedIn.

PMCH has opening for audit manager listed on its website, there is no salary figure listed though they do say they offer “a competitive compensation package commensurate with qualifications and experience as well as significant opportunities for advancement.”

City, county audits delayed [The Sheridan Press]

The post There Are Only Two Firms in Wyoming That Can Do Government Audits and One Can’t Do Its Job Because of Staff Shortages appeared first on Going Concern.

Asked about his vocal stance on the importance of firm culture in maintaining professionalism — which includes independence — and if there are any particular cases that make firm culture a priority now, Munter referenced numerous “troubling things” on the cheating front that have happened in recent memory. Specifically:

• “[T]he issue with Deloitte in Canada backdating work papers“
• “[E]xam cheating that we sanctioned Ernst & Young in the US on“
• “[E]xam cheating in other jurisdictions as well: PwC Hong Kong and PwC China just last week with the PCAOB”

He was then asked if he considers the above settlements part of a trend to which he responded, “Someone might characterize each one of these as one-offs, but when you see a number of these happening in close proximity to one another, it’s troubling, and we thought it was an appropriate time to reinforce messaging about the importance of firm culture and that being a question not just with the audit practice, but for the entire firm, and network for that matter.”

Various other cheating issues have popped up around the globe in the last two years. Just a few:

More than 1,200 people at PwC Canada were involved in answer-sharing, either giving or receiving answers. As a result the firm was fined $750,000 by the PCAOB and $200,000 by the Canadian Public Accountability Board in early 2022.

KPMG UK and KPMG Colombia were busted by the PCAOB for answer-sharing (aka “cheating”) in December 2022.

KPMG Australia engaged in widespread answer-sharing from 2016 to 2020, the PCAOB hit them with a $450,000 fine in late 2021.

Everyone would be wise to keep the answer keys on the down-low for the foreseeable future. The SEC is watching.

The post Y’all Probably Need to Cool It on Sharing Exam Answers For the Time Being appeared first on Going Concern.

Here’s what you need to know.

Average audit fees increased by 4.6 percent from 2021 to 2022

Of more than 6,200 clients, the average audit fee works out to $2.4 million (sauce).

Less than half — 47 percent — of member company respondents said they’ve had to increase their efforts to support the external audit, 51 percent said there’s been no change. Acquisitions are a big driver for increased effort, 21 percent of respondents credited it for the stepped up effort. That or changes to ICFR and divestitures.

Technology is doing a lot of heavy lifting in audit

Much like last year’s survey, 89 percent of preparers said their auditors are using advanced data and information analysis. Almost 80 percent of audit partners surveyed said they used data analytics and/or other emerging technologies in 2022 audits, that’s a five percent increase from prior year. On the client side, 64 percent of preparer respondents said they think the use of these technologies improved audit quality compared to 49 percent of them a year ago.

But AI Isn’t Big…Yet

36 percent of preparers surveyed said they plan to incorporate use of AI into their financial reporting within the next five years.

Musty audit rooms are back!

Better put that deodorant order on subscription, in-person auditing is definitely back.

More than 55 percent of audit partners surveyed say they expect their team will spend more than half of their time together, be that at the client site or at the firm’s office. The number of partners with this expectation has more than doubled from last year, less than 25 percent of audit partners surveyed for 2021 had this same expectation.

On the client side, 43 percent of preparer respondents expect their finance and accounting teams to spend 50 percent or more of their time together on-site supporting the audit during peak times. That’s an even bigger jump from less than 15 percent of them having this expectation last year.

More from CFO Magazine, including averages for large accelerated filers and much smaller filers, here: Audit Fees Rose Nearly 5% in 2022: Weekly Stat

The post Survey Says: Audit Fees Were Up Almost Five Percent in 2022, In-Person Audit Work Is Back appeared first on Going Concern.

2News:

“I think that our profession really has abused those at the entry level and discouraged them from coming into the profession,” he said. “It’s not uncommon for an accounting firm to require their lower-level staff, up to four or five years and even after that, to work 80 or 90-hour weeks.”

That’s something, he says, newer generations of workers aren’t going to do. Even college enrollment in the field is down.

“I know at [University of Nevada, Reno] they have an online master’s program and it’s only got 47 people in it; they want to add people to it,” Bailey said.

Bailey also mentions an issue we wrote about last summer: firms in higher cost of living markets are hiring people living in lower COL cities to work remotely, paying those people HCOL salaries.

“I’ll interview someone and then, unfortunately, someone from San Francisco will hire them remotely and pay them based on the San Francisco wage scale, which we can’t match,” he said to KTVN. We know of at least one mid-tier firm headquartered in the Midwest that had this very problem, there are no doubt many more we haven’t gotten the scoop on.

To put this specific issue into perspective, here are salary ranges for a handful of public accounting positions in Reno and San Francisco according to the 2024 Robert Half Salary Guide. 25th percentile is the low end, 75th is the high, we’ve skipped Bob’s 50th percentile figures because who cares (about any of this, really). Reno is 4% higher than national average, San Francisco 35%. The figures below do not include bonuses, benefits or perks and are obviously averages.

Versus:

So a tax associate in Reno offered the high end of salary to work remotely for a San Francisco firm could theoretically make $23k more money for the same work, a manager is looking at closer to a $60k bump. In an increasingly expensive world, why wouldn’t an accountant choose the more lucrative option?

Mark goes on to say that his firm has done the smart thing and limited the work they do take on, allow their staff to work remotely, and try to avoid overtime “because when you do work overtime, it kind of impairs the other aspects of your life.” Kind of.

Full segment:

The post Our Profession Really Has Abused Those at the Entry Level, Says Managing Partner to the Local News appeared first on Going Concern.

Says the AICPA, bachelor’s degree completions in accounting dropped 7.8% from 2021–2022 after steady decline of 1-3% per year since 2015–16. Master’s degree completions also fell in 2021–2022 (-6.4%) but the percentage decline is significantly less than in 2019–20.

65,035 total accounting degrees completed for 2021-22. So 3,964 fewer bachelor’s and 1,246 fewer master’s for a total of 5,480. Since accounting graduate numbers peaked in 15-16, here’s the difference by year compared to prior year. As always, accountants are encouraged to audit the math:

• 2016-17: 1,336
• 2017-18: 394
• 2018-19: 2,204
• 2019-20: 3,391
• 2020-21: 2,408
• 2021-22: 5,480

Comparing the latest report to 2015-16 that’s 14,819 fewer BS and MS degrees for 2021-22.

Anyway, while we crunch some numbers and work up some obnoxiously snarky observations on the 2023 Trends report, you can catch up on where we were when the 2021 report was released in early 2022: State of the Accounting Profession 2022 Via the AICPA Trends Report

The post The 2023 AICPA Trends Report Shows Things Are Looking Up For Accounting Grad Numbers! JK They Suck appeared first on Going Concern.

The Illinois CPA Society (ICPAS), in partnership with the Center for Accounting Transformation (the Center) and other stakeholders, has launched a survey to figure out why modern day accounting students and professionals are so uninterested in pursuing the CPA credential. ICPAS tackled the issue before in 2020’s A CPA Pipeline Report: Decoding the Decline but things have changed since then and young people who graduated into the pandemic may have unique perspectives. Or it will just be the same perspectives and the profession will have more data points echoing them. The new findings will be published and shared to bring awareness of, and renew focus on, the most relevant and effective strategies to promote the CPA credential and ensure its sustainability and relevance moving forward, said ICPAS in a press release.

They also said:

A key focus of this survey is to understand why a growing number of accounting students and young professionals in accounting and finance careers don’t finish the CPA exam or elect to never take it at all. Accounting and finance students and professionals under the age of 35, with and without the CPA credential, are encouraged to complete the survey. The organizing partners also encourage all accounting and finance professionals to share the survey link with those they know in the target audience.

The responses are anticipated to reveal recent trends and key issues that will arm CPA profession leaders and stakeholders with a deeper understanding of the current perceptions of the profession, the decision-making process regarding pursuing or not pursuing the CPA credential, and the perceived value and relevance it holds today.

“The profession is aligning on the approaches necessary to help stem the tide and ultimately reverse the negative CPA talent pipeline trend we’re collectively facing,” says Geoffrey Brown, CAE, ICPAS president and CEO. “While there’s more research than ever on this topic, interest continues to be high in learning more about the perceived barriers deterring prospective CPAs from ever pursuing the credential. A lot has happened in the three years since our last survey was issued, which is why we were compelled to partner with influential stakeholders across the country to garner a fresh look.”

Survey here, it takes about 10 minutes to complete and you have until December 15, 2023 to do so.

The post Students and Professionals Under Age 35 Are Invited to Take This Pipeline Survey appeared first on Going Concern.

This year’s challenging global landscape underscores the pressures CEOs feel to make decisions on a variety of critical issues — and they impact how CEOs plan to support and attract talent over the next three years.

Notably, global CEOs are steadfast in signaling their support of pre-pandemic ways of working, with a majority (64 percent) anticipating a full return to office is only three years away. This remains consistent with their views in the 2022 CEO Outlook. What’s more, 87 percent of CEOs say they are likely to reward employees who make an effort to come into the office with favorable assignments, raises or promotions.

This sentiment underscores the persistence of traditional office-centric thinking among CEOs. It comes against a backdrop of the debate surrounding hybrid working, which has had a largely positive impact on productivity over the past three years and has strong employee support, particularly among the younger generation of workers. As organizations continue to roll out their return-to-office plans, it is crucial that leaders take a long-term view that embraces the employee value proposition and encompasses the considerations and needs of employees to ensure that talent is nurtured and supported.

In picture form if you are morally opposed to reading:

“The data underscores the immense pressure on CEOs to make quick decisions on the big issues,” said Nhlamu Dlomu, Global Head of People at KPMG International. “The war for talent may have softened in this period of economic uncertainty, but the evidence suggests a one-size-fits-all approach to return-to-office could be detrimental.”

Coincidentally, Fortune published an article a week before the CEO survey results came out about workers’ willingness to return to the office. They’ll do it…if their employers make it worth it (literally).

According to exclusive data from a report from video-conferencing devices company Owl Labs, first provided to Fortune, almost all (94%) of workers are willing to make an office return—but they’re underwhelmed by the current suite of perks companies are shelling out for. In a post-pandemic world, the ante has been upped, and they expect bosses to level up—by paying up—too.

The perks they’re after aren’t wellness rooms or ping-pong tables. What they really want is to save money. Nearly two in five (38%) hybrid workers told Owl Labs they’d be more likely to go to their office voluntarily if their companies shelled out for their commuting costs. That’s the most desired perk by a wide margin, and it’s no wonder why. “Working remotely is often a money saver because it reduces commuting costs to zero, while also making lunch, coffee, et cetera, much more affordable,” George Anders, LinkedIn’s senior editor at large, told Fortune earlier this year.

The article linked at the end with George’s quote: Commuting costs $2,000 and 39 hours more than it did before the pandemic. It explains why no one wants to return to office

They got their numbers from Clever Real Estate’s May 2022 listicle The Best and Worst Cities for Commuters in 2022 which says:

• The average worker commutes a total of 28 minutes one-way to work. In the average U.S. metro, workers spend an average of 239 hours every year commuting – amounting to 3% of their year in total!
• The average commuter in the U.S. spends $8,466 and about 19% of their annual income on their commute every year. As part of that overall cost, the average commuter spends $867 on fuel and $410 on vehicle maintenance each year as a result of commuting. Additionally, the average driver in America loses 32 hours to traffic annually.

Funny that Deloitte is ending its commuting subsidy now. They’re really trying to get those attrition numbers up aren’t they. Anyone else pulling back on the perks? Let us know.

The takeaway here is that if leaders want people back in the office, they better pay up. Or just keep hoping for a recession and people to get desperate.

The post A Majority of Leaders Are Down to Give Financial Rewards and Promotions to Those Who Return to Office appeared first on Going Concern.

First, finance and accounting:

In words:

Hiring outlook: Two-thirds of hiring managers in finance and accounting seek talent for new roles, and 32% are focused on staffing vacated roles. At the same time, 95% said they face difficulty locating skilled talent available for hire. This is not surprising in a field where unemployment rates for many in-demand roles trend well below the national average. For example, according to data from the BLS, the unemployment rate for accountants and auditors is 0.9%, and for financial clerks, it’s just 0.3%.

Employment outlook: 41% of finance and accounting professionals are either looking for a new job now or plan to launch their search by year-end. For 55% of workers in this field, the top reason to pursue a new role is a higher salary. Also, about one-third (34%) of professionals surveyed said they seek remote work options. If you’re an employer, note that offering flexible work could help you boost hiring and retention of these workers.

Now let’s talk about broader hiring trends. All hiring managers surveyed reported similar difficulty finding skilled talent, only 2% less across all professional fields compared to finance and accounting. You’ll note “eliminating roles” doesn’t appear at all in the finance and accounting group so that’s nice.

Let’s compare this to figures on the US talent market in 2022 and the first half of 2023 shared by Robert Half in February:

Back in our corner of the world, the Bureau of Labor Statistics projects employment of accountants and auditors to grow four percent from 2022 to 2032, about as fast as the average for all occupations. Prior to this, BLS projected 10 percent growth (faster than average) for accountants and auditors for the period from 2016-2026. BLS acknowledges in its forecast that technological change is expected to affect the role of accountants in the next nine years but is not expected to reduce overall demand. “The automation of routine tasks, such as data entry, will instead make accountants’ advisory and analytical duties more prominent,” says BLS in its ten-year outlook.

Seeing as we’re in the earliest stages of the glorious AI-driven future, it looks like talent will continue to be a problem for finance and accounting departments everywhere at least for the near-term.

New Data Provides Insight on U.S. Hiring and Employment Trends [Robert Half]

Earlier: Robert Half Reports Finance and Accounting Talent is in High Demand (Duh)

The post Obvious Figure of the Day: 95% of Hiring Managers Are Having Trouble Finding Finance and Accounting Talent appeared first on Going Concern.

The New York resident found accounting work monotonous, with little room for creativity or growth, and maximum salaries weren’t as high as he would have liked.

“The job security and the ability to have a comfortable life motivated me at first,” said Khokhar, who served as a senior accountant at two construction firms and senior auditor at an accounting firm. “But once I started, had some work and life experience, I realized there are better options out there.”

Khokhar earlier this year joined JPMorgan Chase as a treasury sales associate in its commercial real-estate banking division.

