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Why are so many people leaving audit? A partner told me he hasn’t seen anything like this before. What is happening?

likefunnyhelpful
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Audit salaries are the lowest among the large service lines at PA firms and also usually the lowest margin generating. Some of the advisory and tax planning services are generally considered “more exciting” and a lot higher pay. There is also a wider range of exit opportunities for those in advisory/tax that ultimately pay more as well. Advisory also rewards their high performers a lot more through compensation and early promotion compared to Audit. I switched from audit to advisory 3 years ago and am making $45k more in base salary than I would’ve in audit at the same firm (based on what I’ve seen on FB).

Clients are also starting to squeeze/reduce audit fees where they can and more willing to pay for higher costing advisory, M&A, and tax services. From their perspective, it’s way easier to justify services that will help them sell the business or restructure the organization from a tax perspective than a one page audit letter that affirms they didn’t commit fraud. They don’t ever see the audit WPs and other services provide detailed workbooks / reports. For any of the M&A/tax restructure services, it’s also an add-back to EBITDA from a valuation perspective when trying to sell.

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Are you in AAS or due diligence ?

1. Compensation is laughable. Let’s admit it, pure audit service provides very tiny value to clients. Even when we do rfp to clients we boast about our expertise in accounting and the ability to coach them through technical accounting matters (ie advisory type work). Not the ability to prevent fraud. Clients are always unwilling to pay much, and partners takes a big chunk from it because they do that advisory part of the audit.

2. Offshore usage. If all our staff are punting work to offshore and only managing them,how do they even get the learn by doing experience that traditionally accelerates their careers? Same for seniors. I used to tell all my staff to try one year of senior before leaving, because being in a people-managing position at age of 25 is valuable leadership experience. Now I feel too ashamed to even say that. All my seniors “manage” is a daily 30min call with the offshore team.

likehelpful

I already left the firm but am keeping this account to see what eventually happens with all these changes (good or bad). I had the same feelings you have. I think it’s just a significant shift in how audit teams are staffed/structured going forward. Everyone is going to need to heavily change their expectations of what staff, senior and even new managers look like. Those who can’t handle being a glorified offshore project manager will leave. Those who do will get high enough that they have to buy into it or risk hurting progression. My prediction is partners will not make any changes and in 4-5 years with enough double digit turnover, this will be “normal” to everyone between staff and manager and those above will be so far removed from the earlier titles they don’t care/forget.

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It’s a complex multi-factor issue, but the main points are:
1) there seems to be a generational difference (started a bit with the tail end of the millenial generation and became more clear with Z) that they are not willing to work 50, 60, 70 hours a week to accelerate their career at the beginning. We will see how this goes for them as their lives continue.
2) Audit and tax prep fee rates are getting significant crunched as clients realize it’s a commodity. That will not change and likely worsen. This makes it pretty hard to continue to raise pay as big4 may have in the past.
3) Transaction services (finance, tax, strategy) is booming. These services have much higher margins, more interesting work, and better pay. Beyond needing to expand headcount, these service lines are having significant retention issues as clients realize that they can in source more and more of the work.

likesmarthelpfuluplifting

I am a staff and it’s more the fact that we’re almost working busy season hours when it’s not busy season… this leads to general unhappiness and with recruiters reaching out offering more money, better hours, overtime pay, etc it almost doesn’t make sense to stay at a Big 4 accounting firm making less and working more for the hope that you make partner one day.

I also think our generation is realizing that work is not our whole life and there needs to be a real work/life balance where as older generations make a job their life and personality.

