How the Great Resignation has affected the accounting profession.

July 4, 2022

By Dave Michaels

In her role at the International Federation of Accountants (IFAC), Kristy Illuzzi, CPA, CGMA, works with small and midsize entities, including CPA firms. Her conversations with those organizations around the world have brought to the surface some of the ways in which the Great Resignation is affecting the accounting profession.

In this episode, Illuzzi offers advice for organizations on flexibility, technology, and more.

Also, catch up on news related to these topics:

What you'll learn from this episode:

  • Some of Illuzzi's observations about how the pandemic altered the approach to work for some people.
  • Why small and medium size organizations have more flexibility options related to their workforce.
  • How digital tools have dramatically transformed the work of some accountants.
  • The recruiting options now available to regional CPA firms.
  • A summary of recent news covered by the Journal of Accountancy news team.

Play the episode below or read the edited transcript below:

Transcript:                                                            

Neil Amato: Hello and welcome to the Journal of Accountancy podcast. We appreciate you being here, whether you're a regular listener or a newcomer to our show. I'm Neil Amato with the JofA, and today's episode focuses on staffing and hiring trends as well as news related to the IRS, the Supreme Court, and the PCAOB. First up is my conversation with Kristy Illuzzi, a principal of SME/SMP and Research at IFAC, the International Federation of Accountants. That's coming up after this brief sponsor message.

Amato: Welcome back to the Journal of Accountancy podcast. I'm joined for this segment by CPA Kristy Illuzzi of IFAC. Kristy and I are going to talk today about staffing trends, especially as they relate to the accounting profession. Kristy is a repeat guest on this podcast, so, Kristy, welcome back.

Kristy Illuzzi: Thanks, Neil, happy to be here.

Amato: Kristy, first, what do you think of the pertinent hiring and staffing trends for accountants to be aware of? I guess you recently wrote an article on that topic on the IFAC site.

Illuzzi: Yeah, Neil, we actually had a meeting of the SMP Advisory Group here at IFAC. It is 18 individuals that represent firms from all over the world. So we really get an interesting global perspective on these issues, and I know here in the U.S., we've come to call what is going on currently, the Great Resignation.

Interestingly enough, that Great Resignation is really a global issue, and we got some great perspective from practitioners about what they are grappling with in their regions, and although some of the specific issues might be slightly different, there is a huge trend all over the globe in people leaving, in going either to industry, going to other firms, retiring early.

It's simply leaving the profession. It is not just the United States that is going through what we're calling the Great Resignation.

Amato: On that Great Resignation topic, what do you think are some of the reasons that it seems to be acutely affecting the profession in particular?

Illuzzi: I think the Great Resignation is interesting in that it has impacted almost every sector of our economy and every profession in some way, and it's no different in the accounting industry. I think a lot of people during 2020, 2021, when we were on lockdown, we started doing things very differently.

You were forced to work from home almost no matter what industry you are in, and I think it caused a lot of people also to just rethink their priorities. They were home, spending more time with family, perhaps caring for ill family members, small children that were home, and priorities shifted. And I think a lot of people got used to that, and in some cases they are now demanding the flexibility and the ability to continue to do their jobs that way.

So we are starting to see in a lot of parts of the world things opening back up. In some cases you have firms that are now requiring people to come back to the office, and in some cases they are having people revolt, if you will, and essentially saying, I got used to this work from home, this flexibility, this type of environment, and I'm not going to go back to the office, and in some cases they are going to places that will allow for that flexibility.

In some cases you also have people, I think that their priorities shifted. They might have gone into a different or have different passions and decided that accounting just was not the industry for them so there are some just leaving industry altogether.

Amato: Now your focus is SMEs, small and medium entities, and SMPs, small and medium practitioners. Has this whole flexibility concept maybe affected those size of entities more than bigger organizations?

Illuzzi: I think in some cases, yes. I do think that what's interesting about the SMP environment is in some cases they are able to offer more flexibility because of the size and nature of their business. There's not as much bureaucracy, if you will, in place, or policies and procedures are not quite as rigid.

They can be more flexible and agile because they are smaller entities. And so in some cases, they really are the ones that are able to give more flexibility to their people, maybe offer them different opportunities too, whereas at a larger type of institution or firm, again, there might be more rigidity as to how long it takes you to make it to manager or make it to partner or take on a certain role.

I think SMPs have gotten a little bit creative in trying to keep their really good people. We have seen them doing things anywhere from summer Fridays, work-from-home type of flexibility, a certain amount of days a week.

They're doing health and wellness programs at a lot of these SMPs and offering mental breaks and time off. We have people doing more regular touch bases with their staff and checking in rather than waiting, for example, a quarterly or an annual review.

We have partners and managers that are checking in almost weekly in some cases with all of their people to make sure that everyone is OK, that the workload is manageable, that even talking to them. I think that 2020 the conversations that people are having with their employees outside of the work conversations has really gone up.

They're starting to say, how are you, how's your family, really making sure that that work/life balance is there. And I think continuing that, again, is keeping some of these people, that if you feel like you really are dedicated to an organization, that the people care about you, that really goes a long way.

Amato: So flexibility on its own as part of this conversation. It's clearly a key way that an employer needs to adapt if they haven't already, and you've mentioned some of those other ways that people are doing things, but is there more advice that you'd give for people to be more flexible, more adaptable on the employer front if they haven't already?

Illuzzi: Yeah, so I think what we saw happen, Neil, that we were forced to do in 2020, was that even if your firm was not digital, you were pretty much forced to go digital. If you were not doing things electronically, if you were still going to client sites to perform services, to perform audits, and other consulting advisory services, you were forced to figure out how to do that remotely starting in 2020 when client sites were closed and you were unable to go on site.

