As the saying goes, everyone makes mistakes. Just ask the Los Angeles Lakers, who recently unveiled the Kobe Bryant statue, which featured several easily avoidable spelling errors and mistakes at the base of the statue. While the Lakers are currently working to correct the typos, in the accounting world, the price of these unintentional errors and lack of oversight (due to talent shortages and/or strained capacity at the senior management or executive level) can be especially costly — financially, operationally and reputationally.
Over the past two years, we have seen companies, including some large public companies, make key errors such as:
- Pivotal U.S. Securities and Exchange Commission (SEC) deadlines missed
- Unintended draft information or notes left in the final published reports
- Misstatements identified as part of the audit that are basic in nature
- Errors and omissions in vital qualitative and quantitative information leading to material weakness
All these missteps are due to a lack of in-house, qualified, and experienced Certified Public Accountants (CPAs) or accessibility to them via third-party relationships. This shortage of skilled in-house CPAs, also referred to as “bench strength” in the key process areas, is leading to basic miscalculations in their public earnings reports, so much so that companies are starting to disclose the material weakness in Internal Controls Over Financial Reporting (ICFR) due to the turnover and lack of qualified replacements in fundamental accounting positions as the root cause.
This accounting shortage has a downstream effect as well. The additional time and resources required to remediate and/or restate any incorrect financial statements pull the company’s current resources and accounting staff away from their responsibilities, thus trapping a company in this continuous loop of not being able to attract and retain enough qualified CPAs to effectively and efficiently perform their duties to management, stewards of the company, and the public shareholders. Such incidents shake public and investor confidence, unsettle current colleague members, and can even lead to hefty fines levied against the company.
It is clear these mistakes are due to a shortage of accountants. In fact, Fortune.com recently published some figures and reports suggesting that the U.S. may be down around 340,000 CPAs going into 2025. This number is expected to keep growing as fewer young people choose to join the industry in favor of what may be perceived as better careers, both in pay and work-life balance.
Many companies find themselves without the in-house bench strength and/or skill set at the executive level to perform oversight of the vital finance, planning, and accounting (FP&A) functions. This, in turn, leaves them vulnerable to omissions, misstatements and errors.
A Flexible, Cost-Effective Solution To Combat Talent Shortage
Fortunately, there is a solution available — one that can help organizations plug the qualified CPA labor gap, minimize risk, and restore confidence in the financial markets in the process. That solution is co-sourcing, which is the cornerstone of our approach at Cherry Bekaert.
Co-sourcing enables a company’s internal staff, from Chief Financial Officer (CFO) to senior accountants, to work side by side with qualified external CPA professionals as one team, providing best practices while executing based on the management’s timeline of key accounting and operational functions. This gives the company’s CFO or controllership office the capacity and expertise to address its corporate accounting and reporting needs while still maintaining a high degree of control over essential processes and functions.
Co-sourcing also offers the flexibility to scale support up or down according to the demand of the company, making it especially attractive for organizations whose needs tend to fluctuate throughout the year. In practice, this means having the bench strength to cover critical reporting periods, audit matters, or significant transactions occurring throughout the year, along with the option to control costs by reducing support when things are less busy.
Beyond adding strength to your bench with a qualified CPA, the right co-sourcing partner also brings powerful industry subject matter knowledge to the table. This includes helping build strategies to achieve the objectives management has determined and considered to be successful for various planned accounting projects throughout the year. It also includes developing the appropriate level for remediation plan(s) to address concerns around operations and controls that may lead to omissions and misstatements of financial information reported to the public.
Short- and Long-Term Value To Co-Sourcing
As the recent increase in high-profile reporting mistakes has underlined, having access to qualified CPAs has never been more essential to every organization’s success. Without them, the risk of costly, time-consuming errors in how transactions are processed, accounted for and reported rises exponentially.
Yet, at the same time, the accounting talent shortage is making recruiting and retaining these CPAs more challenging than ever. It is very possible that there could be a shortage of CPAs long-term unless changes are made to an assortment of contributing factors.
How Cherry Bekaert Can Help
Cherry Bekaert’s co-sourcing solutions are specifically designed to give companies the capacity and capability to augment their in-house teams. We can assist on multiple levels, from managing unexpected resourcing constraints at the leadership level, providing technical accounting and tax support on day-to-day transactions to the more complex areas, to streamlining the remediation process to eliminate a repeat of the error(s) or misstatement(s) and providing ongoing regulatory compliance. Our Risk & Accounting Advisory practice has the knowledge, experience, and expertise to help your FP&A functions deliver true value for your business and shareholders — both now and in the future.
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