Finish the Year Strong With These Quick Tips For Studying For the CPA Exam During the Holidays

Today is November 24, 2021 (in case you didn’t catch the tiny little publish date in the upper left-hand corner of this post) and with yesterday’s CPA exam score release, that leaves just one more score release for 2021 before we call this year a wrap. Where the year went is beyond me, but that’s a topic for another day.

With Thanksgiving tomorrow and with all of us still stuck in this weird time vortex that we were unceremoniously flung into like particles at CERN back in early 2020, I figured now would be a good time to talk about the subject of studying for the CPA exam during the holidays.

We’ve addressed the topic plenty of time before; for example, this 2010 post in which I suggested you take your CPA review books with you while traveling to see family because I’m a sadist who enjoys watching people suffer. Here were my five tips to stick with your CPA exam plan during the holidays:

Turn people down.Take your CPA review materials with you.Stick to your schedule.Turn your social aversion into a study tool.Use days off to study … MORE!

Here we are 11 years later and all of those still apply. Go figure! The phones may have gotten better and the jeans less skinny since then but the fundamental rules of sticking to a study plan remain. Only now you also have a bonus out: the Rona! Feel free to completely blow off your family to study instead of hanging out with them because ol’ Uncle Roy has been posting QAnon memes on Facebook all year and you simply don’t feel comfortable taking the risk due to the immunocompromised hamster living with you at home. Or whatever.

Historically — and this has been the case at least since I started in CPA review way back in 2007 and probably since the advent of computerized CPA exam testing in 2004 when testing windows were invented — the last quarter of the year is the most difficult to schedule because you aren’t the only one who looked at the calendar and realized “holy shit, how is it November already?!” and scrambled to sit for an exam part before the year is over.

Continuous testing — which was launched in July 2020 and somehow succeeded in a year full of failures and disappointments — should alleviate some of this year-end clogging, but let’s remember some Prometric locations may still be operating at limited occupancy depending on local conditions and mandates which means fewer open slots. You can see the status of these locations on Prometric’s website here and we suggest checking regularly when making study plans to make sure your preferred location is available. Additionally, winter is soon upon us and Prometric snow days are not unheard of. So there you have two specific wrenches in your year-end CPA exam plan to be aware of, on top of the handful of other unforeseen issues like lack of motivation, distractions, and the laziness that comes from gorging on sugar cookies and eggnog. Let’s not even get into the ongoing pandemic day-drinking and mental breakdowns.

Here’s my slightly less sadistic advice specific to 2021: either decide on a game plan and resolve to stick to it OR give yourself permission to take it easy for the rest of the year and pick things up again come January. No one is saying you have to study (unless you’re this guy and are for some odd reason constitutionally obligated to pass a professional licensing exam by a certain date) and you shouldn’t feel guilty if you don’t. It’s been another rough year and it’s a miracle if you even get through it. If you would rather finish the year strong and knock out a part or two before the Auld Lang Syne kicks in, then do yourself a favor and make a schedule, commit to actually following through with it, and don’t get distracted by the usual year-end lollygagging that leads to most of us phoning in our efforts for the last five weeks of any given year (I’m phoning this in right now, for example). Those of you in the latter camp are at an advantage this year what with everyone still acting like human contact is fatal, that might mean fewer invites to holiday parties and a distinct lack of other holiday season distractions. Not that it’s likely you as a CPA exam candidate had much of a social life anyway, but let’s assume you could, then we can assume the Rona could continue to put a damper on said theoretical social life and therefore open up lots of safe, socially-distanced study time.

Happy Thanksgiving to all of you, and no matter what you decide, I trust you’ll do whatever is right for you and your goals. Having guided CPA exam candidates and observed them scramble to sit during the holidays for more than a quarter of my depressingly long life, I will tell you this: you’re exponentially more likely to succeed if your heart’s in it. If not, well, take a holiday. Lord knows you’ve earned it.

Photo by cottonbro from Pexels

The post Finish the Year Strong With These Quick Tips For Studying For the CPA Exam During the Holidays appeared first on Going Concern.

Did you miss our previous article…

KPMG Australia Audit Partners and Staff Didn’t Get Away with Cheating on Internal Training Exams Either

At the end of the Married With Children episode, “Go For the Old,” Al Bundy says: “It’s only cheating if you get caught.” Well, KPMG got caught. The firm was busted for cheating on internal training exams. Again. Just like in the US. This time the cheating was running rampant in Australia.

The PCAOB fined KPMG Australia $450,000 on Sept. 14 for training-related misconduct (i.e., violating PCAOB rules and quality control standards) from 2016 until early 2020, which involved more than 1,100 KPMG partners and staff, including more than 250 of its auditors, taking part in an answer-sharing scheme—either by providing or receiving answers—on mandatory training courses covering topics that included independence, auditing, and accounting.

Does this sound familiar? It should.

