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The Hidden Cost of Big Four Hiring Bias

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Imagine being told your 20 years of diverse accounting experience don’t qualify you for a job because you never worked at a Big Four firm. This is absurd, and it happens every day in our profession.

In a recent episode of The Accounting Podcast, we examined the hiring bias that is creating an artificial barrier in our field. It’s not just a minor inconvenience – it’s limiting diversity, overlooking valuable talent, and perpetuating a dangerously narrow view of what constitutes “success” in accounting.

A Barrier to Diversity and Talent

Scroll through job postings for corporate accounting roles, and you’ll quickly notice a pattern: “Big Four experience required” or “Big Four experience preferred.” This requirement is so commonplace that many in our profession barely question it. But we should.

Why should one to three years of experience on a resume dictate your entire career trajectory? Demanding Big Four experience in job postings is lazy, and it borders on discrimination and classism.  

This hiring bias creates an artificial barrier that significantly narrows the talent pool. It overlooks the wealth of experience and skills accountants gain in smaller firms, industry roles, or alternative career paths. 

Consider the CPA who wrote to us. (Listen to the episode for details.) They have two decades of diverse experience across multiple industries, including exciting projects with buyouts and public company purchases. Despite this rich background, they are potentially disqualified from roles simply because they never worked at a Big Four firm.

The impact of this bias extends beyond individual careers. It homogenizes our profession, limiting the diversity of thought, background, and experience crucial for innovation and problem-solving. This practice also disproportionately affects professionals from underrepresented groups who may have had fewer opportunities to enter Big Four firms early in their careers.

Big Four Experience vs. Operational Expertise

The emphasis on Big Four experience stems from a perception that it provides a unique skill set essential for success in corporate accounting roles. But does this perception align with reality?

Our listener’s feedback paints a different picture: “I have worked with employees of Big Four firms during audits, and frankly, they are disconnected from the reality of operational accounting.” The listener continues, “They can review the heck out of internal control issues, but none of them ever worked with a badly implemented ERP system with an AR module failing and unable to reconcile cash for eight months because of poor IT support.”

As our listener points out, the skills honed in Big Four firms, while valuable, don’t necessarily translate directly to the day-to-day challenges of operational accounting. Audit experience focuses heavily on reviewing past transactions and assessing controls. But operational accounting requires implementing and managing systems, solving real-time problems, and navigating the complexities of business operations.

If you require experience from the Big Four, you might be overlooking candidates with hands-on experience in favor of a resume line item that may not indicate readiness for the role.

Moving Towards a More Inclusive Hiring Approach

Our profession needs to broaden its definition of what makes a successful accountant. We must move beyond the Big Four checkbox and adopt a more holistic view of professional qualifications that values diverse backgrounds, operational expertise, and adaptability.

What might this look like in practice? We should emphasize problem-solving skills and adaptability over pedigree, value diverse experiences and skill sets, consider candidates’ proficiency with various accounting systems and technologies, and assess their ability to handle operational challenges.

By adopting this more inclusive approach, we’ll tap into a broader talent pool, bring more diverse perspectives into our teams, and build teams better equipped to handle complex, multifaceted challenges.

Professional organizations like the AICPA and state societies could play a crucial role in this shift by discouraging the practice of requiring Big Four experience in job postings and promoting more inclusive hiring practices.

Embracing a New Era in Accounting Recruitment

The Big Four bias in hiring isn’t just a topic for academic debate – it’s a real issue affecting careers and shaping the future of our profession. 

This shift isn’t just about fairness. In a rapidly evolving business landscape, we need accountants with varied experiences and skill sets to drive innovation and tackle new challenges.

The accounting profession must embrace a more inclusive approach that values diverse backgrounds, operational expertise, and adaptability.

Listen to the full episode of The Accounting Podcast, where we explore the hidden costs of hiring biases, share more real-world examples, and discuss practical strategies for implementing more inclusive hiring practices. Whether you’re a hiring manager, a job seeker, or simply passionate about the future of accounting, this episode offers valuable insights to help reshape our profession.