Then just for fun WSJ kicks the profession while it’s down and adds an organized list of downsides of a career in accounting recognized for years by students, academics, Xitter users, and washed-up accounting blogs:

The 30-year-old isn’t alone in his discontent with the industry. Accountants have long been viewed by people in the profession as underpaid and undervalued compared with positions in tech and banking. Now the foot soldiers of the profession are leaving the field in droves. Accountants cite low salaries, mundane tasks, burnout and the threat of new technology like generative AI as reasons for considering other industries.

Up until now, most accountant shortage discussion has been focused on students choosing other fields, CPA exam numbers lower than they’ve been in almost two decades, and boomers retiring from accounting en masse. That last one was the first sign a shortage was coming down the road, mentioned here by the Illinois CPA Society back in 2017:

An impending mass exodus of CPAs over the next 15 years is the most obvious contributor to shrinking CPA numbers. The AICPA often cites that the large pool of retiring Baby Boomers will leave a gaping hole in the supply of experienced CPAs.”

Statistics from the AICPA suggest that 75 percent of current CPAs will retire in the next 15 years, leaving a huge vacuum in the industry.

The AICPA cited that figure in this 2015 exposure draft [PDF] about adding a “retired” CPA designation to the Uniform Accountancy Act. Perhaps there are earlier mentions of the boomer exodus, I don’t feel like digging them up. All that to say, it was no big surprise there would be a vacuum to fill yet it’s only in the last two or so years the hand-wringing began.

Here’s what’s concerning and what makes this particular accountant shortage article different from the thousand others that have come before it. WSJ backs up Omar’s anecdote with hard evidence from Live Data that shows existing accountants are dipping out at the level where they really know their stuff and making their way to other fields. So the dry pipeline isn’t the only problem, there’s a building knowledge vacuum too.

Former accountants have largely moved to nonaccounting roles in finance, as well as working as financial analysts or in business operations, human resources and banking, according to employment data provider Live Data Technologies.

A greater percentage of accountants are leaving the profession later in their careers now than in years past. About 82% of workers who exited accounting this year through Sept. 1 had at least six years’ experience, up from 77% and 71% in full years 2022 and 2021 respectively, Live Data said.

The average tenure and age of accountants are increasing, meaning that any given exit is likely to be someone with a longer tenure, said Jason Saltzman, director of growth at Live Data.

The article also mentions a 28-year-old sole practitioner who’s getting out because “the work is often tedious and he doesn’t feel as if he’s making a difference in his clients’ lives,” a 33-year-old tax accountant who says “she feels overworked year-round,” and a 32-year-old senior accountant with her CPA who’s thinking of going to nursing school “because that career likely would yield more meaningful work and potentially a better work-life balance.” Said the sole practitioner, who graduated in 2019, “There are good things about the profession. It’s just that some of the negatives are so negative sometimes, it’s hard to always dwell on the positive.” We tried dwelling on the positive once, traffic plummeted.

It wasn’t even a year ago that WSJ wrote about the shortage and got a quote from someone at Robert Half who suggested a recession would fix the talent problem right up:

In a downturn, students tend to gravitate toward degrees in accounting and finance because they are considered more stable career paths than, for example, marketing and communications.

And yeah, that is what happens when the economy gets bad. We observed it in 2008 and the tough years that followed. Predictable patterns based on past experience can’t be counted on though, as Surgent VP Liz Kolar explained in this guest post she did for us last month: CPA Exam Changes and Pipeline Woes Are a Perfect Storm of Problems For the Profession. With a huge CPA exam change just a few months away, CPA review companies should be seeing a large number of people rushing to get the exam over with before the change. They aren’t. Here’s Liz:

Unless you’ve been living under a rock, you’re likely aware that the accounting profession is experiencing two simultaneous massive shocks.

These shocks (of our own making) are the collapse of the CPA candidate pipeline and launch of the CPA Evolution, the largest change to the CPA exam since the exam went digital nearly 20 years ago. Of course, exam computerization came after current partners had to walk uphill in the snow both ways to make it to and from the client site. Cue the violins.

Many of the discussions about these shocks have come in a vacuum, mentioning either the pipeline collapse or CPA Evolution, but the two are as connected as they’ve ever been. I’ve seen several major changes to the CPA exam throughout my career as a practicing accountant, university professor and exam prep instructor: 1994 – the exam was shortened from 19.5 hours to 15.5 hours; 2004 – the exam went from a paper and pencil exam to a computerized exam; 2011 – the first Computer-Based Testing Evolution (CBT-e) was enacted and the task-based simulation format was introduced; 2017 – higher order skill testing was introduced; and 2018 – Excel was added as a tool, along with a new user experience. Now, we’re facing the CPA Evolution’s arrival in 2024. Typically, each major change is accompanied by a tsunami of candidates rushing to test before the change takes effect and is followed by a drought of candidates signing up to test immediately after the new exam changes go live. We’re seeing more of a ripple than a tsunami this year and could be in for a massive drought in 2024 and 2025.

So that’s where we’re at. Job security isn’t keeping people in the profession and a big scary CPA exam change isn’t compelling graduates to flock to the current exam. Can’t wait to see the 2023 AICPA Trends report.

Job Security Isn’t Enough to Keep Many Accountants From Quitting [WSJ]

The post Now the Profession Is Losing Experienced Accountants Too appeared first on Going Concern.

From the press release:

The 2023 State of Corporate Tax Department report highlights under-resourced tax departments are more likely to face audits and penalties. For trade professionals, feeling understaffed is an acute challenge, shows the 2023 Corporate Global Trade Survey report. Departments are facing the data-intensive demands of today’s import and export trading environment – including new requirements to collect ESG data to comply with local laws – adding complexity, and reputational risk.

“What we’re hearing from tax and trade leaders in these latest reports echoes what we heard in our Future of Professionals research: tax teams are under-resourced and the need for internal efficiency is their top priority. There’s significant optimism about the potential of automation and generative AI to boost efficiency and support future growth,” says Ray Grove, Head of Product, Transactional Compliance at Thomson Reuters. “But tax and trade professionals are facing barriers to unlocking this potential, and, specifically, they’re feeling under-resourced in terms of technology budget for their departments, as well as headcount to be able to achieve their goals. This is not only tempering the success they can have – it’s also bringing risk and increasing the likelihood, and cost, of penalties that they’re facing.”

Marcum can tell you a little bit about the inevitable chaos of taking on more work than staffing levels can handle.

Key points:

• Half of corporate tax departments globally say they are under-resourced for technology, resources and hiring (47%)
• Under-resourced tax departments are more likely to incur tax audits and penalties
• Two-thirds of companies with $100 million-plus revenue are implementing technology to help manage their global trade operations (65%)

More on those first two points:

Respondents from close to one-half of businesses (47%) said they feel their tax department is under-resourced, which has greatly increased the risk of audits and penalties among other negative developments. Indeed, while 61% of surveyed businesses incurred tax audits in the past year, 72% of businesses with under-resourced tax departments did so. And 47% of businesses with under-resourced tax departments incurred tax penalties, compared to 42% of all businesses. In both cases, more than one-third of businesses incurred six or more audits and incurred penalties of more than $50,000. Despite this, respondents say their confidence in their ability to manage tax risk remains high, particularly among more well-resourced businesses.

For at least a decade we’ve been talking about robots taking accountants’ jobs, now that we’ve arrived in the glorious dawning of a new AI future companies must adopt technology to take the place of talent they can’t find. Improving efficiency is top of the list of priorities for tax departments (32%), followed by acquiring additional software (14%) and automation of processes (12%).

You’ll note improving processes outranks finding more talent and maintaining the staff they have by quite a bit. Shout-out to the 11% of respondents who chose “don’t know.” No one does, fam, no one does.

When corporate tax leaders were asked what their teams’ proudest accomplishment of the past year was, almost one-quarter (23%) said their team was most proud of its automation of processes through the implementation of new technology or software. Another 15% said they were most proud of how the tax team increased its speed and efficiency around filings, tax returns, and payments. Only 14% said that hiring additional staff and maintaining their existing staff was their team’s proudest accomplishment. 15% of respondents answered “don’t know” to the question.

This year’s survey was done via a 15-minute online survey with 365 senior tax professionals in June and July 2023. People in the 51-60 age bracket made up 29% of respondents, the under 30 crowd just 5%. Their roles include VP of Tax/Chief Tax Officer, Director/Senior Manager of Tax, Tax Manager, Senior Director of Tax, Senior Tax Technologist, Assistant Tax Manager, Junior Tax Technologist, and the ever-useful “Other.”

Under-resourcing in global tax and trade increases risk for multi-nationals, garners new Thomson Reuters research [Thomson Reuters]

The post Research: The Talent Shortage is Starting to Take Its Pound of Flesh From Corporate Tax Departments appeared first on Going Concern.

Anyway, enough with the corny shit. When this opinion piece popped up in my Google News I was hoping for a refreshing take on the benefits of accounting as a career and some passionate cheerleading. Maybe a field report from some young, enthusiastic former partner who started in public and ended up controller at a cool startup or doing taxes for NBA stars or something. Perhaps finally some common misconceptions would be smashed!

Nah.

Accounting is a field with high demand, and successful accounting students are virtually guaranteed employment upon (or even prior to) graduation. I’m involved in recruiting for one of the largest accounting firms in Connecticut. When I talk to students about their biggest concerns in pursuing an accounting degree and a career in public accounting, they typically point to four misconceptions: lack of work-life balance, the difficulty of the CPA exam, lower pay compared to other financial career paths, and lack of excitement in the work.

Each of these objections is based on a misunderstanding of what a public accounting career is really like in 2023.

With all due respect, sir, these are not misconceptions. Pretending as if they are does a great disservice to young people and is part of the reason why the younguns have issued a collective “fuck that” when it comes to accounting. It depends on the firm of course but given that professors across accounting departments everywhere urge students to go into public accounting (miserly Big 4 firms in particular) with the threat of a pathetic career doing taxes in a strip mall for the rest of your life if you don’t, we need to be honest about starting salaries at public accounting firms. Yes, accountants have incredible lifetime earning potential. Fact. Yes, CPAs do even better over a lifetime. Fact. Good luck selling that to a 22-year-old kid with data analytics skills who can make buckets more money out of the gate in a different field when there’s a cost of living crisis.

The disappointment only grows from there. Here’s his take on work-life balance:

In accounting, finding balance is a matter of weighing the value of hard work and career progression. You get out of the job what you put into it. But the job doesn’t have to include excessive overtime hours every January through April. There’s been a shift in expectations in the industry — while you may be asked to work some overtime during the busier times, you have more flexibility around your schedule to accommodate other events in your life.

“You get out of the job what you put into it” compelled me to Google this guy, you can imagine my shock when I found a young Gen Xer and not an old man who had to walk to the uphill both ways in the snow to sit for all four parts of the CPA exam on a hard chair in a cattle barn on the Indiana State Fair Grounds over two days.

Way to minimize the reality for countless public accountants. Some of them are working more than ever due to firms being short-staffed, the offshore teams have it even worse. This claim is disingenuous at best, he should have stuck to the “yeah you have to pay your dues early on but it pays off as you advance up the ladder” pitch. Is there greater flexibility these days? Sure. Because people started quitting en masse if they couldn’t get it. It shouldn’t have taken a worldwide pandemic for firms to start letting people pick their kids up from school in the afternoon and finish their work from home later in the evening. Do many government and industry accountants have it better? Yep. Could have led with that, at least that’s mostly factual. And a big reason why so many accounting grads are bypassing public completely and going straight to industry or sticking to the more progressive tech-focused small firms. Let’s not lump them in with the public accounting meat grinder.

Moving on. The CPA exam is hard. Fact. Much like the ritual beating one must endure to gain lifetime membership into a street gang, it is at its core a test of one’s dedication to the profession with a test of entry-level knowledge secondary to that. “The path to becoming a CPA is challenging, but doable if approached strategically,” he says. Well obviously. If it wasn’t doable, no one would do it. Increasingly, they aren’t. This is a value proposition problem and as of now, the profession has not done a good enough job demonstrating value, something you’d think a bunch of accountants would excel at (no pun).

It’s true that becoming a CPA takes effort and dedication. A fifth year of college is generally required (to obtain the 150 credit hours required to become a CPA) even if you’re not getting a master’s degree in accounting.

Also, the CPA exam is hard. Only about 20 percent of candidates pass all four sections on the first try — a lower pass rate than the bar. But you don’t have to take all four parts at once, and the rates for passing each section are much higher, about 50 percent. As the AICPA points out on its website, “The Exam is not harder or easier to pass at different times. An increase in pass rates simply means that candidates are better prepared.”

The exam is doable if you approach it strategically, and the additional time and effort invested in becoming a CPA is worth its weight in gold.

This is your selling point? If I’d written this, I might have referenced This Way to CPA’s Why CPA? page. Under the “What’s in It For You?” section:

10-15% higher salary than regular accountants
Becoming a CPA is an investment. CPAs have the potential to boost their earnings by $1 million of their lifetime compared to a non-CPA in the same position.

I would not have referenced this from UWorld Roger CPA Review:

According to Monster Jobs, a CPA’s earnings over the course of 45 years is $3,200,000 if the starting pay is at $46,200 and the pay at 20+ years is $76,000. Such salary data was compiled by looking at the expected lifetime median earnings which were calculated for a 45-year period based on median annual pay levels for 1, 5, 10, and 20 years of experience in each position.

Yeah that’s got to be old info. It checks out though.

Thankfully those numbers have edged up in the last few years though it’s looking like the big jumps of last year are cooling off now.

Finally, here’s his pitch on salaries:

CPAs have a very strong starting salary, and comparisons can be deceiving

The idea that the pay for an accounting major coming out of college is lower compared to other finance or business careers is a bit misleading. Most college students in accounting have a job locked up by the beginning of their senior year — demand is that high. Everyone who leaves school with an accounting degree seems to get a job.

Bro at no point in that paragraph did you explain why it’s misleading, all you did was gaslight people about the accuracy of countless salary reports.

He does add:

Starting salaries in public accounting in 2023 are very good, typically exceeding $70,000. While other financial and professional fields might state similar or higher starting salaries, it’s important to note that they aren’t typically placing as high a percentage of students. It’s harder to get those jobs, and there aren’t very many of them, despite the volume of the surrounding buzz.

Like how he says “might state” as if investment banker salaries are some wildly unreliable As Seen on TV claim. Per the US Census Bureau, the median annual income for Americans in 2021 was $70,784. “Very good” is dependent on a lot of factors, for some people $70,000 is in fact very good. Let’s not kid ourselves, accounting salaries have lagged behind other fields for a very long time (see this 2022 Bloomberg Tax article “Accounting Faces Reckoning After Years of Sluggish Pay Growth“).

