Many aspiring CPAs and auditors have a certain image of the profession. Some are attracted because of its perceived order and structure. Others are pointed to the profession because they are excellent at math. A few even enjoy the complexity of tax laws and regulations. Once in the profession, however, they often find these preconceptions contradicted by reality. Math is not as important an accounting skill as it seems (see Jessica Scheck, “6 Myths about Being an Accountant,” Financial Career Options, Oct. 18, 2016, http://bit.ly/2k1KYMF), and any auditor who has been through a busy season can testify that order and structure can sometimes be in short supply. This disparity between the expectation and the reality of being an auditor leads to disillusionment.
The Internet abounds with information about how to reduce the high staff turnover commonly experienced by CPA firms, information that focuses mainly on making the firms and their cultures, reward systems, and work environments more appealing to young people (Heidi Brundage and Mark Koziel, “Retaining Top Talent Still a Requirement for Firms,” Journal of Accountancy, May 2010, http://bit.ly/2ixNcCZ). Except for the conventional wisdom advising firms to seek out high achievers with excellent grades and leadership roles in extracurricular activities, however, one finds precious little about identifying the right people in the first place. Recruiters should look not for those who are attracted by the myths and stereotypes about accounting, but rather those who look beyond them and are psychologically best suited for a challenging career in financial auditing.
Since 1978, all auditors have been familiar with the expectations gap, but only in reference to the difference between how auditors see their responsibilities and the expectations of users of audit reports. There is another, lesser known expectations gap: the difference in expectations between those entering the auditing profession and those who recruit and hire them. This article explores the extent to which this other expectations gap may have contributed to a high rate of turnover for young auditors and an uncomfortably low rate of success for experienced auditors in meeting the formidable intellectual challenges the profession presents.
The Root Cause of the Problem
According to The Philosophy of Auditing, a landmark 1961 work by renowned professor Robert K. Mautz, assisted by Hussein A. Sharaf, auditing was seen by many at the time as less of a professional activity and more of a “completely practical … series of practices and procedures, methods, and techniques” (Howard Levy, “Unsolved Problems in Auditing: A Half-Century Retrospective and Update,” The CPA Journal, February 2016, http://bit.ly/2jkI6HH). In this author’s view, many young people entering the profession today still believe this. This misperception that audit work is mundane and routine—which is often only true in the earliest stages of an auditor’s career—is reinforced by the proliferation of comprehensive and ubiquitous one-size-fits-all practice aids and the growing pattern of rapidly changing, inflexible, rules-based standards. Therefore, many people subconsciously see predominantly process-oriented people as better suited to a career in auditing than goal-oriented people. (Note that goal-oriented people are also referred to as “results-oriented,” and that “process-oriented” should not be confused with “detail-oriented.”) Over the long run, overpopulating the profession with predominantly process-oriented people who are capable only of a robotic, checklist-driven approach to auditing will invariably lead to more audit failures and higher staff turnover.
Psychologists tell us that “the process-oriented person searches for the nearest relevant set of steps, policies, instructions, guidelines, rules, or regulations. In the absence of established processes, this person feels lost, as if in the wilderness. … Goal-oriented people feel most comfortable when there is a goal to accomplish and they can work independently and competitively to achieve this goal with the outcome visualized as themselves as the winner. Highly organized structures frustrate the goal-oriented person” (“The Goal Orientation,” Success Orientations Publishing, http://bit.ly/2iKfXN6, and “The Process Orientation,” Success Orientations Publishing, http://bit.ly/2jIcJJv). Although a proper balance between both goal and process orientation is necessary in auditing (as is an orientation for detail), people who are more goal oriented than process oriented contribute more to quality auditing and the success of an audit firm.
While modern technology has effectively reduced the amount of tedious, robotic tasks that have historically dominated an auditor’s early on-the-job activities, young auditors remain largely unaware of the growing body of responsibility they will encounter. This lack of awareness appears to be a common cause of high turnover among audit personnel in CPA firms. Process-oriented people often leave the auditing profession after their earliest years when they find out that 1) audits are more than just “foot-tick-and-vouch” activities guided by a checklist or program prepared by someone else; 2) they have to engage in thoughtful risk assessment, exercise judgment in the selection of appropriately risk-responsive audit procedures, evaluate the reliability of audit evidence, and assess their clients’ compliance with ever-more-complex accounting principles, as well as constantly employ a high level of intellectual energy and professional skepticism; and 3) as their level of experience and responsibility grows, they will have to manage teams of less experienced auditors to ensure the effective, timely, and efficient completion of their assigned audit engagements consistent with reasonable client and user expectations.
As stated above, it has been this author’s view for many years that, because of the persistent myths and stereotypes, the profession tends to attract individuals who are more process-oriented than goal-oriented. These people would rather faithfully follow programs and checklists written by others than engage seriously in risk assessment and thoughtful audit scope development. Individuals perceived to be mainly process-oriented are often ignorantly steered by uninformed educators, counselors, and recruiters to accounting or auditing careers. Entry-level candidates who are predominantly goal-oriented, and therefore best suited for careers in auditing, have been and will likely continue to be advised by all but the most enlightened auditing professors and career counselors to seek alternative careers, which are incorrectly perceived to afford greater intellectual stimulation and challenge, as well as the opportunity to exercise sound, independent professional judgment that calls upon their knowledge and experience.
It has been reported recently that many firms typically experience an annual turnover rate of up to 25% (“How CPA Firms Can Reduce Staff Turnover and Boost Profits,” CPA Practice Advisor, May 27, 2015, http://bit.ly/2jt48dv). According to the Society for Human Resources Management, 14–18% “is fairly normal” for CPA firms (Abacus Group, “Boosting Staff Retention in the Public Accounting Industry,” Nov. 11, 2014, http://bit.ly/2jVFsa9). Although it cannot be gleaned from the foregoing statistics, it is apparent to this author that a significant portion of that turnover occurs among young auditors in their early years shortly after earning their CPA certificates. This may result from the fact that many young people believe the CPA credential will open the door to financial careers other than auditing (e.g., in industry). From the outset, such individuals do not plan to stay employed as auditors, and merely use the audit firms as a training ground, even though few licensing jurisdictions still require audit experience for the CPA credential.
How to Fix It
For all the foregoing reasons, auditing firms and the CPA profession as a whole need to address how to better identify and attract people at the entry level who are more goal-oriented than process-oriented, and who understand and appreciate the nature and extent of the responsibilities and intellectual challenges they can expect to face as they grow in the careers they have chosen.
Psychological testing for evidence of a career-related goal or process orientation during the college years or earlier, and again by recruiters as part of the hiring process, would likely narrow the other expectations gap and enhance the profession’s ability to filter out employment prospects unlikely to succeed in auditing careers over the long term. In addition, career counseling programs should be developed for widespread presentation at the college level that will provide more effective tools 1) to identify the predominantly process-oriented students and steer them to other fields and 2) to help the goal-oriented students who might choose accounting or auditing if they understood better what would await them in an auditing career.
The AICPA’s Center for Audit Quality (CAQ) has recently taken a step in the right direction. In the summer of 2015, the CAQ began a long-term social media campaign called “Auditor Proud,” which is intended “to enhance the attractiveness of the auditing profession to younger generations of all backgrounds and to foster greater retention rates of top performing employees.” The CAQ explained that the broad objective of the initiative “is to engage Generation X and millennials, or influencers in their lives (guidance counselors, parents, teachers, mentors, etc.), and provide them with an image of what a career in auditing can offer, as well as lead them to resources where they can access additional information” (http://shortyw.in/2jthDtV). The initiative is worth a look; it may provide a helpful model.