It’s time to redefine what success looks like in accounting – and it starts with how we hire. Join the conversation and be part of the solution.

The 40% Solution: Reclaiming Your Time as an Accounting Firm Owner

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As accountants, we’re no strangers to long hours and busy seasons. But what if there was a way to reclaim a significant chunk of your time without sacrificing the quality of your work? 

I recently sat down with Kwame Agyei, founder and CEO of Appoynt, on The Accounting Podcast to discuss just that. Kwame, a former accountant himself, shared his idea of the “bottom 40%” solution, which could offer a new perspective on managing our firms.

Understanding the “Bottom 40%” Concept

The bottom 40% refers to the tasks that, while necessary, don’t directly contribute to your core services or business growth. These might be administrative duties, data entry, basic bookkeeping tasks, or even managing your calendar and inbox. The key is to identify those tasks that:

  1. Take up a significant amount of your time
  2. Don’t require your specific expertise
  3. Feel like they’re “dragging you down” or preventing you from focusing on more important work

By pinpointing these tasks, you’re not just identifying time-wasters – you’re uncovering opportunities to delegate, outsource, and ultimately reclaim your time to focus on what matters most in your firm.

Once you’ve freed up this time, you have two options: take on more work to grow your business or use that time to improve your work-life balance. The choice is yours, but addressing your bottom 40% creates the opportunity to make that choice in the first place.

Common Tasks to Consider Outsourcing

Now that we understand the concept of the bottom 40% let’s explore some specific tasks that many accounting firm owners might consider outsourcing. Outsourcing can often provide significant time savings and efficiency gains in these areas, allowing you to focus on higher-value activities.

Virtual Assistant (VA) Services

A virtual assistant can handle a variety of tasks, including:

  • Email management
  • Calendar scheduling
  • Travel arrangements
  • Basic data entry
  • Document preparation

The beauty of a VA is that their role can be tailored to your specific needs. At about $1,000 per month for 20 hours a week, it’s a cost-effective solution for many small firms.

Accounts Receivable Management

With the right service, you can automate the process of chasing invoices, using customized workflows based on your preferences. This could include sending reminder emails, making phone calls, or even adjusting the approach based on your relationship with each client.

The potential impact is significant. For example, Kwame says that one firm increased its collection effectiveness from 63% to 78% and reduced its Days Sales Outstanding (DSO) from 23 days to just 12 days. This not only improved cash flow but also enhanced client relationships by ensuring consistent and professional follow-up on outstanding invoices.

Overcoming Hesitations About Outsourcing

Outsourcing can feel like a big leap, especially for accounting firm owners used to handling everything in-house. However, many of the common concerns about outsourcing can be addressed with proper planning and due diligence. Let’s into some of the most frequently cited hesitations and how you can overcome them, according to Kwame.

Security Concerns

As accountants, we deal with sensitive financial information daily. Reputable outsourcing companies address this by using virtual machines with data servers local to the client’s location. This means your data is kept on secure servers in your country, adhering to local data protection laws.

Trust Issues

Building trust with an outsourced team takes time. Start small and gradually increase responsibilities as you build confidence. Communication is key, especially in the early stages. Share your thoughts and concerns freely to help your outsourced team understand your preferences and work style.

The Long-Term Impact of Outsourcing

As you become more comfortable with outsourcing, you’ll likely find more tasks you can delegate. What starts as offloading a few simple tasks can snowball into a significant transformation of your workday. You might start by having a VA manage your calendar, then progress to letting them manage your email inbox, and eventually have them draft responses to routine client inquiries.

This evolution allows you to shift your role as a firm owner. Instead of getting bogged down in day-to-day tasks, you can focus more on strategy, client relationships, and business growth. Alternatively, you can use that reclaimed time to improve your work-life balance.