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Just left big D last week, here are my reasonings (can confirm this has happened to too many of us)

1. Hours are horrible (as expected)
2. Busy season, the entire team worked 80 hours just to receive mediocre performance reviews when I know we worked hard. Manager said that they can’t give too many high ratings
3. Team members left and the rest of us were struggling. I brought it up to the sr manager who just smirked saying that we shouldn’t be using up the budget
4. Given impossible deadlines - I was a first year who was in charge of 4 interns and 2 new hires (we lost 2 seniors)
5. Pay does not reflect my efforts

Anyways left my $67k position for $90k + stock comp ✌🏻

likesmart

I still looking for a 40hr job with good comp 🥲

likehelpful

It is not just people leaving either, it is people not joining. The amount of campus applications for internships and full time positions this year have been laughable compared to the past. I think that social media platforms like fishbowl and Instagram accounts like the Big 4 Accountant have opened the eyes of college students to the true reality of this career and life at big firms. When I was going through the interview process, my only resources for getting a peak into firm life were the recruiters whose jobs were to get students to drink the kool-aid and apply. In a mid-sized market, we only were able to extend two offers to the three we interviewed. Our target was to have four interns prior to this recruiting season, and we could not even lock down enough applicants to even interview for those spots.

likesmart

This is very true. Recruiting in the state of FL used to be easy with lines of students at the fairs. Now, the accounting groups are asking people to show up and we no longer are inundated with applications

like

People are no longer valuating spending 60-70 hour weeks for 2-5 years of experience to get a quicker promotion in industry. Also firms are managing the outsource poorly, which results in auditors doing double the work when they correct the mess the outsource people made.

likesmarthelpful

My firm had an assurance townhall where they talked about adding on more offshore people. Multiple people expressed concerns in the Q&A about the quality of the offshore work.

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I'm putting my notice in today and honestly the biggest driver was having to outsource all my work. I feel like I can't take ownership over any of my work because the utilization of the off-shore team is dependent on me. I'm constantly giving them work I've never done myself.

likesmart

EY1 you are spot on. Left the firm just recently and this describes my feelings about it all pretty accurately

like

People have started to value themselves more than their company values them.

I was very, very lucky in where I landed. I joined my firm in audit working with good people who protected and trained their staff. I worked hard, and had kids while here. Needing a flex schedule after kids was never a problem. Needing to work from home sometimes was never a problem. My value was appreciated and I was given autonomy to do my job well. This is NOT common in PA.

Many firms (including other groups within my firm!) did not do the above. They did not value their employees, and now that they realize their employees are valuable and have options, are scrambling to find ways to make them stay. Which is like breaking up with a toxic boyfriend who then says, "I'll be better I promise!"

like

That point that at least 1-2 people around us have a PA horror story is too true. I had mine this past busy season and it’s honestly sad that it’s part of the normal experience. It shouldn’t have to be.

likesmart

I’m a manager and put in my notice yesterday for industry. Got a 50% comp increase. PwC countered to get me to stay through busy season and the company matched. Now I have a 60% comp increase - thanks PwC!

In the end audit work is largely a documentation exercise and being an all-day review monkey isn’t fun. At least as senior half my time was review and the other half dealing with the client & team. Now I’m almost 100% review.

I have two clients, five audits in flight, a quarterly review in flight, and I’m just tired and if I stayed it’ll only get worse during busy season. My mental health was worth more.

like

Audit sux.

Sincerely,
Tax Gang™️

likefunny

Well it’s public accounting so they both suck in their own ways. But I’m one of the weirdos that kinda likes public and isn’t dying to leave for industry. Audit would’ve been a better choice if I saw myself as a 3 and out type. But I figured if I’m gonna be in it for 30+, better be intellectually interested in my job.

like

1. Industry pays more and usually works less hours
2. Consulting/Advisory and banks are now hiring more folks with audit backgrounds compared to pre covid.

like

The Great Resignation

likefunny

If I was a student from Gen Z, and watched all the YouTube videos of people talking about their day to day work at Big4, I would’ve probably took another major.

like

“Performance based layoffs” in 2020

Normal attrition in 2020

Higher than average attrition in 2021 after those who remained through YE 2020 busy season got pummeled

Inability to replace those who left

Pay for hours worked is less and less of a value proposition

Partners dangling carrots 🥕 🥕 ineffectively as employees are calling the BS

likesmart

Ok now hear me out ... "unlimited" pto AND more pizza meetings. 😉😄

likefunny

What did it for me was realizing the allure of making it to partner just isn’t there anymore. With all the competition and outsourcing, firms have to keep cutting corners on fees and it shows there’s a clear cap in the lifestyle you can attain even if you’re a top performer in public accounting. I don’t doubt that firms are putting forth the best offers possible as they’re absolutely hemorrhaging talent but it’s simply not worth it to break your back for lower pay to *maybe* have a shot at the partnership if the stars align.

