Economic Challenges Create Accounting Opportunities

By Cathy Lockman

What can today’s accounting students expect asthey enter the pro
fession? Despite the high rate of unemployment and thecurrent economic complexities, and in some cases because of those complexities,today’s graduates can expect some unique opportunities, says Sven Erik Holmes, whoserves as Vice Chair—Legal, Risk, and Regulatory, at KPMG LLP.

“On a micro level, we’re optimistic about theopportunities at KPMG, even though the current levels of debt and unemployment inour country as well as the stalled global economic environment create somepessimism at the macro level,” he told an audience of accounting students andfaculty at the Department of Accountancy’s recent Lyceum event.

How does this uncertain economic environmenttranslate into optimism for the profession? Holmes explains that the challengescreate a need for the particular skill set and expertise that accountants andauditors provide. For instance, a complex environment leads to more scrutinyfrom regulators, which means opportunities for the profession. “The enforcementrole of government drives compliance systems, and accountants will have animportant role to play in the development of those systems,” says Holmes.

Accountants are likely to play an expanded rolein other areas as well, including the development of risk management structuresand systems for operation and oversight as well as business planning and taxplanning. “In addition, companies have plans that continue to call for agrowing global presence, even if they are only local today. Such growth and theuniformity of quality of reporting that it will require across countries willcreate lots of opportunity,” he says.

Holmes’ predictions for the future of theprofession are based on knowledge acquired throughout a distinguished careerthat includes key positions in law, government, and academia. Prior to joiningKPMG in 2005, he served as a U.S. District Judge for the Northern District ofOklahoma for 10 years and, before that, he was a partner with the Washington,D.C. law firm of Williams & Connolly LLP. He has also served as an adjunctprofessor of constitutional law, the general counsel for the Senate SelectCommittee on Intelligence, and a member of the Select Committee on SecretMilitary Assistance to Iran and the Nicaraguan Opposition, that is, theIran-Contra investigation.

His experience has earned him respect across professionsfor his professional judgment and integrity, qualities that he encouraged theaudience of students to cultivate for themselves and to explore in the firmsthey consider for employment.

Holmes told of an ethical test that KPMG faced not longafter he joined the organization in light of accusations of irregularities regardingtax shelters. “We made a public declarationthat there had been wrongdoing and took responsibility for it without makingexcuses,” he says. “We also made a commitment to our clients and to the wholecommunity that it wouldn’t happen again. This declaration had a high potentialfor downside, but it ended up impacting our organization positively. Ourclients’ respect for the firm rose because of our forthcomingness, and, just asimportantly, our employees felt the same because the forthcomingness reflectedtheir values. It was something that they wanted to hear from their firm; thatthe acts of a few people didn’t reflect on the actions of everyone in the KPMGfamily. It was important to us that our people’s pride in our organization notbe adversely impacted.”

Moving Forward

As we move beyond the financial crisis and itsfallout, Holmes says there are important questions to be answered in U.S.accounting firms regarding skepticism, communication, the role of the outsideauditor, and the content of the audit report. “There is no question that thereare no more important considerations than skepticism, independence, andobjectivity and what the profession can do to ensure them,” stresses Holmes.

In Europe, the focus is on the number of firmsand their scope of services. Questions include: should the Big 4 go to the Big8, should there be mandatory joint audits to build up the capacity of smallfirms, will firms become audit only or decide to give up clients to meet newregulatory proposals?

“At KPMG, we believe that you have to bemultidisciplinary to do the best job,” says Holmes. “If regulations require oneor the other, we would rather give up clients than become audit only because webelieve it enhances the quality of the audit to have all three functions.” Healso says that it’s important from a recruiting perspective. “We won’t be ableto attract the kind of talent we need if we go to an audit-only model.”

Recruiting is an important focus at KPMG.“There is an ongoing challenge to recruit and retain the very best people,”says Holmes. “There is an enormous amount of competition in the marketplace,and our goal is to have the kind of offerings, opportunities, and programs sothat we can compete as the very best and be viewed as top of class.”

Building an Ethical Environment

How should a company prepare itself to dealwith all of these challenges? According to Holmes, the most important step isto establish a common set of values that guides your firm and to ensure thatthose values are communicated and instilled in your workforce. “We want peoplewho share the values of KPMG,” says Holmes. “We stress that everyone has apersonal responsibility for the ethical environment, that everyone shouldrespect their peers, themselves, and the corporation as part of thatundertaking. There is no better way to instill respect than to ensure you havea strong ethical environment.”

As a result, KPMG put training in place forthird- and fourth-year associates. They also evaluated where in the employmenttimeline they spoke to their employees about ethics. “We examined where ourtouchpoints are with our people and how we use those touchpoints as anopportunity to convey what we stand for as a company and what our expectationsare,” says Holmes. Making sure the importance of a strong ethical environmentis emphasized during interviews, orientation, and even technical trainingbuilds the organization’s commitment to that culture.

Holmes suggests that the responsibility forassuring the right fit of an employee in a corporate culture rests with boththe firm and the employee—even the potential employee.

“As you make your decisions about your firstprofessional choice,” he told the students, “determine whether the organizationreflects your personal values. Ask yourself: ‘When the organization is testedwill it act in a way that I would be proud of?’” Holmes suggested that students“feel free to reverse the inquiry during an interview,” asking recruitersdirectly about how the organization ensures that it encourages an ethicalculture because they have a legitimate interest in knowing that information.

“In the long term your happiness will depend onthe fact that you believe you are part of something that reflects your valuesand that you are proud to be a part of,” he told the students.