Practical Steps to Get Started

Here’s how you can get started:

  1. Identify Your Bottom 40%: Log your activities for a week. What tasks are eating up your time but don’t require your specific expertise?
  2. Start Small: Begin with something simple like having a VA manage your calendar or upload expense receipts.
  3. Choose a Reputable Provider: Look for an outsourcing company that understands the unique needs of accounting firms and has robust security measures.
  4. Communicate Clearly: Over-communicate early to help your outsourced team understand your preferences and work style.
  5. Be Patient: Give the process time to work. Significant improvements often become apparent after about three months.
  6. Gradually Increase Responsibilities: As you become more comfortable, start delegating more tasks.
  7. Monitor and Adjust: Regularly review the performance of your outsourced tasks and make adjustments as needed.

The 40% solution isn’t a magic bullet. But it is a powerful tool that can help transform your accounting practice. By identifying and outsourcing the tasks that are dragging you down, you can free up time to focus on what matters – whether that’s growing your business, improving your services, or simply enjoying a better work-life balance.

So, take a hard look at your daily tasks. What’s in your bottom 40%? And more importantly, what could you achieve if you reclaimed that time? The answer might just revolutionize your practice – and your life.

Want to explore this topic further and hear more insights from Kwame Agyei? Listen to the full episode of The Accounting Podcast, where we explore these ideas in greater detail. You’ll gain even more practical tips on implementing the 40% solution in your firm and hear real-world examples of how outsourcing can transform your practice.

How One Accounting Firm Turned Work-from-Home into a Competitive Edge

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At KBS CFO, new hires undergo a 3-day work simulation. Internal emails are banned, and success is evaluated based on the results delivered rather than the hours worked. These are all strategies that help the firm operate effectively while being completely remote. There is no office.

Robin Thieme, founder and CEO, shared her approach to remote work on my Earmark Podcast. As the accounting industry faces ongoing challenges in recruitment and retention, her insights offer a roadmap for firms seeking to build a more agile, efficient, and attractive workplace.

Revolutionizing Hiring with Work Simulations

KBS CFO has developed a unique approach to hiring that goes beyond traditional interviews and resumes. Their process begins with automated screening through platforms like Indeed or ZipRecruiter, followed by a three-day work simulation that gives candidates a real taste of the job while allowing the firm to assess skills that matter in a remote environment.

“We set up a simulation that includes a wide variety of tasks and assignments to be performed over a three-day period of time,” Thieme explains. These tasks range from explaining complex accounting concepts to simulated clients to analyzing financial data and demonstrating proficiency with project management tools.

The simulation is conducted through Asana, the firm’s project management tool, mirroring the work environment. This approach offers several benefits:

  1. Skill assessment: “Every single step of the way, there’s inherent screening going on,” says Thieme. The simulation tests technical knowledge, critical thinking, communication skills, and the ability to work independently in a remote setting.
  2. Self-selection: Some candidates opt out when they see the work involved, saving time and resources for both parties.
  3. Cultural fit: The simulation helps identify candidates who genuinely enjoy the work and thrive in a remote environment.

While the simulation’s 4-6 hour time commitment might seem substantial, Thieme reports that truly interested candidates don’t hesitate to take it on. Many spend even more time on it, demonstrating their enthusiasm and dedication.

Balancing Flexibility and Accountability

KBS CFO has developed an innovative approach that balances employee autonomy and operational needs. The firm’s core hours policy is at the heart of this approach.

“My requirement is that everybody be committed to working at least 60% of their time between 10 and 3, their time,” Thieme explains. This ensures substantial overlap in working hours across different time zones, facilitating collaboration and timely client communication. However, employees can complete 40% of their work outside these core hours if they meet deadlines and deliver results.

Thieme emphasizes that this flexibility comes with clear expectations: “There’s no flexibility in terms of meeting deadlines. If we make a promise to a client, there’s zero flexibility in that because those promises are essential.”

This balanced approach provides structure without sacrificing flexibility, ensures consistent availability for clients and team members, and maintains accountability by focusing on results rather than hours logged.

Streamlining Communication and Workflow Management

At KBS CFO, innovative remote work practices extend to communication and workflow management. Two key strategies stand out: banning internal emails and implementing a Results-Only Work Environment (ROWE).

