There’s a lot happening this week. Which YAY because hooooo boy can it get boring around here when there isn’t. First things first, check out what the AICPA is working on and when you’ve had a chance to review their idea, reach out with your feedback if you want. Comments are closed on Footnotes because no one here wants to be moderating comments on the weekend, you are however welcome to message the editor if you have something to say about this or any other story shared here.
Restoring Exam credits expired during COVID would help address CPA shortage [AICPA]
The accounting profession is confronted with a talent shortage, and reinstating CPA exam credits that have expired since January 1, 2020, could have an immediate impact on our CPA pipeline.
“The COVID-19 pandemic and the uncertainty that followed pandemic shutdowns disrupted the plans of countless students,” said AICPA CEO of Public Accounting Sue Coffey. “This initiative would offer thousands of students a chance to regain lost momentum and resume their path to CPA licensure.”
The National Association of State Boards of Accountancy (NASBA) recently reported it was establishing a task force to consider a proposed reinstatement. Any proposal would need to be reviewed and considered for adoption by each state board of accountancy.
“A proposal like this could allow for the reinstatement of credit for more than 15,000 CPA candidates and re-open the door for those candidates to complete their journeys to becoming licensed CPAs. I applaud NASBA for raising this possibility and exploring it with state boards of accountancy, since a comprehensive reinstatement effort could help offset hurdles to advancement that many CPA candidates faced due to circumstances outside their control,” said Coffey.
And now, some other news:
Education
The More Things Change, the More They Stay the Same: Addressing the CPA Pipeline Crisis [NASBA]
A pro-150 hour piece written by a guy who helped usher in the rule (and who was licensed at 120 units, obviously):
Yes, like me, many of us obtained a CPA license prior to the 150-credit hour education requirement, and we’re doing “just fine.” We need to acknowledge that we expect much more from our staff when they come to us — particularly during their first year with the firm—than we ever did before. If there were ever a time we need our young staff to come to us with more education not less, it’s now. That’s what CPA Evolution is all about–providing the education and the skillsets not needed yesterday, or even today, but those that will be needed for tomorrow! How can relying on the experience earned “yesterday” be an effective replacement for the education necessary to prepare our staff for what will be needed tomorrow? Many suggestions currently being offered by accounting groups and/or firms aim to address our immediate need. Certainly, credit goes to all who are attempting to do something. However, pipeline enhancement efforts that neglect to consider substantial equivalency and CPA licensure mobility will ultimately do more harm to the profession than good, when measured over the long-term.
Accounting Industry In Flux As Demands Impact Talent Pool And Professional Opportunities [Forbes]
A long read with comments from E. Scott Johnson, Ph.D., Associate Professor of the Practice of Accounting and Faculty Director of the Master of Accountancy (MAcc) Program at the Owen Graduate School of Management, Vanderbilt University on the changing landscape of accounting services and concerns about accounting education keeping up.
“Designing a comprehensive program for financial planning or wealth management is a big ask for all but especially for the largest business schools because of the diverse set of skills (and specialized classes) required for either career path,” says Johnson. “On top of a strong background in finance, both fields require extensive knowledge of tax law, and those are just the beginning of the hard skills needed to excel. The best financial planners or wealth managers will set themselves apart with outstanding soft skills.”
Johnson continues, “If accounting firms want to venture deeper into the world of financial planning or wealth management, I suspect they would not be able to find enough CPAs with the necessary skill set to easily step into the role. Because most accounting programs are laser-focused on turning out students who can pass the CPA Exam, there is precious little room left to offer such a wide range of electives.”
The opportunity on the professional side to provide additional services can run counter to the practicality of higher education programs. “If only a handful of students choose this niche path, then business schools would be investing time and money into courses that might be lightly attended. If there is one thing business schools understand, it is business, and the law of supply and demand makes it unlikely that many schools would be able to provide this type of ‘Swiss-army-knife’ educational path,” concludes Johnson.
Many Gen Zers don’t believe they need a college degree for a successful career. They might be right. [Fortune]
Forty percent believe college degrees aren’t necessary, finds a global study of more than 7,000 Gen Z workers conducted by freelancing job platform Fiverr in partnership with Censuswide. And 70% said they consider freelancing to be just as viable a career option as a traditional 9-to-5. (Of course, freelancers may have been more likely to see and take a survey hosted by a freelancing job platform.)
Practice
3 trends that will reshape accounting and finance in 2023 [Journal of Accountancy]
1. Your technology strategy will become your talent strategy
2. The journey to zero-day close will drive further adoption of accounting automation
3. Accounting will increasingly act as a value-creation partner to the business
Cultivating tech talent: A CPA firm leader’s elementary approach [Journal of Accountancy podcast]
Avani Desai, CPA, doesn’t trace her journey to becoming the CEO of a top firm to her youth — she goes back to before her birth, to the emphasis her grandparents put on education in the 1940s in India. In keeping with the “starting early” theme, Desai believes that, instead of talking to students about accounting in their third year of college, the profession needs to reach out to students in the third grade. And she lived that example recently, visiting her daughter’s elementary school classroom. In the latest episode of the JofA podcast, Desai talks about her career journey, how she found friends during a secondment in New York City, and how she juggles work and life.
