Knowing you guys as well as I do, I realize it's pointless to bore you with details from Council; like how Tom Hood got snapped at by a very frustrated Maryland senator in her office or what people wore to last night's black tie gala. However, I will share with you an interesting panel yesterday that stood out to me as incredibly raw, real and not all that crazy. Bear with me here and forgive me in advance for being serious.
AICPA President and CEO Barry Melancon moderated the Future of Audits of Public Companies panel featuring Joseph Adams of McGladrey, Charles Allen of Crowe Horwath, sharp dresser Wayne Berson of BDO, William Freda of Deloitte, Lou Grabowsky of Grant Thornton, Jean Hobby of PwC (yes, the only woman on the panel… but hey, at least they had one), Steve Howe of EY and everyone's favorite not quite Big 4 CEO John Veihmeyer of KPMG. Sounds like a great time already, dunnit?
Expecting mediocrity and talking points at best and shameless shilling at worse, I saw a group of public accounting leaders scared by the reality of talent retention and endlessly pestering by regulatory burdens like PCAOB inspections. Charles Allen said it best when he said annual reviews are "draining [his] partners."
"If we can't retain the best, we will never attract the best," Veihmeyer told the panel. "Literally the day before yesterday I had a talk with a young partner – 44 years old – who decided they just don't want to sign audit reports anymore." Though JV didn't actually say it out loud, he implied that the regulatory burden is nothing more than busy work that's making his people miserable and keeping them from doing what they do best – audits themselves.
JV doesn't seem to be too concerned with KPMG's ability to attract and retain talent, saying, "There will always be reasons to leave… for more money, better work/life… that has existed since I was a senior accountant." Ask Colin, he can tell you all about reasons* to leave.
"We have a crisis at the audit partner level," said Lou Grabowsky. Oddly, he's not talking about money, he means people are worn out, sick of pushing paper and not really feeling it these days. "Certainly compensation is important but we all know really it's at the bottom of the list." In other words, what good will buckets of money do you if you're miserable, overworked and more worried about not ticking off the PCAOB than actually doing your audits correctly.
"We've got to get the debate back to how to improve audit quality," said Steve Howe. Again, no one actually said "eff the PCAOB this is BS!" but they didn't have to, it was clear to what they were referring when they talked about audit partners spending more time dealing with regulators (no need to say the "P" word) than actually doing audits and doing them well. This isn't about giving auditors even more boxes to check, it's about the service auditors are providing. When auditors spend more time keeping the PCAOB off their backs than they are doing good work, we have a serious problem.
Unfortunately, no one really had an alternative (although I would have paid money to see any one of the panelists propose a coup on the PCAOB just up the street from the hotel where Council is being held) to go with their bellyaching. Veihmeyer hinted that back in the day, the profession kept its own checks and balances but where did that get us?
*Ed. note: This is true. However, in the interest of full and transparent disclosure, I did not leave KPMG on my own (although I did have the day picked). A very nice partner in the New York office told me I was leaving before I could put in my notice.