The SEC and KPMG US reached a $50 million settlement in June 2019 not only for KPMG partners using confidential information that was being fed to them by a PCAOB insider to improve the firm’s performance on public company audit inspections but also for KPMG audit professionals—at all levels of seniority—cheating on internal online training exams by illegally sharing answers with colleagues and manipulating test results.

At the time the SEC said:

This misconduct took a variety of forms. KPMG audit professionals shared exam answers with one another. A number of audit partners gave exam answers to other partners, and a number also sent answers to and solicited answers from their subordinates. In addition, for a period of time up to November 2015, certain audit professionals made unauthorized changes to KPMG’s server instructions that allowed them to manually select the scores necessary to pass the tests, which they often lowered to the point of passing exams with less than 25 percent of the questions answered correctly. The exams related to a variety of subjects that were relevant to the test-takers’ audit practices, and included additional training required by a 2017 Commission Order after the Commission found that KPMG engaged in improper professional conduct and had caused a client’s reporting violations.

The fallout was three former KPMG audit partners—Timothy Daly, Michael Bellach, and John Donovan—agreeing to a settlement with the SEC in May 2020, which included being suspended from appearing or practicing before the SEC as an accountant for three years, two years, and one year, respectively.

The SEC said that in October 2018, at Daly’s request, Bellach texted Daly images of the questions and answers to a training exam. Once KPMG caught wind of possible cheating at the firm and opened an internal investigation, Daly deleted the texts and lied about having received any answers to the training exams. Daly also “encouraged” Bellach to delete the texts on his end, which he did.

Between April and September 2018, Donovan shared training exam answers with his team three times. He didn’t own up to it, of course, and told firm investigators he had not sent, received, or shared answers. It turns out he did all three.

At the Australian House of Klynveld, audit professionals primarily shared answers using email, by attaching documents containing answers to training test questions, according to the PCAOB. In addition, “answers were also shared via text messages or instant message services, by providing the answers in hard-copy documents, by saving the answers to test questions on a shared server, or orally when taking tests in the presence of others.”

The PCAOB continued:

Instances of improper answer sharing occurred in connection with tests that were a part of the Firm’s mandatory training, including the Independence Training, Audit Foundations, Spotlight, and U.S. GAAP and GAAS courses.

Improper sharing of training test answers occurred at all levels of the Firm. After Firm leadership learned of the practice and conducted an internal investigation, the Firm sanctioned 1,131 individuals, or approximately 12% of Firm personnel, for their involvement in answer sharing. The Firm’s investigation revealed that the misconduct was widespread within the Firm’s audit practice, including among those who performed work on audits governed by PCAOB standards. With respect to audit training tests, at least 277 personnel engaged in answer sharing.

The Australian Financial Review reported today that two KPMG partners were forced to retire over the cheating, while another 16 partners received formal warnings and had their income docked by tens of thousands of dollars. Also, another 30 KPMG staff members received warnings and had their pay docked, while the additional 1,131 staff received “verbal or written cautions” for either sharing or receiving exam answers.

KPMG Australia CEO Andrew Yates had to do some damage control, calling the cheating “totally unacceptable” and a clear breach of the firm’s code of conduct, according to AFR:

“I was incredibly disappointed. It reflects poorly on all of us in the firm. But as I’ve said before, I think we have great integrity and great intent. We’ve self-reported and been under program of remediation,” he said.

Mr Yates, who was head of KPMG’s audit, assurance and risk management business at the time, said the firm had just completed a culture review and taken other remedial action over the cheating.

He said the sanctions had been based on the level of individuals’ involvement in the sharing of answers and their level of co-operation during the firm’s investigation.

“There was a range of behaviour [involved], from people who received something and did nothing with it [through to] the people who created an email with the answers on it,” he said.

As part of the remediation program, partners, directors and senior managers in the firm’s audit division were forced to retake two years’ worth of exams.

The firm has also created new integrity training which highlights to partners and staff “that sharing answers in relation to testing is not acceptable”, according to a statement from the firm.

The PCAOB admitted that KPMG Australia would have been given a much larger fine had the firm not self-reported the cheating to the PCAOB within 15 days of learning about it, not disciplined those involved, and had not taken actions internally to make sure something like this never happens again.

KPMG fined $615,000 over ‘widespread’ exam cheating [Australian Financial Review]

Related articles:

SEC Says $50 Million Fine For KPMG Is ‘Significant’ and ‘Appropriate’ For All That Cheating Going On

Which KPMG Scandal Is Worse: PCAOB ‘Steal the Exam’ or CPE Training Exam Cheating?

Survey Finds That Nearly a Third of KPMG Employees Aren’t Surprised by Latest Cheating Scandal

Three Former KPMG Partners Charged by SEC For Being Dirty, Dirty Cheaters

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Private Equity Is Now Dipping Its Toes In Public Accounting Firms

In early August, EisnerAmper announced a “strategic investment” in the firm courtesy of investment management firm TowerBrook Capital Partners, the first of its kind for a firm of that size. The door is now wide open for private equity to get a piece of the accounting pie.

