February 13, 2020
Read more On the Margins in the archive.
Help (hiring) wanted
I don’t think a week goes by without an article on the plight of the small business owner (paywall) trying to hire some decent people. It just so happens that businesses of all sizes are trying to hire decent people, and lots of those decent people wind up at big companies because big companies have money to throw around for higher salaries, better benefits, etc.
Which brings me to an obvious point: Hiring people requires money. Unfortunately, sometimes the business owner herself isn’t in the best position to fully understand where the money in her business is going, and whether that money can be better deployed towards something like, say hiring. I think many small business owners would pay someone to help them find the money from their current operations to finance a couple of hires. And who better than an accountant to help them do that?
“You have to be relentlessly pursuing efficiencies or you won’t survive,” one business owner told the Wall Street Journal. Small business owners nod sagely in agreement, but are also thinking, “Yes, but I don’t really know what ‘relentlessly pursuing efficiencies’ means.”
If I had to guess, I’d say that means small businesses have to get SCRAPPY. They’re outmanned, outgunned, outmoneyed, and they still have to find ways to compete with BIG BUSINESS. Observe:
Some small companies are using software to drive efficiencies that keep head count down and allow the companies to remain competitive. North Carolina Trailer Sales Inc. invested in new software that costs $15,000 a year to streamline bookkeeping and other administrative tasks.
I wonder who helped them decide on new software to streamline bookkeeping? I could be wrong, but it seems like just the sort of thing an accountant could do. Which makes me think that this whole small-businesses-struggle-to-find-workers problem is also just the sort of thing that accountants are uniquely positioned to help solve. And if the bookkeeping software wasn’t enough of a clue, here’s what Mr. North Carolina Trailer Sales had to say:
“We want to make sure we are in a good, positive cash-flow situation,” Mr. Shelton said, and that “the economy is going to work with us.”
I don’t think there’s much more to say here. Go get scrappy.
CPAs are worried about the future of the CPA
One thing that folks of different political persuasions seem to agree on is that too many jobs require a license. On one side, people say that it’s an unnecessary obstacle for people seeking a particular job while the other thinks it’s simply unnecessary bureaucracy.
Whatever the position, the AICPA sees all this anti-licensing stuff as a threat to CPAs, and so they’re out there doing their thing, protecting THE SHIELD:
There are major forces at work, and lots of big money, to unwind in the states the basic licensing regime that exists in this country. It’s not just targeted to CPAs, but it’s targeted to all licensing.
That’s a quote from AICPA CEO Barry Melancon at a recent Accountants Club of America meeting. At that same meeting he also mentioned a bill in Arizona:
that actually said you could do anything and you don’t have to be licensed. All you had to do was tell the person you provided the service to that you weren’t licensed. So if you wanted to practice medicine, you could literally, under that law, say, “I’m going to provide medical services. Oh, by the way, I’m not a licensed physician.”
Sure, I get the point: Certain professions, like doctors, should require a license. I would say, though, that that doesn’t stop people from going to pure QUACKS for medical treatment, or prevent Dr. Oz from yakking on TV. But never mind that.
If we go on first principles here: Do accountants need a license? The answer of course is no, they don’t. Most people can get an accounting degree and go be an accountant at virtually any business they want. Sure, it may limit their careers in some instances, but it certainly doesn’t stop them from being accountants.
If they don’t need it, then why do accountants get licensed? The AICPA says the CPA, “is a symbol of trust and professionalism in the world of business […] [and] the reward is that CPAs are considered the most trusted advisors in business.” Okay, fine. But on a more practical level, if you want to be an independent auditor when you grow up, the law says that you must have a CPA license.
So then the question is: Should we require accountants who want to perform independent audits to be licensed? We just got done saying that that’s the only service that mandates licensure. Here’s what Barry Melancon said in that same speech:
“For almost everyone in this room, when you first started out in auditing and went out on an audit, everybody on the audit team was either a CPA or eligible to be a CPA,” said Melancon. “That is not the case today. We are seeing audit teams with CPAs as a minority on those teams. And if we don’t change the definition of CPA, and embed technology in the definition of a CPA, those numbers are going to continue.”
He believes it will be harder to argue for state licensing of CPAs, even with firms that are at least 50 percent owned by CPAs if the people doing the audits are mostly not CPAs.
Hmmmm, yes. A couple weeks ago we talked about PwC’s new Cash.ai, an AI program that will “automatically read, understand and test” all sorts of cash-related items “to do a more complete audit of cash.”
And here’s what I wrote:
it’s easy to imagine a world of people auditors who “read, understand and test” the AI programs that are doing the actual reading, understanding, and testing of client documents. But would those people still be auditors? Will they need an auditing background? Probably, but all this will be secondary to the engineering and mechanics going into the AI auditor.
If audit teams of the future are packed with AI engineers and technologists, will they need to be CPAs? Will AI engineers and technologists want to be CPAs?
This puts the AICPA and the CPA designation in an awkward position. They’re arguably less relevant, and some might say, unnecessary, especially as auditing—the one service that requires it—becomes more reliant on technology.
Fresh from Gusto
- Jeff Haden explains what businesses can and cannot do when their employees discuss compensation with each other.
- The difference between Bronze, Silver, Gold, and Platinum health plans, explained.
- How to Make the Gig Economy Work for Your Firm with Jeff Phillips on February 17.
- Fraud: Even Stupid People Can Do It, and Even Smart People Can’t Stop It with Greg Kyte (and me) on February 19.
Read with Gusto
- The SEC and North Carolina prosecutors are looking into allegations of bid-rigging that helped Ernst & Young win a multi-million dollar audit.
- PwC didn’t screw up the Oscars.
- Go easy on the B12.
- Philadelphia Flyers mascot Gritty cleared of assault allegations, then taunts a nun
- NASA is hiring.
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