Ed. note: on July 13 we contacted AAP media relations to request salary ranges for accounting positions referenced in the below 10-Q disclosure. We don’t expect a response but if we get one, we’ll update.
The Wall Street Journal wrote today about recent disclosures made by Advance Auto Parts, Joby Aviation, and Germany’s Evotec that specifically point to a lack of accounting staff as a contributor to or sole factor causing certain material weaknesses. It seems we are entering the “find out” phase of FAFO, the FA being shitty pay (and to a lesser extent, decades of ineffective recruiting strategies).
WSJ:
The widening shortage of accountants has begun showing up in financial statements.
U.S.-listed companies such as car-parts provider Advance Auto Parts, electric-air-taxi firm Joby Aviation and German biotech company Evotec in recent months have disclosed efforts to address material weaknesses due at least in part to a lack of accounting staff. These names are larger than the typically smaller companies that historically might have had trouble attracting accounting expertise.
Advance Auto Parts was late on its most recent 10-Q and said in a June 2 SEC filing “The “Company” is unable to complete the filing of its Quarterly Report on Form 10-Q for the quarter ended April 22, 2023 (the “Form 10-Q”) within the prescribed time frame without unreasonable effort or expense due to the circumstances described below.”
“In the course of completing the preparation of the quarterly financial statements for the Form 10-Q, the Company determined that it had a deficiency in the CompanyÂ’s internal control over financial reporting as of April 22, 2023. Specifically, during the first quarter of fiscal 2023, the Company experienced the loss of certain accounting personnel and turnover of accounting positions, which may have resulted in a deficiency that represented a material weakness in the CompanyÂ’s internal control over financial reporting as of April 22, 2023.” [emphasis ours]
It looks like they filed the 10-Q a couple days later and in it [PDF], management said disclosure controls and procedures were not effective to accomplish the company’s objectives at the reasonable assurance level solely due to the following material weakness:
In the course of preparing our financial statements for the interim period ended April 22, 2023, management identified a material weakness in our internal control over financial reporting that existed due to turnover of key accounting positions during the first quarter. The Company was not able to attract, develop and retain sufficient resources to fulfill internal control responsibilities during the first quarter, resulting in the lack of a sufficient complement of personnel with an appropriate degree of knowledge and experience as of April 22, 2023.
And here’s their game plan:
As an initial step in remediation of this material weakness, we are engaging temporary third-party resources with the appropriate level of knowledge and experience in accounting and internal control matters to complement the existing organizational structure.
We are also actively developing and implementing a comprehensive remediation plan. We have engaged a leading public accounting firm to
support this work. We expect the remediation plan will include the following:
- hire, develop and retain incremental personnel with appropriate accounting and internal controls expertise;
- review and update (as appropriate) the organizational design of the controllership function;
- review and update (as appropriate) our methodologies, policies and procedures designed to ensure adequate internal control over
financial reporting, including underlying information technology and business process controls; and- review and update (as appropriate) training programs on relevant internal control over financial reporting matters.
The material weakness will not be considered remediated until management completes the remediation plan and keeps it in place for a sufficient period of time. The Company is committed to the improvement of its internal control over financial reporting and, together with its outside consultant(s), will continue to develop, refine and implement its remediation plan for the material weakness, including responding as necessary to any additional employee turnover or other internal or external factors that may impact execution of the plan.
OK well, good luck with that I guess.
Out of curiosity I checked Advance Auto Parts’ site and there are several open accounting jobs listed. About half of these are based in Hyderabad, India, the others are in the company’s hometown of Raleigh, NC and one in Roanoke, VA. The company launched the Advance Global Capability Centre India about a year ago.
US-based Advance Auto Parts accounting jobs: Senior Internal Auditor, Vendor Incentives Accounting Manager, Lease Compliance Specialist, Tax Manager.
India: – Internal Controls Senior Analyst, Accounting Analyst, Sr Accounting Analyst, Inventory Senior Accountant, Accounting Analyst, GL Accounting Analyst, and Inventory Accounting Analyst.
Sadly (for us) there are no salaries listed with these jobs. Here’s Glassdoor:
And Indeed:
Said the WSJ piece, nearly 600 U.S.-listed companies of a total 7,359 reported material weaknesses related to personnel, typically in accounting or information technology, this year through June, down 5.2% from the prior-year period, but up 40.6% from the 2019 period, according to a review of filings by research firm Bedrock AI.
Their accounting manager salary is less than the starting pay for someone at an accounting firm with 0 years of experience, and they’re wondering why they have a shortage?
Those salaries are overall abysmal.
This is a horrible company to work for. Low pay and few raises. They should disclose this in the footnotes.
I believe they did. Just not in explicit terms.
😂 Nice to see you still have some zingers in you
Saying things explicitly demonstrates a lack of creativity and imagination. It’s how you can tell the men from the boys when evaluating the quality of writing in the risk factors section of an SEC filing.
Sadly this won’t be enough – we’re going to need someone public to blow up like FTX before there is a real pressure to up the salaries.
There isn’t a shortage of accounting talent. Companies can fill any open accounting position if they are willing to pay market rates, just like any other position in any other department.
The real issue is that the idiots who run all these dysfunctional and underperforming companies don’t value accounting or the people who do accounting. Charles Darwin correctly identified the solution to this problem though.
Let’s say it again for the people in the back:
**Companies don’t value accounting or the people who do accounting**
I disagree. I work in the Manufacturing field. In the finance department. We pay however the last 3 people who were at one time supposed Controllers in the past could not understand basic reconciliation concept. The good accountants are staying out and what’s left to hire sucks!
CPA who recently graduated law school talking here. Two of my classmates were CPAs, and I befriended two more CPAs attending another law school nearby. Because of our willingness to attend three years of law school and also put off earning capacity, the oft maligned 150 hour requirement stated as an impediment to receiving a CPA license is false. All of us just got tired of working in public and wanted to combine our expertise with a legal degree. Law school was hard and introduced a new way of thinking, but I am sure glad I did it.