“We are not permitted to email one another internally,” Thieme states emphatically. “It’s banned. I’m pretty serious about it because it’s such a waste of time.” Instead, all internal communication and task management occur through Asana. Every task is assigned a due date in the system, ensuring proper tracking and clear responsibilities.

This approach offers numerous benefits, including improved clarity and accountability, a searchable history of all work and communications, and better organization of client information. Thieme shares an example: “We had a situation with a client where I was talking to them about some kind of issue. Six months ago, I had been talking to them about the same issue, and I was just able to easily find the conversation. They were pretty impressed.”

Complementing this streamlined communication is KBS CFO’s adoption of a Results-Only Work Environment. “I can observe if due dates are being missed, regardless of whether the client is aware of it or not,” Thieme explains. This focus on outcomes rather than hours worked aligns perfectly with their remote work model, allowing them to measure performance based on results and promote a culture of accountability and ownership.

Implementing these strategies isn’t without challenges. It requires a shift in mindset for both managers and employees. However, the payoff regarding efficiency and accountability is substantial, contributing to operational excellence and enhanced client satisfaction.

The Future of Remote Work in Accounting

By prioritizing results over hours worked and effectively leveraging technology, firms can attract top talent, improve client satisfaction, and boost overall efficiency. However, implementing such changes isn’t without challenges. It requires a shift in mindset, investment in technology, and a willingness to challenge traditional practices.

As Robin Thieme puts it, “We’re accountants, but somehow we don’t translate the numbers game to the way we run our business.” This highlights the importance for accounting firms to use the same level of analytical rigor in managing their operations as they do in handling their clients’ books.

As the accounting profession grapples with talent shortages and increasing client expectations, firms that embrace these innovative practices will likely gain a significant competitive advantage.

Ready to revolutionize your approach to remote work? Listen to the full interview with Robin Thieme. In Thieme’s words, “It’s not about working less; it’s about working smarter.”

The IRS Tidal Wave: How Tax Pros Can Ride It to Success

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“The IRS tidal wave is here.” That’s how CPA Trendlines described the latest surge in tax enforcement, and they’re not exaggerating. After years of pandemic-induced leniency, the Internal Revenue Service has resumed its collection efforts.

The IRS isn’t just targeting average taxpayers. They’ve also set their sights on bigger fish, focusing on high-income individuals owing significant tax debts and wealthy individuals who haven’t filed taxes for years.

For millions of Americans, this enforcement surge spells trouble. But for intelligent tax professionals, it’s an ocean of opportunity. This wave of IRS activity, powered by billions in new funding, creates challenges and possibilities. Those who adapt quickly can turn this surge into a lucrative new service offering.

In a recent episode of The Accounting Podcast, we explored the full scope of the IRS’s actions, examined how they’re spending their increased funding, and mapped out practical strategies for accountants looking to expand into tax resolution services. Let’s dive in and see how you can turn this IRS tidal wave into your next big opportunity.

The Scale of the IRS Enforcement Surge

The numbers behind the IRS’s enforcement surge are jaw-dropping. We’re looking at a full-scale offensive that targets millions of taxpayers across the board:

  • Over 11.3 million non-filers are in the IRS’s sights
  • More than 15 million taxpayers with outstanding balances are facing scrutiny
  • 1,600 high-income individuals owing significant tax debts are under investigation
  • Over 100,000 wealthy individuals who haven’t filed taxes for years are being targeted
  • Hedge funds and real estate partnerships are facing increased audits
  • The IRS is even cracking down on the misuse of corporate jets for personal travel

How serious is the IRS about these high-value cases? They’ve assigned 1,500 officers to handle those 1,600 high-income cases. That’s nearly a one-to-one ratio. As my co-host David Leary quipped, “If you cheat the government of a significant amount of money, you’re going to get a personal IRS agent just for you.”

This isn’t just tough talk. The IRS’s enhanced enforcement has already yielded $1 billion in collections. And they’re just getting started.

