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September 23, 2023

Accounting News Roundup: EY Guy Gives Advice and CFO Worries | 03.31.16


EY's global CEO Mark Weinberger gave an interview to Australia's Financial Review where he dropped some wisdom about skills and stuff.

The global professional services firm, which is holding its global partner meeting in Sydney this week, is bracing for a major upset in its workforce and marketplace over the next decade.

"Whatever you're studying today will probably be obsolete by the time you get out into the real world," Mr Weinberger said in an interview.

"The average age of an S&P500 company in the United States is 15 years," he said, alluding to the fact that many clients that EY services today either won't exist 20 years from now, or will be very different.

"Kids are too caught up and worried about memorising everything on a test. That's not life," he said.

As a former high school and college student, I can tell you — memorizing stuff for a test is very much a part of life! Teachers and professors say, "know this" or "be familiar with this" and if you don't, you might get a bad grade on that test and then, depending on who you are, your life might be over. But, I get it, M. Dubs wants young people to "[learn] how to learn, refining what you're good at, and honing collaborative abilities" so they can "future-proof their careers." Interestingly enough, I am also a former young person and I can tell you, many don't think about the future all that much! There's way too many bad choices to be made in the present to be bothered with thinking about the future. Only when a person is no longer young do they start thinking about the future. Life is tricky like that.

Anyway, I think what he's trying to say is that what accounting students learn is changing a lot and that's a fair statement. Pretty soon the machines will handle the accounting and the accountants will be data scientists or machine wranglers or something. Learn how to learn!

CFO worries

There are lots of surveys out there that ask questions like, "What keeps you up at night?" and "What's your biggest concern for this year?" and "Would you rather punch Donald Trump or an accountant?" and I guess the answers to those surveys questions can result in some interesting findings, but mostly not. Deloitte's latest CFO survey says "outlook for revenue, earnings, capital spending and domestic hiring all declined to the lowest level since 4Q 2012" and that outlook might be due to the fact that it's a presidential election year: 

“Past surveys have shown that election run-ups tend to have a rather negative impact on CFO confidence, and in previous election years, net optimism had turned negative into the third and fourth quarters.” 

I suppose you could reason that the negative impact of the presidential campaign on CFOs' confidence explains why non-GAAP financial measures are so pervasive, which in turn causes all those non-CFO people to worry about non-GAAP financial measures. And as we discussed yesterday, all this worrying falls back on CFOs worrying about which non-GAAP measures to use so not to cause too much worrying. The solution, obviously, is to hold presidential elections every year so we can finally source the blame for all our worries all the time.

Hire some accountants already

Maybe this is just my background as an accountant talking, but if I ran a public company, I'm confident that I'd hire some people who knew a thing or two about SEC reporting. I'm not a genius, it just seems like a prudent thing to do. What never ceases to amaze me is when companies get themselves into some accounting trouble, restate their financials and then explain that they didn't have the right people to do the work, as if SEC reporting was something that the family dog could handle without much trouble.

Here's a version of this story involving Advanced Drainage Systems who filed a restatement on Tuesday of its results from 2011-2014:

The restatement was necessary because the company found mistakes in the way it had accounted for leases, inventory and other items. An outside investigator found a number of errors and said that some employees felt that the company culture was not conducive to proper reporting.

Since then, Advanced Drainage made a number of changes, including the retirement and replacement of its chief financial officer last fall. The new person in that role is Scott Cottrill.

In the conference call, Cottrill said many of the errors arose because the company “did not have the right skill sets in accounting and finance” to operate a publicly traded company and had too few employees to keep up with proper reporting.

If you're an investor in this company, then I don't think it's too much to ask management to find a couple of people with adequate experience.

Previously, on Going Concern…

I wrote about a reply all misadventure involving some Virginia CPAs. And in Open Items: Big 4 major gpa problem?

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