Turnover In Public Accounting Firm Presented by

Transcript:Turnover In Public Accounting Firm Presented by:
Turnover In Public Accounting Firm Presented by Loren Schwartz – Partner May 2022 Table of Contents Is Turnover Really that Bad? Supply Demand How’d We Get Here?: In a Nutshell Solutions 1 2 3 4 5 Is Turnover Really that Bad? My History: Started with Big 4 firm in the 1990s with team of 23 After 5 years, only two still with the firm This was—and is—the norm CPA Journal: Reported turnover in large CPA firms (i.e., revenues more than $75 million) at 17% One in every six firms experienced turnover of over 20% Likely understated – most firms saw decreased turnover during first year of pandemic Larger cities have had higher turnover than smaller urban areas Why is this a problem? Continuity on projects increases efficiencies and lowers audit costs Reverse true with high turnover Consistency on audit execution/methodology within firms is harder to achieve with high turnover 3 Supply 4 Supply is low and getting lower… Bureau of Labor Statistics: Unemployment rate for accountants and auditors: 2% in Q3 2019 and 1.5% in Q2 2019 Lower than national unemployment rate (3.5%) National Student Clearinghouse Research Center: Colleges and universities in U.S. saw total undergraduate fall enrollment decline 7.8% between 2019 and 2022 James Madison University: Enrollment in intermediate accounting course sequence dropped 34% over 4 years AICPA: Recent study shows over 75% of CPAs will retire in next 15 years Pandemic resignations and job changes Demand Demand is high and getting higher… May 2021: Median annual wage for accountants/auditors? $77,250 DoD decided it was time to get audited Audit year 2020: DoD spent nearly $1 billion 20% for audits 80% accounting and audit support/readiness Expects to spend $1.281 billion in FY 2022 These audits are mostly in disclaimer positions; full audit costs not yet realized Technology has increased churn—dramatically 5 How’d We Get Here?: In a Nutshell Department of Defense Decided to get audited and started spending (a lot) accordingly Technology Improved recruiting, which led to increasing churn CPA Certification Goal of many young accountants Now requires 150 credits Possible contributing factor in decreased accounting majors Lost potential accountant before they even got to the profession 6 Solutions Attract new professionals Go back to 4-year degree Retain current professionals Reduce “busy season” We did not have to force federal financial statements due date of November 15—we brought that on ourselves Permanently embrace remote workforce Increase part-time work opportunities