Hey! It’s Monday. And it’s the last Monday morning news brief of 2023 for us, next Monday is Christmas and the Monday after that is the first day of 2024. Hope you all are getting some good rest and merriment in the coming days, we’ll be on a low posting schedule next week with a few new things here and there should you be one of those weirdos who reads accounting news on holidays.
And now, the news.
Deloitte is supposedly using AI to prevent layoffs, that’s according to Bloomberg and then Insider covering Bloomberg‘s coverage:
The rapid advances in AI will bring about significant disruptions to the labor market.
The bad news is that some workers are going to see their jobs and skills replaced by automation. The good news, though, is that AI could also help workers move into roles that are more in-demand.
And major consulting firms like Deloitte are doing exactly that. The firm is deploying AI technology to assess its current employees’ skills and figure out how to move them into areas of the business that are more promising, according to Bloomberg. The firm is essentially making a bet that AI will not only help it avoid mass layoffs, but also moderate its hiring growth in the coming years, Bloomberg reported.
We have a question about Bloomberg‘s article:
Deloitte hired 130,000 people this year??? https://t.co/6vGPVoALte pic.twitter.com/hRXC2SHIqE
— Going Concern (@going_concern) December 17, 2023
According to Deloitte’s revenue announcement in September, the global headcount is 457,000, up from 411,951 at the end of FY22.
New research from Anthony Le, PhD candidate in Accounting at Columbia University, confirms what many commenters already know: it isn’t just salaries driving people away from the accounting profession. The abstract from his paper Accounting Rules and the Supply of Accountants:
I explore the role that accounting rules, in particular the restrictiveness of GAAP, have played in the declining supply of accountants. I find that when exposure to restrictiveness is high, there are fewer students majoring in accounting, fewer CPA exam candidates, and fewer accountants and auditors overall. The overall demand for accountants does not decrease when exposure to restrictiveness is higher — however, the nature of the demand for accountants changes. There is less focus on tasks such as applying judgment, thinking creatively, and thinking critically, and more focus on determining compliance. Despite the decrease in the number of accountants, earnings for accountants do not increase, and the wage distribution becomes more compressed. I supplement these analyses with a survey-based field experiment. Consistent with the archival results, the salience of restrictiveness deters students from entering the profession due to their inability to use creative and critical thinking. Overall, the findings suggest that restrictive regulation can shift the task content of occupations and reduce the pool of individuals interested in the profession.
We’ll dig into that one some more later.
On Friday, Wall Street Journal talked about the biggest story of last week: EY trimming back partners.
Big Four Accounting Firms Overhired. Now They’re Starting to Lay Off Partners.
An Ernst & Young senior partner, during a call with some of the accounting firm’s U.S. partners and staff, delivered a sober message usually reserved for clients: It’s time to cut costs.
“This has been a difficult week as we took needed action to address resource challenges in our business, where growth has notably slowed or where we have excess capacity,” said Dave Burg, EY’s head of Americas cybersecurity, in the webcast call on Thursday.
The accounting firm is laying off dozens of U.S. partners, The Wall Street Journal reported this week, a rare tactic that extends ongoing job cuts to the top echelon of one of the Big Four firms. That followed the roughly 5% cuts to KPMG’s U.S. workforce this summer, which also included partners.
While EY, KPMG and Deloitte have collectively laid off thousands of U.S. workers this year, partner layoffs are far less common in the industry. Firms generally have to buy out the partner’s equity and make an additional payment based on the person’s seniority and tenure when they leave, said Tom Rodenhauser, managing partner at Kennedy Research Reports, which tracks the consulting industry.
The Big Four—EY, KPMG, Deloitte and PricewaterhouseCoopers—had a combined 15,700 U.S. partners in 2022, including 3,600 at EY and 2,344 at KPMG, according to market research firm Statista.
As someone who bought no less than three dozen actual printed and bound books this year, I enjoyed this CBC Radio piece featuring a Deloitte analyst who has me beat in the bookshelf department. TLDR: e-readers didn’t take off like we all thought they would and the printed book market is far from dead.
When e-readers like the Amazon Kindle burst onto the scene, showing up next to menorahs and under Christmas trees in the early 2000s, they were predicted to bring about the death of the print book — and maybe the independent bookstore too.
But publishing sales data and on the ground observations from booksellers indicate that neither prediction has come true — in fact, sales of print books appear to be enjoying a bit of a lift driven by strong performance in genre fiction and interest from younger readers.