Per the press release:

TowerBrook’s significant capital infusion will help drive EisnerAmper’s long-term growth initiatives, which include accelerating the evolution of service offerings, investing considerably in talent and technology, and strategically expanding via organic growth and targeted mergers and acquisitions—all directed at exponentially enhancing client service.

We can safely extrapolate from this bit that Eisner understands it will take more than squeezing clients for every dime billable hours to compete in the ongoing (and escalating) talent war.

This news pretty much flew right by our radar because we’re usually too busy suspiciously eyeing creepy firm robots for the first sign of hostile human takeover and other such critical matters but a recent Reuters article about the investment caught my attention and I figured this item might be of note.

Before everyone gets excited, it’s not like accounting firms will become the next Bitcoin. But it does mean that we could see some truly interesting shake-ups in the years ahead. On the investor side, this is a win as they can avoid being on the receiving end of long screeds about why private equity is destroying [x] market (currently it’s housing) because no one over at Slate is going to make it their personal mission to excessively hand-wring over investment firms ruining accounting.

Back to that Reuters piece. In it, we learn that the Eisner deal is something that’s been in the works for longer than many of you have been in the profession, it just never panned out until now.

The deal is transformational and there are likely more to come, said Allan D. Koltin, CEO of Koltin Consulting Group and an advisor to accounting firms involved in many of the profession’s largest mergers and acquisitions. “Private equity has been trying to get into the accounting profession for 15 years,” Koltin said. “This journey started back in 2006 and, up until a few weeks ago, in the world of the Top 20 CPA firms it’s been unsuccessful.”

Market changes have created an unprecedented demand for capital among accounting firms — for technology, talent, and strategic acquisitions — that opened the door for this type of deal, Koltin explained.

“Firms are merging fast and furiously to expand geographically and to expand their products and services,” Koltin added. “As a result, there are more larger firms in our profession today than ever before. When you get to a point in your growth somewhere between $100 million and $200 million — it’s like [getting] a target on your back. You have to keep growing. This business is unforgiving. If you don’t continue to grow you can’t continue to recruit and retain great talent. They go somewhere else.”

In case reading between the lines isn’t your specialty, that last paragraph is a strong signal that firms are freaking out about this talent problem. We’ve known that, of course, but it’s yet another piece of evidence to file away in our binder of things that keep firm leaders up at night. And for all of you, this means that you are running this show, not the people who sign your paychecks.

Given that, we’ll be keeping an eye on this going forward.

Further reading:
Guest Article: Be Wary of Private Equity – Could Be the Devil With a Blue Dress On [INSIDE Public Accounting]
As M&A activity reshapes the tax & accounting profession, private equity takes a hand [Reuters]
EisnerAmper Announces Investment By TowerBrook Capital Partners [PR Newswire]

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Did you miss our previous article…

How Are Public Accounting Salaries Stacking Up For 2022? (Part 4, Accounting Principals)

Accounting Principals has finally released its salary guide for 2022, and the main takeaway is average base salaries for roles in public accounting are expected to increase 6.4% across the board next year. So you guys get a salary adjustment that would barely cover the current inflation rate. Hooray.

For 2022’s salary guide, Accounting Principals provided salary data for employees in three tiers based on experience:

Low: Zero to two years of experience in that position or one similar.Medium: Three to 10 years of experience in that position or one similar.High: Ten or more years of experience in that position or one similar.

Below are the average base salaries for each of the 11 public accounting jobs in AP’s 2022 salary guide, listed by experience with a comparison of 2021’s projected salary and 2022’s projected salary (2021 -> 2022):

ccounting services

Low experience: $53,844 -> $57,312Medium experience: $63,062 -> $67,124High experience: $71,198 -> $75,784

ccounting services, senior

Low experience: $58,994 -> $62,794Medium experience: $71,198 -> $75,784High experience: $99,723 -> $106,146

udit/assurance services associate

Low experience: $54,430 -> $57,935Medium experience: $66,040 -> $70,293High experience: $75,282 -> $80,131

udit/assurance services associate, senior

Low experience: $59,409 -> $63,235Medium experience: $69,205 -> $73,662High experience: $79,952 -> $85,102

udit/assurance services manager

Low experience: $69,205 -> $73,662Medium experience: $91,563 -> $97,460High experience: $103,734 -> $110,415

udit/assurance services manager, senior

Low experience: $85,477 -> $90,982Medium experience: $93,841 -> $99,884High experience: $110,877 -> $118,018

Tax services associate

Low experience: $50,386 -> $53,631Medium experience: $56,147 -> $59,763High experience: $66,821 -> $71,125

Tax services associate, senior

Low experience: $71,198 -> $75,784Medium experience: $82,385 -> $87,691High experience: $87,462 -> $93,095

Tax services manager

Low experience: $88,503 -> $94,203Medium experience: $103,750 -> $110,432High experience: $133,162 -> $151,567

Tax services manager, senior

Low experience: $92,563 -> $98,525Medium experience: $112,911 -> $120,183High experience: $142,396 -> $151,567


Low experience: $144,430 -> $153,732Medium experience: $216,424 -> $230,362High experience: $324,480 -> $345,378

You can find our previous articles on salary projections for 2022 here.

