As social media has become increasingly important in the recruiting and hiring process, CPA firm leaders have become increasingly visible on professional social media platforms. LinkedIn is one of the largest and most popular professional networks in the world; businesses use it to attract top talent, establish connections, and build relationships. As a result, it is one of the best places for professionals to promote themselves by listing their professional achievements, work experience, professional skills, and educational background. It has become a critical part of the hiring process, as the vast majority of employers—91%, according to a survey of recruiters conducted by Reppler—screen prospective employees through social network sites such as LinkedIn or Facebook (Erica Swallow, “How Recruiters Use Social Networks to Screen Candidates,” Mashable, Oct. 23, 2011, http://bit.ly/2PVyJ4G).
With the prevalence of digital deception, it may seem counterintuitive to rely on self-reported information on social media websites, but according to an experiment conducted by academic researchers on the effect of LinkedIn on deception in résumés, the information disclosed by individuals on public websites is considered more credible than that on private résumés (Jamie Guillory and Jeffrey T. Hancock, “The Effect of LinkedIn on Deception in Résumés,” Cyberpsychology, Behavior, and Social Networking, February 2012, http://bit.ly/2zwyvqi). Specifically, the authors found that digital deception is lower for verifiable information, such as educational background, work experience, and professional skills that can be endorsed by colleagues.
This article examines the LinkedIn profiles of 1,196 audit partners in the United States and analyzes audit partner demographics—including generational differences, professional skills, regional and gender differences—in order to better understand of the composition of CPA firm leaders.
Audit Partner Profiles on LinkedIn
The partner title is a key measure of success in public accounting; it implies a certain level of seniority and experience that contributes to external credibility. Audit partners are the face of a CPA firm’s audit department, and they are responsible for helping to set the direction of the firm, developing business strategy, and recruiting new entrants into the profession.
The initial list of audit partners used in this study was obtained from the PCAOB’s “Auditor Search” database. This database covers all audit partners for public companies in the United States and included more than 3,800 engagement partners; after excluding partners who only audit financial service firms, the sample was reduced to 1,772 audit partners. Almost 70% of these audit partners have public profiles on LinkedIn. Audit partner attributes were also obtained or corroborated with data from other sources, such as company websites.
In general, the LinkedIn sample is commensurate with current trends reported in the profession; the average age of audit partners in the sample is 46, the average time to become partner is 12.77 years, 17.3% of audit partners have graduate degrees, and 23% graduated from one of the top 50 universities in the United States. Following the method used by Jayanthi Sunder, Shyam V. Sunder, and Jingjing Zhang (“Pilot CEOs and Corporate Innovation,” Journal of Financial Economics, January 2017), the authors identified audit partners who graduated from a top university by whether the partner’s undergraduate institution is in the top 50 schools ranked by U.S. News & World Report in any year from 1983 through 2007. This is also the period in which more than 90% of partners in the sample obtained their undergraduate degrees.
In order to examine the differences between generations of accountants, the sample was split into audit partners over age 50 and under age 50, based on the year the partner reported receiving their bachelor’s degree [i.e., 1990 graduates and earlier (or later) are over (under) the age of 50]. (The results of the analysis are shown in Exhibit 1.) Partners graduating after 1990 took 12.35 years to reach partner, whereas those graduating prior to 1990 took an average of 13.86 years to become partner. It therefore seems that the time to make partner has decreased, which is consistent with industry trends and firms’ retention efforts. In addition, there is a distinction between age groups for audit partners at Big Four and non–Big Four firms. On average, partners at the Big Four progressed more quickly than those at smaller firms if they graduated prior to 1990. Big Four audit partners graduating after 1990, however, make the progression to partner slightly slower (an average of 12.52 years versus 11.9 years for partners at smaller firms). Moreover, almost one-third of audit partners at smaller firms have had experience with the Big Four.
Generational Breakdown of Sample
With regard to postgraduate education, 18.8% of partners have advanced degrees if they graduated after 1990, while only 13.5% of those graduating prior to 1990 have graduate degrees. Advanced degrees are much more common among partners at non–Big Four firms than those at the Big Four, and partners at smaller firms are also more likely to have MBAs than are Big Four audit partners, which may indicate that audit partners at smaller firms have a greater focus on client acquisition and general firm management than their Big Four counterparts.