Question for partners - If you were a senior in today’s industry, would you want to stick it out to partner or would you go take the 50% raise for less hours?

likeuplifting

RSM 1 you are 100% right! The power dynamics have shifted and now the employees have the leverage under this economy… Partners are scared shitless

likefunny

Job opportunities elsewhere for CPA’s are at an all time high, if your unhappy in PA it is a good time to leave. But if you are happy, its also a good time to double down, express your commitment to the firm along with your own personal flexibility or pay desires, the firm is also more incentivized than ever to work with you

like

Also partners thinking short term. They won’t pay their top talent top dollar so those individuals leave. Then partners go and replace them for someone half as good for top dollar (because it costs to poach) and then top talent peers and below these new replacements get annoyed and leave. IMO most true leaders don’t think short term like that and so, talented individuals, they look around and see an industry full of short term thinkers so they pack up their bags and find another show.

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This is literally why I left Deloitte. I was doing a managers job for senior pay and when I asked for more money I got shot down hard. They were shocked when I took an offer for $30k more elsewhere and then replaced me with an external hire who made more than me and couldn’t figure out how to open our audit software.

likefunny

It’s all service lines in public accounting. The job market is hot. Worker shortage, which means more work for the rest of us who stay and increased burnout. For some, the pandemic has taught them the importance of focusing on other things in life, such as their health, family, friends, hobbies, etc. i have friends who straight up quit without another job lined up because they couldn’t tolerate it any longer.

like

Accurate - I’m reaching that point soon

likesmart

Covid made people realize life can be short. Why work ridiculous hours for the chance to make a lot of money 10 years down the road when life can end unexpectedly. All the st home time made people realize how much they hated the commute to the office

likesmart

I definitely agree with this! Covid changed a lot of peoples perspective. Also I think not as many people quit last year because of the uncertainty and job security with covid so now it’s a double wave this year

like

I think public accounting is losing a branding battle. When I chose the major 17 yrs ago it was based on a decision to balance career risk and volatility with solid lifetime earnings. Nowadays, if you are trying to manage risk while focusing on earning a good income, accounting doesn’t have the same appeal.

A large number of leading firms did layoffs during the Great Recession and the Pandemic when we are literally the people who drive revenues. That was a dumb move and now young people look at this career as no different than back office accounting which gets cut before profit centers. We are not providing legal services that can be cut at the discretion of executives, all public companies need annual audits, so proactively firing people leaves the survivors thinking “wtf?!”.

As a replacement anyone who wants to control risk will move into data analytics or software engineering. Those positions now occupy the relatively safe, high earning niche that we once did. This is the chickens coming home to roost and it’s a shame that the leaders in our profession will not hear the message.

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This isn’t confusing. Accounting, on its own, is not innovative. Services and products that are not innovative and do not have some natural barrier to entry become less profitable as competition enters the market.

I like what I do (tax), but it’s not “fun”. I have good personal relationships with members of my team that I am not in the same city as. I think one takeaway for a lot of us this past year is I’d like to place a higher priority on my family and my health.

It is not an audit issue. People are leaving all service lines

like

I had a conversation with a partner about this, and she said she thinks part of it is also just less people going into accounting and less people taking cpa exams.

My additional take on it is that it is hard to enjoy some of the better points of public accounting when covid ripped a lot of those away (team outings, holiday parties, etc.).

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The thing with the cpa exam is it really adds no value. The pay bump from sr to manager is laughable given the prestige of the cpa title. Look at the diff in pay between a paralegal and a lawyer with his/her bar license. Why don’t we see that in the accounting field? You have to get your cpa and then do the work for another 15 years before you starting making “good” money in firms.

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