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EY Rakes In $40 Billion In Global Revenue, Will Try Not to Suck So Much At Auditing

A day after Deloitte got the Big 4 revenue boasting season rolling yesterday, EY announced today that it pulled in a “solid” $40 billion ($39,959,000,000, to be exact) in revenue for the year ending June 30, a 7.3% increase over 2020’s $37.2 billion.

But aside from all the patting each other on the back for once again coming in third (probably) among the Big 4 in total revenue, the biggest news out of the EY camp today was this, courtesy of the Financial Times:

EY will invest about $2bn over the next three years to improve the quality of its audits following scandals including the collapse of German payments group Wirecard in a high-profile fraud last year.

The sum will be part of a record $10bn investment plan unveiled by the accounting firm on Wednesday that will fund initiatives including staff training and improving its ability to detect fraud.

Along with its rivals, EY has come under pressure to invest in its business to strengthen audit processes. It has suffered a series of setbacks including its failure to sound the alarm over a fraud that toppled Wirecard, a company it audited for a decade, and its work on collapsed FTSE 100 medical group NMC Health.

And let’s not forget the £2.2 million fine EY will have to pay the UK’s Financial Reporting Council for botching its audit of bus transportation company Stagecoach. And then this week it was reported that EY is facing litigation in Switzerland from investors of the now-collapsed conglomerate Zeromax:

Zeromax, whose crash in 2010 made it the second-largest bankruptcy in Swiss history, made multimillion-dollar jewellery purchases and made irregular offshore payments – which the big four auditor approved.

EY’s Swiss partnership gave the company clean audits between 2005 to 2007, and continued to audit Zeromax for another three years, but did not disclose audit opinions on the company’s annual accounts, in the run up to its collapse.

In remarks today, EY Global Chairman and CEO Carmine Di Sibio said EY would invest $2.5 billion between 2022 and 2024 in new technology, including in artificial intelligence and machine learning for its audit platform, Canvas, according to FT.

He added the investment would “allow us to do a better audit and a more efficient audit” and improve the group’s chances of detecting fraud. In total, Di Sibio said about $2bn of the three-year investment would “impact audit quality”. …

Di Sibio stressed that EY had strengthened its processes around “client acceptance and client continuance” as a result of the Wirecard scandal. The group now undertook a more rigorous investigation of current and future clients, he said, including scraping social media sites, and was investing in more training for its auditors in fraud detection. About $500m a year will now be spent on staff training.

Speaking of EY’s much-maligned audit and assurance business, it’s still making money despite all the scandals. Of EY’s four main service lines, A&A brought in nearly $13.6 billion in 2021. Here’s how the other service lines performed this year:

Audit and assurance: $13.6 billion (up 5.8%)Consulting: $11.1 billion (up 6.4%)Tax: $10.5 billion (up $7.2%)Strategy and transactions: $4.8 billion (up 14.6%)

EY’s global headcount at the end of June was 312,250, up from 298,965 at the end of June 2020.

EY to spend $2bn on improving audit quality after scandals [Financial Times
EY hit with $1bn claim for one of the largest bankruptcies in Swiss history [City A.M.]

Related articles:

EY Won’t Let a Mere 2.3% Increase In FY 2020 Global Revenue Ruin Its Thursday

EY UK Sheds Some Pounds Because An Audit Partner Messed Up Big Time

Deloitte Is the First Big 4 Firm to Clear $50 Billion In Global Revenue

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How Are Public Accounting Salaries Stacking Up For 2022? (Part 3, Hays US)

In today’s edition of “How Much Are You Worth?” let’s take a look at public accounting salary projections for 2022 from recruitment firm Hays US.

We chose four tax and four audit roles from Hays’s 2022 Salary Guide to highlight in this post. Hays provides accounting salary ranges, with the first figure indicating minimum pay and the second figure indicating maximum pay. In this particular salary guide, the salary ranges for tax and audit roles are given for eight states/regions:

CaliforniaColoradoWashington, DC; Maryland; and VirginiaFloridaGeorgiaIllinoisNew YorkTexas

Unfortunately many of the salary ranges for public accounting jobs in the 2022 guide are exactly the same as in Hays’s 2021 Salary Guide (see: California, Illinois, and Texas). However, some roles in some states are expected to see a bump in pay next year. For those roles, we provided a comparison of 2021’s projected salary range and 2022’s projected salary range (2021 -> 2022). The smallest pay increase was 3.4% (audit manager in Colorado), while the largest was 44.7% (tax director in New York).