Shifts in the accounting profession [The Manila Times]
You know how talent-strapped firms are relying on outsourcing to ease staff shortages? It seems there is a shortage brewing in The Philippines.
The growth in virtual assistants enabled by digital technologies, are outsourced by firms and professionals from abroad, which is now encroaching into the accounting services, apart from the usual secretarial services. The demand for virtual bookkeeping assistants are on the rise, as these professional independent contractors can remotely manage the day-to-day finances of a firm, such as preparing balance sheets. creating general ledgers, organizing financial statements, and handling pricing and invoicing. The Philippines is obviously one of the beneficiaries of this shift but the rise in virtual assistant bookkeepers are creating a shortage in accounting professions among medium and large firms.
10 Ways GPT-4 Is Impressive but Still Flawed [New York Times]
On a recent evening, Anil Gehi, an associate professor of medicine and a cardiologist at the University of North Carolina at Chapel Hill, described to the chatbot the medical history of a patient he had seen a day earlier, including the complications the patient experienced after being admitted to the hospital. The description contained several medical terms that laypeople would not recognize. When Dr. Gehi asked how he should have treated the patient, the chatbot gave him the perfect answer. “That is exactly how we treated the patient,” he said. When he tried other scenarios, the bot gave similarly impressive answers. That knowledge is unlikely to be on display every time the bot is used. It still needs experts like Dr. Gehi to judge its responses and carry out the medical procedures. But it can exhibit this kind of expertise across many areas, from computer programming to accounting.
Big 4
The WWE is negotiating to legalize betting on its (scripted) matches [KERA News]
CNBC media reporter Alex Sherman says to KERA: WWE has been working with EY, commonly known as Ernst & Young, a big accounting firm, on securing the results of a sampling of hand-picked matches. This is all sort of hypothetical at this point, but they’re looking to the Academy Awards, actually, as their template for why they feel like they might be able to convince regulators and then betting companies to go along with this plan. In a few states in the country today, it is already legal to bet on the Oscars. And, in that case, there is an accounting firm – famously, PricewaterhouseCoopers – that works with the Academy Awards to put its known results under lock and key, sealed away, until the awards show announces the results. So that’s not a scripted set of results, yet it is known prior to the event, and gambling is legal on the Oscars.
So the pitch from WWE is that that’s actually not really all that different from what we’re doing. Yes, we’re scripting it, but we can present the scenario to you where a very, very few amount of people will know the answers to this. We’ll allow gambling on it for a certain amount of time, then we’ll turn the gambling off. Then we will tell the performers and the production crew who’s going to win and how the script should go, and then the match will happen. And in the meantime, over the course of weeks or months or whatever it may be, the people that gambled on the match would then win or lose with the results. So that’s the pitch. Whether or not this pitch will actually be accepted – still to be determined.
Accounting expert discusses EY, Deloitte, KPMG and PwC’s move into the legal sector [bytestart]
In 2022, 13% of law firms in the UK reported losing contracts to one of the Big Four, again showing that this shift is impacting the market in serious ways. Over in the US, top law firms say that they are facing even more competition for work from the accountancy giants, with 24% reporting losing business to the Big Four in 2022 and experiencing trading difficulties. Over in the US, there are signs that deregulation of the legal sector could open up yet more opportunities for accountancy firms to scoop up even more of the legal market.
PwC invests millions to support underrepresented students [Accounting Today]
As part of PwC’s $125 million Access Your Potential initiative, the PwC Charitable Foundation is committing $25 million in grants over the next five years to create pathways for historically underrepresented community college students to move into careers. According to Michael Sutphin, president of the PwC Charitable Foundation, the investment seeks to upskill students, get them prepared with career readiness and provide them with the digital skills they need to succeed academically and professionally. By leveraging the intellectual capital of PwC, Sutphin said the goal was to strengthen the broader community college system and provide training to students who otherwise might not have access to valuable resources.
Rivals (privately) hope consulting inquiry focuses on PwC [Australian Financial Review]
Senior partners at major consulting firms privately hope that the new Senate probe into conflicts of interest at Australia’s largest firms focuses on PwC’s damaging tax leaks scandal and blames it for putting the entire sector under the spotlight. The rival operatives, who spoke on condition of anonymity, say the leaks scandal gave the Greens and the Labor government an excuse to scrutinise their public sector work yet again. The official focus of the inquiry is about unethical behaviour by consultants engaged in lucrative federal government work. The committee is accepting submissions until April 21 and intends to report by September 26. “Clearly, the inquiry is directly related to recent Tax Practitioner Board reports [about PwC],” one senior consulting insider at a rival firm said.