Even the smallest of firms that maybe had not embraced technology as much as they could have, they used 2020 as an opportunity to really do that, and so I think a lot of people saw that the way of doing things prior was no longer working and you could get by and you could do these services without being onsite.

I think the argument a lot of employees are making that are maybe being asked to go back to an office is, hey, we survived the past two years. We were able to do all of these services remotely. Why all of a sudden are we going back to the old business model?

There are some environments in some parts of the world where firms do feel, and I understand the sentiment, that you need some level of human interaction, and I feel that way. I personally miss human interaction and in-person meetings and talking to people live.

But I think that there has to be some balance or mix of in-person interaction versus the flexibility and the work from home and being able to really use the technology. I sometimes think, Neil, about what would have happened if COVID happened 20, 30 years ago when the technology wasn't there and whether or not certain things just would have ceased.

Like audits wouldn't have been done and advisory work just would've stopped for a period of time, but that did not happen, and I think a lot of that is due to the fact that we have so many tools and technology that are available now to be able to do things remotely.

People know that, and they're using it as a recruiting tool, as a hiring tool. People are using it to potentially say, I'm going to leave unless you provide this flexibility, and so I think we just all need to be really aware of that.

Think about your business and it's survived 2020, 2021, hopefully pretty unscathed. I know [for] a lot of us there were bumps in the road along the way, but do we now have a new business model that we really need to look forward and take some of those lessons learned and maybe the technologies that we're using and just continue that.

Amato: We're recording in late June so I'll ask looking ahead to the second half of the calendar year 2022, when it comes to filling roles, what are some of the strategies that firms and those in CPA decision-making positions can employ?

Illuzzi: Yeah, we have heard, Neil, I mean, there are some firms that have gotten really creative in their recruiting and done some things that they didn't do before. They're using social media, for example, more and more to recruit people and to get people interested in their firm.

They are using tools and technology to put themselves out there, doing things remotely, looking at people outside of their regions, and some cases if they can't find someone, I just even think about here in the United States.

Maybe a regional firm used to only recruit in their region, in their particular city or county or state, and now they're going outside of that to say, well, now that we can work remotely, now that we're using automated tools and techniques, we might be able to recruit anywhere in the United States or in some cases, even look outside of the United States for qualified people.

They're also using, in some cases, interim staffing solutions, where if they have a real need today and they've had this mass exodus of people, they're looking at short-term hiring contractors, consultants, paying them a little bit higher to get them in the door just to fill the workload.

There are some short-term staffing agencies that have popped up and grown throughout the pandemic that specialize in people that can work remotely from anywhere. In some cases, there are challenges.

There are places in the world like Australia where hiring from outside your country is extremely challenging due to labor laws. The fact that they have been on lockdown for so long and have different COVID type of rules in place.

There's certainly challenges and in different parts of the world. But I think you are seeing firms getting more creative in their recruiting and their hiring. They are offering bigger bonuses, for example, for referrals to try to get people that currently work at the company to work their network, to get people to come in that might fit with their culture and what their values are.

I think more and more firms are changing the model and looking at how to do things differently and get creative when it comes to retention and recruiting.

Amato: It's been a good conversation. Anything you'd like to add as a closing thought today?

Illuzzi: Just that for me, one of my fears being a CPA here in the U.S. is that we are hearing that there are less people going into the profession and because I think that the need for qualified professional accountants globally has only gone up since the pandemic.

I think that the AICPA had done a whole series and covering how CPAs are being called upon more and more during the pandemic to be those trusted business advisers for their clients and even help them through the pandemic.

A lot of cases you called on your accountant to help you with PPP loans or other grant programs or help you with your cash flow, figuring out how to just stay afloat during these difficult times. And I just worry that with less people entering the profession, with less people taking the exam, there's no decrease in work, so who's going to do that in the future?

I feel like we're always going to need professional accountants, and I would just encourage younger people that are out there that are looking for a career path, accounting is not what it used to be.

It's not necessarily sitting there ticking and tying and doing just compliance work. We really have become business advisers, and a lot of firms or even moving to more of advisory services than ever before as well and I think that was partially kick-started by the pandemic and the clients just realizing, well, who am I going to go to if I'm having cash flow problems?

You're going to go to your accountant. That's your first line of defense in trying to get through this. So I just hope that the profession continues to grow and evolve and embrace technology and that younger people will still see the profession as a great one to go into.

I know that I personally still feel that way, and I'm very happy with my decision to join the accounting profession and become a CPA here in the United States.

Amato: Kristy, thank you very much.

Illuzzi: Sure. Thank you, Neil.

Amato: Again, that was CPA Kristy Illuzzi of IFAC. Thanks to her for being on the show and sharing her insight.

In other news, the Public Company Accounting Oversight Board, or PCAOB, has amended its standards in order to strengthen requirements that apply to audits that involve multiple firms. Kevin Brewer has that coverage, which will be linked in the show notes for this episode.

The JofA's Paul Bonner has written about the U.S. Supreme Court agreeing to hear the case of a businessman who was held liable for $2.72 million in penalties for failing to file FBARs reporting his foreign accounts.

The court will likely address a split between the Fifth and Ninth circuits on how the maximum civil penalty should be applied — per account or per form. The latter interpretation would have reduced the total penalty in this case to $50,000.

Paul Bonner also has written about IRS news of voice bots being used to help taxpayers set up payment plans. That topic and others mentioned in this episode will be linked in the show notes, and you can also find the latest news on journalofaccountancy.com. Thanks for listening to the JofA podcast.

 

 

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