Now, high demand is an accurate selling point. In fact, it might be the best one the profession has. Young people may fall victim to being seduced into other career paths with the lure of better starting pay but at least some of them could be swayed into accounting by emphasizing that even in difficult economic times, accountants can find work more reliably than their classmates who went into tech or law. See also: At Least We Aren’t in Tech, Boast Smug Accountants Who Didn’t Get Laid Off Today. Sadly the layoffs came later.

In September 2009, Rick Telberg’s CPA Trendlines shared that the accounting industry added 2,300 jobs in August of that year while the broader US economy lost 216,000 jobs and unemployment hit 9.7 percent. For those not old enough to have experienced the Great Recession as an adult, that was a big deal and evidence of the profession’s resiliency even in tough times because boy were things dire back then. This is a strong selling point and one that is unique to accounting. Can lawyers say the same? No, see the “Notes From the Breadline” tag on Above the Law. Not that accounting escaped that period of time completely unscathed, comparatively speaking it hurt a lot less.

Next time go hard on the employability thing. That one’s not misleading. Talk about specific career opportunities available to accounting majors and tell stories of the people who work in and around the profession, especially those who aren’t in public because they seem to be happiest with their chosen career. That’s a better pitch than “the money isn’t that bad and the work-life balance is fine most of the time except for several months out of the year.”

The post Guy Who Works at a Firm Actually Named FML on Why Accounting Is a Great Career appeared first on Going Concern.

So IBM put two different studies together — one with 3,000 global C-suite leaders across 28 countries, another with 21,000 workers across 22 countries — and one thing they’ve learned is executives estimate that 40% of their workforce will need to reskill as a result of implementing AI and automation over the next three years. THREE YEARS.

87% of executives believe job roles are more likely to be augmented than automated, but there’s a catch: with technology automating away much of the busywork it’s communication, teamwork, and flexibility that will be more important than ever.

Interestingly, the executives themselves don’t seem to think that AI will have as huge an impact on them and their work than it will at lower levels.

While workers at all levels will feel the effects of generative AI, lower-level employees are expected to see the biggest shift. More than three in four executives say entry-level positions are already being impacted, while only 22% say the same for executive or senior management roles.

Executives in our survey estimate that 40% of their workforce will need to reskill due to implementing AI and automation over the next three years. That translates to 1.4 billion of the 3.4 billion people in the global workforce, according to World Bank statistics.

What sort of reskilling? On average, 87% of executives expect job roles to be augmented, rather than replaced, by generative AI. That figure is closer to three-quarters in marketing (73%) and customer service (77%)—and more than 90% in procurement (97%), risk and compliance (93%), and finance (93%).

Once the darling of in-demand skills in 2010s, STEM is “plummeting” in importance, dropping from the top spot in 2016 to 12th place in 2023. Some bad news for large swathes of the Going Concern audience: leaders are now hungriest for people with people skills.

Even “basic computer and software application skills” have experienced a drop. It’s all about communication and managing your time.

As the need for technical acumen has increased more broadly, many leaders may now see these skills as table stakes.

Looking to the future, executives are more focused on developing people skills, with time management and prioritization, collaboration, and communications topping the list.

As technology becomes more user-friendly, employees are also able to do more with less advanced technical skills. No-code software development platforms, for instance, let people without a programming background create business critical prototypes and apps. Plus, as machines take over mundane tasks, people can spend more time on the problem-solving and collaborative work that require stronger people skills.

This pivot away from STEM skills highlights the volatility of the talent landscape. It’s likely that the skills people need will continue to change, which is why organizations must build a flexible structure that allows for evolution.

Let’s talk about what matters to employees and not the executives they work for. Props to IBM to skipping right past “salary, benefits, and job security,” pretending those things aren’t employees’ most important factors at work and focusing on some secondary stuff employees also want.

When asked to make tradeoffs, foundational factors such as salary, benefits, and job security still top the list of employee priorities. But when asked to select the most important work attributes out of a list that doesn’t include those factors, people put impactful work above all other attributes, including autonomy, equity, flexible work arrangements, and growth
opportunities (see Figure 5).

PwC is way ahead on this. Recall comments made earlier this year by Joe Atkinson, PwC chief products and technology officer, when he spoke to the New York Times:

PwC’s workers have expressed fears about displacement, according to Mr. Atkinson, especially as their company explores automating roles with generative A.I. Mr. Atkinson stressed, though, that PwC planned to retrain people with new technical skills so their work would change but their jobs wouldn’t be eliminated.

Says IBM:

But employees may think that, by partnering with AI, they are training their replacement. Leaders can combat this initial resistance by highlighting how AI can help people focus on more meaningful work—which is something employees crave.

And:

Additionally, when asked to select whether the work they do, the employer they work for, or the people they work with was most important to them, nearly half of employees say the work they do is far more important than who they work for or who they work with regularly.

So far, it seems, employers have missed the memo. The executives we surveyed rank impactful work lower than nine other non-compensation attributes when assessing which factors matter most to their workforce.

This disconnect is poised to cause problems as executives rush to automate as many tasks as they can. If leaders don’t plan human-machine partnerships with impactful work in mind, they might miss opportunities that will help people work smarter and more strategically. How employees will use—and benefit from—technology needs to be considered as carefully as the tech investment itself.

Oh good, they did put compensation on there.

So what’s the takeaway? A) AI is evolving rapidly and incredibly accessible compared to advanced technologies before it, workers at all levels should be jumping in and playing around with it because it’s coming to your job regardless (this means you too, executives). B) communication is more important than ever. You don’t have to be an extrovert to navigate the gauntlet of professional communication, you just need to be clear.  If you get stuck, just ask ChatGPT to write your emails for you.

IBM study: Augmented work for an automated, AI-driven world [PDF]

The post IBM Study: AI Won’t Replace People, People Who Use AI Will Replace People Who Don’t appeared first on Going Concern.

Here are the key findings from “Cultivating employee engagement in financial services,” specific to financial services institutions but no doubt applicable across offices everywhere (and certainly those belonging to people with Deloitte.com email addresses). TL;DR: Overall survey results indicate that financial services institutions (FSIs) with overly strict in-office mandates could face dual challenges: possibly losing their pipeline of leaders and having difficulty recruiting talent. Caregivers are particularly sensitive to RTO mandates and more likely to leave their company if forced back into the office.

Strict return-to-office mandates could impact retention. Among leaders surveyed who work remotely at least part of the time, 66% say it’s likely they’d leave their current job if their company required them to return to the office five days a week.

Caregivers are more likely to be affected by return-to-offices mandates. Leaders with caregiving responsibilities surveyed were 1.3 times more likely than non-caregivers to say they’d leave their organization if their company eliminated their ability to work remotely.

Leaders surveyed prefer flexible work arrangements over prescribed workplace models. Some financial services institutions now require their workforce to go into the office three to four days a week. However, only 18% of respondents say this would be their ideal arrangement.

While remote working has improved engagement and well-being, most surveyed leaders believe it will put them at a disadvantage. Among leaders with hybrid work arrangements, 62% of respondents say they would prefer to work remotely more often but feel it would be bad for their career.

Financial services institutions may face a shrinking pipeline of future female leaders in the years to come. Almost half (45%) of women respondents in senior leadership roles report being likely to leave their current employer over the next year.

Deloitte got their info from 700 US mid- to executive-level financial services professionals—manager-level through senior leadership just below the C-suite—from many of the largest US FSIs. “Our respondents are meant to represent the future of financial services leadership: ‘next-generation leaders’ are manager level, and ‘senior leaders’ are EVPs, SVPs, or equivalent or lines of business leaders; some are just one step away from the C-suite,” they said. “As such, our respondents should represent the leadership pipeline at many of the largest US financial services firms.” Millennials and Gen X made up 91% of the survey population.

Since some leaders respond better to visual learning, let’s throw a few helpful graphs in here.

Says Deloitte in its advice to leadership:

Take small steps. Any significant changes to the current working arrangements may be met with strong opposition. Starting with lesser number of days in office, before ramping them up, would allow employees time to soak in the benefits of an in-office environment. Our survey indicates a clear preference for 1–2 in-office days a week over 3–4 days. In some cases, employers are offering a combination of flex and core hours, where all employees are expected to work during specific hours (e.g., 11 a.m. to 3 p.m.), with full flexibility for remainder of the day. Offering team-based decisions on workplace arrangements is another option. This approach can empower employees to voice their flexibility preferences while still committing to the needs of the team.

On that note: 4-6pm is now “a dead zone” for many workers. People are logging out early, running errands, picking their kids up, taking a quick nap, and then logging back in later to finish their day. This explains why there are now so many people at the grocery store right at 4 o’clock.

More than one-third of respondents (38%) said having opportunities to connect with leaders above their level could positively impact their work experience so Deloitte suggests instituting regular live, in-office sessions with leadership. Almost four in 10 respondents said they’d like more learning and development opportunities, in-person, role-based, or business-specific training programs are one way to get those people in the office with something that benefits them more than the nebulous promise of “collaboration” pro-RTO leaders have been trotting out for years.

Ultimately it’s both a personal and practical choice if a return-to-office mandate sends someone back out into the job market. People without as many responsibilities at home might be less insistent on leaving but they appear to be just as unwilling to come into the office for what they consider to be too many days a week. Leaders are advised to tread carefully and ask themselves if it’s worth it to lose your best people over a couple extra days a month under the fluorescent lights.

Cultivating employee engagement in financial services [Deloitte]

The post In Shocking Blow to Pro-Office Leadership, People Will Quit If You Force Them Back Into the Office appeared first on Going Concern.

Journal of Accountancy:

The AICPA has formed an advisory group of accounting stakeholders that will help to shape strategy to address the profession’s talent shortage.

The National Pipeline Advisory Group represents a broad spectrum of leaders in the accounting profession. The group’s work on a national pipeline strategy will be informed by the use of technology, surveys, and in-person forums to solicit insights and input from diverse groups nationwide, the AICPA said in a news release.

“The slowdown in young adults choosing accounting as a career is a collective problem for the CPA profession and requires a collective and inclusive solution,” said Sue Coffey, CPA, CGMA, CEO of Public Accounting for AICPA & CIMA, together as the Association of International Certified Professional Accountants. Coffey is executive sponsor of the initiative and member of the advisory group.

“We want to make sure we have a broad range of viewpoints and perspectives to help define the profession’s pipeline strategy moving forward,” Coffey said. “This deep, capable, and experienced group will play a critical role in guiding that conversation and subsequent call to action.”

Now, before you say “didn’t they do this already?” you should know that ‘The National Pipeline Advisory Group’ “is focused on developing a cohesive and agile national strategy.” Says JofA, that strategy goes beyond the elements of the Pipeline Acceleration Plan, a set of initiatives already underway or being explored. Whew, here I thought they were demonstrating to us the meaning of insanity in practical application.

The Pipeline Acceleration Plan (known around these parts as the AICPA’s 12-Point Plan to Do F*ck All to Solve the Accountant Shortage approved in May at Council):

What the plan actually needs to look like:

Pay people better then you can hire more people which would address public accounting’s second biggest issue of relentlessly long hours. While you’re at it start promoting entrepreneurship, small firm, and straight-to-industry as viable options for accounting majors instead of professors aggressively advertising Big 4 as the be-all end-all of accounting because that gateway to Hell is scaring a lot of people away. You’re welcome for that freebie, AICPA.

The Center for Audit Quality just released a report on increasing diversity in the pipeline that, while clearly focused on diverse students (it’s literally in the title of the paper), gives us a wealth of data on why young people are choosing other majors. It also gave us this quote:

So we already have a wealth of answers to the “why” in the “why aren’t young people pursuing accounting?” Is a new group somehow going to unearth an as yet undiscovered, mysterious reason for why young people are choosing majors other than accounting? Sure hope so, this song and dance is getting old.

No offense intended to members of the group, sure you all are wonderful people.

The post The AICPA Has Cooked Up Yet Another Plan to Do F*ck All to Solve the Accountant Shortage appeared first on Going Concern.

In FY2003, average audit fees were $681,000; in FY2022, this number was $2,243,000.

A few more factoids:

• The average audit fees paid by SEC registrants reached an all-time high in FY2022 at $2,242,980—representing an 11% increase from FY2021
• Average total fees paid grew nearly 10% in FY2022 to $2,702,922, the highest amount seen over the 20-year period.
• Total audit fees reached nearly $16.8 billion in FY 2022, increasing 0.6% from FY2021
• Audit fees paid to Big 4 firms account for 92% of all audit fees for SEC registrants paid in FY2022
• Together, the average amount that SEC registrants paid for non-audit services increased in FY2022, reaching $459,942—representing a 3% increase
  from FY2021

Says the intro, audit fees paid to external auditors can be an indicator of audit complexity.

The intro also says:

Over the past 20 years, significant activity in the regulatory markets, both in the US and internationally, has affected audit fee and nonaudit fee trends. Accounting standards ASC 606 Revenue from Contracts with Customers, ASC 842 Leases, and ASC 326 Financial Instruments – Credit Losses required companies to change existing accounting and financial reporting standards. These new regulations likely contributed to rising audit fees in prior years. Accounting standards that became effective for entities post-FY2021 are refinements, with some new guidance for specific sub-topics under Business Combinations, Leases, and Earnings per Share. In response to these changes, auditors are required to implement new procedures to determine if the companies’ new policies adequately meet the standards.

Increases in audit complexity resulted in additional effort from external auditors. Higher-risk audits require more auditor resources (hours, personnel, specialists, etc.) to reduce audit risk to an acceptable level.

Ah, so now we begin to understand why there’s less “busy season” and more “just busy.”

Fewer companies disclose audit fees paid to external auditors compared to the peak in 2006 when 10,912 companies did so. In 2022, only 7,279 companies disclosed how much they’re paying for audits. God bless Ideagen Audit Analytics.

Who took home the most in audit fees in 2022? That’s what we’re all here for right? PwC. Followed by EY, Deloitte, and then KPMG predictably coming in fourth.

There’s a bunch of other stuff in the report like a breakdown of audit fees by industry (Transportation & Communication is highest, Agriculture lowest), quite a bit on Marcum’s favorite topic SPACs, US versus foreign filers, and even auditor ranking by audit fees per million of client revenue (EisnerAmper takes #1 there). You can snag the full report from IAA here.

