Please ensure Javascript is enabled for purposes of website accessibility

Accounting News Roundup: CPA CFOs; PwC’s Vatican Gig; Dumb Office Perks | 04.22.16


When shopping around for a CFO, businesses may consider several candidates with accounting backgrounds. Seems appropriate, right? Well, a study from a trio of professors has found that if your company is in high-growth mode, you should think twice about that:

CFOs with accounting backgrounds in high-growth industries invest less in research and development, make lower capital expenditures and are less likely to obtain external financing for their businesses, according to a paper to be published in an upcoming issue of the Journal of Accounting and Economics.

It shows that such “accounting CFOs,” CPAs, or those who worked previously as an auditor or controller before their appointments, are more effective at controlling costs at low-growth industries than those without such backgrounds.

Accountants? Risk averse? Knock me over with a feather! The data used was from 2000 to 2010 and one of the authors, Ahmet Kurt, said, "Companies are making some changes. […] [F]irms are realizing that accounting CFOs are not working for them." But don't worry CFO aspirants, there's still hope for you in companies looking to cut costs. Accounting CFOs are swell for those:

In the low-growth industries, accounting CFOs showed a tendency towards greater cost efficiency. When revenues were increasing in such industries, according to the paper, the accounting CFOs showed a 19% increase in cost efficiency.

It makes sense, doesn't it? CFOs with accounting backgrounds think about where money is being spent. CFOs with, say, a finance background think about how to pay for stuff. I'm sure that's overgeneralizing things a bit, but it seems like a decent hunch.

Holy audit

The fact that an organization as secretive and political as the Catholic Church even asked a Big 4 firm to audit its books is pretty remarkable. So it's no surprise that something came up:

The Vatican suspended an audit of its finances by PricewaterhouseCoopers (PwC), it said on Thursday, a decision sources said was taken to determine if there were irregularities in the contract.

Vatican sources said the Secretariat of State, the top department in the Vatican bureaucracy, sent letters last week to all departments informing them of the suspension.

At issue is whether proper procedures were followed when the contract, reportedly worth $3 million, was signed by the Secretariat of the Economy, the department headed by Australian Cardinal George Pell, they said.

In other words, an administrative error. The expectation is that PwC's work "will resume shortly." Something tells me that this is going to be the audit equivalent of an Easter Vigil service.

Dumb office perks

We've touched on silly office perks in the past, but this Bloomberg article discusses the proliferation of them across many businesses, including advertising agencies. And really, you could replace every mention of "advertising" with "accounting" and the article would be just as accurate:

Deep down, people just want to get paid. An entry-level advertising job pays $45,000 less than an entry-level job at a tech company, according to the LinkedIn and 4A survey, and that gap can't be filled with snacks or whimsical decor. There's a false perception that millennials would rather work at a cool office than get a paycheck. But compensation consistently ranks high for employee satisfaction, especially for millennials, who graduate with an average of more than $35,000 in debt.

"If you're making $35,000 a year and have a debt load of $30,000, which is about the average, think about that income ratio and trying to live in a large city," said Bruce Elliott, a manager of compensation and benefits at the Society for Human Resource Management. So why do companies bother with perks? It's simple: They don't cost very much. "From a compensation and benefits point of view, [perks] are actually fairly cheap," said Elliott.

Were you thinking about a kegerator? Please don't.

Previously, on Going Concern…

Megan Lewczyk wrote about artificial intelligence.

In other news:

Get the Accounting News Roundup in your inbox every weekday by signing up here.