I read "A memo to CPA firm CEOs" (Oct. 5-18, 2009) with great interest. Mr. Miller and Mr. Bahnson have done a great job of challenging public accounting firms, particularly the larger partnerships. Their breakdown of the Four Es is on target, in my opinion. I was particularly intrigued to see this coming from academics. I would expect this from colleagues of mine who have been in public accounting and see the challenges with the partnership model from the inside. The partnership model, at least with the large firms and, I suspect, with some of the small and mid-tier firms, in my opinion is never going to be entirely independent.
I could not find a fit in the three large firms where I invested my career over the past seven years, and it took an abrupt change and my reflecting to realize why I couldn't fit in. The Holy Grail of the partnership and staff climbing their way to the top has lost its appeal, and now the partners need to figure out a way to grow the business and get new partners to support them in their retirement. I'm grateful not to be a partner in the current model. When I joined public accounting in 2003, I thought firms were figuring out the human element of their model and could head in a new direction, but that didn't last, and people are merely a resource to drive revenue.
The latest push by accounting firms to get International Financial Reporting Standards on track was to be the next big profit push for the partners; and while they haven't given up, it doesn't appear to have the same potential as the Sarbanes-Oxley bandwagon they pushed so heartily. Convergence of IFRS and GAAP needs to be driven by the needs of investors and shareholders, not by partners who need to buy their new high-end foreign cars. We're a long way from an "enlightened" approach to client service from public accounting firms. Their primary objective is profit and managing risk so that they don't get wiped out in a costly lawsuit.
Daniel Gaffney
Daniel Gaffney & Associates
Chicago
