ANTHONY H. CATANACH JR. is an associate professor in the School of Business at Villanova University, as well as the Cary M. Maguire Fellow at the American College Center for Ethics in Financial Services. His professional experience includes five years as an audit manager with KPMG and six years in the financial services industry. Dr. Catanach has received numerous awards for his publication, teaching, and curriculum innovation efforts. He has authored numerous articles on a variety of accounting, finance, and management issues, as well as several business education texts..
Greg Smith had an interesting essay Wednesday in The New York Times, “Why I Am Leaving Goldman Sachs.” He said the firm used to think of providing service to the clients—what would work in their best interests. Now the firm merely thinks of making money, even to the detriment of clients. Now there’s a surprise coming from an investment banker!
But this letter also makes us wonder when somebody will write a similar letter as they exit one of the Big Four (not that the NY Times would publish it). After all, these large global accounting and auditing firms don’t serve their clients either. Why not? Quite simply because they have forgotten who their client really is, and now frequently substitute management for shareholders.
Further, Smith speaks to the lack of ethics. “Integrity? It is eroding.” We aren’t surprised. If one makes money a god, the idol must be worshipped whatever the sacrifice. And it’s no different with the Big Four. Just look at the last quarter century to be convinced that erosion is an understatement! When we were undergraduates we never would have imagined that an ethics course would be a requirement for licensing or that the government would create auditors for auditors. See “Accountants Behaving Badly.”
Another comment that caught our attention was Smith’s inability to “look students in the eye and tell them what a great place this was to work.” We wonder when Big Four recruiters and business school administrators and counselors will exercise similar intestinal fortitude. How can these parties continue to recommend the Big Four to unsuspecting students and their parents given the major ethical and professional lapses of the past and present? Why would any well-intentioned academic institution send their newly minted product off to such tainted employers? Money and graduation statistics of course!
Then there are Smith’s comments on leadership. “The firm changed the way it thought about leadership.” You know how we feel about this point. We don’t believe the accounting profession has exercised any in a very long time. See “Where Are the Accounting Profession’s Leaders?”
So, out of the thousands of Big Four CPAs, does even one have the courage to take a stand similar to Greg Smith’s? We are waiting.
This essay reflects the opinion of the authors and not necessarily the opinions of The Pennsylvania State University, The American College, or Villanova University.
J. EDWARD KETZ is an associate professor of accounting in the Smeal College of Business at Pennsylvania State University. He has a bachelor’s degree in political science, a master’s degree in accountancy, and a Ph.D., all from Virginia Tech. Professor Ketz has been a member of the Penn State faculty since 1981. He also has taught at the University of Connecticut and the University of Maryland. Professor Ketz has authored and edited 17 books including Hidden Financial Risk (Wiley, 2003) which examines the corporate culture and the institutional setting that engendered recent accounting scandals. Dr. Ketz has been cited in the popular and business press, including The Wall Street Journal, The New York Times, The Washington Post, Business Week, and USA Today. He also has appeared as an accounting commentator on CNN, National Public Radio, and Bloomberg Radio.
The Big 4 may not be the best place to start, but you (or at least those looking for work) see a number of job openings for accountants who have so-many years of public accounting experience at the Big 4. So, are they looking for accountants who are already tainted, or is this really more about a certain amount of public accounting job experience ?
On the other hand, maybe the solution is put students with strong ethics into the Big 4 and transform them back into more ethical institutions, or at least to attempt it, right?
Today’s Big 4 have become grinding mills. As a former Big 4 accountant, the workload is extreme and at times very unethical. there is pressure to have a large amount of consultants on site at the client 12 hours a day five days a week, regardless of the workload. The justification is in case the partner comes out of meetings at 5 and something has to be done, which rarely happens. The training is not there anymore, you have to be self motivated and self driven in learning and growing. After three years in, my life and income improved dramatically when i left.