Good morning and happy Monday, here we are again. Let’s get this over with.
Thousands of Reddit communities have gone dark to protest company’s controversial new API policy. Funny enough Reddit is completely down this morning so I can’t confirm r/accounting is MIA.
Edit: Still there and still miserable. Bless your cold little hearts.
👉 Check out our video and pass it on. pic.twitter.com/nO3h0ZoEj1
— Life at Deloitte US (@lifeatdeloitte) June 7, 2023
How accountants can make a smooth career transition from Journal of Accountancy:
Very often life transitions trigger in people a desire to seek more fulfillment in their lives. Such transitions can be the beginning of a new year or entering the second half of life. Starting a new career can represent an overwhelming task, one that is filled with uncertainty and requires a lot of time and effort. A constructive way to embrace that uncertainty is by planning ahead. By doing so, it puts you in the driver’s seat, enabling you to make the right decisions. This article provides a framework that will enable you to increase your chances of success when switching careers.
Alvarez & Marsal is muscling its way into the local transaction advisory market, pillaging another clutch of partners from one of the big four firms, says AFR.
Street Talk understands three transaction tax partners from Ernst & Young have jumped to the global consulting group: Sean Keegan, Andrew Sharp and Edward Consett.
Keegan’s the first stop for tax advice for most of the international and domestic private equity firms; Sharp’s made a name for himself in fund structuring for domestic buyout funds; and Consett specialises in infrastructure, seen on the CWP Renewables transaction and the Spark Infrastructure takeover last year.
The trio, who all have tenures of at least six years at EY, resigned last week. They are expected to start in Alvarez & Marsal’s new advisory group in December.
More bad news for consulting via FT: Companies rethink consultants as they fret about economic outlook
An annual report on the consulting market by Source Global Research, which includes contributions from big firms and is considered a benchmark for the industry, reveals a significant rethink of the use of consultants by US clients because of the economic outlook. More than three-quarters of professional services buyers had cancelled at least some existing projects or scrapped new ones, a Source Global survey found, while two-thirds had paused most existing project work.
“Given the current uncertainty in the economic environment and the tightening of clients’ budgets, projects are being staggered into smaller pieces,” Chiaki Nishino, North America president at the consulting firm Prophet, told Source Global. “I doubt we’ve seen the worst or the best of the market so far this year.”
Clients are five times more likely to be expecting fee rates to come down than they were before the coronavirus pandemic, said Source Global chief executive Fiona Czerniawska. “Only about 50 per cent of clients think that firms add value above the fees they charge. This is a longstanding gap, and it comes back to haunt the industry every time there is even a sense of economic uncertainty.”
Cybersecurity work and HR consulting are among those areas in the doldrums, Czerniawska said, along with M&A work for private equity firms and others. While spending on IT consulting remains high, it is being targeted at projects that immediately boost the bottom line.
The changes have left firms overstaffed in many areas, after a hiring spree in the past two years. Accenture, McKinsey, KPMG, EY and Deloitte are among those to have cut underutilised staff or restructured their operations.
“What firms have done is take on a lot more staff than they needed to, and certainly paid them more,” Czerniawska said. “Broadly speaking the problem here is not demand, it’s about what clients are willing to pay for it.”
KPMG on the UK economic forecast via The Guardian:
A new report by the accountancy firm KPMG has found that the economy has enjoyed a better start to the year than it had thought, and is now expected to grow by 0.3% this year, compared with its previous prediction of an uplift of just 0.1%.
However, British households and businesses are set to suffer more financial pain with the Bank of England expected to raise the base interest rate – currently 4.5% – three more times this year in order to tame the stubbornly high rate of inflation.
“We’ve seen a slightly stronger momentum for the UK economy,” said Yael Selfin, chief economist at KPMG UK.
“The UK economy has so far avoided a technical recession. But risks are still elevated. A stickier inflation will see monetary policy tightening even further, increasing the risk of unwelcome side effects, among other potential headwinds.”
I wish I could go just one day without being reminded accounting exists.
That’s one way to advertise your accounting services. Found in downtown Philadelphia. pic.twitter.com/fJ5CRuDZ0v
— Going Concern (@going_concern) June 11, 2023
Where does all the information we’re putting into AI go? Fortune talks about how ESG is last year’s acronym, this year AI is the hot topic on audit boards everywhere.