Here is Hays’s public accounting salary projections for 2022:


Tax director: $120,000-$200,000Tax manager: $80,000-$150,000Tax senior: $80,000-$120,000Tax accountant: $75,000-$95,000Audit director: $150,000-$200,000Audit manager: $110,000-$150,000Audit senior: $60,000-$100,000Audit associate: $40,000-$60,000


Tax director: $140,000-$200,000Tax manager: $100,000-$120,000Tax senior: $70,000-$90,000Tax accountant: $75,000-$95,000Audit director: $150,000-$200,000 $150,000-$220,000Audit manager: $110,000-$145,000 $120,000-$150,000Audit senior: $80,000-$100,000 –$90,000-$100,000Audit associate: $40,000-$60,000 $55,000-$70,000

DC, Maryland, and Virginia

Tax director: $160,000-$210,000 $160,000-$250,000Tax manager: $80,000-$150,000 $100,000-$150,000Tax senior: $50,000-$75,000 $70,000-$100,000Tax accountant: $65,000-$90,000 $75,000-$90,000Audit director: $150,000-$200,000 $150,000-$250,000Audit manager: $100,000-$130,000 $100,000-$175,000Audit senior: $60,000-$90,000 $70,000-$100,000Audit associate: $40,000-$60,000 $55,000-$70,000


Tax director: $140,000-$220,000 $150,000-$240,000Tax manager: $90,000-$130,000 $100,000-$130,000Tax senior: $70,000-$90,000Tax accountant: $50,000-$75,000Audit director: $150,000-$200,000Audit manager: $80,000-$115,000 $100,000-$130,000Audit senior: $65,000-$85,000 $65,000-$90,000Audit associate: $50,000-$70,000


Tax director: $140,000-$240,000 $140,000-$275,000Tax manager: $90,000-$155,000Tax senior: $70,000-$90,000 $70,000-$100,000Tax accountant: $55,000-$75,000 $60,000-$75,000Audit director: $150,000-$200,000Audit manager: $90,000-$150,000Audit senior: $65,000-$90,000 $65,000-$95,000Audit associate: $50,000-$75,000


Tax director: $160,000-$210,000Tax manager: $80,000-$150,000Tax senior: $50,000-$75,000Tax accountant: $65,000-$90,000Audit director: $150,000-$200,000+Audit manager: $100,000-$130,000Audit senior: $60,000-$90,000Audit associate: $40,000-$60,000

New York

Tax director: $130,000-$190,000 $140,000-$275,000Tax manager: $80,000-$150,000 $90,000-$160,000Tax senior: $80,000-$110,000Tax accountant: $65,000-$90,000Audit director: $150,000-$250,000Audit manager: $90,000-$150,000 $100,000-$175,000Audit senior: $60,000-$100,000 $70,000-$100,000Audit associate: $40,000-$60,000 $55,000-$75,000


Tax director: $180,000-$210,000Tax manager: $135,000-$165,000Tax senior: $75,000-$90,000Tax accountant: $60,000-$80,000Audit director: $150,000-$200,000Audit manager: $115,000-$135,000Audit senior: $75,000-$95,000Audit associate: $55,000-$65,000

If you missed Part 1 (Robert Half) and/or Part 2 (Alliance Resource Group) in our series of public accounting salary prognostications for next year, click on the links above or click on the article titles below.

Related articles:

How Are Public Accounting Salaries Stacking Up For 2022? (Part 1, Robert Half)

How Are Public Accounting Salaries Stacking Up For 2022? (Part 2, Alliance Resource Group)

The post How Are Public Accounting Salaries Stacking Up For 2022? (Part 3, Hays US) appeared first on Going Concern.

Did you miss our previous article…

ESG Is the Next ‘Hot Thing’ In Accounting, Say MIT Researchers

For years we’ve been hearing how blockchain and AI will transform accounting, and this recent article from MIT Sloan School of Management (aka MIT Sloan) about the five forces remaking accounting gives them both the obligatory nod. But we’re not here to talk about blockchain. We’re here to talk about ESG.

After a brief introductory paragraph about the “change bearing down on the accounting discipline,” they go directly into climate change and what that means for the bottom line:

“For the longest time, the purpose of a company was to provide returns for its equity investors and debt investors,” said Nemit Shroff, accounting professor at MIT Sloan. “ESG is saying that the purpose of a company is broader than just its investors — it’s society at large. That means that the measurement has to in some sense reflect that, and that’s a huge fundamental change.”

The one constant amid much change: Knowing exactly what to measure will be essential to making progress.

“Rewards [for companies] are going to be greater in instances where you can measure the company’s performance,” Shroff said.

