Three years after accounting scandals roiled Enron Corp., audit firms are still regularly making headlines for all the wrong reasons. In the past week alone, KPMG was dismissed from its audit duties at troubled mortgage company Fannie Mae, while Ernst & Young agreed to pay a $125 million fine arising from its role in auditing Superior Bank, a failed Illinois thrift. KPMG says its work for Fannie was "grounded in the principles" of proper accounting, while E&Y maintains it is not liable for Superior's problems.
Yet there has never been a better time to be an auditor. Thanks to congressional demands for more extensive probes, companies and their outside auditors are adding accountants at a record pace. Even the federal government, from the Securities & Exchange Commission to the FBI, is hiring. "We have 1,200 more people today than a year ago, and if we could have another 1,000 people tomorrow, we'd take them," says Allen Thomas, national managing director for human resources for Deloitte & Touche.
The crunch stems largely from auditing reforms passed by Congress in the wake of Enron and other scandals. Those changes have increased the number of hours it takes to do a typical audit by 40% to 60%. Yet even as demand has spiked, the supply of auditors is down. In the 1990s, numbers-savvy students bypassed accounting degrees in favor of finance and technology programs. By 2001 the number of students earning accounting degrees had dropped below 45,000, from more than 60,000 graduates 10 years earlier. That has created a "sellers' market" for talent, says Greg Garrison, head of audit and assurance for PricewaterhouseCoopers.
It's not just Big Four firms such as PwC that need to staff up. With CEOs and CFOs of public corporations now required to vouch for their numbers, companies are also scrambling for extra auditors. Giants, including Ford (F), Motorola (MOT), and Johnson & Johnson (JNJ), have been hiring accountants at a brisk pace, according to university placement officers. Government organizations are also big recruiters. Everyone from the Public Company Accounting Oversight Board, a watchdog agency created by the Sarbanes-Oxley Act, to the FBI, which has set a goal that 15% of its new recruits must be accountants, is in the market.
QUITE A BONANZA
All of which makes for quite a bonanza in perks and workplace flexibility, particularly for the mid- and senior-level managers most in demand. This summer, Deloitte launched a program that allows top performers to take a leave for up to five years. The firm continues to pay for career education and licensing, and it assigns each leave-taker a personal mentor to keep them involved and up to date. The program is aimed at keeping folks most likely to jump ship -- those with enough experience to be attractive to outsiders but who have not yet made partner. Ann Donaghey, 38, had been promoted twice since she joined the firm six years ago, but she was prepared to quit after having twin boys in February. When Donaghey learned she could apply for a five-year leave, it was a great relief. But it may have been an even bigger relief to Deloitte: Replacing Donaghey would have cost roughly double her annual salary.
Compensation is also on the rise. Most firms say auditors' pay is up 10% to 12% across the board this year. For top people, 20% is probably more like it. Bonuses are more frequent, too. But bigger salaries are just part of the package. Ernst & Young, which boosted hiring of experienced accountants by 36% this year and added 23% more college grads, doles out more vacation time as well. It even offers free concierge service for staff to get personal errands done.
The auditing frenzy won't last forever. Enrollment in accounting classes is climbing, and more students are pursuing a degree. Still, for now, auditing is a great gig.
By Nanette Byrnes in New York