Are You Guilty of Time Theft?

Firms preach you should charge all hours you work to the proper charge code. Simple right? Unfortunately, not all employees do as they are told. In fact, time theft is running rampant in public accounting. And it appears to be one of the biggest elephants in the room that no one is addressing. So let’s dive in, shall we?

Time thievery in public accounting

If you are unfamiliar with the term, I define it as all charge code fibs including both over and under billing. While some definitions only consider overbilling, I include both. Either way, the hours billed do not match the hours worked and no half-baked justification makes it ok.

For example, have you:

  • Swapped charge codes to bill work to another engagement (especially if the other engagement is under budget)?
  • Used a non-billable code (e.g., Education or Administration) for client work?
  • Worked over time for a client and decided not to record the time to stay under your budgeted hours?
  • Exaggerated hours at the end of the billing cycle to meet utilization targets?
  • Charged your breaks to a client to meet your daily busy season over time quota (e.g., 10+ billable hours)? I mean, is it really a “working lunch” if you do more lunch and less work…?
  • Liberally rounded your billable time up to the nearest hour to spend some time scrolling Going Concern?

My bet is you are guilty of at least one of these timesheet faux-pas. While all of the above are likely happening in some form or another, my hunch is that CPAs are more likely to under bill than overbill. Employees that eat billable time are way less slimy (read: unethical) than those who get caught charging too much and billing it to a client.

Performance pressure cooker

Shout out to fellow GC contributor Blake Oliver for tweeting this great infographic last week that shared a couple of stats about the pervasiveness of the issue:

  • 20% of every dollar earned by a US company is lost to time theft per the American Society of Employers
  • Employees “steal” an average of 4.5 hours every week from their employers according to Robert Half

Another study performed by a payroll software company (which you are welcome to take with a grain of salt since they do have some skin in the game) also gives some interesting insight:

  • Forty-three percent of hourly workers surveyed admitted to exaggerating the amount of time they worked during their shifts.
  • Twenty-five percent of those surveyed say they reported more hours than they actually worked 76 to 100 percent of the time.

While I couldn’t find a study specific to public accounting, I think it is pretty safe to say that time theft is a problem in the profession.

If you have ever been in the trenches in public accounting, you have felt the pressure. Where does all the pressure come from? I blame the billable hour and utilization targets. The immense pressure to meet utilization goals and to stay in budgeted hours is crushing and may cause people to do things they shouldn’t do. After all, utilization percentages are the only true metric for success and continue to be a big deal.

Is there change in the air?

I wish. I love Forbes contributor Liz Ryan’s take on the subject. In 2015, she said that:

‘Theft of time’ is an old, crusty idea that had its roots in the factory era whose echoes still reverberate in the Knowledge Economy today. It is a nonsensical term when applied to salaried employees. It is an archaic leadership idea when applied to anybody, no matter how they get paid.

If only it were so… while the war against the billable hour is still rumbling in smaller boutique firms, it has yet to make a dent in the way large firms manage employees and bill clients.

Keyword: Yet.

As more employees work remotely and there isn’t anyone to watch over their shoulders, employers will toy with the idea of monitoring their employees more. Software company Advance Systems suggests that companies:

monitor the time of remote employees with web-based time clocks. Instead of filling out manual time sheets, employees punch in wherever they are using a Smartphone, PC or laptop. Data is sent immediately to the system, and managers can see who is on the clock in real time. Additional GPS functions allow managers to see employee location.

Yikes… that’s a little too invasive for me.

Fingers crossed firms will start to embrace more results-oriented performance metrics and ditch the time-centric metrics they rely on now. Unfortunately, I am not holding my breath.

I know you were hoping I wouldn’t ask, but it’s your turn to spill. Are you guilty of time theft? Don’t worry, it’s anonymous.

Image: iStockphoto/Norasit Kaewsai

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