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There was an undercurrent of generational tension in a major report on workplace culture released by the largest US auditing firms last month.
Based on interviews with executives and partners at Deloitte, EY, PricewaterhouseCoopers, KPMG, Grant Thornton and BDO, the report highlights complaints that companies risk losing the old “apprenticeship model” in which Junior employees are seniors.
The new model of remote and hybrid working has created training challenges that have not yet been fully overcome, according to several prominent figures, whose interviews were revealed. Participants in one company even complained that managers and partners had to step down from a certain level to do review Tasks traditionally performed by more junior staff, meaning that some work at the time did not require the second pair of eyes needed to check accuracy.
Generational tension is not limited to accounting firms, as Generation Z – the age group born between 1997 and 2012 – is making its presence felt in the workplace, but it holds particular significance in audit firms given their central role in the financial system. A report was released last month by the Public Company Accounting Oversight Board, which is trying to figure out why its inspectors are seeing an increase in deficient audits after the pandemic. The deficiency rate stabilized last year and has begun to decline, but the Public Company Accounting Oversight Board says it remains unacceptably high, given the risk of auditors being exposed. Failure to find errors Or even fraud in public companies.
“The culture of an audit firm contributes to an audit firm's ability to provide a high-quality audit,” the PCAOB wrote, explaining its focus on the issue. “Audit firm leaders, through the tone they set and the culture they foster, are responsible for ensuring that their employees maintain independence, integrity and professional skepticism.”
The report, which is not unique, noted that “the younger generation has different views on careers compared to their older counterparts, with many viewing their work as a job, rather than a career, and are therefore more likely to leave the profession if they are offered more jobs.” “. Attractive opportunities.
Interestingly, he also noted that audit firms with the highest insolvency rates in recent years appear to have the highest percentage of senior managers and partners who were recruited from other firms rather than starting their careers within the firm. This suggests that companies that can retain their employees over the long term have an advantage in building a strong culture and maintaining high standards.
This is not easy in this profession Struggling to attract talent Primarily, amid competition from better-paying jobs in finance and technology. Companies try to shed accounting for long hours, especially during the busy annual season after the end of the fiscal year. But not everyone in power supports companies' emphasis on work-life balance initiatives. More than a third of partners interviewed by PCAOB said such efforts reduced productivity and delayed the professional development of younger employees.
For companies like BDO and EY that were in the bottom half of the PCAOB Quality league tables In 2022 and 2023, with the highest deficit rates, emphasis was placed on centralizing and unifying audit procedures. But centralization and standardization is not a career dream for anyone, let alone Generation Z. It risks stripping auditors of their ability to make professional judgments and could reduce their work to mere accuracy. There are already many disincentives for people to engage in audits of public companies, and the PCAOB report acknowledges that this includes scrutiny by its inspectors, making the work more stressful with high downside risks to jobs if employees get it wrong.
Another trend in many companies is sending them more routine tasks Marine centers In India and elsewhere, however, this presents another dilemma. It risks stripping new hires of the foundations of business procedures and accounting principles, exactly the kind of apprenticeship some of their seniors already bemoan.
Most forward-thinking companies are reimagining the auditing process from the ground up. This includes collecting and verifying financial data in real time, and integrating new AI tools to highlight anomalies. Such moves would allow staff to focus on investigating issues raised by “red flags” and dealing with interesting accounting issues that require more complex judgments. This is a generational shift that can't come soon enough.