Although audit partners do not actively engage in the daily tasks of working on a client’s audit, they sign and approve the firm’s audit report and financial statements for the clients they manage. As such, prospective partners should be technically competent, and specialization may help in the promotion process. Based on this study, the top 10 skills that audit partners highlight on LinkedIn are accounting, auditing, financial reporting, internal controls, mergers and acquisitions, revenue recognition, SEC filing, SOX, tax accounting, and U.S. GAAP. Not surprisingly, auditing is the skill most often listed by audit partners across most age groups; audit partners over age 60, however, list accounting most often. Younger audit partners tend to highlight more technical skills in their profiles, such as Sarbanes-Oxley Act compliance, internal controls, SEC filing, and U.S. GAAP. Older audit partners tend to focus on more broad-based skills such as financial reporting and accounting; they also list mergers and acquisitions as a professional skill more often than younger partners. Among audit partners at Big Four firms, all audit partners list specialization in technical skills, whereas non–Big Four partners list the more broad-based skills.
The marketable skills of these groups show the changing trends in the profession toward more technical- and legislation-based accounting skills, as opposed to general broad-based knowledge. This trend is particularly prevalent in the Big Four, where specialization may serve as a marketing tool, allowing them to tout their expertise in these areas to their clients. These skills may also serve to differentiate the Big Four from smaller firms and create a competitive advantage in obtaining and retaining clients. Specialization among younger audit partners at smaller firms has increased as well, possibly to compete with larger firms. CPAs must also consider the potential consequences of specialization; highly specialized audit partners may not be as well equipped to handle more general accounting issues. A full breakdown of the skills analysis is shown in Exhibit 2.
Audit Partners’ Skills Breakdown
Regional Differences in Professional Skills
The United States has a diverse array of industries spread across the country; however, certain areas tend to be home to specific industries, such as the financial industry in New York or the technology industry in California. In addition, many states attempt to attract certain industries to their area, and many companies prefer certain locations that meet the needs of their industry (e.g., power supply, raw materials). Therefore, the authors also examined the skills listed in audit partners’ LinkedIn profile by state; the results are presented in Exhibit 3. The 10 states observed are California, Florida, Illinois, Massachusetts, New Jersey, New York, Ohio, Pennsylvania, Texas, and Virginia. Auditing is the top skill listed by audit partners in seven of the states, and is among the top three skills listed by audit partners in every state. In general, accounting and financial reporting are also listed in the top three skills. The top skills in Virginia are U.S. GAAP and financial reporting, the latter of which is first in New York and Massachusetts. This makes sense, given that many financial services firms are located in both New York and Massachusetts and that financial reporting is likely to be a marketable skill in these areas as well as the metropolitan area surrounding Washington, D.C. The lowest reported skills among audit partners are tax and revenue recognition.
Audit Partners’ Skills in Selected States
The number of women graduating with accounting degrees continues to surpass that of their male counterparts. As the accounting profession becomes more diverse, it is important that new entrants in the field see the potential for advancement. This change has, however, been gradual, with more than 60% of the accounting profession consisting of women, according to the Bureau of Labor Statistics (Labor Force Statistics from the Current Population Survey, http://bit.ly/2SdSqkN), but less than 20% being accounting partners at Big Four and non–Big Four firms (Terry Sheridan, “Women Audit Partners are Few and Far Between, Study Finds,” Accounting Web, July 24, 2017, http://bit.ly/2QlMOaN).
In the sample examined here (Exhibit 4), only 12.6% of audit partners are women, and on average, women audit partners are more likely to work at Big Four firms than non–Big Four firms. Female audit partners at non–Big Four firms, however, tend to be younger than those at the Big Four. Female audit partners are also more likely to have graduate degrees and to have graduated from one of the top 50 universities in the country. In general, female audit partners are younger and promoted more quickly than their male counterparts; the average age of a female audit partners is 44, compared to 46.2 for male audit partners. In short, although the accounting profession is becoming more diverse and inclusive, there is still a tremendous amount of work that must be done to improve the progression of all new entrants to leadership positions.
Audit Partner Demographics by Gender
Potential for Success
In order to keep the prospect of becoming a partner attractive to new hires, firms must continue to focus on culture and inclusion. As a firm’s leadership becomes more diverse through promotion, the firm can become more attractive to employees with diverse backgrounds because they see the potential for success. In addition, the progression to partner is much faster now than in previous generations, which should be used as a selling point to retain young talent in public accounting. The marketable skills of accounting partners have also changed over the years to include more technical and specialized skills, and these skills vary based on the partner’s geographic location. Although specialization may boost their chances for promotion, CPAs aspiring to become partner should not lose sight of the important nontechnical skills necessary to be effective, such as leadership and critical thinking. These attributes are important given that partners spend a significant amount of time managing relationships with clients and employees. Finally, as the millennial workforce expands, younger employees increasingly focus on greater flexibility and better fit with the firm culture; as a result, the changing profile of accounting partners may contribute to attracting and retaining employees.