The post Here’s How Much Audit Fees Have Increased in the Last Twenty Years Making Us Wonder Why Salaries Didn’t Do the Same appeared first on Going Concern.

The world’s major accounting firms are stepping up investments in new Indian facilities away from bigger cities as global demand for cheaper back office operations grows and smaller towns move up the economic value chain.

For decades, large multinational corporations have rushed to India’s biggest metropolises, chiefly Mumbai, Delhi and Bengaluru, to set up massive operational centres that employ millions, lured by vast, low-cost talent pools, particularly in IT.

Business service exports have become a critical part of India’s economy but the sector has been hit by a slowdown in global demand for software and challenges in big urban centres such as rising costs, high attrition and slow progress in getting workers to return to the office after the pandemic.

Another Reuters piece explains the IT slowdown in detail. Said the CEO of IT behemoth Infosys in April: “We have a lot of bench with us. They are ready to move into production projects.” Isn’t that the same thing that’s happening at many Big 4 firms across the globe?

Now for some numbers.

“Global giants are finding it easier and more competitive to shift work to small locations in India,” said Debasish Mishra, chief growth officer, Deloitte South Asia, noting the vast pool of English-speaking accounting, engineering and science graduates.

Deloitte, with a workforce of over 100,000 in India, says it will hire 50,000 more staff over three years, and expand its footprint in new towns while KPMG plans to hire over 20,000 over the next three years.

PwC hired close to 12,500 in the fiscal year ended March and expects to hire the same number this year, said Padmaja Alaganandan, the firm’s India chief people officer.

Deloitte South Asia CEO Romal Shetty said a few weeks back that Deloitte plans to have 30% of its workforce operating from India within the next four years, an estimated total employee count ranging from 150,000 to 160,000. The most recent Deloitte Global headcount is 415,000, a third of which is about 138,000.

Reuters references a forward-looking EY report released in June that says multinationals are to going set up quite a few new “Global Capability Centres (GCCs)” for varied industries in so-called tier-two cities like Jaipur (pop. 3.1 mil), Vadodara (2.175 mil), Kochi (2.1 mil), and Chandigarh (population 1.6 mil for the Chandigarh, Mohali and Panchkula metropolitan area). Currently multinationals are setting up about 70 such centers a year, the EY report suggests that by 2030, the overall number of new GCC establishments per year could reach 115. Bengaluru, Hyderabad, Chennai, Mumbai, Pune, and Delhi remain popular sites for GCC squatting in India but the tier-two cities “are becoming popular for new set-ups owing to its improving infrastructure, favorable state policies, and lower real estate and talent costs. Coimbatore in particular is emerging as the next big GCC hub post Chennai in Tamil Nadu.”

Said Reuters, without a hint of irony, that means more professional opportunities and potentially higher salaries in areas away from more globally connected business centres.

Global accounting firms set up shop in India’s smaller cities [Reuters]

The post Firms Are Making Big Expansions in India appeared first on Going Concern.

In May, EY Global CEO Carmine Di Sibio told CNBC’s Squawk on the Street that his firm “pretty suddenly” went from 20 percent attrition to 12. “So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he said. EY cited strong employee retention rates and “overcapacity” when the firm laid off 3,000 people earlier this year. There’s no reason we shouldn’t believe Carmine but cynical observers might want to acknowledge that the failure of EY’s Project Everest plan — and more specifically, the $600 million hole it left in EY’s finances — was likely a significant factor and unrelated to staff retention.

It looks like US Big 4 firms aren’t the only ones seeing historically low attrition. This is from the business paper Pulse talking about turnover at Korean firms:

According to industry sources on Sunday, the number of newly hired certified public accountants (CPAs) at the Big Four last year was 1,993, while the number of departures was 1,235. The ratio of departures to new hires, which reflects the trend of staff turnover, was 0.62. This figure remained around 0.8 in 2020 and 2021, but significantly dropped by over 25 percent at the end of last year.

Among the individual accounting firms, Samil PwC, known for having the lowest turnover rate among the Big Four, reportedly maintained a single-digit turnover rate at the end of June. On average, the Big Four firms have a turnover rate of around 15 percent.

It was also revealed that Samjong’s [KPMG] turnover rate dropped to the early 10 percent range in the third quarter of last year.

“While the workload has decreased, the staff turnover rate has significantly declined. We now need to consider the efficiency of labor management, including personnel costs,” said an official from an accounting firm.

Said Pulse, salary increases and decreased demand for accountants in the market are why staff turnover is so low. Makes sense and again, it tracks with what we’ve observed in the US.

They add:

There were around 1,050 new hires in 2019, around 750 in 2020, around 1,140 in 2021, and around 1,340 last year. However, this year, the dominant forecast is that even including the Big Four and other major local accounting firms, it will be difficult to reach 1,000 hires.

The layoffs will continue until morale attrition improves. In the meantime, can we all agree the accountant shortage is over? They’ll start complaining about it again when the economy gets better.

The post Why Won’t You Leave?! Korean Big 4 Firms Have the Same Low Attrition Problem Everyone Else Does appeared first on Going Concern.

Wrote The Telegraph on Sunday:

KPMG is giving extra training to its graduate recruits and hauling them into the office more regularly amid concerns that lockdown damaged Gen Z’s development and confidence.

The Big Four accounting and consulting firm has overhauled its graduate training programme after noticing that its “lockdown generation” recruits were finding it difficult to adapt to working life, sources told The Telegraph.

It comes after bosses at the firm observed that some of its new junior staff were lacking in confidence when it came to basic skills like working in teams and project management.

The firm, which is one of Britain’s biggest graduate recruiters, will now provide classes on “soft skills”, such as how to give presentations in person and how to work in a team.

The firm hired around a thousand new graduates in the UK last year and is expecting to increase that to about 1,500 this year.

KPMG has been doing new hire orientation completely remote since the pandemic, they’re now pivoting to three days in the office and two at home. The idea being that shy young recruits need to be socialized, much like how one would tame feral kittens by forcing them to be held and pet. Hopefully there’s less hissing involved.

“There’s no doubt that the pandemic has impacted recent graduates and apprentices, who are now joining the workforce,” said Jon Holt, KPMG UK CEO. “They have missed out on a lot. If I think back to my own time at the University of Nottingham it’s hard to imagine how my experiences – including the friendships I formed – might have been affected by lockdowns.”

“I admire their resilience and it’s important that as a business we support them as they begin their training and careers with us,” he added. “This includes offering additional courses to help them build soft skills, as well as training them in the big issues facing our clients such as ESG and technology.”

Bro, these kids are afraid of their own shadow, who gives a flying flip about ESG?

Related:

Big 4 Firms Are Noticing a Sudden Skills Gap in New Hires

The post ‘Lockdown-Damaged’ New Hires Struggle to Socialize at KPMG UK appeared first on Going Concern.

That leaves just one Big 4 firm. Here’s what PwC had to say about the possibility of layoffs:

So far PricewaterhouseCoopers LLP is the only one of the “Big Four” accounting firms that has not announced layoffs and said it had no plans to. The firm did allude to attrition in a statement to The Business Journals, but stressed that it did not serve to reduce overall headcount — and that it occurred year-round.

“We are not planning layoffs currently as a firm,” the company said in a statement.

PwC said “attrition is a natural part of our high-performing culture, so too is our philosophy of shared success.”

Attrition seems to be the word of the day. KPMG said in their Monday statement that “economic headwinds, coupled with historically low attrition” led the firm to make the decision to let people go. As much as we at Going Concern get a thrill out of calling bullshit, it looks like firms of all sizes are dealing with low attrition and therefore higher numbers of people who are choosing not to jump. Because leavers are specifically accounted for in firms’ business plans, that means churn must be forced if it doesn’t happen naturally. So that’s where we are.

We’ve heard from sources inside PwC that performance matters much more this year than last year and various posts on Reddit and Fishbowl confirm exactly that. See:

Beware of “performance-based” layoffs
Is PwC doing silent layoffs and calling it performance based?

And this recent thread on Fishbowl:

How has PwC not had layoffs make the news? I’ve heard so many friends getting silently laid off this past month, but not sure what’s true.

Posts all seem to use the same creepy language about people disappearing as if they were raptured or something.

On the other hand, you have plenty of OG commenters who say this happens every year (it does, to an extent) and that recent performance-based separations are just that, performance-based. If we believe what PwC sources have told us, it’s just that the definition of low performer has widened to include more people.

Stay billable, friends.

The post PwC Goes on Record to Say There Will Not Be Layoffs (Not Loud Ones Anyway) appeared first on Going Concern.

First, the chart. Priorities are aggregated by number of mentions from surveys of more than 500 tax leaders around the world and grouped by theme:

Here’s another. Ignore that we skipped Figure 2, it’s coming.

The report clarifies that just because talent slipped to the fourth spot overall it doesn’t mean firms no longer care about it. Big firms absolutely do.

“It should be noted that although the order of priorities may have changed, this doesn’t necessarily mean firms care any less about any given priority, it’s just that respondents’ primary focus may have shifted,” says the report. “As a practical matter, all of these priorities are inter-related, and the statistical difference between the top three priorities, for example, is only a few percentage points. And although finding and developing talent did drop from the top spot to the fourth spot overall due to input from small and midsize accounting firms, the hunt for talent is still very much a top priority at large firms.”

For firms with 30 or more people (Large firms in Figure 2 below), recruiting, developing, and retaining talent is still the highest priority. But at what the report defines as Midsize firms (between four and 29 people), the top priorities are efficiency and client service.

With talent out of the way, let’s talk about client service. “The prioritization of client services is especially evident at midsize accounting firms, where both individual and business clients are asking their accountants to play a more active advisory role,” the report says. “Midsize firms see expanding their services into areas such as tax strategy, financial planning, and business guidance as a key growth strategy, both to differentiate themselves from small-firm tax preparers and to compete with larger accounting and auditing firms, most of which already provide such services.” Three years ago we might say you need talent to expand into advisory areas but the report reminds us that technology and a seemingly unlimited supply of overseas accountants can get at least some of the work done. Too bad there isn’t actually an unlimited supply of overseas accountants.

Wrapping things up here:

Overall, the results of our 2023 report suggest that in the face of a possible recession, accounting firms are looking for ways to streamline their operations — through both process re-evaluation and the adoption of new technologies — and doing what they can to position themselves for growth in 2023.

To be sure, tax leaders are still dealing with a serious labor shortage, but they are also pursuing alternative strategies to achieve their goals, including greater investment in tax technologies, better training on existing systems, outsourcing, and even freelance contractors. Client demand for a broader range of advisory services and more flexible pricing models is also driving decision-making going into 2023, as is competition for higher-quality clients and the need to hire, develop, and retain experienced tax professionals at all levels.

RIP workers’ market, we hardly knew ye.

Thomson Reuters Institute 2023 State of the Tax Professionals Report [PDF]

The post If We Believe This Report, Talent Is No Longer Firms’ Number One Priority appeared first on Going Concern.

Published today in India’s business paper The Economic Times:

Deloitte plans to have around 30% of its workforce operating from India within the next four years, with an estimated total employee count ranging from 150,000 to 160,000, as the country figures prominently in the firm’s global growth plans, according to Romal Shetty, CEO, Deloitte South Asia.

Discuss.

The post Deloitte Plans to Have a Third of Its Workforce Operating From India Within the Next Four Years, Says South Asia CEO appeared first on Going Concern.

Orange County’s largest accounting firms are continuing their hiring spree, with most of the county’s top companies adding to their headcount in 2022.

Altogether, 39 firms on the list reported increases, including 22 by more than 10%. A year ago, 20 firms reported double-digit growth.

Only one firm reported a reduction in staff while eight reported no change. A year ago, seven firms reported a headcount reduction and two years ago, 13 did so.

Of the big firms, eight of 10 reported increases. OCBJ was kind enough to give us the numbers for three of the Big 4.

The Costa Mesa office of Deloitte once again topped the list with 1,097 employees, a 12% jump; a year ago, it increased headcount by 15%.

Deloitte OC Managing Partner Marshall Solomon has previously told the Business Journal that the local growth is a reflection of the company’s national growth; its companywide headcount rose 20% to 415,000. [Ed. note: Deloitte laid off 1.5% of its US workforce in April, the OCBJ numbers are for 2022].

Locally, it’s been growing in sectors like life sciences, technology and real estate.

No. 4 PwC, also known as PricewaterhouseCoopers, in Irvine jumped 18% to 489 employees. It’s the second straight year of double-digit growth; last year, it reported a 12% increase.

It’s right behind No. 3 KPMG LLP, which reported the same employee count at 498.

The number of partners at accounting firms in Orange County increased 6.4% to 700, up from 5.3% the year prior. The article also says the number of certified public accountants rose 9% to 2,014 but then states “executives at several firms are reporting a shortage of qualified candidates.”

The average base salary for accountants in Orange County is $69,000 according to one site with limited salary points to work off of. Glassdoor lists an average of $80,903 base for a CPA with 1-3 years experience in Irvine, $110,954 with 7-9 years of experience.

The post Who’s Hiring in Orange County? Apparently Everyone appeared first on Going Concern.

Dr. Tspipursky—aka the “Office Whisperer,” aka the “Hybrid Expert”—wrote in a recent Forbes piece that leaders who believe forcing employees to return to the office will naturally lead to mentoring and development are huffing cope. If anything, the pandemic has shown that employees can get shit done outside the office, which means demanding them to come back is, well, you know, not very smart.

There is no denying that every professional, accountants included, began to rethink how they do their jobs when they were forced to work remotely. In the accounting industry, the enticement—and offerings—for remote work roll on. As of May 2023, there were more than 600 remote accounting jobs listed on the job board of talent solutions firm Robert Half.

And there more, according to the ConvergenceCoaching ATAWW Survey, the percentage of accounting firms allowing their folks to work remotely in 2022 on a regular or fluid basis nearly doubled to 80%. And get this: 43% say they are adding remote recruiting to their talent strategy.

So, if you don’t give accounting talent what they are looking for, as Dr. Nicknames says, you may be shit out of luck. A Thomas Reuters’ article says that the desire for remote or hybrid positions remains strong, with 41% of finance and accounting professionals either looking or planning to seek new employment in the first half of 2023. Among those professionals, 63% plan to go hybrid, with 47% interested in a fully remote position.

According to a PwC Remote Work Survey, pre-pandemic, only 29% of financial services firms had at least 60% of their workforce working from home at least once a week.

