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There was generational tension in a landmark report last month on the workplace culture of the largest US audit firms.
According to interviews with executives and partners at Deloitte, EY, PwC, KPMG, Grant Thornton and BDO, he highlighted complaints that firms may lose the old “training model” where entry-level employees learn from their elders.
The new model of remote and hybrid work has created training challenges that have not yet been fully resolved, according to many veterans, who were interviewed on condition of anonymity. Respondents from one organization complained that managers and partners had to climb stairs to work. audit Tasks traditionally carried out by more junior staff, which means some jobs don’t get a second pair of eyes to ensure accuracy.
Generational tension is not unique to accounting firms as Gen Z – the age group born between 1997 and 2012 – is making its presence felt in the workplace, but given their central role in the financial system, it has particular implications for audit firms. Last month’s report was prepared by the Public Company Accounting Oversight Board, which is trying to puzzle out why regulators saw flawed audit work after the pandemic. The deficit rate stabilized last year and began to decline, but PCAOB auditors said it was unacceptably high given the risk. Failure to find errors Or fraud against public companies.
In its focus on the issue, the PCAOB wrote that “audit firm culture contributes to the audit firm’s ability to deliver quality audits.” “The leaders of an audit firm have a responsibility to ensure that their professionals maintain independence, integrity and professional skepticism through the tone they set and the culture they foster.”
In a different way, the report stated that “the younger generation has a different view on the profession than their older friends. Many of them see their work as a job and not as a job. It is suggested that they may leave the profession if they are offered a lot.” Attractive opportunities”.
Intriguingly, he also found that audit firms with the highest deficits in recent years appear to have the highest percentages of senior managers and partners hired from other firms rather than starting their operations in-house. This suggests that companies that can retain employees for a long time will have an advantage in building a strong culture and adhering to standards.
That is not easy in the profession Struggle to attract talent First, among the competition from better-paying jobs in finance and technology. Organizations are trying to break the reputation of accounting for brutal hours, especially after the end of the financial year during the annual busy season. But not everyone in power is focusing on companies’ work-life balance initiatives. More than a third of partners interviewed by the PCAOB said such efforts reduced productivity and delayed the professional development of young recruits.
For firms like BDO and EY that were in the bottom half of the PCAOB Quality league tables In the year In 2022 and 2023, there were significant deficits and emphasis was placed on centralizing and standardizing audit processes. But centralization and standardization aren’t anyone’s dream job, let alone Gen Z. This can rob auditors of their ability to exercise professional judgment and reduce their work to box-checking. There are many incentives for people to enter a public company audit, and the PCAOB reports that this includes scrutiny from its own regulators, making the job even more stressful.
Another trend in many organizations is to outsource many common tasks to it. Beach centers In India and elsewhere, but this brings more problems. The type of practice that some of their elders bemoan is effectively disappearing, with the risk of immersing new recruits in business processes and accounting principles.
The most forward-thinking organizations are evaluating the audit from the ground up. This includes ingesting and validating financial data in real-time, and layering on new AI tools to highlight anomalies. Such measures allow employees to focus on issues that raise “red flags” and on interesting accounting issues that require more complex judgments. That is a generational change that cannot come soon enough.
