September 20, 2019

Is There an Auditor Exodus in the Works Or Is It Just Business as Usual in the Big 4?

Finally, a somewhat challenging "question" has found its way into the tip box:

Hello Going Concern!

I am writing to you because I have come to the realization that there is a bubble forming and it is on the brink of erupting, and no I am not talking about the internet bubble–I am talking about the AUDITOR BUBBLE. So hear me out, I have come to the conclusion that the auditor bubble has formed and it is the INVERSE of the housing bubble the economy experienced a few years ago. During the housing bubble, the price of homes far exceeded the value they were worth. In the auditor bubble that is now taking place we are experiencing the inverse: the salary of an auditor is far too low for the value of work we are providing. So why do I say that this bubble is about to explode? Because in the past 2 months I alone know about 30 people who have quit the firm in my local office. Because there are approximately 550 requirements in the east region of the big 4 public accounting firm I work for and more people are still quitting as I write this. Because I am about to enter busy season for my high risk PCAOB client and we are short two seniors. Because my generation is not willing to accept the "auditor lifestyle" that sacrifices happiness for little monetary reward. Because the audit cliche "the longer you stay (and torture yourself) at the big four, the better off you will be in the long run.." really doesn't matter to us millennials when recruiters can place us in jobs we love tomorrow. 
 
So when will this bubble erupt? It may be happening now, or tomorrow or over the next 6 months. I just hope that the old stagnant, change adverse [sic] partners of the firm wake up and make changes sooner than the bankers in the housing bubble did…. 
 
That  is all. Thanks for listening to me rant! I choose to remain anonymous if you do decide to post this. 
 
Sincerely, 
A victim of the auditor bubble
First, darling, we have to point out that those in public accounting have been fleeing public accounting since the dawn of public accounting. Has your entire team fled? Then you might have a problem. Is your entire team going to flee at the height of busy season? Then you really have a problem. Of the 30 people who quit, how many made the 2 year mark and (probably wisely) decided to GTFO now as opposed to hanging out for just one more busy season?
 
Second, if you're calling it a "bubble," that implies an over-saturation. Meaning you wouldn't be short a couple seniors, you'd have extra seniors who should have never been hired in the first place standing around doing nothing but waiting to be promoted (which you probably have anyway).
 
To your other points, however, I think you may be onto something and it's bigger than your office.
 
Let's look back on the economy of the last 6 or 7 years. Just as the housing market was swirling down the drain, I started a new job in CPA review. The office culture was great, the product was good, my colleagues were awesome, and despite being in accounting — an area I never thought I would actually enjoy — I really liked the job. The company was small at that time, maybe a little over half a dozen of us including administrative staff, my boss, and a marketing team.
 
Then, the downward spiral turned into a big economic turd that shit on everyone. People in otherwise somewhat reliable fields were completely screwed out of jobs and scared out of their minds. As all this was going on around me, I was safely tucked in my CPA review office where we were raking in the money by the truckload. It defied reason; while everyone else was struggling, we were expanding with new markets, new divisions, new titles, new staff, and new initiatives. We had to hire twice as many administrative staff just so I didn't have to work 90 hours a week dealing with our students.
 
Do you know why this is? Because suddenly, becoming a CPA was an attractive prospect to people who might have considered it back when the economy was in great shape (or rather, back when it appeared to be before the SHTF) but went into other fields. Throughout the entire period during which the economy was unraveling like my nice towels in the bathroom versus a litter of kittens, public accounting and accounting-related jobs have remained fairly easy to grab if you have a pulse, basic knowledge, a decent resume, and remedial social skills. Hell, you don't even really need that last one, especially if you come with a good GPA.
 
I believe this, my friend, is the bubble to which you refer. I have wondered all this time what will come of the realtors-turned-accountants who bailed from their first profession when the economic waters got choppy, took their 24 or whatever required units and enthusiastically yet reluctantly pursued CPA licensure because HEY, there are always accounting jobs. I imagine some of them didn't even make it past Intermediate Accounting (which is why Intermediate Accounting exists, really), still more of them weren't able to pass the CPA exam and gave up, and others couldn't make it through a single busy season.
 
Of the 30 people who just quit at your firm, how many of them do you think were pressured into an accounting degree a few years ago fresh out of high school because someone somewhere told them it was the only way to get a decent job? Those people were never going to stay. And those people are not exclusive to this economic environment either; as I said earlier, Big 4 refugees are as old a tradition as the Big 4 (or 8) itself.
 
Alright, enough of that. You mention "change averse" partners (or did you purposely use "adverse" as some auditing pun I missed?), so what exactly do you suggest they do to keep staff? I am fairly certain if you have an idea that actually works, you can basically take your pick of million dollar offers from firms that have — despite what you may think — been trying to solve that problem forever. Of course, it's a lot easier to send out hot recruiters and tweet a bunch of HR gobbledygook to lure in more unsuspecting youngsters and hope at least a few of them stick around than it is to invest in real long-term retention. You are talking about a level of change that would take nothing short of a miracle to implement. And one that is not exclusive to your generation at all, despite what you all might think.

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