So, as Dr. Tspipursky, who really is CEO of future-of-work consultancy firm Disaster Avoidance Experts, says:

Instead of forcing everyone to return to the office and hoping for osmosis-driven mentoring, it’s imperative to create a hybrid mentoring program that encompasses in-person and virtual mentoring elements. Such a program has been successfully implemented for several of my clients, such as the companies mentioned earlier. The result was happier senior staff and more effective mentoring.

Why are senior staff more willing to come to the office to do mentoring rather than through a mandate? Well, my focus groups with senior staff showed that they overwhelmingly realized the value of in-person mentoring: not only did they get in-person mentoring themselves, but they also recognized that in-person connection is very important for building trust. It allows junior people to be vulnerable when they ask questions that reveal vulnerability.

And he has the goods to back up everything he says:

From my experience, a hybrid mentoring program requires several key activities:

• Individual lunch sessions with senior professionals: One-on-one interactions with senior professionals are the most powerful form of mentoring, but given the scarcity of time for senior professionals, this should not be the only mentoring activity.
• Virtual coffee roulette with senior professionals: A lower time burden for senior professionals, allowing for more accessible mentoring arrangements, even though less impactful than individual lunch sessions.
• Group lunch sessions with senior professionals: A senior employee takes out a few junior employees for lunch, which facilitate knowledge sharing and relationship building in a time-efficient manner for senior professionals.
• Group mentoring: A senior employee mentors a cohort of junior employees, fostering a collaborative learning environment and reducing time demands on senior staff.
• In-person coworking sessions: One senior and several junior employees work together on their individual tasks in shared spaces in the office for a couple of hours. Junior team members can ask questions as they come up, while the senior staff person can check in on their work every half-hour or so. Doing so promotes teamwork and organic knowledge transfer, while decreasing the burden on senior employees.
• Virtual coworking sessions: Similar to in-person coworking, but conducted via videoconference for increased flexibility.

Firms with a heavy RTO hand should take heed and reconsider their “collaboration” mandates. If they don’t, the Robert Half folks are going to love all the job placement contracts.

The post Forcing People Back Into the Office to Foster Mentoring Will Only Foster Resentment, Says Cringe Nicknamed Doctor appeared first on Going Concern.

Because the accounting profession has a long history of being reactive rather than proactive especially as it pertains to emerging technology, firms are now scrambling to develop AI best practices and acceptable use policies. In the early days of ChatGPT (by “early days” I mean like four months ago), firms told staff to be cautious with ChatGPT and not to throw client data at it; at the same time, firms were developing their own AI technologies. Said a PwC Australia spokeswoman in February, “Our policies don’t allow our people to use ChatGPT for client usage pending quality standards that we apply to all technology innovation to ensure safeguards. We’re exploring more scalable options for accessing this service and working through the cybersecurity and legal considerations before we use it for business purposes.” Not long after, PwC US announced a $1 billion investment in AI to expand and scale its artificial intelligence offerings. There is absolutely no doubt firms are eager to figure out how to monetize this technology and fast.

While they’re doing that, there’s the issue of staff use of these tools. We really don’t know where stuff ends up when it’s put into the AI void but we do know ChatGPT uses your conversations to improve it. That’s fine if you’re a writer for a shitty accounting news site and need headline ideas because you ate a weed gummy for lunch knowing damn well you had a deadline, not so much if you are a professional handling sensitive data. OpenAI started offering an opt-out option for ChatGPT chat history however even if you choose this open they say “we will retain new conversations for 30 days and review them only when needed to monitor for abuse, before permanently deleting.” Boy is it gonna be fun when the data breaches start making headlines.

For now, we get a look at how one firm is handling the issue. Ranked #68 on the Accounting Today Top 100 and the sixth fastest-growing firm in the country, Sax LLP is working on an AI policy for its staff and spoke about it to ROI-NJ:

Leon Grassi happened to be drafting the in-house rulebook for how Sax LLP accountants might use artificial intelligence platforms minutes before speaking to ROI-NJ on the exact same topic.

It’s less coincidence than predictable that he was occupied by the thing a lot of accounting firms are right now.

“To be honest, an AI acceptable use policy for staff is not something we ever thought we’d be creating at an accounting firm,” he said. “But we’re by no means the progenitor of this. It’s spreading around like wildfire now.”

Grassi, chief marketing officer and head of business development at Parsippany-based Sax LLP, said that, with the emergence of AI-driven language processing tools such as ChatGPT, accounting firms aren’t just thinking about how their staff might interact with these tools far down the line. … It’s already happening.

In other words, as Grassi said, the cat’s out of the bag. The technologies are readily accessible to anyone. And accounting firm leaders don’t see themselves as in a position to tell their staff that they shouldn’t be used for research, emails, articles or other tasks.

Last week I wrote about several people who feel more than comfortable dictating what people can and can’t use AI for, 40% of HR professionals surveyed by talent company iCIMS for their annual “Class of” report who said that using ChatGPT/AI bots during the hiring process is a definite deal breaker. Screw those guys.

If your firm has issued an AI acceptable use policy we want to see it. Email editor@goingconcern.com, please and thank you.

The post Accounting Firms Scramble to Push Out AI Acceptable Use Policies appeared first on Going Concern.

The buzz of AI and ChatGPT is seeping into the job application process – for better or worse. Almost half (47%) of college seniors are interested in using ChatGPT or other AI bots to write their resumes or cover letters, and 25% of Gen Z already use an AI bot to help write their resumes or cover letters. But they should proceed with caution, as nearly 40% of HR professionals say using ChatGPT/AI bots during the hiring process is a definite deal breaker.

Oh please. HR has been using applicant tracking systems to automate the tossing of resumes into the garbage for years. HireVue can punt you from the applicant pool if it doesn’t like the cut of your jib. And now they’re using an AI tool that “scans emails from applicants and responds to those emails using language that feels warm and human” (the irony). So it’s a bit rich for those same people to turn around and say they’ll deny you a job if you get a little help from technology.

Here’s my question: how would they even know a candidate used AI to help with a cover letter or resume? ChatGPT detectors aren’t great at the moment. I ran this article I wrote through ZeroGPT and it said two sentences that I know for sure I typed with my human hands using words generated from my brain were suspected to be most likely generated by AI. To be fair, that result is complicated by the fact that millions of sentences I’ve written in my voice in the last 15 years are publicly available for language models to learn from, see this Washington Post investigation into Google’s C4 data set that shows Going Concern data has helped train a few large language models like Google’s T5 and Facebook’s LLaMA (those poor models).

For a better example, check out the Texas A&M professor who flunked his entire class and almost screwed them out of their degrees because ChatGPT erroneously took credit for writing their papers. To make that story even funnier, a Redditor ran a selection of text from the professor’s doctoral dissertation through ChatGPT and asked if the AI wrote it to which our future overlord responded “Yes, the passage you shared could indeed have been generated by a language model like ChatGPT, given the right prompt. The text contains several characteristics that are consistent with AI-generated content.” Beautiful.

Here’s my other question: why do they care? Really, why do they care? If AI can help someone who isn’t the best writer put their best self forward and produce an attractive cover letter then what’s the problem unless that person is actually a writer and the job position is Senior Writer?

To get perspective from the recruiter side, I asked Beth Dierker of Accountingfly (and by “asked” I mean I Slacked her with a link to the Mashable article) if she’s heard any firms complaining about candidates using AI to zhuzh up their resumes. She said not really and offered some advice for candidates:

ChatGPT can be a helpful tool for candidates, for example writing cover letters or enhancing your resume to highlight experience that matches job requirements. But in my opinion candidates should be careful and use ChatGPT responsibly. The copy produced should be proofread for accuracy and tone, and don’t let it misrepresent your experience.

So there you have it. Use it, just use it wisely. Fuck ’em.

The post People Who Have No Problem Ghosting You For No Reason Suddenly Butthurt About AI-Assisted Cover Letters appeared first on Going Concern.

He also discussed hiring, saying they’ve been seeing a slowdown in hiring across the board (he means outside of the firm), “particularly in professional services” (so, in the firm). He then talks about how consulting firms, including EY, have begun pushing back new hire start dates due to the state of the economy. “It really has nothing to do with ChatGPT…YET,” he said. “It has to do with the fact that many companies were hiring based on attrition rates that were much higher a year ago, a year and a half ago post-Covid, you know, people were leaving, The Great Resignation. Those attrition rates, for example for ourselves, went from 20, over 20 percent, down to 12, pretty suddenly.” This tracks with everything we’ve been hearing surrounding layoffs and layoffs-that-aren’t-layoffs (a.k.a. Death by PIP), firms are seeing much lower attrition rates than they budgeted for AND a slowdown in client demand, leading to cuts.

“So therefore a lot of companies, including ourselves, have found ourselves with more people than we need at this point in time,” he continued.

Foreshadowing more layoffs?

Above text was transcribed by a human with rickety hands, please forgive any errors. Just watch the video.

The post Carmine Talks About AI Putting HR Out of a Job, Attrition, and a Rough Labor Market appeared first on Going Concern.

Not to say there aren’t still firms totally on board with remote work — there are, and if yours is shoot me an email so we know where to send people when their firm forces a return to office — but it’s not looking good for the future of working in your sweats. Ah well, it was fun while it lasted.

Case in point, Elon Musk went on CNBC yesterday and railed on the absurdity of the “laptop class” working from home when so many other workers, like those on the Tesla factory floor, have to show up in person. “I think that the whole notion of work from home is a bit like the fake Marie Antoinette quote, ’Let them eat cake,”″ he said.

“It’s not just a productivity thing,” said Musk. “I think it’s morally wrong.”

He went on to ask if it is ‘morally right’ that you get to work from home while the people who fix your house have to physically show up at your house to do their job. “That’s messed up,” he said. “People need to get off their moral high horse with the work from home bullshit.”

Now, we can handwave this as one guy with a lot of opinions complaining specifically about software engineers but you best believe there are firm leaders out there who take anything said by a CEO on CNBC as the gospel and will see this as justification for increasingly aggressive return to office policies.

Let the record reflect that we strongly disagree with Mr. Musk’s view.

The post Elon Musk Thinks You’re a Douche If You Work From Home appeared first on Going Concern.

Financial Times has written about BDO USA’s plan to double its offshore workforce and couched the move as a direct result of the accountant shortage here in the US. “Shortage of young accountants leads BDO USA to double offshore workforce,” reads their headline. Some details from that article:

• BDO USA will add thousands of overseas jobs, largely in India
• The firm is aiming to have 5,000 people at BDO RISE within five years
• The firm currently employs about 12,000 people, has 2,000 people in India, and recently added about 100 jobs in South Africa

“We are seeing a tremendous talent shortage in the profession,” said BDO USA CEO Wayne Berson to FT. “While it would be nice to just hire domestically, you have got to be open to the notion that maybe someone else has something that you don’t have, that you can buy.” For cheap. He forgot for cheap.

People who regularly point out that there isn’t an accountant shortage but rather a shortage of salary offered to domestic accountants (looking at you, Reddit) will be pleased to hear that the FT article goes on to acknowledge that “US starting salaries for accountants often fail to match up to those available in finance or technology.”

As we already know, audit and tax in particular are starved for talent for reasons that I shouldn’t have to explain to anyone in audit or tax. Just in case though, FT includes this:

Berson said young people appear more interested in becoming consultants than joining the more stable, but less immediately lucrative, tax and audit professions.

“The next generation are wanting to move quickly, wanting to be excited by their job. A lot of them are looking at things like advisory services,” he said.

You know what’s exciting? Money.

Anyway, the FT article made me remember a tip we got way back in March when BDO laid off 85 advisory people. Actually it was more like 125 people including 40 back office folks but who’s counting. Just days after advisory head Eskander Yavar wished the newly-severed “the very best,” Wayne Berson and his entourage traveled to India to party with the RISE folks (RISE stands for “round-the-clock international services for excellence” which is just a fancy way of saying “cheaper offshore talent”). There was much celebrating the visit on LinkedIn at the time:

While we’re here, let’s look at some chatter from BDO’s bowl on Fishbowl around that time:

All of this might compel a reasonable person to ask if the so-called “shortage” is really the problem.

The post Rise Up! BDO USA Is Gonna Double Its Offshore Workforce, Mostly in India appeared first on Going Concern.

This is from CNN Philippines in March:

The country is facing a shortage of accountants as college enrollment for this field of study dropped while those licensed chose to work abroad, a group of certified public accountants said on Friday.

The Philippine Institute of Certified Public Accountants (PICPA) said local accounting firms already hit a tipping point and began hiring non-certified public accountants to fill the widening gap that started five years ago.

The group added that the country has produced just around 199,000 CPAs in the past 100 years.

“That’s a big problem now of the profession because several of the CPAs here in the Philippines are migrating abroad, or they are working online for foreign companies,” said PICPA national president Erwin Alcala.

OK that’s not so bad for us, it says right there their CPAs are choosing to work for foreign companies. A user on r/philippines offered their perspective on that article and the driving forces behind the shortage:

As an accountant, I see the following reasons why:

The CPA Board Exams (CPALE) is one of the hardest, if not the hardest board exam to pass. Can you even imagine taking five to six exam subjects that are all mathematical and analytical in nature? It doesn’t help that the Board of Accountancy (BOA) with its mindset of “Our profession is of the elite” and applying a quota over the number of examinees that will pass the CPALE. There are some people within the BOA that think that if a lot will pass, the value of CPAs will be dragged down. Hence, them applying a quota. That is why the passing rate is on par with the Bar exam.

And no it’s not the examinees are lacking knowledge, it’s the Board that is somehow, doing something behind closed doors. Well, you can take this with a grain of salt but this is for real.

2. The industry. Ten to fifteen years ago, as soon as we graduate from Accountancy school, we would be employed by accounting firms or other local corporations. Now? In my area alone, as soon as you graduate, you go straight to the BPO-sector serving clients either based in the United Kingdom, United States of America or Australia. It’s like accountancy school became a factory of well, BPO agents who have accounting as their specialization to serve foreigners. Brain drain right?

