Morning! I trust everyone had a safe and fun 4th of July except for our non-American readers who I hope enjoyed their Thursday. It’s summer so spirits should be high regardless.
I don’t expect there to be much news out there today, maybe the profession watercooler will surprise me.
I found out from Reddit over the weekend that AI is going to put both you and me out of a job. Redditors seem to know it all so I guess we should believe him.
EY’s Dan Black wrote something for Fast Company warning all of us in the workplace to get ready for Generation Alpha because they’re coming.
I can still vividly remember my first day at EY nearly 30 years ago. Back then, I was part of the young “new start class” that was so starkly different from the existing employees with our cutting-edge pagers and trendy single-breasted suits.
Reading this I know exactly what kind of haircut Dan had back then.
It’s hard to believe that Gen Alpha (born between 2010 and now) is set to begin entering the workforce in just six years, adding a new dimension to the multigenerational workforce. The arrival of Gen Alpha to the labor force will bring new technology, approaches to work, and expectations about the workplace that don’t yet exist. As a global recruiting leader, I’ve seen the shift firsthand. Today, younger workers are seeking careers that are flexible, personalized, and experience based.
Fortunately, the science and art of welcoming a new generation to the workplace is a practice that’s been happening since time immemorial. But companies should start preparing now for this new workforce dynamic.
Then he gives some actual advice so go read it. On your iPad, Gen Alpha-style.
Inc. wrote about how the CPA shortage is impacting startups and reminds us all that unassuming accountants are the guardians of the entire capitalist financial system as we know it. Without a fresh supply of them to keep watch, we’re boned. We might already be boned. Not sure yet. Actually, there were plenty of accountants standing around in 2008 and we survived that so, hey, it’s probably not so bad.
For many early-stage and smaller companies, accountants serve as de-facto financial advisers in place of a CFO, and right now, in a tricky environment of higher interest rates, elevated costs, and tighter margins, entrepreneurs could really use some professional guidance. But with depleted ranks, accounting firms are struggling to keep up with demand, and founders say they are struggling to get the answers they need.
“Small businesses are out there going: I need this help. It’s a tougher economy today,” says Ben Richmond, a certified public accountant who manages the U.S. client base for the small-business accounting software platform Xero. “The challenge is a lot of the firms aren’t either resourced with the right technology or enough people to get to that.”
For founders, regardless of whether they use a big four auditor, an independent firm, or an automated DIY solution, this headache will not affect tax season, says Richmond. “You’ll have no issue finding someone to do your tax return,” he explains. “But if you want the help of a true business partner or an advisor, that’s where there’s not as many firms out there,” he adds. “Firms are struggling to get through just the basic workload they have.”
On the topic of the accountant shortage wreaking havoc on capital markets, the Robert H. Smith School of Business at the University of Maryland published this:
The Accountant Shortage Highlights How Critical Accounting Is to Capital Markets
Last summer NPR’s Marketplace aired a story about the nationwide shortage of accountants. That caught the attention of Professor Rebecca Hann, Assistant Dean of Doctoral Programs and Dean’s Professor of Accounting at the University of Maryland’s Robert H. Smith School of Business. Intrigued by the report, she pondered, “How can we quantify the cost of an accountant shortage?”
This question led to the study entitled, “The Price of an Accountant Shortage: Evidence from Job Vacancy Duration and Internal Control Weaknesses.” The research co-authored by Hann, Smith PhD candidate Jingwen Yang and Yue Zheng, assistant professor at Hong Kong University of Science and Technology, reveals that prolonged accounting vacancies increase a company’s vulnerability to accounting errors, leading to weak internal controls over financial reporting.
“There’s growing evidence of firms struggling with late filings,” says Hann. The accountant shortage has left numerous companies unable to file their quarterly and annual financial statements on time. This highlights the critical role accountants play in ensuring timely and accurate financial reporting. When filings are delayed and accounting mistakes occur, it can jeopardize a firm’s ability to raise capital and maintain investor confidence.
Here’s a crazy idea coming out of Australia: tying pay to audit quality. With a touch of public shaming, something we’re always in favor of.
Audit firms should be publicly ranked and auditors’ compensation should be tied to the quality of their work rather than the amount of money they bring in, the Institute of Public Accountants says.
The IPA’s proposal, addressed to the Treasury, aims to address a culture among audit firms it said prioritised efficiency over effectiveness and created conflicts of interest.
“Economic fundamentals suggest that incentives drive behaviour,” the accounting body’s submission said. “If revenue generation drives compensation, then it may be given priority over conflicts of interest.”
The Treasury is considering reforms to the accounting and auditing sector, including splitting off audit services, in response to the PwC tax leaks scandal and the subsequent parliamentary inquiries that raised concerns with multidisciplinary firms’ audit practices.
We assume this means strictly upper-level auditor pay because let’s be honest, associates have zero individual responsibility for audit quality good or bad. Making their pay any worse will only make recruiting problems that much tougher.
I don’t think we’ve written a standalone story about this topic but we’ve been keeping an eye on the government of India’s desire to consolidate its 96,000 accounting firms into a few big ones that they think could compete with Big 4 on a global scale. Y’all didn’t think they were going to be content to do our busy work for peanuts forever, did you?
Anyway, here’s the latest on that:
The CA Institute has made two key decisions to create a supportive framework for the aggregation and expansion of CA firms, President Ranjeet Kumar Agarwal announced.
One of them is related to relaxation of the existing five-year demerger norm to a ten-year period. Earlier, firms going in for a merger can regain their legal names if they do a demerger within five years. After five years, they will lose the chance of getting back their old names.
This period is now extended to ten years.
The second decision is on allowing Limited Liability Partnership (LLP) to become a partner in another LLP. “By retaining the two firm identity intact, the two firms can still come together and work with combined strength to bid for projects and deliver. There will be combined resource and combined expertise,” Agarwal said.
We’ll continue to monitor developments. I don’t think anyone should be scared.
KPMG got a nice little write-up in Ad Age of all places. Well, it was an interview with KPMG CMO Lauren Boyman and it’s tagged as “Opinion.”
Here she talks about an AI-hosted podcast booth:
Have you developed customer-facing marketing initiatives?
One of the objectives that we had within marketing was to create AI-driven brand experiences. We wanted to share the art of the possible and enhance perceptions of KPMG.
We recently introduced KPMG Skylar—an AI-hosted podcast booth. We created this interactive AI experience to help our audience understand the power of what AI can do, and just how natural it can feel to interact with it.
The technology behind the experience uses a combination of AI services, starting with speech-to-text technology to recognize speech input, which is then passed through a series of generative AI prompts to ensure the response is safe before generating an AI response from Skylar. We launched Skylar at this year’s SXSW and since then, the experience has “gone on the road” to many events and sponsorships. It’s helped expand our brand perception in the AI space.
Found this guy tweeting about it:
KPMG presents ‘Skylar’ as part of our brand activation at #SXSW24 this weekend!
— Richard Entrup (@entrup) March 9, 2024
In addition to sponsoring, advising, and judging the SXSW24 Startup Pitch Competition this year, we’ve built a #GenAI-powered podcast experience where our host ‘Skylar’ will interview conference… pic.twitter.com/Wcdd9u1EBj
He really loves AI, you guys.
Fun fact, if you start typing ‘KPMG Sky—‘ into Google it suggests “KPMG scandal” instead. Perhaps because not much has been written about KPMG Skylar whereas scandals…
We done? Yeah, I think we’re done. As always, I’d appreciate it if you reach out should you come across any interesting stories we haven’t written about or have some dirt to share. Email is fine but text is best. Stay cool.