Before we go any further, let’s zip over to Investopedia first to get a definition of ESG so we’re all clear what we’re talking about:

Environmental, social, and governance (ESG) criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates.

We good? OK.

If you recall, Deloitte announced in August it was rolling out a climate learning program for its 330,000 people to “inform, challenge and inspire Deloitte people to learn about the impacts of climate change and empower them to confidently navigate their contribution to addressing climate change by making responsible choices at home and at work, and in advising our clients.” They claim this is the first program of its kind for a major worldwide organization. And KPMG has already planted its own flag, investing $1.5 billion into a three-year ESG initiative. So we know it’s a hot topic, the research from Sloan just confirms that.

Continuing with the article:

More than ever, investors care about a company’s ESG performance and companies are under pressure to show the positive impact they’re making. A report from Moody’s Investor Services showed global flow to environmental, social, and corporate governance concerns increased to $80.5 billion in the third quarter of 2020, up 14% from the previous quarter. And when BlackRock chief Larry Fink urged companies to eliminate greenhouse gas emissions by 2050, investors paid attention.

“Businesses are increasingly recognizing that maximizing shareholder value involves more than profits,” said Chloe Xie, assistant professor of accounting at MIT Sloan. But because ESG measurement and reporting aren’t currently standardized on a balance sheet the way that earnings are, this remains “a new frontier for accounting.”

Many companies measure their environmental impact by focusing on their carbon emissions and the specific actions they’re taking to reduce them, such as planting trees that will absorb carbon from the environment, Shroff said.

“Carbon emissions is a natural thing for people to think of, and I think partly it’s because we tend to focus on what we can measure, and we can measure carbon emissions,” Shroff said.

Collapse enthusiasts are no doubt intimately familiar with the looming threat of climate change but this is genuinely new territory for a profession “whose core responsibility is to help businesses maintain accurate and timely records of their finances” as Sloan said.

A December 2020 Harvard Business Review article punctuated the article’s title about the future of ESG with an incredulous question mark at the ridiculous idea that the future of ESG lies in the hands of the accounting profession and yet here we are. The IFRS Foundation is considering global sustainability standards and the SEC has declared an enhanced focus in climate-related disclosures.

It seems that unlike the robots that they’ve been saying for 10 years are coming for your jobs, this “revolution” may actually be upon us.

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Deloitte Came Oh So Close to Having a Historically Low Audit Deficiency Rate

If it was any other year, champions of audit quality would be throwing Deloitte a ticker-tape parade for only having two glaring errors out of 53 audits inspected in the firm’s newly released 2020 PCAOB inspection report.

But it was PwC auditors who were the ones pulling ticker-tape out of their hair while Deloitte was standing on the sidelines looking like McKayla Maroney during the 2012 Summer Olympics in London. It does seem a bit fishy that PwC, after making significant mistakes in 18 of its 60 audits of public companies reviewed by the PCAOB in its 2019 inspection report, dropped to only one deficient audit out of 52 inspected in its 2020 report—which is a record-low 1.9% error rate. And if it wasn’t for PwC, Deloitte would be the one with the all-time low deficiency rate of 3.8%.

There has been speculation that because of the pandemic and the recent unrest at the PCAOB, the audit cops are going soft on audit firms during the inspection process, resulting in the historically good 2020 report cards for PwC and Deloitte. But if you look at Deloitte’s deficiency rates in its past five inspection reports, the quality of the firm’s audits has been trending in the right direction:

2015: 24%2016: 24%2017: 20%2018: 11.5%2019: 10.3%

So it’s not totally inconceivable that Deloitte’s auditing improved as much as it did from 2019 to 2020. The PCAOB found deficiencies in both the financial statement and internal control over financial reporting audits during the most recent inspection cycle, as the graphic below shows:

According to the PCAOB, the most frequently identified deficiencies were:

One of the deficient audits was for a Deloitte client in the consumer staples sector; the other was for a client in the industrials sector.

So if PwC and Deloitte got gold stars from the PCAOB, what did KPMG, EY, BDO USA, and Grant Thornton get? We’ll let you know in the coming days. In the meantime, Deloitte’s 2020 inspection report is below in its entirety:

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Related articles:

It’s True: PwC Had a Nearly Flawless 2020 PCAOB Inspection Report

Deloitte Is Doing a Much Better Job Lately of Not Screwing Up Audits

The post Deloitte Came Oh So Close to Having a Historically Low Audit Deficiency Rate appeared first on Going Concern.

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The CPA Credential and the Profession Are in a Race For Relevance, Says ICPAS CEO Todd Shapiro

Interest in the CPA credential has been down significantly since at least 2016, and we have discussed this issue to death so I don’t need to link you to the evidence (but here’s some anyway). The problem here is that talking about it isn’t solving it, thus we will continue talking about it and hope it all works out somehow.