Audit
Deloitte Hit by Record China Fine, Suspension Over Huarong [Bloomberg News]
China suspended the operations of Deloitte & Touche LLP’s Beijing office for three months and fined the firm after a review of its work on auditing of China Huarong Asset Management Co. After on-site inspections, a review and a hearing the Ministry of Finance found that Deloitte had “serious audit deficiencies” in its work with Huarong between 2014 and 2019, according to a statement. The firm was fined about 212 million yuan ($30.8 million).
US regulators to meet Deloitte, EY in Hong Kong next week to prepare for summer inspections of audits of US-listed Chinese firms [South China Morning Post]
American accounting regulators will come to Hong Kong next week to hold “preparatory meetings” with Deloitte and EY ahead of inspections later in the year as they seek to assess their auditing of Chinese companies listed in the US, according to people familiar with the matter. Executives of the Public Company Accounting Oversight Board (PCAOB) will meet senior management of the two accounting firms in an attempt to understand their internal controls and operations, three sources who did not wish to be identified told the Post. The PCAOB will inform Deloitte and EY at a later stage which companies or new listings it wants to inspect, said one of the sources. The inspections will be conducted in the summer or September.
Audit quality concern from 2022 monitoring reviews [ICAEW]
Recent data shared by the Quality Assurance Department (QAD) for the calendar year 2022 gives a greater cause for concern, with conclusions from this latest period showing a deterioration in audit quality to just 71% good or generally acceptable compared to 77% for the previous calendar year. QAD experience suggests that this downward trend is likely to be echoed in its final conclusions on the year ended 31 March 2023. Whilst QAD statistics always come with a health warning, explaining that they represent reviews at a substantially different population of firms each year, this is a significant change to see over a single year.
Debunking common myths about auditors, auditing [The Journal Record]
The people of Oklahoma get a lesson on what audit is.
Auditing is the process of examining and evaluating an organization’s financial statements to ensure those financial statements are a fair and accurate representation of the transactions they claim to represent in compliance with generally accepted accounting principles. Despite the importance of this process, there are several common myths surrounding auditing that can mislead individuals and organizations. There are a number of myths surrounding audits and auditing that need debunking.
Firm Watch
Elliott Davis forges its own path after canceled merger with Texas-based Whitley Penn [Upstate Business Journal]
The cancelation of the merger comes a year and a half after Elliott Davis set down even sturdier roots in the Greenville business ecosystem by opening new offices downtown. Situated on floors four through six in the Camperdown development, with floor-to-ceiling windows providing an expansive view of the downtown skyline, the new 75,000-square-foot offices of Elliott Davis were designed to reimagine how offices should complement the lives of the employees who flow through its spaces. “Clearly, we wanted to provide a work environment that was attractive, but we also wanted to provide a work environment that was reflective of our values,” [Elliott Davis CEO Rick] Davis said at the opening of the new offices. “I would say that the flexibility people expect today is certainly a component you’ve got to build into anything.”
Background: The Elliott Davis/Whitley Penn Merger Fell Apart in the Eleventh Hour, RIP Elliott Penn
CLA Launches Paid High School Accounting Internships in 15 Locations [CPA Practice Advisor]
CLA’s high school internship program was created with high school students, for high school students. It will provide students with hands-on work experience and opportunities to collaborate with high school students from across the country. Interns can gain experience on multiple projects including client service simulations and social media development. The internship program will also offer students the opportunity to engage in presentations and competitions. The internship program is open to students between 16 and 18 years old and will be available in 15 select CLA offices nationwide. The program begins June 19, 2023, and applications are now being accepted at CLAconnect.com/en/hsintern.
Other Stuff
Tips offered to CRE pros following bank failures [Mortgage Professional America]
Last week’s collapse of Silicon Valley Bank and Signature Bank send shock waves across the banking industry after both were shut down by the Federal Deposit Insurance Corp. In the wake of those failures, EisnerAmper pros offer strategies and best practices that real estate leaders can employ to secure their portfolios during time of institutional instability.
SEC’s climate reporting draft rule draws huge public comment [AP]
A closely watched rule from the Securities and Exchange Commission that would require public companies to say much more to shareholders about how their operations affect the climate has generated more public comment than many recent regulations from the agency, attorneys and industry experts say. The SEC is expected to issue a final rule in the spring following a draft last summer that drew nearly 15,000 comments, according to SEC Chairman Gary Gensler. The rule would make the U.S. the latest government, after the European Union, to regulate what companies must report on their greenhouse gas emissions and energy consumption. Companies could have to report on the cost of climate change for their business above a certain threshold. “Anecdotally, I’ve never seen this number of comments come back on anything proposed by the SEC,” said Steve Soter, vice president at Workiva, a software company that helps companies with regulatory and financial reporting.