Mississippi auditor Shad White issued a report Thursday that said the state’s public universities spent $23.4 million on diversity, equity and inclusion efforts from July of 2019 to now.
“There have also been allegations that DEI staffers are duplicative of other human resources staff and are therefore a waste of money,” said White. “In light of all this, as a starting point, I thought it was important for taxpayers to know what public universities are spending on DEI.”
Grant Thornton comments on the PCAOB’s proposed Auditing Standard, General Responsibilities of the Auditor in Conducting an Audit and Proposed Amendments to PCAOB Standards:
We support the Board’s initiative to modernize and clarify its “foundational standards,” to reflect changes in the auditing environment, and to eliminate outdated or inconsistent language. Still, we have raised some significant concerns regarding the potential for unintended consequences that might occur because of the way the Board has proposed updating and streamlining the requirements. Paramount among our concerns is that the proposed standard could exacerbate the “expectations gap” between the assurance that an investor (or another market participant) may believe an audit provides versus the assurance that can reasonably be provided, even through a properly planned and performed audit.
Deloitte’s Sports Business Group in the UK has released their annual football finance report. Not that football, guys.
Women’s Super League (WSL) clubs generated £32m in aggregate revenue in the 2021/22 season, up from £20m in the previous financial year, according to new analysis from Deloitte’s Sports Business Group. The significant 60% rise was driven by increases in both broadcast and commercial revenues.
The commencement of a new broadcast deal in the 2021/22 season – the largest broadcast deal of any professional women’s football league, representing a reported £8m per year – led to a significant uplift in broadcast distributions for WSL and Women’s Championship clubs. The deal marked the first time that broadcast rights to the WSL had been auctioned separately from the men’s game, with broadcast distributions shared among WSL and Women’s Championships clubs at 75% and 25% respectively and included an equal fixed amount per club, plus a share based on league position.
The profession’s O-est of the OGs Edward Mendlowitz, CPA/PFS, ABV writes a letter to The CPA Journal about charging what you’re worth:
The column, “Underpricing Leads to Undervaluing,” by Jason L. Ackerman in the Sep/Oct 2022 CPA Journal was a great article. I wholeheartedly endorse and agree with everything he wrote. I have always been doing what Jason suggests, and it has worked greatly and profitably for me. This is an article that should be taken to heart by every practitioner whose pricings are important to their income, financial security, and growth of their practice.
As CPAs, we continually face pressure from clients to keep fees “reasonable.” We tend to think that means “low.” Pricing our services too low inhibits our growth and ability to add services that would provide added value to clients and denigrates the significant value we do provide. It also puts us in a position where many of us might spend inordinate energy looking for newer clients that are more likely to pay us more “reasonable” fees. This doesn’t serve us—or our clients—well.
What Jason Ackerman is suggesting is something that I have done since the late 1970s. At that time, my partners and I had a fast-growing practice, but we felt we weren’t earning what we should. We measured this by what we believed we would earn had we been employed by another firm performing comparable services. We analyzed (isn’t that what CPAs like to do?) where we stood, and the services and value we provided to our clients and determined what we felt was the proper fee. Our target was to earn at least a third more than what our salaries would be if we were employed elsewhere. We further added to that the profits we needed to grow our practice and infrastructure. This analysis came up with a client-by-client fee increase in the 40–50% range, which is similar to Jason Ackerman’s suggestion. We then went over each client and reviewed the fee and the value delivered, and we determined a targeted amount that we would need to increase each fee. Our fees were generally fixed and bundled.
Lastly, some other stuff:
- PwC Accounting Gamekeeper Turns Poacher
- EY US Names Dante D’Egidio as Vice Chair of Americas Assurance and Katrina Kimpel as Vice Chair of the EY Professional Practice Group
- PwC accused of ‘walking both sides of the street’ on inflated medical device prices
- JG Wentworth Names Kim Banks as Chief Accounting Officer
- Sara Kissling, a business teacher at Oregon High School, received the 2023 Accounting Educator Award from the Wisconsin Institute of Certified Public Accountants (WICPA) at this year’s Member Recognition Banquet & Annual Business Meeting on Friday, May 5.
Please let me know if you see anything interesting while you’re wandering around the internet this week. Have a good one.