How the IRS is Spending Its New Funding

The fuel behind the IRS’s enforcement surge is a massive influx of cash from the Inflation Reduction Act, which allocated about $80 billion to the IRS. This funding was then reduced to around $57.3 billion. But they’ve only used about 10% of that money so far. This enforcement wave is just beginning.

Let’s break down how they’ve spent that initial $5.7 billion:

  • $2.3 billion for operations support
  • $1.4 billion for taxpayer services
  • $1.3 billion for system upgrades
  • $691 million for enforcement activities

Despite all the talk about increased enforcement, the IRS has spent the least on that. The IRS is playing the long game, investing in infrastructure and services to make future enforcement more efficient and effective.

We’re already seeing improvements. The IRS is getting faster at responding to correspondence. Two-thirds of tax professionals report it takes over 90 days for a substantive response from the IRS. That might sound slow, but it’s down from 81% previously.

What does this mean for tax professionals and their clients? Expect the pace of enforcement to increase as more funding is used. The IRS will have more resources to pursue non-filers and those with outstanding balances. But here’s the real opportunity: millions of taxpayers will need help navigating audits, settling back taxes, and negotiating with the IRS. Are you prepared to meet this demand?

Riding the Wave: Offering Tax Resolution Services

It’s time to consider adding tax resolution services to your practice. But how do you structure this new offering? I recommend a subscription-based model.

Here’s why: tax resolution isn’t a one-and-done deal. It often takes months, even years, to fully resolve issues with the IRS. A subscription model allows you to provide ongoing support while ensuring a steady revenue stream for your firm. For clients, it offers predictable costs and ongoing protection against IRS issues.

This approach is a significant shift from traditional hourly billing. You can decide how many tax resolution clients you need on a subscription to cover the fixed cost of hiring people to provide this service. So it doesn’t have to be about billable hours anymore.

Here’s how to implement it:

  1. Designate a person or team specifically for tax resolution work.
  2. Calculate how many clients you need to cover costs and generate your desired profit.
  3. Estimate the average time each client will require per week or month based on typical notice frequency and response needs.

Consider offering tax resolution as a discounted subscription to all tax prep clients, not just those facing issues. As my co-host, David Leary, pointed out, “Most won’t ever need it because they’re already working with you.”

This approach turns tax resolution into a form of insurance or preemptive protection. It’s a win-win: clients get peace of mind, and you have a new, steady revenue stream.

Of course, implementing this model isn’t without challenges. You’ll need to price your subscription carefully to ensure profitability, and clients used to traditional billing methods may resist. However, the long-term benefits—both for your firm and your clients—make it worth considering.

Are You Ready for the IRS Tidal Wave?

This isn’t just about surviving a temporary storm—it’s about positioning your practice for long-term success in an era of increased IRS scrutiny. The firms that adapt quickly to this new reality will thrive in the future.

To get the whole picture and arm yourself with all the knowledge you need, listen to this episode of The Accounting Podcast. You’ll get more in-depth analysis, practical tips, and strategies to help you ride this wave of change.

Raising Prices Without Losing Clients: A CPA Firm’s Success Story

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Setting the right price for your services can feel like walking a tightrope. How do you increase your rates without alienating your loyal clients? Can you boost your bottom line while maintaining strong client relationships? For many CPA firm owners, these questions aren’t just theoretical – they’re critical to the success and growth of their businesses. Today, we dive into a real-world success story that proves it’s not only possible but potentially transformative for your practice.

In a recent episode of the Who’s Really the BOSS podcast, Rachel and Marcus Dillon, owners of a family-run CPA firm, share their journey of transforming their pricing model. By aligning their pricing with the value they provide, the Dillons have streamlined client relationships, better communicated their worth, and optimized their practice for growth.

Let’s examine how adopting a value-aligned pricing strategy can benefit your firm.

Strategic Approach to Price Increases

The Dillons successfully raised prices without losing clients using a strategic approach. They simplified their pricing process by implementing evergreen engagement letters in 2022, eliminating the need for annual renewals.

“We used to send out updated engagement letters every year with pricing to every single engagement. And that was stressful,” Marcus Dillon explained. The shift to evergreen letters allowed the firm to focus on value-based pricing rather than annual negotiations.

