You can tell the global accounting industry is in the midst of a staffing crisis when the UK office of a big four accounting firm looks to Zimbabwe to fill its gaps.
This is precisely what the UK office of Deloitte Touche Tohmatsu did last year. Nor does it seem to be alone in adopting such measures: rival firms in other locations are also eyeing accountants overseas. And the staffing crisis, while not quite as acute as in 2005, continues unabated.
"Globally, there is a big shortage of accountants," explains Robert Walters, chief executive of the eponymous international recruiting firm Robert Walters Plc. "All the big accounting firms are desperately short of people."
As at Deloitte, this desperation is prompting the so-called 'big four' accountants - Deloitte, Ernst & Young, PricewaterhouseCoopers (PwC), and KMPG - to redistribute staff internally, or to cast their external hiring nets further afield.
The reasons for this shortage of accountants are manifold. Key among them is the fact that firms didn't train enough accountants during the downturn of 2001, 2002 and 2003. Because accountancy training typically lasts at least two years in each jurisdiction, that failure continues to make itself felt today.
"There's a lack of people with three to five years' experience," says Keith Feinberg, the New York-based director of permanent placement services at recruiter Robert Half International. "It's down to the fall-off in people going into accounting careers three to five years ago."
For example, Walters says PwC has recently undertaken a major recruitment drive in Australia in search of staff for its New York office, and that UK accounting firms have deepened their love affair with accountants in South Africa, Australia and New Zealand, where qualifications are similar to the UK's Association of Chartered Accountants (ACA) exams.
Mariano Arcelloni, human resources director at PwC in Milan, says a lack of skilled staff and newly qualified accountants in Italy has encouraged the firm to look in Eastern Europe for recruits for its Italian offices. The policy has not been an unqualified success. "There are two difficulties," he says. "One is the language barrier - not many Eastern Europeans speak fluent Italian. The other is the fact that there is a shortage of accountants everywhere."
The ongoing impact of Sarbox and IFRS
Regulatory changes have added to the burden. For example, the Italian auditing market was given a boost in 2004 by the Vietti Law, requiring that Italian companies looking to raise debt on external capital markets have their accounts prepared by an auditor.
Less locally, the Sarbanes-Oxley governance code came into effect in the U.S. in 2002 and is due to impact non-U.S. companies with U.S. stock market listings this coming July. Recruiters say most companies, even in Europe, have already made the initial adjustments necessary to comply with the new rules. As a result, demand for Sarbox specialist consultants is now waning, but the story doesn't end there.
"Many companies are still hiring accounting and finance professionals in response to Sarbanes-Oxley," says US-based DeLynn Senna, executive director of Robert Half Finance & Accounting. "An example of this is the continued high demand for internal auditors."
Martin Dixon, director of recruitment firm Hays France, reports a similar trend in continental Europe. "There has been a noticeable number of candidates looking for permanent work having completed Sarbanes-Oxley projects, but these candidates are not finding difficulty in securing new roles, be it in audit or financial control. If anything the extra number of skilled candidates that SOX projects has generated has filled a gap in the market."
Alongside Sarbox, demand for accounting professionals has been impacted by the global roll out of International Financial Reporting Standards (IFRS). Companies based in the European Union have had to adhere to the new standards since January 1, 2005. "IFRS is absolutely an issue," says Karl-Joachim Brand, a director at Robert Half in Frankfurt. "It's an important topic here: demand for people who are familiar with the new standards is high."
Recruiters report that both IFRS and Sarbox have boosted continental European demand for English-speaking accountants, who are particularly sought after by multi-national companies. "Skilled accountants who speak fluent English and are familiar with US GAAP or IFRS and Sarbanes-Oxley, are in particularly short supply," reflects Federico Fontana at the Milanese office of Michael Page.
Bringing in juniors, and keeping hold of them
Predictably, part of the response to the global shortage of accountants has been the recruitment and training of juniors.
PwC's Arcelloni says graduate recruitment for the Italian audit business has risen from 250 to 450 over the past three years. "We can't recruit any more juniors than that even if we want to," says Arcelloni. "It's a matter of training people - there is a limit to how many we can take."
Stevan Rolls, the UK head of resourcing at Ernst & Young, says better retention of recent graduate recruits has helped alleviate the staffing crisis. "There's still a shortage of newly qualifieds, but we're recruiting slightly fewer experienced people this year than last."
Rolls says Ernst & Young has improved staff retention by changing its corporate culture and introducing things like increased staff mobility internationally. "There isn't the complete sense of panic there was six to eight months ago," he says. "But we're still busy."
Pay up, but not dramatically
In a tight market, global pay for accountants is increasing. DeLynn Senna, executive director of Robert Half Finance & Accounting, predicts starting salaries for US-based internal auditors, who have seen demand boosted by the implementation of the Sarbanes-Oxley, will rise 9% this year.
Feinberg at Robert Half International says counteroffers are popular, as accounting firms and corporates seek to retain accountancy staff. A CPA with five years' experience can now earn $85,000 in the New York market, says Feinberg.
Pay in continental Europe is predictably lower. Dixon at Hays France says a French accountant with five years' post qualification experience can command just €75,000 to €90,000.
Brand at Robert Half in Frankfurt says German accountants with five years' experience can expect to earn no more than €60,000.
In Italy, Fontana at Michael Page says pay for accountants has risen between 10% and 20% in the past year. However, he says an Italian accountant with three years' experience can still command only €50,000 max.