Fewer people taking the CPA exam on its own isn’t a huge problem (well, the AICPA might say it is but they’re slightly biased), especially when you consider the trend toward accounting firms hiring more non-accounting graduates than they used to. We fully expect that trend to continue and it’s not the worst thing in the world since the future is upon us and said future consists of piles and piles of data in need of analyzing. But the raw CPA exam numbers aren’t the only problem. There are multiple issues hitting the profession at once from multiple fronts, like the fact that the AICPA estimates 75% of CPAs will retire in the next 15 years and that there is a serious shortage of accounting professors. Interest in accounting programs is still there, but this September 2019 CPA Journal article suggests that while accounting program enrollment data looks good on its face, there may be trouble ahead — a “current disenchantment” they called it. All of these taken together could mean a critical shortage of CPAs in the near future.

So we’ve established what pressures exist and why they should be concerning, but the profession continues to wonder out loud why people aren’t drawn to the CPA credential like they used to be. The following short video just put out by the Illinois CPA Society has some ideas:

CEO Video Series: Putting Destination CPA Back on Accounting Students’ Radar from Illinois CPA Society on Vimeo.

I know you all are very busy so in case two minutes and 26 seconds is more time than you have to spare, here are the reasons ICPAS President and CEO Todd Shapiro gives for why people might choose not to pursue the CPA credential these days based on feedback they’ve received researching this problem:

They feel they can take off in their anticipated or chosen careers without it.They believe that any value the CPA credential holds is outweighed by its lack of relevance to their personal endeavors and the time commitment necessary to obtain it.They don’t see the personal or financial return on investment.Their employers or prospective employers aren’t supporting or requiring it.They see other experiences as being more valuable.

A few of these fall under the “no time” category which is something we’ve addressed before; however, as anyone who has ever camped out in line overnight on new iPhone release day will tell you, most people can make time to do something when they’re sufficiently motivated to do so. And in the case of the CPA, it seems like more and more accounting graduates are deciding that the personal investment required for licensure is too great a trade to make in exchange for the potential benefits.

This is not an argument about “is the CPA worth it” because we know it is. And we should not extrapolate any information about its value from the fact that fewer accounting graduates are taking it these days. But the profession needs to do some serious reflection on the why of this issue and what it can do to address it. What will it take to convince tomorrow’s accounting graduates that their personal and financial investment is worth it? In other words, how can the profession fully convey the credential’s value? You’d think that would be an easy question for a bunch of accountants to answer but alas, here we are.

Further reading:
A CPA Pipeline Report: Decoding the Decline [Illinois CPA Society]

Photo by Lukas Hartmann from Pexels

The post The CPA Credential and the Profession Are in a Race For Relevance, Says ICPAS CEO Todd Shapiro appeared first on Going Concern.

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Lawyers Complain the Pandemic Made the Bar Exam Too Hard, Should CPAs Complain Too?

Stumbled across an interesting article yesterday that I thought worth sharing with you if for no other reason than it’s been a while since we’ve instigated a pissing contest with lawyers over whose professional licensing exam is harder. The article suggests the law profession should just get rid of the bar exam completely due to poor performance in recent years because the stress and anxiety of the pandemic made it too hard to study, something to which I’m sure even the most overachieving among you can relate.

While worldwide mental health issues brought on by a global pandemic might be new, proposals to ditch the bar exam are not. A March 2021 Wall Street Journal op-ed directly attacked the same barrier to entry that some have complained keeps diverse candidates from the accounting profession.

Congress may soon strengthen the antitrust enforcement powers of the Biden administration’s Justice Department. The department should use those powers to eliminate the American Bar Association’s monopoly in determining what constitutes an acceptable legal education and state licensing requirements, which restrict the supply of lawyers.

Here’s Above the Law‘s Joe Patrice with a hot take on that issue, should you be interested.

Our side of the professional services pool has no shortage of scary headlines suggesting your credential is under attack by misguided small-L libertarians who think professional licensing is dumb, so the discussion happening on the law side isn’t all that different from the one happening in accounting. The AICPA is watching this legislative threat closely, and rest assured they will do everything in their power to ensure those pesky libertarians don’t ruin their monopoly on CPA licensure destroy the value of your hard-earned CPA credential.

Anyway. Let’s get back to the subject at hand. This is from “Bar scores, always low, drop even more due to pandemic. Does test still make sense?” via WVNews:

After spending tens or even hundreds of thousands of dollars for a law degree, the reality is that a surprising number of prospective attorneys won’t make the grade when it counts most: Passing the bar exam.

According to statistics provided by the West Virginia Supreme Court, the total pass rate for the July bar exam in West Virginia ranged from a low of 57.5% in the middle of the pandemic this July, to a high of 76.8% in July 2020. During the February exam — which often is taken by out-of-state residents or those who failed the first time around — the total pass rate ranged from 45.9% in February 2019 to 72.3% in February 2011 [did they mean 2021? We assume so]. The WVU pass rate for July’s exam ranged from 58.8% in 2021 to 74.2% in 2013, while the February WVU pass rate ranged from 25% in 2020 to 60% in 2018.

