Demand for Accountants Continues to Climb
Amid economic turmoil, accounting remains one field with strong growth potential. According to the Bureau of Labor Statistics, the employment of accountants and auditors is expected to grow at least 18% by 2016 – that’s faster than the average rate of growth for all other occupations. “An increase in the number of businesses, changing financial laws, and corporate governance regulations, and increased accountability for protecting an organization’s stakeholders will drive growth,” states the government agency. Mitch Feldman, President of executive recruiting firm, A.E. Feldman, adds that aside from increased regulation, globalization and new technology have also made the job of accountants increasingly complex.
In the past decade, acronyms like SOX, XBRL and IFRS, have raised the bar for accounting professionals and put even more pressure on already strained accounting departments. Now, the ongoing economic uncertainty stemming from the credit crisis is complicating matters. A.E. Feldman, says that as the volume and complexity of their workload rises, demand for accountants continues to climb and competition for qualified talent remains fierce.
Convergence Looming
The question about whether the world is going to global standards is no longer ‘if,’ but ‘when,’” says KPMG Chairman and CEO Timothy P. Flynn in a statement. The Securities and Exchange Commission (SEC) recently announced it voted to publish for public comment a proposed Roadmap, or series of benchmarks, that will guide the United States through the process of convergence from U.S. GAAP to International Financial Reporting Standards (IFRS). The move could ultimately unite the global business community and move all U.S. public companies under a single global standard by 2014. As a result, more multinational companies must hire professionals with sufficient knowledge of IFRS to make the conversion and to maintain IFRS financial statements, both among domestic and international operations. A.E. Feldman reports that accounting jobs are opening up as the need for IFRS-trained accounting talent intensifies.
Adapting to New Technology
New concepts like XBRL and enhanced business reporting are making real changes in the way business is being done. These major financial reporting developments are critical issues facing financial, legal, risk, audit and compliance officers at publicly held companies.
Right now, the SEC is calling for companies that file using U.S. GAAP and have a worldwide public float over $5 billion to provide XBRL-formatted financial statements beginning with fiscal periods ending December 15, 2008, according to AccountingWeb.com. The report adds that the remaining companies using U.S. GAAP will be phased into the XBRL program over the course of the next two years.
XBRL, also known as eXtensible Business Reporting Language, involves computer “tags” similar to the bar codes used to identify groceries in the supermarket. According to the SEC, the tags uniquely identify individual items in a company’s financial statement so they can be easily searched, downloaded, reorganized, and put to any number of other comparative and analytical uses.
As corporations adapt to add the infrastructure in order to meet the filing requirements of the SEC, A.E. Feldman, reports that opportunities are opening up for Audit Managers and senior-level professionals with expertise in the preparation and maintenance of financial, accounting and statistical reports. Securities lawyers must also prepared for the transition to XBRL reporting.
Fair Value Under Fire
Suspending rules that require financial companies to value assets at current market prices would only further erode investor confidence, says Federal Reserve Chairman Ben Bernanke according to Reuters.
Mark-to-market, or fair value accounting, took full effect this year and has been blamed for exacerbating the credit crisis – mainly for its contribution to billions worth of dollar writedowns. Also known as FAS 157, the measure forces companies to use complex methods to assign a value to an asset based on what the current market would be willing to pay for it. Critics contend, however, that market prices in the current distressed environment don’t reflect the asset’s true value. Asset values have been hit by falling home prices, loan delinquencies and foreclosures. FAS 157 requires firms to use market data to value assets. Since the market for most mortgage-backed securities has dried up however, there is little active trading to price CDOs or other complex investments.
Despite the criticism, SEC Chairman, Christopher Cox, has said in the past that fair value accounting is here to stay, according to CNBC. The report quotes Cox as saying that current mark-to-market models provide great benefits to some of the alternatives. Now amid the ongoing turmoil on Wall Street, Bernanke recently told a Senate Committee that banks want to abandon fair value accounting standards and instead use their own estimates of hold-to-maturity prices for these assets, but warned such estimates would be unreliable, according to Reuters. The report adds that Cox would not say at the hearing whether the agency would consider a temporary suspension of fair value accounting but said regulators plan to provide “timely guidance.”
Now as public firms grapple with the challenges of fair value accounting, they continue to invest in the infrastructure necessary to comply with the measure. As a result, candidates seeking business valuation jobs remain hot commodities.
Forensic Accounting Getting Hotter
Exacerbated by the credit crisis and economic slowdown, opportunities are growing in the fields of fraud and litigation as well as forensic accounting, according to Feldman. “It’s not just corporate and public accounting that is hot, there is growing demand for forensic and international accountants as well,” he says.
Mortgage fraud in the U.S. has skyrocketed, according to a recent report from the Mortgage Asset Research Institute (MARI). The study (which MARI compiled data from the biggest names in the lending industry, including Fannie Mae, Freddie Mac, Wells Fargo, Bank of America and J.P.MorganChase) found that the number of fraudulent loans issued during the first three months of 2008 jumped 42% from the same period a year ago. “The mortgage industry is currently in a volatile state, as many constituents try to protect themselves from criminals who continue to use these turbulent times as an opportunity to commit new fraud and inflict additional financial damage for our nation’s lenders,” according to the report.
“Increased focus on and numbers of financial crimes such as embezzlement, bribery, and securities fraud will increase the demand for forensic accountants to detect illegal financial activity by individuals, companies, and organized crime rings,” states the Bureau of Labor Statistics. The government agency adds that the development of new computer software and electronic surveillance technology has made tracking down financial criminals easier, thus increasing the ease, and likelihood of, discovery. And as success rates of investigations grow…demand for forensic accountants will increase.
Membership in the Association of Certified Fraud Examiners (A.C.F.E.), which was founded only in 1988, has increased by more than 50% since 2003 to 45,000 members. A.E. Feldman reports that fraud and litigation opportunities, are opening up. CPAs with expertise in forensic accounting are in a prime position to benefit from the surge in demand.
A.E. Feldman’s accounting division is constantly researching industry trends and developments. To learn more about any of these issues or inquire about existing and future job opportunities in accounting the lines of communication are open. Contact A.E. Feldman’s President, Mitch Feldman, and the firm’s accounting recruiting team here.
