• For Employers

    To Most Accounting Students, Small Accounting Firms Don’t Exist

    By | February 7, 2017

    Here’s a fun article by Marc Rosenberg about “how totally uninformed young accountants are about CPA firms.” Now, you might think that this is one of those condescending KIDS TODAY posts, but it’s actually pretty self-aware. Rosenberg offers a picture of a profession that has an enormous perception problem, citing some pretty surprising examples. He quizzed some interns about aspects and here’s a look at the results:

    There are 30 local CPA firms in metro Chicago with 30 or more personnel. Name 5 besides the six sponsoring firms of this program.

    Result:  9 of the 11 interns could not name even one firm.  The other two named one firm each.

    Message to local firms:  Almost no one on college campuses knows who you are.  If you want to attract the best and the brightest, you better get active on campuses.

    If you’re an intern, this isn’t a big deal. It’s possible, maybe even likely, for those six firms to hire those eleven interns, so they don’t need to know the names of any other firms. On the other hand, this is an atrocious result for any of the other 20+ firms in the Chicago area.

    Here are a couple more fun quiz question results:

    How many total work hours a year do you think a typical staff person at a CPA firm works?
    Intern’s response:  2,600, almost 20% higher than the actual of 2,241.

    Rosenberg writes, “The CPA firm industry is stuck with an undeserved reputation as sweat-shops,” and you can blame the Big 4 for that. They are sweatshops and a lot of small accounting firms have partners whose entire careers are built on that kind of culture.

    Then there’s this doozy:

    How much do you think typical local CPA firm partners in Chicago earn?
    Intern response:  $184,000 – that’s not a misprint!  Actual in 2015 was $410,000.

    Whoa, now that could be an issue.

    Since I’m one to point fingers, I’ll gladly put the blame for these misconceptions on the firms’ leaders. The vast majority of accounting students don’t know what the hell they’re doing. They ended up in this field either because they “like math” or because their parents recommended it. That’s the extent of their knowledge. But I suspect accounting firms are full of partners who believe their exemplary work speaks for itself and should magically attract in the best and brightest talent in all the land.

    That wishful thinking has resulted in the situation that exists now: A bunch of small accounting firms who claim there’s a dearth of talent when in fact there’s talent everywhere. To some of these firms, the situation calls for its own throwback episode of Unsolved Mysteries. WHERE IS THE TALENT? WHY DID THE TALENT DISAPPEAR? WILL THE TALENT EVER RETURN? CAN WE STILL CONTACT THE TALENT?

    Small accounting firms need to take their cues from the Big 4 on this. The Big 4 have been yapping about how great they are to professors for decades, so naturally the professors are yapping to students and the students are yapping to each other. It’s all Big 4 yapping all the time. Until small firms get used to talking about themselves, no accounting students will either; and the only thing worse than everyone talking about you, is no one talking about you.

    [CPAPA]

    • Big4Veteran

      A couple thoughts…

      1. Prestige is an issue that small accounting firms have. Another one is that many people don’t want to spend their career helping rich fuckers cheat on their taxes.

      2. If more partners at my Big 4 firm had told me how much money they make, I may not have left.

      • N.E.R.D.

        1. Prestige is just kool-aid; can’t argue with the B4 grindhouse results, but most grads wise up to the bullshit after a year or two. I drank the kool-aid too when I was in school. This is probably the #1 issue for small firms. I think a secondary issue is that smaller firms often look for experienced hires b/c they can’t quite so easily float the expenses of green graduates.

        Not sure why you think small firms are exclusively the only accounting firms to help “rich fuckers cheat on their taxes.” KPMG shelters? ‘Member? And they’re just the only ones that got caught recently. PWC & Caterpillar are being watched closely too (though technically not criminal at this point), off the top of my head. I doubt anything criminal will come of it, but I think it’s hardly unique to small firms to help rich fuckers avoid their tax responsibilities.

        2. You didn’t have a rough idea how much partners made while you were/are working in public? Not sure how much I believe that; it’s almost common wisdom once in the biz that partners make bank. This poll is for interns, outsiders looking to come in but so far unfamiliar with the sharp lessons of public accounting.

        • Big4Veteran

          I didn’t use the word “exclusively”. You did. Maybe I’m being overly picky, but I think there’s a difference between helping corporations minimize their tax liability and prepare a defensible tax provision versus helping “rich fuckers” literally cheat on their taxes at a small accounting firm. Call me old fashioned, but I think there’s a difference between staying within the law and outright breaking the law.

          No, I didn’t really know how much the partners made at my Big 4 firm when I was there. I had a general idea of base salary (within say $100k or so), but I had no idea how much any of them were actually taking home after bonuses and whatever other comp/perks they get.

          • N.E.R.D.

            You implied exclusivity since that was the “career choice.”