Print book sales are up 10‒14 per cent over three years in most major English-speaking markets, says Duncan Stewart, a consumer forecasting analyst for Deloitte who lives in Toronto and specializes in media and technology. He says those are quite nice numbers “for an industry that many people thought was dying.”
When they first gained popularity, industry watchers predicted e-books would soon be the preferred medium for younger readers who were growing up online, he told The Cost of Living, while print books would remain the go-to for their grandparents.
EY, the firm that laid off 3,000 people earlier in the year, has delayed start dates in consulting twice now, and just axed a bunch of partners, got a complimentary article in Employee Benefit News about how they’ve “gamified” employee well-being.
Wellness apps, mental health benefits and paid time off are great ways to promote well-being within a company, but they are typically crafted to be used by individual employees on their own time. To ensure that wellness is woven into the day-to-day practices of employees, professional services company EY decided to make mental fitness an ongoing team sport.
“One of the things we ask our folks is, “Do you have time for healthy habits?” says Frank Giampietro, EY’s chief well-being officer. “We can’t control everything from a well-being perspective, but we can control whether people feel like they have time to take care of themselves.”
“It’s not this thing that sits off to the side,” Giampietro says. “If we do an all-hands call at our U.S. level, or if we do an all-hands call for a part of our business, well-being is now often on the agenda. Sometimes it’s five minutes, sometimes it’s 30, but people see it as part of how we operate.”
Stamford, Connecticut still hasn’t gotten its yearly audit done and an audit partner at RSM had to take time out of his busy day to visit a Board of Finance meeting. Stamford Advocate:
“We are at the one-yard line here to get this audit across the finish line,” said Scott Bassett of RSM U.S. — the firm hired by the city to review its books — at a Board of Finance meeting Thursday.
“We’re at the one-year mark, too, Scott,” said Board of Finance Vice Chair Mary Lou Rinaldi.
Stamford’s audit report for fiscal year 2021-22 was supposed to be filed by the end of December 2022. The Board of Finance has tracked the audit’s progress for the past year, listening as city officials have pushed out the anticipated completion date again and again.
The delays, and the extra hours RSM has put into the job, will cost the city “several hundred thousand dollars,” said city Director of Administration Ben Barnes.
RSM’s Bassett previously told the Board of Finance that Stamford didn’t seem to have “a process that closes the books and gets the city audit ready.”
An audit has shown that Georgia is losing money on its film tax credit:
The State of Georgia spent $1.35 billion on film tax credits in 2022, according to a new audit released on Thursday.
The report, prepared by a team at the Georgia State University Andrew Young School Fiscal Research Center, found the incentive “induces substantial economy activity” in the state.
It’s also the “largest tax expenditure among Georgia’s economic development incentives,” the report said.
Georgia “loses money” on the benefit — something consistent with studies of other state film tax incentive programs.
“The productions come because the investment has been made in our community for the built environment,” Fayette County Development Authority president and CEO Niki Vanderslice said. “If we don’t have the productions, then we have large spaces that may go unused.”
Just one “Made in Georgia” show I can think of off the top of my head:
The IRS issued guidance on the Sustainable Aviation Fuel Credit on Friday:
The Treasury Department and Internal Revenue Service issued Notice 2024-06 (PDF) for the new Sustainable Aviation Fuel (SAF) credit created by the Inflation Reduction Act of 2022.
The SAF credit applies to a qualified fuel mixture containing sustainable aviation fuel for certain sales or uses in calendar years 2023 and 2024.
The SAF credit is $1.25 for each gallon of sustainable aviation fuel in a qualified mixture. To qualify for the credit, the sustainable aviation fuel must have a minimum reduction of 50% in lifecycle greenhouse gas emissions. Additionally, there is a supplemental credit of one cent for each percent that the reduction exceeds 50%, for a maximum increase of $0.50.
Lastly, and in case you missed it, here are my picks for the top stories of 2023. Not to be confused with the most read stories of 2023 which we’ll be publishing next week.
If you have an interesting news story to share with us, a general gripe, or concern you can tweet us, email me, or text the tipline at 202-505-8885. You may also submit a letter to the editor on any topic discussed on this site or of special importance to the profession if that’s more your style (we might even publish it). We also accept guest posts, guest posts must meet our rigorous guest post guidelines.
Have a great week, you.