How The Right SOX Can Make Even A Green Eyeshade Stylish OK, what college major is now considered sexy, exciting, lucrative, and a guarantee of multiple job offers with attractive salaries and maybe even a signing bonus? Accounting. No kidding.
In an old Monty Python skit, a career guidance counselor calmly explained to his client that testing had revealed that he was a hideously boring person, and while that could be a drawback in most professions, in accounting it was actually considered a great strength. But apparently, the image of those nerds with pocket protectors and green eyeshades has been cast aside. And the cause of this great transformation, you might ask? The Sarbanes-Oxley Act of 2002.
Government regulations don’t typically create glamour professions, but as recent articles in The Wall Street Journal explain, Sarbanes-Oxley, or SOX, has been both a dream and a nightmare for the accounting profession. Sarbanes-Oxley was the Congressional response to a series of high profile management/accounting scandals, such as Enron, WorldCom, Adelphia Communications, and others. In addition to placing greater responsibilities on top management for the accuracy of their firms’ financial statements, SOX also imposed new regulations on the accounting profession, especially the ‘big four’ national public accounting firms, to avoid conflicts-of-interest. The result has been a major reshuffling of business clients, and a substantial increase in the amount of staff time being devoted to completing corporate audits, including the restatement of previously released financial statements.
All of this has meant a huge increase in demand for accountants. In an article by Julie Bennett, the president of the internet job site Monster.com is quoted as saying, “We do monthly employment indexes, counting job postings on 1,500 web sites from all over the country. From February 2004 to February 2005, job postings in accounting and auditing positions were up 50 percent. It’s been an amazing turnaround.” Likewise, quoting the CFO of an east coast professional staffing company, Bennett reports, “If you walk through the doors of one of our 80 branches and say you have SOX experience, our eyes will light up.”
Not surprisingly, all of this new demand is translating into higher salaries for accountants. Suzanne McGee’s article cites numbers from the professional staffing company, Robert Half, projecting a 10 percent jump in salaries for accounting managers at large firms between 2004 and 2005. Firms are not only facing intense competition for new hires, but are worried about keeping their existing staff from bolting for a better offer, since those with experience are best equipped to help clients comply with SOX. According to the head of ‘big four’ giant PricewaterhouseCoopers’ U.S. experienced recruitment, McGee reports, ““We beg, we borrow, we steal, we grovel, we scour the world” to find accountants with five-plus years of experience in public accounting.”
Other firms are reported to be offering their employees flextime and other benefits, and sizeable bonuses for referring successful candidates for jobs.
But the movement towards labor market equilibrium does not happen overnight. For all of the aggressive steps being reported by firms in the Bennett and McGee articles, an article by Diya Gullapalli suggests many are still catching up to an evolving market. Because of the need to get quality audit work done now, even if sufficient new and experienced staff cannot be brought in yet, intense pressure, long hours, and insufficient rewards are leading many to leave their jobs at ‘big four’ firms. More than half of the respondents to a survey done for PricewaterhouseCoopers reported that they viewed the accounting profession as less attractive than they did five years ago, and one in six indicated they would likely quit their job in the coming year. Accounting firms continue to try to respond, with better reward systems, bigger bonuses, and non-monetary benefits such as a concierge service at another ‘big four’ firm, Earnst & Young LLP. By increasing hiring, reassigning existing staff, and turning down or dropping business, many are trying to more carefully manage workloads as a way of reducing turnover.
Sources: “CPA Recruitment Intensifies As Accounting Rules Evolve,” by Suzanne McGee, The Wall Street Journal, March 22, 2005 (p. B6); “Need To Comply with SOX’s Stringent Standards Is Sparking A Global Scramble For Talent,” by Julie Bennett, The Wall Street Journal, March 22, 2005 (p. B9); and “Audit Profession Feels Squeeze,” by Diya Gullapalli, The Wall Street Journal, May 4, 2005 (pp. C1, C6).
2a. An imbalance between supply and demand in the labor market need not always manifest itself in significant changes in wage rates. What non-wage aspect of employment would you most like to insist on if you were fairly sure it would not hurt your chances of getting a job? What non-wage item would you most fear an employer might require or take away if unemployment were high and they weren’t worried about being able to replace workers?
2b. Suppose your prospective employer offered you a trade-off between monetary bonuses and extra long hours. How much in monetary compensation above your base salary would you demand to be available seven days per week, for up to 12 hours per day for extended periods? Assume that your base salary is as good as or better than any other offers you had when you took this job. If you had a competing job offer with a slightly lower base salary and no time-based bonus plan, but fairly strong assurances that you would have regular 40-hour weeks, which job would be more attractive to you?
2c. How, if at all, do you think your answers to the two questions above would vary for someone who is just graduating from college compared to a mid-career professional at age 40? Why?