            You say potato, I say global arbitrage of tax rates via dubious shell holding companies in Luxembourg and Ireland that require “story telling” to defend. Though technically this isn’t illegal (yet), it still smells like cheating to me. I don’t think cheating on your taxes outright is defensible either. Two wrongs…yadda yadda.

            Pushing the boundaries of the law and breaking the law is a thin line to walk IMO.

          • Adam Hill

            Which small firms did YOU work for?

          • cpanum31

            You were trained as an accountant at a business school and you couldn’t have backed into their approximate income by doing a standard of living analysis?

      • IndenturedServant

        Would I want to live the life of a big4 junior partner in return for 300-400k a year? Probably not. Add to that the long odds of making partner in the first place and staying in big4 for a shot at partnership quickly becomes inadvisable.

    • D’Angelo

      I used to work at a terrible small CPA firm. I work at a national firm now. There are a number of reasons why I would not recommend someone start at a smaller CPA firm.

      Work quality at small firms is all over the place. Some small firms are competent, some are inept. That’s not to say that large firms don’t screw things up or turn out some shoddy work, but all of the really awful accounting work I’ve seen has come out of small firms. On average, someone is going to learn a lot more and get better training at a larger firm.

      Some small firms will have you doing client bookkeeping or running payroll. This type of work sucks. You will never have to deal with this at a large firm.

      Bigger firms have better exit opportunities.

      • HWSquared

        That said, a couple of months doing bookkeeping or payroll is massively useful experience for later in life, whether you go into industry or stay in audit – if nothing else, you’ll be the only auditor that actually understands what a client’s payroll team are trying to do!

      • The Horniest Partner

        A lot of truth here ^^^.

      • EXB4ANON

        This is completely on point. use small firms for nothing more than an opportunity to move on to something better.

    • Jack

      Small firms differ widely in their capability and clientele. I would look at the bios of the partners. If they worked at the same small firm their whole careers or at only other small firms, I would be hesitant to join. If they have significant big firm experience, likely that they have solid technical ability and business experience. Also, they probably have had experience serving larger and/or more complex clients at the larger firm, so possibility that the firm they’re with now would have good work experience vs. just bookkeeping junk. I would also look at the list of services they have on their website and the industries they list. If they list bookkeeping/payroll, then I would hesitate. If they list audits but then the industry they list is non-profits, I would hesitate. Starting at a large firm definitely has all the advantages others have listed, but if you just don’t like the thought of a large company environment, some small firms could be quite good careers. You just have to vet them really well.

    • sludgemonkey

      Small firms need to figure out how to avoid doing much work so they have great margins. That will allow them to get bigger. I would hire a bunch of those pharma sales ladies too.

    • McValue Meal Audit

      This just in, College students don’t know anything.

      It’s not their fault, all the professors and career department sack ride the big four because the big 4 has the biggest recruiting budget.

      • The Horniest Partner

        and they endow professors. My college only promoted B4

    • The Horniest Partner

      As a early-mid 90s grad, my grades were avg (I blame it on all the sex I was having), my interview skills were got-awful and it was an employers market. I ended up at a 12-person firm. It was awful aside from the 40 y/o divorce’ who would flirt with me and the WT receptionist I banged. I did one audit, a couple reviews and the rest was payroll taxes, bookkeeping and crappy 1040s. My first audit the partner met me there and told me “start auditing” and he left. That was the extent of my training.
      Kids – don’t be like the Horniest Partner, your first job should be at a minimum 50+ local firm, regional or B4.

      • EXB4ANON

        Yeah, my experience was with an even smaller firm. I have zero sympathy for local firms. I’m honestly not sure why anyone would actually go work at one other than not having any other options. Which is totally justifiable. However, if they don’t use it as a launch pad to something better then that is on them.

        • N.E.R.D.

          “I’m honestly not sure why anyone would actually go work at one other than not having any other options.”

          More pay, less hours.

    • The Horniest Partner

      On the flip side, my college roomie got a job with Arthur Anderson out of school. He spent 3 hrs every night our senior year studying for CPA exam. His first year at AA he worked 70+ hrs year round. After one year, he left AA and pursued a career other than accounting.

    • cpanum31

      One thing that I always found interesting was that almost all Personnel Offices, when they are looking to hire an accountant, make Big 4 experience a requirement for the interview.

      I always thought it was interesting.

    • Eric Cartman v2

      For reference; I started at a firm with a professional staff of about 30 people. Did all the fun accounting/tax work like compilations, payroll, sales tax, 1040’s, etc for about three years. Wasn’t glamorous but eight years later I’m making six figures as a controller of a closely held business before I hit 35. Rare that I work over 40 hours/week, I can work from home just about whenever, go for runs with co-workers at lunch, etc. Don’t know anything about public company reporting, won’t ever make 400k as a partner at B4 but I get to spend time with my kid and enjoy my life.

      Everyone can be ‘successful’ with a little motivation. I’d also advise marrying a women who works at a large international law firm and let her bring home the bacon.