The newly-appointed leaders of EY Global and PwC US, Janet Truncale and Paul Griggs, respectively, are stepping into their roles amid a challenging landscape for their businesses. Both hail from the financial services auditing side, at a time when consulting services are contributing an increasing share of total revenue, despite fiercer competition and client cost-cutting.
The auditing side is also grappling with growing regulatory pressure due to concerns over lapses in audit quality at accounting firms of all sizes. Adding to these headwinds are broader industry challenges such as a diminishing pipeline of future accountants, potential shakeups to the partnership model, and the introduction of artificial intelligence. The relevance of the auditing industry is also under scrutiny.
Furthermore, over the past six years, the industry has seen a decline in college graduates specializing in accounting, with an even more significant decrease in newly licensed CPAs. This is despite the industry’s need to attract more candidates due to its aging professional population. Thus, the new leaders will have to address this pay situation head on and make the profession appealing to the next generation of accountants and consultants.
In response to these challenges, different approaches are being considered, like BDO’s creation of an employee stock ownership plan. This provides employees with partial ownership of the firm early in their careers, a move that could potentially incentivize younger talent to join.
AI integration, another challenge for the industry leaders, also offers opportunities for more efficient operation and faster response to client demands. Truncale and Griggs, being veterans in auditing, must also demonstrate the value and necessity that auditing brings to capital markets despite recent criticism. Their focus should also be on bolstering public trust in the auditing profession.
The new leaders must not only reassure investors and the public but also make a compelling case to courtrooms that their firm’s audit reports can be trusted. The key message being that independent auditing remains valuable in the current market environment, just as it was in 2001 following the Enron Corp. scandal.
The elevation of Truncale and Griggs indicates EY and PwC’s consistent focus on their traditional accounting roots. Their challenges are significantly tied to the industry’s evolution, and their actions will inevitably shape what the industry will look like in the future. They must carefully evaluate and decide what steps they should take to effectively address these emerging challenges.