3. The salary. This circumstance is tied with number two. Locally, CPAs make Php 15,000 for a start or maybe Php 20,000 if such person lands in a good company. Non-CPAs of course starts a bit lower, Php 12,000 to Php 15,000. Again, the figures provided are for local companies such as accounting firms or well, any other in the local industry. Go to the BPO industry, to those who serve clients in the UK, USA or AUS, that figure gets doubled for a start. A cousin of mine, landed Php 45,000 for his starting salary as a basic bookkeeper of a US accounting firm. I, myself, started with Php 20,000, then jumped ship to another company, landed Php 65,000 and now, in my current, I am at six-figure already, and I am not a CPA too (not boasting). Bottomline is, can you imagine the pay disparity between a CPA and non-CPA in the BPO industry? If you cannot, I can explain it in one sentence: The BPO industry is a disruptor for the local industry that the disparity between the salary of a CPA to a Non-CPA working in the BPO industry is just Php 5,000 to Php 10,000 the most.

4. Going abroad. Well, this is true too. For those people who can’t find their green pastures here, they tend to go abroad. 80% of my college batch are in abroad to be honest. Some, chose to take the exams, pass but not practice the profession and just manage a business.

BPO = Business process outsourcing (BPO).

Point #3 says the starting salary for a CPA in the Philippines is about $270-360 USD if they choose to work close to home compared to $800 for a basic entry level role at an accounting firm here in the United States. Non-CPAs make about $90-$180 less than CPAs in outsourced roles which sort of makes sense as both groups are doing mostly grunt work. You can see why accountants in the Philippines would prefer to work for accounting firms in the UK, US, or Australia, and based on that Php 45,000 starting salary we can see why onshore firms would prefer that talent.

Another thing mentioned in that comment is the difficulty of CPA Board Exams. Off the top of my head, the pass rate is around 25%. Because “off the top of my head” isn’t sufficient fact-checking even for Going Concern, I looked it up and came across this December 2022 post about historical CPALE pass rates written by Joel L. Tan-Torres, Chairman of the Professional Regulatory Board of Accountancy from 2014 to 2018:

During my term of less than five years, the total number of passers come up to just below 32,000, with the most number of CPAs of 5,468 entering the profession after the October 2015 examinations. For the 13 examinations conducted during my term as Chairman, there were about 94,000, with a record number of 14,816 taking the examinations in October 2017. These numbers translate to an average passing percentage of about 34%.

Interesting because right around that time, the AICPA was observing a gap in people who graduate with an accounting degree and people who go on to sit for the CPA exam. Additionally, US accounting degree completions peaked in 2015-16 and have trended down since. Was there some horrible anti-accounting ad campaign launched in the mid-2010s or something that we missed?

He continues:

The trend in 2019, where two tests were given and three pandemic-era examinations, indicates passing rates reaching the lowest levels for the CPA examination in recent history. For these five examinations, only 6,847 out of 35,918 examinees passed. This represents a passing percentage of 19 percent. I understand that the American Institute of CPAs examination has passing rates historically averaging from 45 percent to 55 percent.

This declining trend of both new CPAs passing and examinees applying for the licensure examination is disturbing. This raises questions and issues such as whether the pandemic caused these declines; if there is a growing disinterest in students pursuing the accountancy profession; the state of accounting education and schools in the Philippines; the impact of the decreasing supply of new CPAs to employers in the local and global markets; the image of the Philippine CPA or accountancy brand in the global business and accounting communities; and even the state of the CPA licensure examination process and system.

Bringing us back to current day, Kristine Ismael (who herself is a professional) has written about the growing Philippine CPA shortage for The Manila Times:

At the recent accountancy centennial celebration, Professional Regulation Board of Accountancy Chairman Noe Quiñanola mentioned the issue of a shortage of accountants in the Philippines. There are about 200,000 certified public accountants (CPAs) as of 2023. Recent CPA licensure examinations add only about a few couple of thousand CPAs every year due to the passing rates not going above 25 percent.

Traditionally, new passers get their professional experience at audit firms in order to land better job opportunities and higher compensation in the future. This entails going through the busy season where accountants usually experience 50- to 90-hour work weeks for about three to four months. This job requires a lot of personal sacrifices, physical and mental stamina, emotional stability and spiritual strength, especially during the busy season.

Having gone through several busy seasons myself, I’ve experienced and witnessed people miss a lot of sleep, miss out on some social activities outside work and develop unhealthy habits to cope with the stress, to name a few.

Gee, can’t possibly imagine why young people would choose other professions.

As I said at the outset, for now it seems US firms shouldn’t panic about these numbers. But if the trend continues both in firms increasing their offshore resources and in the foreign countries we get talent from seeing declining accountant numbers, this pipeline might end up as dry as ours. Can someone check on India and see how they’re doing for talent?

The post The Philippines is Running Low on Accountants and US Firms Should Be Worried appeared first on Going Concern.

At first I read this and wondered if I accidentally made decaf this morning because what? If anything technology transformation would ease the shortage because it reduces the busywork tasks, thereby reducing the number of grunts required to do said work. Then I read it again and understood what he’s saying. The pool of trained grunts is smaller because technology does much of the work they used to do, so there are fewer of these people ascending the ladder.

One explanation for the shortage of accountants is technology transformation, James says, meaning that machine learning and other artificial intelligence algorithms have taken on some of the more “menial” tasks in accounting, such as checking transactions on an audit.

“There’s a lot of work that recently graduated students used to do in accounting that was really quite menial,” James says. “You can have a program go through literally millions of transactions in a few seconds looking for patterns that are unusual that might suggest either an error or an intentional transaction that shouldn’t be in there.”

Since some of the more entry-level accounting jobs have been taken over by emerging technologies, firms are having a tougher time finding professionals to fill higher-level positions.

Emerging technologies have had both a “positive and a negative impact on the accounting industry,” James says. “This means there’s an opportunity for some more interesting work for them, but it also means that some of that industry has actually had a hard time finding enough students at the moment.”

Let’s pretend for a moment that low pay and long hours aren’t almost entirely to blame for the shortage. Could he onto something?

The post Seniors and Up Are Hard to Find Because Associate Grunt Work Has Been Automated? appeared first on Going Concern.

But firms couldn’t be doing this solely because they trust their staff and want them to be happy. No, the Great Resignation was in full swing when the hybrid work announcements started rolling out and firms were afraid to lose people if they pushed too hard on RTO. Better then to use the carrot, let managers be the bad guy when the team absolutely must be in the office and trust educated, adult people to make appropriate choices for themselves otherwise.

In a recent Employee Benefits News piece, Frank Giampietro, chief well-being officer at EY, says that his firm continues to embrace the carrot. Though as the red hot job market cools off, we are beginning to see hints of firms contemplating the stick.

At EY, they realized that employee obligations at home were preventing some people from coming into the office. “We have a multigenerational workforce, and when we went out and talked to our folks, we discovered there was a wide variety of things getting in the way, some of which were financial. We had to remove the barriers and create opportunity,” he said. So the firm added $800 to the existing $1000 well-being fund that reimburses things like childcare, pet care, and commuting. This is the point in the article where the parents laugh heartily at the thought of $800 making even the tiniest difference in the daycare bill.

The message behind this is that great things happen when people are together in person, and the company is invested in making that a reality for employees, says Giampietro. And it’s paid off: The company saw a 150% increase in employees returning to the office in just over a year.

Citation needed.

Other firms performed the same analysis on their employees and came to the same conclusion EY did: if you help people out with costs they will now incur as a direct result of being in the office, they are more likely to come in. Accounting firms might be singlehandedly propping up the Doggy Daycare Industrial Complex.

And again, carrot:

EY has avoided mandating a return-to-work, which gives their team a more open-minded approach to the hybrid structure, Giampietro says. But to further entice employees to return, EY established “predictable flexibility” so that people could plan ahead and decide as a team when they would come into the office. Not only does this allow for in-person collaboration, but creates accountability among teammates.

“We want to try and empower people, not control them,” says Giampietro. “We consistently get folks who say, ‘I didn’t think I had any reason to have to come in and be with my team. I was getting my work done just fine. I had no idea what I was missing out on until I experienced it.’ That is really our philosophy: Give people the opportunity to experience it, and then let the experience speak for itself.”

Contrast that philosophy with the Bloomberg software engineer in this recent Fortune piece. She left New York City at the beginning of this year to care for a sick relative and was fired-but-not-fired when returning to office would be an impossibility for her.

She says Bloomberg has been trying to get people back in the office since November, at first through informal communications from managers and HR about how great face-to-face collaboration is (sound familiar?). It didn’t seem any policy was enforced, she and her team continued to work from home. Some of her colleagues had even moved away, no one seemed to bat an eyelash.

Meanwhile, she got a “glowing” performance review and a fat bonus. All seemed well.

Come February, Bloomberg got more aggressive about RTO. Says Fortune, employees were expected to use an internal system to record their location each day. And if they didn’t log in from their assigned office for those three days a week they’d get a nastygram from their manager. She informed the company of her move and said it would be impossible for her to come in three days a week, they warned her that this might be “difficult.”

“I was very frank with my manager,” she said. “I explained the situation—that it wasn’t just a personal preference but a necessity.” She says Bloomberg never said explicitly that return to office was required, nor did they communicate consequences for those who could not or would not oblige. You can guess where this is going.

She received a strongly worded letter from HR that they would fire her if she did not return to office immediately. Further, they would consider it “voluntary resignation.” She had no plans to resign and communicated as much to the company, the company went ahead and sent her termination instructions. “They are firing me but they are refusing to admit that they are firing me,” she said.

For now, we aren’t seeing this kind of wide-reaching RTO push from the big accounting firms. But the talent shortage is doing a lot of heavy lifting here, firms don’t want to scare people off. If and when layoffs come, don’t be surprised to get a few unfriendly reminders from leadership about getting your butt back in your chair. Think of all the collaboration you’re missing out on!

Is your manager passive-aggressively goading you back into the office? Let us know.

The post While Other Industries Have Turned to the Stick, Accounting Firms Continue to Use the Carrot to Encourage RTO appeared first on Going Concern.

IRS employees, y’all are out of luck sorry. Not like you’re allowed to partake anyway.

The post Busy Season Survival Tip #626: Save Those Paperclips appeared first on Going Concern.

Since we’re all sick about talking about the talent shortage, let’s take a look at the second biggest problem for firms in 2023: Rising salaries.

Text:

2. Rising salaries

Scarce supply and high demand can only mean one thing: higher prices.

“Rapidly rising compensation rates in our industry — and poaching from large, national firms” are serious problems for firms, according to Erica Ishida, president and COO of Ohio’s Apple Growth Partners.

Firms have to pay talent so much more, in fact, that many of them share the concern of Glen Swanson, CFO at MHCS in Iowa, about “maintaining profitability while having to significantly increase salaries.”

Raising salaries to levels that would put accounting back in the game as an attractive major to students is indubitably a hardship for firms. F.

Now let’s see a chart of staff salaries over the same period https://t.co/2vEabzGTJd

— Going Concern (@going_concern) March 14, 2023

We have said this before but raising salaries now would hurt a lot less had firms done a better job of doing it over the last decade and a half or so. You know, incrementally. Instead, firms skated by year after year as computer science lured the would-be accountants away with its shiny technology and superior starting salaries. Suddenly 15 years have gone by and new hires are making basically the same money their predecessors — who are now partner age — made when they were hired in the early ‘aughts. That’s changing now, thankfully, but it should have been done a decade ago.

While we’re here, let’s look at accounting’s biggest issues in 2017 (Accounting Today):

Firms continue to face a myriad of issues that affect the way they work, including increased regulation and global complexity, a shift in the workforce, and new client demands for value-added services.

More recently, though, new issues have emerged that have actually put into question the role and value of accountants in general, such as artificial intelligence and robotic process automation, which has really shined a spotlight on the profession. The Boston Consulting Group predicts that by 2025, up to one quarter of jobs will be replaced by either smart software or robots. A separate study from Oxford University suggests that 35 percent of existing jobs in the United Kingdom are at risk of automation in the next 20 years. Among the top 10 percent of jobs most likely to be automated: insurance underwriters, tax preparers, loan officers, credit analysts, and accounting professionals.

Ah to go back to the days when they were threatening to put you out of work! If only firms had been more proactive about the salary issue, they’d have five better problems to focus their efforts on in 2023. Like automation, succession planning, and how to get more Papa John’s coupons.

The post Accounting Firm Leaders Cite ‘Rising Salaries’ As The Second Biggest Problem Facing Their Firms appeared first on Going Concern.

VSCPA did a very similar survey in 2020 [executive summary PDF here] and compared to that, accountants in the state saw the biggest salary bump in:

There were some unexpectedly low changes elsewhere, particularly at the 7-9.9 years experience level and Partners:

A few other points from the executive summary:

• Among non-accountants, mean salaries for staff in support positions include Finance ($109,013), IT ($91,000), Human Resources ($87,727), and Marketing ($78,882). Those in General Administration ($53,516) and Paraprofessionals/Bookkeepers ($55,173) earn less.
• Non-accounting positions also showed sharp changes from 2020, with Finance (+34.5%) and IT (+21.8%) making considerably more, and HR (+12.5%), Marketing (+6.2%), Paraprofessionals (+5.4%), and General Administration (+3.7%) earning smaller 2-year increases in mean salary.
• Participants in public firms indicated their highest and lowest salary by staff category if they had more than one person in a position. Average spreads can be quite wide, as high as 75% among Partners, 60% among Directors, and between 19% and 29% among Accountants I-III.

Finally, this note is the takeaway:

Overall, public firms reported a mean increase in salary of 7.6% between October 2021-22 [emphasis ours] and anticipate a slightly lower mean of 6.6% in October 2022-23. This is considerably higher than the 4.0% annual real and anticipated increases in 2020. Average increases in industry/corporate (mean 7.0%/median 5.0%) and government/nonprofit (mean 8.1%/median 7.0%) in 2021-22 were also relatively high.

You can check out more on the survey results or purchase a full report from the VSCPA here.

The post Survey Says: Virginia Accountant Salaries By Experience Level appeared first on Going Concern.

When Australian Financial Review wrote up the KPMG cuts, they mentioned that competitors at EY and Deloitte did not plan to cut jobs, despite having observed market conditions similar to those that spurred KPMG to cut people loose. “We are still experiencing solid growth and demand for our services across many parts of our business,” said EY Oceania CEO David Larocca. “We have pulled back on recruitment where necessary. We do not currently have any plans for reductions in our headcount.” Deloitte shook the whole thing off, with Deloitte Australia Chief People and Culture Officer Pip Dexter saying the firm was experiencing solid growth and planned to increase overall staff numbers (OK good luck with that, Pip).

Now PwC Australia has weighed in — and we can officially stop adding “Australia” after every firm name now that it’s been established that this article is about Down Under Big 4 firms — to say that while they’ve already seen client work drop off a bit, they don’t plan to get rid of anyone.