The timing of the price increase announcement was also crucial. The Dillons announced their increases on February 15th, with an effective date of April 1st. This timing, while unconventional as it fell during tax season, was strategic. It allowed clients ample time to consider the changes and ensured that most tax work was completed before potential client transitions occurred.

Marcus emphasized the importance of regular, small increases: “Always go get a small price increase every year. If it’s 3%, 5% something. That way people are always in the habit of expecting a price increase that goes along with inflation.”

Transparent Communication and Client Management

Central to the Dillons’ success was their commitment to transparent communication. They used QuickBooks Online to create detailed estimates that showed the full market rate for their services and a “loyalty discount” for 2024. 

“We put the year 2024 on there. That way, they could see that that reduces or goes away over time,” Marcus explained regarding the loyalty discount. This transparency helped clients understand the pricing structure and set expectations for future adjustments.

Rachel Dillon was in charge of communicating the price increases to clients. “We never want to hurt the relationship of the “team of three” with the client and have to have awkward conversations,” Rachel explained. So pricing almost always goes through Marcus and myself.”

The Dillons used email tracking software to gauge client reactions and follow up as needed, ensuring no client felt ignored or undervalued.

Balancing Client Retention and Profitability

The Dillons’ approach yielded impressive results. For Client Accounting Services (CAS), the client base decreased from 81 to 75 over three months. However, the average revenue per CAS client increased from $1,823 to $2,103. Their AIM (individual tax) service saw a similar trend, with client numbers decreasing but average revenue increasing.

The Dillons were strategic about which clients they were willing to lose. “We knew that clients under $1,000 a month under the legacy pricing are going to have to go up beyond a thousand,” Marcus explained. This approach allowed them to focus on clients who valued their services and were willing to pay for the expertise provided.

They also thoughtfully handled special cases, such as clients selling their businesses. Rachel emphasized the importance of this approach: “Any time a client is going through an M&A deal, our team’s hours go up. There are just more requests, more clarifications.”

Overall, the firm achieved a 94.15% acceptance rate on CAS price increases by June 1st, with total monthly recurring revenue increasing by 6.46% despite client attrition. This outcome aligns closely with what Marcus calls the “80-10-10 rule”: 80% of clients accept the increase, 10% have questions but ultimately accept, and 10% leave.

The Dillons learned valuable lessons from this process. “Creating capacity seems to attract more ideal clients,” Rachel noted. Letting go of clients who were no longer a good fit created space for new, higher-paying clients better aligned with their service model.

It’s worth noting that the process wasn’t without emotional challenges. “The two to three weeks and even the week and two after we sent these out, there were tons of conversations between [Marcus] and me with our leadership team,” Rachel shared. You know, just going through all the scenarios.”

The Dillons also emphasized the importance of having a network of professionals to refer clients when they no longer fit the firm’s service model. This allowed them to maintain positive relationships even when parting ways with clients.

The Dillons’ experience shows how CPA firm owners can successfully implement price increases while maintaining strong client relationships. Their story proves transparency, clear communication, and strategic timing can boost profitability without sacrificing valuable client connections.

For CPA firm owners, the broader implication is clear: when handled thoughtfully, price increases can be a powerful tool for business growth. However, success requires a delicate balance between valuing your services appropriately and maintaining the trust and loyalty of your client base.

To gain more detailed insights into the Dillons’ strategy and hear about their experiences firsthand, listen to the full “Who’s Really the BOSS” podcast episode. Their story offers practical advice for any CPA firm owner considering a pricing strategy overhaul.

Remember, as a CPA firm owner, you provide valuable expertise and services to your clients. Don’t be afraid to price your services accordingly. With the right approach, you can increase your profitability while strengthening, not weakening, your client relationships.

Rachel and Marcus Dillon, CPA own a Texas-based, remote client accounting and advisory services firm, Dillon Business Advisors, with a team of 15 professionals. Their latest organization, DBA | FIRM, supports and guides accounting firm owners and leaders with free resources, education, and operational strategy.