Hi. Monday again. Oh joy. Without any further filler text, let’s get this over with.
Yesterday Financial Times published a story about PwC UK’s top consolation prize:
Senior PwC staff in the UK who will never be partners are to be offered a new “managing director” title as the Big Four firm seeks to keep top employees whom it is unwilling to admit to its £1mn-a-year partnership.
People familiar with the matter told the Financial Times the UK firm had introduced the new grade to hold on to a key layer of senior accountants and consultants and to bring in external hires with higher salaries.
However, the role would not serve as a stepping stone towards becoming partner as managing directors would be ineligible for promotion to the top rank, they added.
The University of Miami has chosen permanently-jumpscared-looking former Deloitte CEO Joe Echevarria as president:
“Joe knows and understands complex institutions,” stated Manny Kadre, chair of the UM Board of Trustees. “Joe’s vast experience in managing complexity is evident from his 36 years at Deloitte LLP, a global provider of professional services, where he led tens of thousands of professionals in more than 100 cities across five continents and multiple industries. Here at the U, he has immersed himself in our academic environment, working closely with faculty and academic leaders, diving deep into our processes, and empowering the teams closest to our mission to strive for excellence.”
As acting CEO, Echevarria supported transparency and supported academic faculty, Kadre said.
In a matter of weeks, we should be hearing that the Pentagon has failed yet another audit. Defense One argues this is a good thing:
Far from a mere compliance exercise, the cultural and technological changes required to pass an audit are the same ones necessary to keep U.S. forces dominant.
For the Defense Department to pass its audit, it must account for more than dollars. It must track the vast array of things the military uses: munitions, spare parts, fuel, real estate. Moreover, it must track the condition of these things: In the shop? Ready for use? In the field? And it must do so accurately and in real time. All this requires comprehensive changes. Cyber security must be improved, systems integrated, processes and automation deployed to ensure the accuracy of data, and more.
Undaunted, DOD has attacked these problems with resolve and money. Over the past five years, the department has spent more than $4 billion to improve visibility and transparency. Efforts to pass the audit have helped integrate data from finance, logistics, and readiness systems, breaking down longstanding silos and making it possible to see across the entire defense enterprise. What was once a cumbersome and time-consuming process—yielding outputs that were neither timely nor reliable—has become more streamlined.
Earlier this year, the Marines became the first US military branch in history to receive a clean audit opinion.
The AICPA has established a scholarship named after outgoing president, CEO, and vintage waffle iron collector Barry Melancon:
The AICPA Foundation has launched the Barry C. Melancon Professional Accounting Research Fellowship to support the next generation of accounting and finance professionals with the skills, knowledge and training to advance the accounting and finance profession. The Fellowship has been established as a legacy of Barry Melancon’s 30-year leadership tenure at the AICPA & CIMA as well as his dedication, advocacy and future-focused commitment to the profession.
“I have been fortunate to spend my career as an advocate for our great profession. The passion that I have had for the profession and the spirit of everything that I did was for the betterment of the profession and the people within,” noted Barry Melancon, President and CEO of the AICPA and CEO of the Association. “It is a personal joy to be able see the creation of a Fellowship in my name to encourage others to contribute to the profession’s benefit, advancement, and future.”
In survey news, Deloitte released one this morning.
A new external survey released today by Deloitte zeroes in on what many employees are looking for in corporate learning and development opportunities — and where organizations might be missing the mark. The inaugural survey found that while 87% of workers see human skills like adaptability, leadership, and communications as integral to their career advancement, only around half (52%) think their company values employees with human skills more than those with technical skills.
In addition, 3 in 5 surveyed employees believe their company focuses more on immediate business needs than providing the training they may need for long-term success. This could signal challenges for companies down the line, with 94% of respondents expressing concern that future generations will enter the workforce without the necessary human skills.
“Organizations that overemphasize technical training at the expense of enduring human capabilities — like divergent thinking, emotional agility, and resilience — could end up impeding innovation and leaving employees ill-equipped to lead teams, adapt to market opportunities, and fully harness the potential of technology,” said Anthony Stephan, chief learning officer, Deloitte US. “Technical and human skills are symbiotic, which is why leaders should take a ‘Yes AND’ approach — for the investments they make in tech skills, developing an equally exciting and critical human skill experience.”
This guy thinks CISOs need their own GAAP:
If CISOs are really going to elevate their position in the C-suite and truly drive meaningful discussion about cyber risk, they’re going to need to have the same rock-solid level of reporting that their brethren in the finance department bring to their board discussions. Financial reporting data has become extremely structured and repeatable across all enterprises because it’s guided by the standards set out through generally accepted accounting principles (GAAP), which are governed by the Financial Accounting Standards Board (FASB). Everybody measures the same things, in the same way. Doing this makes it hard to cook the books and easy to ensure that the yardstick reads the same way no matter the business.
I believe that we’re going to need to get to a place where we have GAAP-style accounting for security monitoring. This may seem like a tough ask to make of the industry—standards battles are always long and never pretty. But we’re getting to a point where regulators, insurance companies, and veteran risk executives will scramble to find a way to make it happen because there’s such a dire need.
If we can get to a consensus of generally acceptable security monitoring practices, setting out a standard reporting structure it becomes easier for auditors to check best practices, for insurers to get real-time snapshots into exposure levels, and for CISOs to easily translate exposures into financial risk quantification that makes sense to the board. This kind of ground-truth reporting is crucial for next-generation security executives to have the right conversations with the board about how to prioritize where resources should go first, what it’s going to cost, and the next steps organizations need to take.
