{ "media_type": "text", "post_content": "Any B4 partner on here care to explain how firms are having record years in revenue, while also cutting down on the massive travel expenses from past years, but still managed to take away bonuses, raises, and even some people’s job? Genuinely curious as to how this could possibly be justified.", "post_id": "5f5a2cf3703df10022c640a2", "reply_count": 54, "vote_count": 38, "bowl_id": "564a5cdb94887803001dd07c", "bowl_name": "Accounting" }

Any B4 partner on here care to explain how firms are having record years in revenue, while also cutting down on the massive travel expenses from past years, but still managed to take away bonuses, raises, and even some people’s job? Genuinely curious as to how this could possibly be justified.

likeupliftingsmart
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Well I'm not a partner but here's my take. Revenue does not equal profits. Bonuses are usually paid off profits and not revenue. It is interesting how all the B4 are flaunting their revenue numbers this year though. KPMG is having a difficult year because even though we don't have travel expenses, we have expenses associated with the Lake house and deployment of KCW which is stretching resources thin. Personally, I believe partners should've taken larger reduction in salary or draw to provide employees with merit increases.

likehelpful

Lol y’all don’t realize how terrible the back office accounting is at accounting firms. Think about your worst client’s books, then drop expectations exponentially.

likesmart

Bonuses are a look at the previous performance year. We had a good year last year, so we got bonuses last year. Salaries are forward looking to make sure we’re paying our people competitively and that we’ll be appropriately staffed for next year’s forecast and we’ll be able to staff the engagements we think we’ll have. The salary increase you received in October of 2019 was intended to correspond to this year’s revenue growth and plan numbers, so you’ve already received an increase for this year’s growth in revenue. We don’t know what next year will look like, so we don’t know what to give. Theoretically (at least in my personal views) bonuses are what should be on the table for discussion to correspond to the growth in revenue realized for this year. However, it was a firm decision to cut the bonus pool to stave off layoffs for as long as possible (rah rah one firm approach, we’re all in this together). But right now we have too many heads to staff engagements we anticipate on having for the next fiscal year because we didn’t realize turnover. People likely held on tightly to their jobs due to uncertainty in the market. If we cut heads, then I think there will be some return to normalcy, and perhaps increases can resume in October of 2021, or perhaps there will be some type of mid-year adjustment if forecasts suddenly change and demand picks up. But last I heard we were still substantially behind plan numbers, so it’s anyone’s guess.

likefunny

My thoughts exactly, sometimes people really need to state things as they truly are and not give the convenient diplomatic answers.

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Do you know how expensive payments on boats and vacation homes are??

likefunnysmart

Getting a 2% raise felt great during these record years.

likefunny

They are cutting down on way more than just travel expenses I promise you that

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OP it’s called “strategic positioning”

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What I dont understand is why so many lay off in Tax (my area) while EY and PwC are with many jobs offering in TAX - look in Lkdn. Who's lying? Who's telling the truth?

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Some of them are likely the market testing for Green card applications. So not real openings

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The only thing I heard from the messaging that they will rely on to explain is that less people have left the firm than predicted. So that has significantly caused higher expenses than expected.

Pwc: most people get a sign on bonus when switching firms. Even in this environment, they are still offering decent signing bonuses.

Revenue is not meaningful to this discussion. Fiend hired for 10% growth and only saw 2% growth for example. Expenses grew faster then revenue so no raises or bonuses.

That’s not true for my firm and we still haven’t gotten raises or bonuses despite record profits.

Great question OP, they’re saving on OT dinner, OT cab ride home. Wish we could get that in bonus instead.

At least at PwC those expense go to the client so no impact on bottom line.

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How do you know firns are achieving record revenue?

I don't. Pants are overrated.

likehelpful

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