AFR:

PwC Australia has experienced a fall in client demand from the peak hit early last year but, unlike KPMG, has no plans to go through the “painful” process of cutting jobs, chief executive Tom Seymour says.

In fact, the firm has 1100 open positions and has forecast growth of between 10 per cent and 15 per cent this financial year. That’s down from 17 per cent in 2021-22 but still above its long-run average growth rate.

The outlook for the nation’s largest professional services firm is consistent with rivals Deloitte and EY, which have told The Australian Financial Review they too had no plans to cut jobs despite the fall in client demand. These firms also reported that staff turnover had fallen as companies across the economy eased back on hiring.

Over the years, we at Going Concern have observed a pattern in times of economic trouble and you probably have, too. Firms say “we are not firing anyone” and technically they don’t, they just ratchet up PIPs and cut the “low performers” or worse, don’t put people on a PIP at all and say it was low performance anyway. We saw this during the early days of the pandemic when EY on this side of the globe fired a bunch of people who weren’t on PIPs “for low performance” and then, when questioned about it by staff who clearly knew what was going on, said there’s no rule saying they need to be on a PIP. Side note: you can read a powerful letter calling out EY management for the way they handled these layoffs-but-not-layoffs here.

We may be in for choppy seas ahead so keep your head down and your utilization high if you want to sail through it, no matter what the firms say.

The post PwC Australia Says It Will Not Be Firing People Just Because Client Work Slows Down appeared first on Going Concern.

In New Jersey, they are piloting a program that grants credit for work. A partnership between PwC and Saint Peter’s University in Jersey City, the program essentially trades that 5th year of education for experience in the field, a win-win for both students and firms. The university oversees the work for credit program the same they would any other internship for credit, making sure that students are actually learning and not just working for free. No reasonable person can argue that 30 arbitrary units in any subject (the current requirement) is better than actual experience and exposure to accounting practice where you learn more about accounting than you would in underwater basket weaving. One CPA I spoke to who was instrumental in arranging this pilot program told me that he hopes to see this program expanded to firms of all sizes, and accounting employers beyond large public accounting firms, even non-profit, government, and industry. We’ll have to wait to see how that shakes out.

On this topic, I came across a recent article in the Journal of Accountancy that describes another firm/education partnership also integrating experience and education, albeit in a different way to what they’re doing in New Jersey. Read:

Though it wasn’t common among [2022–2023 chair of the AICPA board of directors Anoop Natwar] Mehta’s peers when he was in school, he got work experience in accounting while still a student. He believes that gave him a leg up, and he believes today’s company leaders can benefit from offering the same opportunities.

“These students are getting recruited before even they finish their degrees, which is new and which is exciting,” Mehta said. “If I relate back to my own career, I started working after a couple of years in college, and I do know that I felt that I came out ahead because of it.”

Mehta made mention of an AICPA program in development to help firms and students alike. Students finishing their undergraduate degree who haven’t yet reached the 150 hours required for CPA licensure would be hired by firms and work as first-year associates while taking up to 30 hours of cost-effective classes catered to the skills the firms need.

“I’m all for figuring out a way to formalize one year of work experience tied in with their education,” Mehta said. “If we can figure out a way to make that affordable, I think we’re really going to start to move toward solving pipeline issues.”

Watch this January 19 AICPA Town Hall for more on this topic, pipeline discussion timestamped here.

A couple years ago, EY announced EY Career Path Accelerator, a partnership with Hult International Business School to offer a free online MBA to 312,000 employees. As of February 2022, only 55 EYers had graduated from the program. So that concept has already been tried out to some success.

Desperate times call for desperate measures and the traditionally uncreative profession is going to have to start hitting the blunt to come up with some wild ideas to get students into accounting. We imagine it won’t be too difficult to convince firms to let people work for free. The rest might take some evangelizing.

The post Integrating Experience and Education is One Way to Ease the Accountant Shortage at Least a Little appeared first on Going Concern.

We haven’t mentioned it before because it’s stupid but “quiet hiring” is one of nine workplace trends for 2023 identified by research firm Gartner and the newest buzz phrase on the block until the next dumb one comes out. All nine are:

These trends really aren’t so terrible when not packaged in dumb buzz phrases and they aren’t new either. Quiet hiring in particular boils down to dumping more work on your existing employees or shuffling them around rather than scouting new talent because it’s too hard to find people these days. Gartner describes it as:

In 2023, savvy HR leaders will turn [quiet quitting] on its head with “quiet hiring” in order to acquire new skills and capabilities without adding new full-time employees. This will manifest in a few key ways:

• A focus on internal talent mobility to ensure employees address the priorities that matter most without changes in headcount
• Stretch and upskilling opportunities for existing employees while meeting evolving organizational needs
• Alternate approaches, such as leveraging alumni networks and gig workers, to flexibly bring in talent only as needed

“With quiet hiring, we’re talking about an organization strategically, at a leadership level, looking at the talent they have across the organization and where the critical gaps are and finding ways to fill those,” she said. “It’s trying to acquire new skills and capabilities without acquiring new people,” said Emily Rose McRae, senior director of research at Gartner, to San Francisco’s ABC7. Yeah, they’ve been doing that for a long time, it just has a stupid name now.

While employers are moving people around and forcing a single person to do the work of two or more (sound familiar, acting seniors who aren’t getting senior pay?), workers are apparently angrily spamming resumes hoping for an exit opportunity that sticks. So the “rage” in “rage quitting” boils down to rage at rising cost of living, flat salaries, and the bullshit that comes with working for companies that suck.

When “rage applying” appeared a few weeks back I was convinced it had to be a troll. Actually I’m still not convinced it isn’t but HR magazines are picking it up so even if it started out as a joke it’s no doubt been absorbed by and instilled fear in HR people everywhere. So what is it exactly?

HR Exchange Network describes it as:

Rage applying is when young employees in professional fields get fed up with the workload, boss, compensation, or all of the above and apply to as many other companies as they can while soaking in their anger. The act of applying to other jobs when one’s morale is low is nothing new. But the term “rage applying” is the latest buzzword to surface in Human Resources as Gen Z and some Millennials grapple with a wide range of disappointments and setbacks.

Many of them began their careers in a pandemic that had people feeling more isolated and forcing them to work from home. As a result, they have not cultivated the kinds of relationships that get people to stay. They might have lacked the mentorship that can fuel a new worker.

Oh fuck off.

In January, CNBC tapped a bunch of “experts” to explain the driving factors behind rage applying and shared this TikTok that raised awareness of it among disenfranchised young people “lacking mentorship” in that viral way popular TikToks do:

@redweez Keep rage applying when youre mad that energy will push you to greater horizons than the job youre stuck in! #work #milennial #worklife ♬ The Sign – Ace of Base

CNBC also introduces us to Chelsea McLin, a young woman who leveraged rage applying to get a $14,000 bump in salary:

Whenever Chelsea McLin was “fed up” with her job — whether it was because she received a passive aggressive email or got more work than she could manage — she would think to herself, “Let me fly somewhere.”

She then applied for a bunch of jobs, sometimes four to five a day, she told CNBC Make It.

“I was just overwhelmed and stressed all the time. I was like, I don’t like the person I am right now. I want to move before I actually hate this job,” said McLin, who was working as a coordinator at a nonprofit organization.

Career coach Jenna Greco told CNBC that the issue is blindly applying to any and everything just to get out of a job you hate.

What makes rage applying different from a typical job search is also the mass application to “any job” that will get workers out of the one they’re in now, said Greco — even if one is clearly unqualified for it.

For example, Chelsea McLin said, she applied to jobs “everywhere” and some of those positions were chosen at “random.”

“There were a lot of tech jobs, project management jobs … I don’t know if I’m qualified, but I might as well put it out there.”

And it worked out for her. What’s the problem?

Said the career coach, if you rage apply to a bunch of jobs you might have to — brace yourselves because this will be shocking — deal with rejection. One might counter this concern by suggesting that if you are spamming resumes, you are less invested in the process and therefore won’t take rejection personally because you know that you aren’t a good fit for the positions you’ve applied for. So it’s not you and your skills that have been rejected but rather the skills and experience you don’t have.

The downside of “spraying your resume out there and seeing what sticks” is having to deal with the possibility of rejection, said Greco.

“The rejection emails wear down your confidence. I saw a TikTok the other day that said, ‘Just got another rejection email from a job I don’t remember applying to at 3am,’” she added.

“Why put yourself in a position to get rejection emails from jobs you don’t even care about or remember applying to? It can fuel more frustration in your current job.”

So? Why stay at a job that has fundamentally changed you as a person and turned you into someone you don’t even recognize?

She added that rage applying is “a very reactive way” to job search, which can be detrimental in the long run.

“You have the potential to jump from the frying pan into the fire. When you haven’t taken the time to really get clear on what you want in your next job and target roles that align with that, you’re just sending out applications hoping the next job will be better,” she said.

“The high that comes from a potential pay bump at another toxic job is going to wear off pretty quickly.”

I repeat: so? Why shouldn’t people take advantage of this hot market while we have it? There is evidence the market is cooling down from the worker side (yes, even in accounting), which is all the more reason to sniff around and see what’s out there before the tables are turned back to employers.

Go forth and rage, kids.

The post OK Now They Are Just Trolling With These ‘Newest Workplace Trend’ Buzz Phrases appeared first on Going Concern.

The question:

Ignoring the talent shortage what’s the most pressing issue in the profession right now?

— Going Concern (@going_concern) February 20, 2023

Let’s begin with my favorite response of the bunch:

Ignoring the talent shortage

— Kendall Collier (@KendallCollier) February 20, 2023

Really though.

And here’s one from the Illinois CPA Society based on what they’ve heard from their members:

What we hear among our members: retaining existing staff, lack of support for pursuing the CPA credential, and DEI challenges. During busy season, retaining staff will likely be #1.

— Illinois CPA Society (@IllinoisCPA) February 21, 2023

ICPAS has also done some research into why accounting graduates are choosing not to take the CPA exam if you’re interested in that. For the uninitiated, CPA exam candidate numbers have been on the decline since the second half of the ’10s, with a gap between accounting graduate numbers and anticipated CPA exam candidate numbers first appearing around 2014. The number of CPA exam candidates decreased 17 percent between 2019 and 2020 and it saw a 6 percent increase from 2020 and 2021 according to the AICPA Trends report which is basically a thorough physical examination (including blood work and squat and cough) for the profession. A modest increase in examination candidates is expected for 2023 due to the launch of CPA Evolution in 2024, just as we saw in 2010 prior to the significant exam changes ushered in with CBT-e in 2011.

Back to the question of pressing issues. In no particular order, here are the rest of the responses:

• Lack of succession planning of local firms.
• How to leverage tech to make busy season more manageable for professionals
• Pricing. There are still too many firms undervaluing themselves especially for D level clients. Appropriate pricing helps with compression and capacity issues.
• Pricing, deadline work compression, and outdated mindsets.
• Deadline compression forcing more work into q1/q2 is a pain for me.
• I think everything is at least indirectly related to the talent shortage, but I would go with (1) work life balance and (2) credibility/audit failures #ftx and wirecard, which I think are driven in part by the talent shortage

Work-life balance or rather the lack thereof is an issue that has long served as the boil on accounting’s ass and is believed by anyone who has been paying attention to be one of the main factors that has led to a shortage of accounting graduates and public accounting talent from entry level up to senior, second only to offensively low starting salaries. The two are intrinsically tied together as there is a direct correlation between the amount of shit one is willing to take and how much one is getting paid to do it. We suspect that were accounting firms to raise salaries in a significant way, talent would follow. Because salaries did not budge much over the past 15 years and because workloads became heavier and heavier as the years wore on, the perceived value of an accounting career eroded more and more with each passing year. And now we’re where we are.

The problem now is that firms can’t just hire more people to reduce the workload. There are no people. That leaves raising salaries as the big draw, and there has been some positive movement in that area, it may not be enough.

So we’re pretty much screwed there. Anyone want to talk about succession planning?

The post We Asked Twitter What’s the Second Most Important Issue in the Accounting Profession Right Now, Here’s What They Said appeared first on Going Concern.

Quick thread to provide some additional info regarding changing the 150 credit hour rule.

Professional licensing is managed by each individual state. Dept of Labor and Licensing, State Board of Accounting is responsible for enforcing the licensing laws in that state

— Byron Patrick, CPA (@byron_cpa) February 20, 2023

To change the requirements to get licensed as a CPA, each State Govt must pass a law to make the change. This is not 1 person/department’s decision.

As a result, in order to make a change, a Bill must be sponsored and submitted to the state legislature.

At that point, the state legislature will prioritize the bills they will vote on in that session. They never get through all Bills.

Let’s be optimistic and say that the Bill is brought to the floor. We now must make a big lobbying push

State legislators won’t bother to show up to vote unless their constituents are advocating for or against the matter.

Keep in mind there will be arguments w/in the State against making the change. Specifically, higher education will be negatively impacted by the lost revenue.

Public colleges are State Employees. Let’s assume advocacy can overcome this resistance.

You get the votes to pass both sides of the govt, we now need a governor to sign the bill. Again the Gov needs to know there is support to prioritize signing the bill to make it a law.

Congratulations, requirements have been changed in 1 state. 51 additional jurisdictions to go.

If I recall it took nearly 10 years to get a critical mass of states to change to 150, due to the need to gain support in each state government to even care about making a change.

A country with different req for the CPA is a nightmare. A couple states might benefit because people from out of state get licensed in their state. However, holding yourself out as a CPA in other states will be an issue. How many CPAs work with clients only in 1 state?

There is a lot of frustration with the @AICPA that they aren’t listening to the members and supporting a change. Their purpose is to support, advocate and protect CPAs and the License. They have a vested interest in ensuring there are as many CPAs as possible.

They also have first-hand knowledge of how hard it is to make changes to the requirements to become a licensed CPA. They are not going to intentionally not take action on the pipeline challenges putting their membership, dues, and purpose at risk. We all have the same goal.

Finally, do not read this thread and assume I’m an advocate of 150 >120. I refuse to have that debate as you may as well argue that gravity is bad for earth. The reqs that are in place are not going to change. I am an advocate of influencing the things that we can change.

Such as:

• Creative approaches to achieving the ed reqs
• Financial support to help people achieve their ed reqs
• Advocating for firms to compete for talent w/ compensation & benefits
• Elevating firms and their practices that create environments that people want to be a part of
  

The passion and interest in easing the pipeline challenge is awesome. It is in our best interest that we continue to fight and advocate for people to choose a career in Accounting. There is no silver bullet and certainly, there is no simple answer.

