Ed. note: on July 13 we contacted AAP media relations to request salary ranges for accounting positions referenced in the below 10-Q disclosure. We don’t expect a response but if we get one, we’ll update.
The Wall Street Journal wrote today about recent disclosures made by Advance Auto Parts, Joby Aviation, and Germany’s Evotec that specifically point to a lack of accounting staff as a contributor to or sole factor causing certain material weaknesses. It seems we are entering the “find out” phase of FAFO, the FA being shitty pay (and to a lesser extent, decades of ineffective recruiting strategies).
The widening shortage of accountants has begun showing up in financial statements.
U.S.-listed companies such as car-parts provider Advance Auto Parts, electric-air-taxi firm Joby Aviation and German biotech company Evotec in recent months have disclosed efforts to address material weaknesses due at least in part to a lack of accounting staff. These names are larger than the typically smaller companies that historically might have had trouble attracting accounting expertise.
Advance Auto Parts was late on its most recent 10-Q and said in a June 2 SEC filing “The Company is unable to complete the filing of its Quarterly Report on Form 10-Q for the quarter ended April 22, 2023 (the Form 10-Q) within the prescribed time frame without unreasonable effort or expense due to the circumstances described below.”
“In the course of completing the preparation of the quarterly financial statements for the Form 10-Q, the Company determined that it had a deficiency in the Companys internal control over financial reporting as of April 22, 2023. Specifically, during the first quarter of fiscal 2023, the Company experienced the loss of certain accounting personnel and turnover of accounting positions, which may have resulted in a deficiency that represented a material weakness in the Companys internal control over financial reporting as of April 22, 2023.” [emphasis ours]
It looks like they filed the 10-Q a couple days later and in it [PDF], management said disclosure controls and procedures were not effective to accomplish the company’s objectives at the reasonable assurance level solely due to the following material weakness:
In the course of preparing our financial statements for the interim period ended April 22, 2023, management identified a material weakness in our internal control over financial reporting that existed due to turnover of key accounting positions during the first quarter. The Company was not able to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience as of April 22, 2023.
And here’s their game plan:
As an initial step in remediation of this material weakness, we are engaging temporary third-party resources with the appropriate level of knowledge and experience in accounting and internal control matters to complement the existing organizational structure.
We are also actively developing and implementing a comprehensive remediation plan. We have engaged a leading public accounting firm to
support this work. We expect the remediation plan will include the following:
- hire, develop and retain incremental personnel with appropriate accounting and internal controls expertise;
- review and update (as appropriate) the organizational design of the controllership function;
- review and update (as appropriate) our methodologies, policies and procedures designed to ensure adequate internal control over
financial reporting, including underlying information technology and business process controls; and
- review and update (as appropriate) training programs on relevant internal control over financial reporting matters.
The material weakness will not be considered remediated until management completes the remediation plan and keeps it in place for a sufficient period of time. The Company is committed to the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement its remediation plan for the material weakness, including responding as necessary to any additional employee turnover or other internal or external factors that may impact execution of the plan.
OK well, good luck with that I guess.
Out of curiosity I checked Advance Auto Parts’ site and there are several open accounting jobs listed. About half of these are based in Hyderabad, India, the others are in the company’s hometown of Raleigh, NC and one in Roanoke, VA. The company launched the Advance Global Capability Centre India about a year ago.
US-based Advance Auto Parts accounting jobs: Senior Internal Auditor, Vendor Incentives Accounting Manager, Lease Compliance Specialist, Tax Manager.
India: – Internal Controls Senior Analyst, Accounting Analyst, Sr Accounting Analyst, Inventory Senior Accountant, Accounting Analyst, GL Accounting Analyst, and Inventory Accounting Analyst.
Sadly (for us) there are no salaries listed with these jobs. Here’s Glassdoor:
Said the WSJ piece, nearly 600 U.S.-listed companies of a total 7,359 reported material weaknesses related to personnel, typically in accounting or information technology, this year through June, down 5.2% from the prior-year period, but up 40.6% from the 2019 period, according to a review of filings by research firm Bedrock AI.