ICYMI: American Institute of CPAs (AICPA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT) suggest state and local governments step it up to beat the talent shortage. Press release:
State and local governments are being squeezed by a shortage of accounting professionals, making it difficult at times to find staff CPAs who can prepare critical financial information or outside firms to conduct audits. Addressing this problem will require a multifaceted approach, including educating legislative bodies about the value of the CPA, offering competitive salaries for CPAs in government and fees paid to outside auditors, and reviewing the thresholds that trigger certain kinds of audits, according to a joint report by the American Institute of CPAs (AICPA) and the National Association of State Auditors, Comptrollers and Treasurers (NASACT).
“We have a talent shortage in accounting that affects business as a whole, and many of the pipeline initiatives the profession is putting in place will help the public sector as well,” said Susan Coffey, CPA, CGMA, the AICPA’s CEO of public accounting. “But accountants who do government work face unique challenges that require more specialized solutions. The public deserves to know its tax dollars are being spent as intended — and that requires strong government finance teams and experienced auditors.”
One key issue is that government and private sector accounting and auditing standards often differ, so CPAs working in the public sector require specialized expertise. Yet salaries and audit fees are often well below those offered in the private sector, the report found. State and local governments also don’t always understand the value CPAs bring to finance teams and the audit process, so hiring is often driven by a cost-savings approach, rather than a focus on the qualifications that an experienced staff accountant or outside auditor may bring.
And Journal of Accountancy article:
The report, Public Sector CPA Resources: The Current Landscape and Recommendations for the Future, is built on the efforts of a joint working group that gathered insights from a series of forums and a comprehensive survey. The report ranked a lack of competitive compensation and the need for specialized government technical expertise as key factors stymying governments in the hiring and retention of CPAs.
Fifty-six percent of 450-plus survey respondents employed in accounting, auditing, or finance at a state, local, or tribal government entity said compensation concerns have a large impact in this area. One respondent who works in local government commented that accounting professionals “can make double doing anything else.”
Further, 63% of government respondents agreed that the technical expertise required of CPAs in the public sector had a large or moderate impact on the challenge of hiring and retaining qualified professionals.
In municipal messiness, the city of Sturgis in South Dakota is bringing on an outside accountant to help them with their accounts:
In a recent audit report conducted by accounting firm Ketel Thorstensen, it was revealed that the city has not reconciled all of their bank accounts since 2023.
To help dig them out of their financial problems, the city approved a $15,000 contract with CPA firm Casey Peterson and Associates during a council meeting two weeks ago.
A public accountant from the firm will be on contract until December to help Sturgis get caught up with their finances.
Allegedly the problem is some issue with their accounting software. Yeah, everyone says that.
In late August, the South Dakota Department of Revenue released its tax collection numbers for the 2024 Sturgis Motorcycle Rally and revealed the yearly gathering of bikers brought in $1,399,501 in revenue generated from state sales tax, tourism tax, municipal sales tax, and municipal gross receipts tax.
Al Pacino has put out a memoir. I wasn’t planning on reading it but I’m tempted now. Variety on how Pacino’s shady accountant made him broke and desperate:
Al Pacino writes in his recently-published memoir “Sonny Boy” that he was forced to make dramatic career changes after losing all of his money due to a corrupt accountant who eventually served seven and a half years in prison for running a Ponzi scheme. The accountant mismanaged the Oscar winner’s funds, bringing Pacino’s savings from a staggering $50 million to zero dollars.
According to Pacino, it was in 2011 when he started “to get warnings that my accountant at the time, a guy who had lots of celebrity clients, was not to be trusted.” The actor was already paying “a ridiculous amount of money to rent some big fancy house in Beverly Hills,” and then he took his entire family on a trip to Europe where he flew various guests overseas “on a gorgeous Gulfstream 550” and “rented out a whole floor of the Dorchester hotel in London.”
When Pacino returned to his Hollywood home, he became suspicious after realizing his finances had not dramatically changed despite spending so much on vacation. “And I thought, It’s simple. It’s clear. I just know this. Time stopped. I am fucked,” he writes.
Maybe I’ll buy it and jam it in there on the bookshelf next to Retail Gangster.
“There isn’t a better time to be getting into the CPA profession, in part because there’s a lot happening,” says Zach Donah, president and CEO of the Massachusetts Society of Certified Public Accountants (MassCPA).
Due to a growing global business environment, an increase in part-time services and a rising need for companies to meet environmental, social and governance (ESG) criteria, the accounting profession is expected to grow 6% over the next decade, Donah said. That outpaces the overall projected job growth over the next decade, according to the U.S. Bureau of Labor Statistics.
Data nerds will delight in some figures released by INSIDE Public Accounting:
At 67% of participating firms, partner agreements have been updated within three years; at 27% of firms these agreements have been updated within the last 12 months; and at 7% of firms they haven’t been updated in 10 years or have never been updated.
Fifty percent of participating firms have a formal process to cull clients. Of those that culled clients, firms on average reduced their clients by $290,000. For firms over $30 million, the average revenue culled was $630,000, or a little over 2% of revenue.
Eighty-one percent of firms offer business development incentives to staff and/or partners. In 37% of firms, these incentives are paid out for a year for new clients while in 13% of firms, staff receive incentives for the life of the client.
For more news, check out Friday Footnotes, published here every Friday at 5pm Eastern. Last Friday’s Footnotes: The Profession’s Ethics Dilemma; Co-Pilot Called Out in Court For Calculations; Audit Uncovers File Called ‘Twilight Zone’.
That’s it for now on this chilly October morning. Feel free to reach out via email or text if you see an interesting story we should be talking about, have a tip to share, or just want to vent. You may also send any comments, concerns, or compliments in my direction but be gentle, I’m more sensitive than I let on.
Have a great week!