People are going to be willing to do the work & check all the boxes if the outcome is worth the effort. Let’s find ways to make sure that outcome is worth it… because by today’s standards of overwork and underpaid for new/young accountants, even 120 won’t be worth the effort.

/end

Go debate or praise him on Twitter if you want or duke it out in the comments, up to you.

The post What You Should Know About Changing the 150 Hour Rule Before You Debate For or Against It appeared first on Going Concern.

Thomson Reuters has written up the 2022 ConvergenceCoaching, LLC® Anytime, Anywhere Work (ATAWW) Survey — you can request survey results here — and we learn that almost all responding firms say they are being flexible about where and when their people put in their time.

Of the 216 accounting firms that participated in the 2022 ATAWW Survey, 97% allowed their talent to choose where they work, while 94% offer flexibility in when people are working. The report notes that with more firms leaning into outsourcing, offshoring, and fractional staffing resources, it is increasingly important to learn to work asynchronously across multiple time zones. The survey also shows that surveyed firms are leveraging gig-based workers (30%), domestic outsourcing teams (30%), and overseas offshoring providers (35%).

With an increasingly tight talent pipeline, the report illustrates that leaders need to get innovative on staffing their teams. In fact, the 2022 ATAWW Survey found that “81% [of survey respondents] hired at least one remote team member they had not employed before,” which essentially means that firms are hiring new staff in their remote geography. It’s remarkable to note that this result was up from 38% in 2020.

A few bullets from the survey, including a familiar one that was just explained in the paragraph before this:

• 95% offer remote auditing, and the percentage who performed more than half their audits away from the client site soared to 54%
• 83% of firms allow Admin and Operations to work remote or blended
• 81% who employ remote talent hired a “stranger” outside their geography (up from 38% in 2020)
• 73% don’t dictate when extra hours are worked (no more mandatory Saturdays)
• 19% offer Unlimited PTO
• 12% close the office between Christmas and New years

No more mandatory Saturdays? We’re gonna need some confirmation on that. We’re also going to need confirmation on the 47% of survey respondents that say they close their offices on Fridays when things are slow; 1% of the firms surveyed say they give Fridays off year-round. We’re gonna need their names and HR contacts, thanks.

2022 ConvergenceCoaching® Anytime, Anywhere Work (ATAWW) Survey [ConvergenceCoaching]

The post Accounting Firms Are Being Uncharacteristically Modern About This Whole Remote Work Thing appeared first on Going Concern.

I’ve tagged this to Partners Corner to be sure the handful partners who read here will set a calendar reminder for 2024 so we never again miss this important day.

While you’re here, I invite you to dive into Pizza Parties In Lieu of Compensation: A Comprehensive History, that article will remind you that National Pizza Day and National Pizza Party Day are two distinct events. While National Pizza Day has sadly passed, we can look forward to National Pizza Party Day on Friday, May 19.

Stay billable, friends!

The post We Regret to Inform You That National Pizza Day Has Come and Gone appeared first on Going Concern.

As CEO of a staffing firm that connects companies with professionals in Mexico, every day I speak with accounting firms, CFOs and other executives looking to hire accountants and other financial professionals in the U.S. The narrative is always similar: They have jobs to fill but they can’t attract the employees they need.

There aren’t enough qualified candidates to fill all open positions.

Just last month, I was contacted by a mid-size CPA firm that had won a slew of new business and was looking to hire 16 auditors and a high-level manager to run the audit team. And they needed this team fast. Despite their best efforts, they couldn’t recruit the talent they needed. They were exasperated by the lack of qualified candidates. What’s more, the applicants they did consider hiring, even entry-level candidates, had salary expectations that often exceeded those of highly experienced staff who have been with the firm for years.

I wish he’d thrown out a number here. From the firm side, entry-level candidates’ salary expectations are too high. From the staff side, highly experienced staff are getting ripped off.

And so, as you probably predicted when you started reading this, Max says firms are seeking out talent where the median salary for an entry level accountant is a smidge lower than what those entitled American Zoomers are asking.

Let’s throw Glassdoor in here too, this is for accountants of all experience levels.

MX$150,000 is $7,908 USD. That works out to about $95k a year. Here’s how it shakes out for entry level accountants south of the border:

And Payscale:

Max, who has no dog in this fight obviously, says that many small and mid-size firms are beginning to look outside the U.S. to solve their staffing needs. We have known about a huge increase in accounting firm outsourcing in the last decade but rarely does Mexico come up in common conversation, mostly India and the Philippines.

Says Max:

The U.S. isn’t the only country in the world with talent. For example, our neighbor to the south is rife with bright, bilingual individuals often with the same (if not better) qualifications as their U.S. counterparts. As of the second quarter of 2022, there were more than 466,000 accountants and auditors in Mexico while the U.S., despite having more than double the population, has just over 665,000 actively licensed CPAs. With a shared border, strong cultural familiarity and other benefits, I’ve noticed many multinational accounting firms have begun to see Mexico as a goldmine for accounting and finance talent.

We want to dig into this and see if Mexico has experienced any of the same pipeline issues we are currently experiencing. We’ve got a call out to Instituto Mexicano de Contadores Públicos, will report back with what we find.

Can Outsourcing Help With The U.S. Accounting Talent Crunch? [Forbes]

The post Accounting Firms Have Begun to See Mexico As a Goldmine for Accounting and Finance Talent, Says Guy appeared first on Going Concern.

But you know this article isn’t going to be praise for employee perks. No, we’re going to call out how CLA transparently discusses a rise in ‘musculoskeletal issues’ in their workforce that prompted them to partner with a group offering virtual physical therapy.

Employee feedback, [CLA managing director of HR Patrick] Bowes says, was the most critical driver of the changes to the CLA benefits strategy, which was also informed by claims data. For instance, leadership has seen a rise in short-term disability applications, and thus eliminated its tiered structure for eligibility, so that all workers are covered at 100%. Noticing the rise of musculoskeletal issues among the workforce, it instituted a new partnership with a provider that offers virtual physical therapy. It also rolled out an option that allows employees to seek second opinions and treatments related to complex diagnoses at some of the best care centers in the country—at no cost to employees.

“If I have something I need treatment for—we’re seeing things like cardiac issues, cancer, orthopedic things—I can travel to the best centers for that specific care, bring a caretaker with me, be treated on site there and never see a bill for it,” Bowes explains.

Can we talk about this? Surely it’s not only CLA seeing an increase in these issues, it’s just that they were the ones who decided to talk openly about it for this one article. Should we be concerned? Is this the profession’s real crisis and not the talent shortage? WHY DOES EVERYTHING HURT?

It is known that stress has physical consequences. You are probably holding a bunch of it in your jaw and shoulders as you read this (friendly reminder to take a deep breath, loosen your jaw, and gently roll the tension out of your shoulders). This is from an American Psychological Association article on stress effects in the body:

When the body is stressed, muscles tense up. Muscle tension is almost a reflex reaction to stress—the body’s way of guarding against injury and pain.

With sudden onset stress, the muscles tense up all at once, and then release their tension when the stress passes. Chronic stress causes the muscles in the body to be in a more or less constant state of guardedness. When muscles are taut and tense for long periods of time, this may trigger other reactions of the body and even promote stress-related disorders.

For example, both tension-type headache and migraine headache are associated with chronic muscle tension in the area of the shoulders, neck and head. Musculoskeletal pain in the low back and upper extremities has also been linked to stress, especially job stress.

Unfortunately it doesn’t end with tense shoulders. Stress can also cause respiratory problems, long-term problems in your heart and blood vessels, and it can even make you fat. Remember that old TV spot about cortisol?

p.s. That crap didn’t work.

Says APA:

Glucocorticoids, including cortisol, are important for regulating the immune system and reducing inflammation. While this is valuable during stressful or threatening situations where injury might result in increased immune system activation, chronic stress can result in impaired communication between the immune system and the HPA axis.

This impaired communication has been linked to the future development of numerous physical and mental health conditions, including chronic fatigue, metabolic disorders (e.g., diabetes, obesity), depression, and immune disorders.

Here’s Mayo Clinic on what happens to your body when stress is always high and the physical response to it that was originally intended to help our ancestors avoid immediate threats like large, scary animals stays on:

The body’s stress response system is usually self-limiting. Once a perceived threat has passed, hormone levels return to normal. As adrenaline and cortisol levels drop, your heart rate and blood pressure return to baseline levels, and other systems resume their regular activities.

But when stressors are always present and you constantly feel under attack, that fight-or-flight reaction stays turned on.

The long-term activation of the stress response system and the overexposure to cortisol and other stress hormones that follows can disrupt almost all your body’s processes. This puts you at increased risk of many health problems, including:

• Anxiety
• Depression
• Digestive problems
• Headaches
• Muscle tension and pain
• Heart disease, heart attack, high blood pressure and stroke
• Sleep problems
• Weight gain
• Memory and concentration impairment

Any of that sound familiar?

Friendly reminder to release the tension from your jaw again. And I’m just going to leave this here for anyone who might need it.

Why this accounting firm has rolled out 2 dozen benefits since COVID [Human Resource Executive]

The post Let’s Talk About Why ‘Musculoskeletal Issues’ Are on the Rise at This Accounting Firm appeared first on Going Concern.

To put things into perspective for the normies who may not understand that accountants’ work is critical to the entire foundation of our financial system, he likens accountants to referees, the order-keepers of sports:

“We may not always like the referees, but sports is a free-for-all without them,” he said. “Accountants and auditors are to business as those people in the black-and-white-striped shirts are to sports. We’re the referees of business.

“Without accounting and without finance, there are no rules to the game. It’s like playing a game, and you make up your rules as you go along. It keeps the system honest.”

To combat shortages, those in the accounting industry are working to attract more people to the field. Advancing technology in the sector, raising awareness about accounting careers, increasing diversity, and changing the profession’s image are some of the ways they’re tackling the challenge.

Beyond the aggressive PR and outreach campaign already underway, one other way to ease the shortage would be to completely eliminate accounting as a major. Wrote John “Jack” Castonguay, PhD, CPA in the August/September 2021 CPA Journal:

Even though the CPA Evolution Project is aligning the credential with practice, it is also underscoring that the value in the license lays not within the accounting curriculum that has existed for decades; the new value is the technology, the analytics, the systems, and the tax research. But I believe the curriculum realignment anticipated by the CPA Evolution Project will only lead to an even faster decline in enrollments if accounting remains siloed as a stand-alone major.

As the profession gets more specialized, the accounting curriculum is expanding to include more information, more courses, more skills, and more tracks—but students are less skilled at each one. It’s a cycle that can’t be fixed by repackaging existing courses. It can only be fixed by eliminating the accounting major and unlocking accounting’s interdisciplinary value and specialization within finance, information systems, or other departments.

Viewed through this lens, the decline in accounting majors isn’t a crisis at all, rather an opportunity to innovate and redefine what “entry level CPA” looks like. Now if only we can figure out how to make it literally and figuratively worth it to young people.

A shortage of accountants is pushing the industry to reboot its image to win over young talent: ‘You have to sell them’ [Insider]

The post Accountants Are the Referees of Business, Says Guy Who Would Know appeared first on Going Concern.

With 2020 now three years behind us, researchers have had some time to analyze the trends of those past three years and one study found that men age 25-54 (IOW: prime working age) are simply not working as hard as they used to. And here we thought that was just a boomer meme.

Fortune wrote it up under the headline “Men making good money in the prime of their lives are leaning away from demanding jobs and it could be because they’re ‘re-evaluating their priorities’” though in the study’s conclusion the researchers are clear that the trends they identified in analysis don’t fully answer the question of why the labor market is in the state it is and that further research is required to begin answering that question.

Fortune:

The latest trend is young men with at least bachelor’s degrees spending fewer hours working, a study by the National Bureau of Economic Research earlier this month found. They spent an average of 14 hours less annually on the job between 2019 and 2022.

The decline was far less over the same period for similarly qualified women, who worked three fewer hours.

“The pandemic may have motivated people to re-evaluate their life priorities and also gotten them accustomed to more flexible work arrangements (e.g., work from home), leading them to choose to work fewer hours, especially if they can afford it,” the report said.

From the abstract of Where Are the Workers? From Great Resignation to Quiet Quitting [PDF]:

To better understand the tight post-pandemic labor market in the US, we decompose the decline in aggregate hours worked into the extensive (fewer people working) and the intensive margin changes (workers working fewer hours). Although the pre-existing trend of lower labor force participation especially by young men without a bachelor’s degree accounts for some of the decline in aggregate hours, the intensive margin accounts for more than half of the decline between 2019 and 2022. The decline in hours among workers was larger for men than women. Among men, the decline was larger for those with a bachelor’s degree than those with less education, for prime-age workers than older workers, and also for those who already worked long hours and had high earnings. Workers’ hours reduction can explain why the labor market is even tighter than what is expected at the current levels of unemployment and labor force participation

The paper covers both the flood of resignations that began in 2021 and the Great Resignation’s better-paying cousin ‘quiet quitting,’ both of which tend to lead to fewer hours worked for individuals who take that path:

Two labor market phenomena were popularized following the pandemic: the Great Resignation in 2021 and Quiet Quitting in 2022, both of which appear in the title of this article. Although some of the people who quit as part of the Great Resignation did exit from the labor force (extensive margin), many others simply found a new job, possibly with an employer offering more flexible work arrangements and less demanding hours (intensive margin), as well as better pay. Those who engage in Quiet Quitting do not actually quit or leave the labor force, but stop idolatrizing work and seek more work-life balance, including fewer hours (intensive margin). Our analysis helps us understand the role of both phenomena in the tightening of the labor market.

The lower participation rate is a continuation of a trend that has existed since the Great Recession, say the researchers. They concluded the reduction in hours among workers is something new that was induced by the pandemic, and that available evidence suggests it will likely continue. The reduction they identified was larger for prime-age males with a bachelor’s, and also for those male workers who already worked longer hours and earned more.

Wrote the authors in the paper’s conclusion:

While we made some conjectures based on available evidence as to why workers reduced their hours and whether they will continue to do so, these remain open questions. In addition, it will be fruitful to have a better understanding of the lower labor force participation of younger male cohorts, both its causes and consequences. These important topics are left for future research.

Read more:
Where Are the Workers? From Great Resignation to Quiet Quitting [National Bureau of Economic Research]

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