Specialty group people, do you agree that we should roll out our audit practice? It’s a loser practice and causes our pay to be “equalized - we should be making a lot more bringing in 80-100% margins

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We get the specialty work because we have the client connection through audit.

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The audit relationships drive a lot of work for consulting and other specialties. Also a lot of stability in the annuity nature of the business.

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We could replay history. Arthur Anderson incubated a consulting practice in Anderson Consulting. For years the audit practice subsidized the growth. AC grew up and its client base was increasingly disconnected from the audit practice. Audit practice starts another consulting practice (AA Business Consulting). Anderson Consulting partners begin to resent the dollars flowing from AC to AA and complain that AA is competing (despite AC doesn’t want to talk or serve middle market clients served by AABC) or recognizing the investment made by AA to allow that practice to grow. Commence billion dollar divorce proceedings.

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OP. Interesting thread. Fee auditor observations. First - I’m not sure you understand margin. You seem to think because you charge 80% of your hours that you get 80% margin. That’s now how margin works? Maybe you mean 80% recovery... but that’s different thing. Few other observations. Interesting that you have a stat on what percentage of revenue comes from audit clients? Cannot challenge your figures but I know when you are serving the really big accounts cross selling (not just by audit) is the way to drive growth. So when wrapping up TAS project you hear of tax issue and 3 meetings later you have big project. So that’s not specific to audit but I know my firm currently putting big emphasis on cross selling as a continued driver of growth. The other thing you are totally missing is what happens during downturn. If EY TAS (and maybe advisory but was small then) didn’t belong to ey the audit firm - 100% would have got out of business in 2009. My region let go of about 70% of TAS managers and SM’s and those that stayed were there to do audit support for few years. There was ZERO transactions. Tax work is economic conditions driven but obviously not to Same extent. But would say without audit support even a stand alone Tax practice might not have survived 2009. I say this to a lot of early stage SM’s who stared in 2009 or so - been living through a period of continual growth which won’t last for ever. I generally think the different service lines compliment each other. Not sure about rsm but ey TAS fokks could say the same about tax right now. Their revenue and growth is crazy and tax (as well as audit) is holding them back. Where does it end.

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Lol is this the salty ITAX RSM person who hates b4 and audit?

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@ RSM 3 - facts... I never bill less than 80% of my time. I’m a manager so I know, dont argue (: audit only brings in 30% of our revenue and shrinking. Plus, your audit senior manager’s bill rate is much less than our manager’s... and at significant discounts. Please do some homework before talking 😂😂

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The audit practice will soon be changing. Not sure how soon but it will change. I don’t think the audit practice should or could be rolled out. Go to a specialty firm if you want to make more money. I’m sure the RSM perks are what’s keeping you around. If not then why are you still with RSM? Serious question. Unless you want to be one of the pioneers at RSM who tries to push audit folks elsewhere / separate.

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I just assumed trollpost

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OP, u should read through firm values, maybe should be elsewhere if not up to your own values.

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Disagree - 90% of my clients are non-audit.. in fact, there’s a lot things we can’t work on for audit clients (valuations, contingent fee work)

@PwC 1: I’m in R&D credit and don’t hate Big 4. There’s more than 1 person at RSM who hates audit lol. Are you a salty auditor? 😂😂

@RSM 2: We did some math in our office, 80% of our specialty group revenue doesn’t come from audit clients. We have annual projects too so we don’t need audit for that.

😂 just checking. No I am not

Lolwut

@ RSM 2 - that’s why it’s history.. right now, audit is just causing everyone to get paid less. Our specialty group partners agree

So what are they willing to put on the table to buy out of the partnership? Or why aren’t they starting their own firm from scratch? Firm provided a platform to build the specialty practices and therefore are owned collectively by the partnership. Firm leadership does recognize consulting and non attest services as the growth engine for the firm

Not buy out - just split clients and people fair and square so we don’t run into any independence issues anymore

“From scratch” meaning we could bring our specialty group clients and existing projects... that could work too.

You seem to have a fundamental misunderstanding of property rights and equity. If I was an audit partner (which I am not - consulting Director) why do I agree to give away a profitable piece of my business for no compensation?

From scratch means you honor your non compete and walk away from current clients

So, how are the audit partners, assuming the firm will be audit-only, going to serve the consulting/ tax clients? If consulting/tax partners form 70% of the group and decide to go separate out the audit practice, they could could drive the audit partners out instead.

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