July 14, 2023
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There aren’t enough accountants
It’s been my experience that many accountants believe that they are underappreciated. There’s ample evidence for this, again, based on my own experience as an accountant for a time, but also listening to the experiences of others.
Clients grumble to auditors for beating up on them for shoddy accounting or controls. Clients grumble to bookkeepers about where their financial statements are and what they mean. Clients grumble to tax pros about the IRS, about [insert politician name], about the size of their refund or amount due. Everyone grumbles about the invoice.
Part of the reason accountants might be underappreciated is that they are not as flashy as their white-collar counterparts. Flash suggests that you have to be taken seriously, that you are getting your money’s worth. Lawyers, even the bad ones, are flashy because they can keep you out of trouble, but also: ALL THAT SCHOOL. A law degree is often perceived as a flashy education, so lawyers must be smart, right? Wrong.
Bankers are flashy because they have all the money. Better put, bankers don’t have all the money (they tend to spend all theirs) insomuch as the banks themselves have the money. Bankers work at banks. and so it’s more that they’re flashy by association. These are just the facts, people.
Techies are flashy because they build things and take every opportunity to tell anyone who will listen that the things they’re building will save the world. Yes, yes, it’s all very impressive, and if you’re not impressed, well, then you don’t understand the GENIUS of it all.
Accountants, on the other hand, are the blue-collar workers of the white-collar world, as a former colleague of mine was fond of saying. Their work is essential, yet, it’s largely invisible to most people, overlooked at the very least.
That may start to change, however, if stuff like this starts happening more often:
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.
Maybe it’s just me, but an electric-air-taxi company sounds just like the type of business that would have raised millions of venture capital money and spent it on made-to-order omelet stations or a Tony Robbins keynote at their annual conference but not a nickel on an accounting department.
Anyway, it’s true! The GREAT ACCOUNTANT SHORTAGE has gotten so bad that companies that can’t hire enough accountants are now reporting material weaknesses in their controls over financial reporting (ICFR). That means these businesses are at a greater risk of screwing up their accounting, might be more vulnerable to fraud, or, in some cases, simply can’t get routine stuff done on time:
Advance Auto Parts […] said it had identified a material weakness in its ICFR due to turnover in key accounting positions during the fiscal quarter ended April 22. The company said it wasn’t able to attract and retain enough qualified people to fulfill internal-control responsibilities.
So much so, that the Raleigh, N.C.-based company said on June 2 it wouldn’t be able to file its 10-Q quarterly report on schedule because it needed more time to assess the control deficiency and its remediation. It filed the 10-Q four days later.
It’s quite a thing when you don’t have enough people to do the job. It’s quite another when you need to spend a lot of extra time figuring out just how big of an impact not having enough people to do the job is on your business.
Regardless, I don’t have a clue how many people would be required to fully staff Advance Auto Parts’ accounting department so they could get a 10-Q out on time. Still, you’d think maybe they’d start pulling people off the floor to fill in. And maybe they could enroll them in the nearest accounting program while they’re at it. Oh! And they’ll need to pay them more:
One solution for companies is to offer accountants more lucrative pay packages, said John Coffee, a professor at Columbia Law School. Accounting has been long viewed by people in the profession as underpaid and undervalued, compared with positions in tech and banking.
“Higher salaries are coming for in-house accountants whether management likes it or not,” he said.
Of course, there’s always a chance those people will feel underappreciated anyway and leave for a better job. We’re going to keep having this conversation, aren’t we?
Accountants vs. Robots
For all the worrisomeness about artificial intelligence, job elimination seems to be the worrisomenessest. Tech and business leaders have done their best to calm those worries, suggesting that A.I. will improve people’s skills and productivity rather than put them out on the street. And sure, fine, makes sense, but I can’t really blame anyone for being suspicious of the American business world’s desire for “efficiency” which is to say, “way fewer people.”
I bring it up because big accounting firms are not missing out on this hot A.I. action. KPMG just announced an expansion of its big partnership with Microsoft to include a $2 billion investment in A.I. and cloud services. Microsoft, as you may know, has a big stake in OpenAI, the maker of ChatGPT, and there’s been more than a little bit of speculation about the tech’s ability to take on a big chunk of work and eventually eliminate human jobs.
In announcing the expanded partnership, KPMG’s leader tried to address this upfront:
KPMG’s global chair and chief executive, Bill Thomas, said in an interview that the company isn’t looking to use technology to eliminate jobs, but rather to enhance its workforce with AI skills—for example, by moving people to new roles or offering them training.
“I certainly don’t expect that we’ll lay off a lot of people because we’ve invested in this partnership,” Thomas said.
Come on, Bill! Please don’t say it like that. Way too much room for interpretation! YOU JUST LET A BUNCH OF PEOPLE GO.
Sigh. At least he didn’t say anything about efficiency.
Thomas said a significant portion of KPMG’s investment will go toward generative AI, which many businesses are eager to apply to their finances as a way to cut costs and yield new efficiencies.
Oh, never mind.
Fresh from Gusto (and friends)
The Xero Roadshow Accelerate stops in Austin on July 27, Atlanta on August 3, and Los Angeles on August 17 for a day full of content and networking with your local accounting community. Use these codes at checkout for 25% off: Gusto-25ATX, Gusto-25ATL, Gusto-25LA
- What You Need to Know About Florida’s R&D tax credit.
- My colleague Luke Pardue on tipping trends.
- Our partner Jirav raised some money.
Our on-demand webinar, Grow with Gusto: Next Steps for Your Practice, is now available. If you’re new to the Gusto Partner Program and wondering what’s next, this session is for you. Editor-at-Large Caleb Newquist and Gusto representatives will discuss FAQs, considerations, and recommendations on what to do next. Register and watch now.
- How to Help Clients Find R&D Tax Credits with Joshua Y. Lee and Kenji Kuramoto, CEO of Acuity, on August 8, 2023.
Read with Gusto
- Tax preparer firms like H&R Block and TaxSlayer that shared their users’ private data with Meta and Google could be fined billions.
- The DOJ charged Alex Mashinsky, the former CEO of bankrupt crypto lender Celsius, with fraud.
- Actors are on strike now too.
- “Just get me out of here. Let me go be an accountant.”
- Anchor Brewing is closing.
- The Man Who Broke Bowling
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