May 5, 2023
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Gusto’s Lead Economist, Liz Wilke, returns with the May installment of The Economy Explained, discussing what’s happening in the economy, what that means for businesses, and what to keep an eye on in the coming months so you can advise your clients with confidence. Watch and get a free one-pager that you can white-label to share with clients.
Last time we spoke, we discussed how mega firm EY had called off the split of its consulting and auditing practices because no one could agree on what to do with the tax folks. But I guess the Wall Street Journal article wanted to officially state the deal’s demise this past Monday, time of death 5:30 am Eastern Time:
When Ernst & Young dropped its breakup plan, the firm’s executives said they remained committed to achieving the split. Since then, it has become clear that the effort is dead, at least for the next few years, according to internal webcasts and people familiar with the matter.
So I guess that implies an opportunity for a zombie EY split deal in the future? That’s kind of exciting. But who knows, really, because this guy, for one, is over it:
“My message to everyone about Everest is, it’s behind us,” Kevin Flynn, head of tax at EY’s U.S. arm, told his staff recently, according to a recording of a webcast heard by The Wall Street Journal. “Let’s not spend time in the rearview mirror.”
“I know this creates a lot of angst for all of you,” EY leader Captain Obvious said on the same webcast, and there’s nothing worse than someone telling how you feel except for when that person is actually right about how you’re feeling.
All the internal strife is naturally followed by a nameless rival Big 4 executive saying, “Are there people [at EY] who are unhappy with what’s happened and talking to us? Yes.”
We’ve talked about this before: competitive poaching. It’s fierce among Big 4 firms, and it’s been covered extensively at Going Concern for years. And so, yes, many EY people are wondering what they should do now, including whether or not they jump for another mega-firm. Now, if you work at EY and can compartmentalize all of what’s happened and move on, then by all means, stay. It’ll be fine. But let me also go on record to recommend that any disaffected EY employees should NOT go to another Big 4 firm.
Why? Simple: It’s not going to be different. In some cases, it might be worse! The Deloitte subreddit is filled with horror stories right now; PwC just ordered its people back to the office; and KPMG is the auditor of Silicon Valley, Signature, and First Republic Banks (and PacWest too!). A few people might want to ditch EY for one of those situations, but who?
Accounting has been in a talent crisis for quite a while, and during this time, the largest accounting firms have been able to throw money around to either attract or keep people. A lot of the time, this has been at the expense of their much smaller and resource-strapped competitors. And even though these big firms will weather these storms (like they weather all of them), now would be a great time for smaller firms to take advantage of the situation. There are good, talented people at these large firms, and they would have a lot to offer to a smaller firm, not to mention the clients of those firms. If this is you, up your game and snag these jaded Big 4 folks before the cynicism fades.
Accountants vs. Robots
Will ChatGPT replace accountants? No one’s sure! Maybe it’ll be a tool that makes their jobs easier. Or maybe it’ll be your colleague who’s better than you at the job and just complains way, way less. But then again, what if ChatGPT ends up being just like us?
Here’s a story about a study conducted by Brigham Young University accounting professor David Wood that makes ChatGPT seem very relatable:
[A]s a study led by Wood […] found, the platform often struggles to understand mathematical processes, and often embellishes data to cover up mistakes when they occur.
Struggles with math and bullshits its way through poor performance? Are we sure ChatGPT isn’t human?
Fresh from Gusto (and friends)
- Gusto’s new business survey found that the number of remote and hybrid workers hired grew across all industries, and nearly half of all the workers hired by new businesses were remote or hybrid.
- My colleague Luke Pardue discusses Gusto data that shows many small business payrolls exceeding the FDIC deposit insurance limits.
- Gusto’s Head Ambassador, Will Lopez, is hosting a pop-up event in Denver with Ignition on May 18. Sign up here.
Our new 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 where to go from here. Register and watch now.
Read with Gusto
- The useful lives of some tech companies’ assets are increasing.
- “[W]e find that individual partners issuing adverse ICOs experience unfavorable changes in their client portfolios in the form of lower fees and less prestigious client assignments.”
- Of course, the IRS is to blame for the earlier debt-limit deadline.
- When a dying star eats a planet.
- During an interview with Wired, Margaret Atwood ordered $45 foie gras, a whiskey, and shared thoughts on ChatGPT.
- Dune: Part Two (trailer).
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