The aggregate national bar pass rates are in the same range: 60,784 people took a U.S. bar exam in 2020, and the overall pass rate was 61%; the February rate was 41% for 19,409 participants, while July of 2020’s was 71% for 41,375 participants.

This has caused calls from some to eliminate the bar exam, notes Steptoe & Johnson PLLC Office Managing Member-Bridgeport Shawn A. Morgan. Bar exam detractors have pointed to the pandemic with 18 months of remote coursework and especially low bar passage rates as a result.

“The opponents of the exam favor allowing new lawyers a period of apprenticeship instead of a test for licensure. California, for example, allows this option,” Morgan said.

They also got a hilarious quote from a lawyer married to another lawyer who roasted the morons who can’t pass a simple test:

“My wife and I worked our butts off and passed — we earned it. The people I know who failed the test, I believe they deserved to fail it. They weren’t prepared, they weren’t bright enough, they couldn’t grasp the concepts. There are a multitude of reasons why these people fail, but its usually because they didn’t put in the work necessary to pass. And as [longtime Charleston attorney Tony O’Dell] said, being a lawyer is hard work and you have to learn that from the beginning. Put in the work or you won’t make it.”

Dyer added that “we only want individuals in the field who can pass that exam. Just like a doctor with boards or an accountant with the CPA exam, it’s important to have a standardized gatekeeper test to make sure only the brightest are getting in because they will be handling such serious and important matters. I don’t think the low passage rate affects the system. The test protects our legal system,” Dyer said.

Is he… suggesting there is no such thing as a dumb lawyer? Not gonna touch that one.

Anyway, this got me wondering how future CPAs have performed during these unprecedented times (are we still using that phrase?). The last time we checked in on CPA exam scores, 2021 CPA exam pass rates were up from the year prior, with the year prior being up from the year before that. So already we know CPAs are doing better than lawyers (suck it, Dyer).

Take a look at 2020 CPA exam pass rates:

2020 Pass Rates

AUD”,”47.97%”,”65.29%”,”56.89%”,”47.50%”,”52.84%”],[“BEC”,”61.76%”,”76.92%”,”69.89%”,”60.77%”,”65.56%”],[“FAR”,”46.37%”,”62.86%”,”55.67%”,”43.53%”,”49.98%”],[“REG”,”55.42%”,”75.97%”,”66.12%”,”58.00%”,”62.29%”]]” data-edit-mode=”false”>SECTIONQ1Q2Q3Q4CUMULATIVEAUD47.97%65.29%56.89%47.50%52.84%BEC61.76%76.92%69.89%60.77%65.56%FAR46.37%62.86%55.67%43.53%49.98%REG55.42%75.97%66.12%58.00%62.29%

And 2021 CPA exam pass rates as they stand today:

2021 CPA Exam Pass Rates

AUD”,”47.97%”,”65.29%”,”56.89%”,”47.50%”,”52.84%”],[“BEC”,”61.76%”,”76.92%”,”69.89%”,”60.77%”,”65.56%”],[“FAR”,”46.37%”,”62.86%”,”55.67%”,”43.53%”,”49.98%”],[“REG”,”55.42%”,”75.97%”,”66.12%”,”58.00%”,”62.29%”]]” data-edit-mode=”false”>SECTIONQ1Q2Q3Q4CUMULATIVEAUD48.56%50.49%49.70%BEC62.16%63.31%62.84%FAR46.64%42.63%44.70%REG59.29%58.81%59.03%

Pass rates via the AICPA.

Q2 exam performance brought the cumulative pass rate down a bit for each section but we’ll just chalk that up to April 15 or something. The main thing is CPA exam pass rates have stayed pretty consistent throughout the most stressful two years that most of us will ever endure, which is saying quite a bit about future number-crunchers and their ability to get the job done even under tremendous pressure. A tenacity upon which the entire foundation of the Big 4 meat grinder is precariously built, no doubt.

So what’s our takeaway? You guys are killing it. And since we’re all going through the same stress thanks to the same annoying virus the lawyers might have to come up with a better culprit if they’re trying to ditch their licensing exam because of it. Might I suggest global warming? That one’s pretty annoying.

Further reading:

Bar exam scores keep rolling in, nearly all lower than last year [Reuters]
Bar Exam Scores Dip… Time For Everyone To Freak Out! [Above the Law]
Bar scores, always low, drop even more due to pandemic. Does test still make sense? [WVNews]

Photo by Daniel Reche from Pexels

The post Lawyers Complain the Pandemic Made the Bar Exam Too Hard, Should CPAs Complain Too? appeared first on Going Concern.

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