Is the Billable Hour Obsolete? [The Atlantic]
As you know, we've talked about the slow death of the billable hour in the accounting profession and although this article focuses on the legal profession, you could, in almost every context, replace "legal" or "law" with "accounting" and you have a suitable article stirring up rage right here on Going Concern. Let's try it:
“In the six and a half years since the onset of the Great Recession, the market for accounting services has changed in fundamental—and probably irreversible—ways,” according to Georgetown's “Report on the State of the Accounting Market,” released this year. Most significantly, the power has shifted away from accounting firms and towards clients. “Purchasers of legal services are now insisting on value in legal spend,” says James W. Jones, a senior fellow at the Center for the Study of the Accounting Profession at Georgetown and the lead author of the report. “And by value, they mean predictability, cost-effectiveness, and efficiency. Quality is assumed.”
Here's another good one:
Many firms have not been so quick to adapt. One reason may be that the billable hour is so deeply entrenched in the accounting psyche. Or, as the Georgetown report posits, accounting firms may be “victims of [their] own success” prior to the financial crisis. While the leaders of the most successful firms may be understandably unmotivated to mess with a model that has made them very wealthy, the vast majority of firms need to come up with new ways respond to client demand for efficiency and better align the priorities of accountant and client.
In general, any knowledge-based professional firm could be applied here. The article also notes a study that found that alternative fee arrangements made up 22% of all transactions this year, up from 5% in 2008. Yes, this topic upsets people, but it seems to me that if the Atlantic is writing about it, non-billable pricing methods have made some traction.
Deloitte Acquires Leading Canadian Asset Reliability Consultancy [Deloitte]
Asset Performance Group will "[bring] new reliability engineering and maintenance capabilities" to Deloitte's operations consulting practice. It's basically the yin to Deloitte Digital's yang in the firm's quest to become the Walmart of professional services.
Goldman, JPMorgan Said to Fire 30 Analysts for Cheating on Tests [Bloomberg via Matt Levine]
What a terrible reason to get fired. But, I think you'll appreciate the background:
Bankers throughout Wall Street often assist each other on basic training and compliance tests because these are seen as time consuming and repetitive, according to separate people with knowledge of the process. Investment banks have started taking strict measures to prevent this from happening in recent years amid increasing scrutiny from regulators.
Training and compliance tests are "time consuming and repetitive"? There's a news flash. I hope accounting firms don't take such a hard line; cheating on internal ethics exams is the kind of irony we need in this profession.
In other news:
- David Copperfield's accountant seemed to have made some tax returns disappear. [TMZ]
- Master Limited Partnerships are no longer all the rage. [WSJ]
- Match.com will file for an IPO. [DealBook]
- Bernie Sanders has plenty of underwear. [DMR]
Image: Raysonho/Wikimedia Commons