How to Audit (Part 4): The Origin of Accountants
There are 286,000 qualified accountants and 169,000 accountancy students in the UK (source: FRC). That means you can’t avoid them for your whole life. This blog post will explain where accountants come from and what motivates them.
The Defensive Play
It was once believed that accountants were delivered by storks while sucking their thumb and clutching a calculator. Modern biology proved that accountancy is not a natural career choice. Show me a child who aspires to be an accountant and I will show you the telephone number of a good therapist.
Accountants are actually produced from the “Big 4” accountancy factory (the four largest firms who dominate the industry). Fresh university graduates are the raw materials and they take three years to process. They are lured through the gates because the training contract offers:
- Stable employment
- A free chartered accountancy qualification (the “ACA”). Qualification means a large pay rise and near-guaranteed job security for life.
- Good work experience with exposure to many different aspects of a business
For these reasons, accountancy is a defensive play for 90% of trainees. It is a safe option for the graduate who is unsure about their long terms career goals. By simply doing as you are told for three years you will end up with valuable work experience and qualifications. No thought is required and the long-term serious career decisions are deferred.
It is a safe and pragmatic career choice. But that’s the way accountants should be.
The Machiavellian View
The cynical view is that trainees are entirely self-serving and leave as soon as the training contract ends, having conned the ACA from their employers.
However, this Machiavellian view is acceptable to the Big 4 because they easily extract enough value from their trainees. They perform a great bulk of the fieldwork at the client. Even though the ACA is a great expense the cost is recovered many times over. A trainee is charged out at over £100 for every hour that he works at the client. A trainees will earn around £350,000 in profit for the firm during their contract period.
A lot of trainees do leave after qualification but the business model is not designed for all of them to stay. Otherwise, there would be too many assistant managers.
However, the three years are not just a relationship of convenience. The firms do want you to stay after qualification even if it is not as an accountant. They will make efforts to find placements elsewhere. Possible destinations include other business areas of the firm, such as advisory, placements at the client and placements abroad.
Trainees are not solely treated as a resource but as valued members. This is why the Big 4 do well in employee satisfaction surveys.
The Meaning of Audit
Accountancy is a good career – but why do any work at all? Accountants do have dreams of lying on a beach for half the year and skiing for the other half. But that would be a waste of immense talent. Also, modern civilisation would collapse if there was no-one to audit the accounts.
We agree that work is necessary. On the basic level, we need to earn money for food and shelter from bandits. However, should we expect fulfilment and satisfaction from our work, or is it just a means to an end?
Inevitably, accountancy is just a 9 to 5 job for a lot of people. I have joined in the bitching and moaning sessions while at work. But I have also met those who do enjoy auditing. It is more satisfying to work with them. They get the unpopular label of being “keen”, but it is the geeks who do well at school, not the jocks.
I wanted to become a chartered accountant after doing some work experience while I was in school. I did the usual amount of photocopying and filing. But I spent the bulk of the summer making over 100 archive boxes to store old files. This proved to be valuable experience because I won the first year trainee box making challenge. I was impressed by the importance of my bosses work and the respect that he got from his clients.
During university, I did some summer work in a chemical factory. I spent many 8 hour shifts lining up plastic bottles and stacking them on pallets. I vowed never to do any more menial work and to go for a challenging career. That’s why I am an accountant.
I didn’t know about the dire days I would have counting things on pallets and sifting through endless invoices. But I like the people and the work can be interesting. It’s pleasing to understand and apply a complicated accounting standard while at work. So like most people, I fall between the pragmatists and idealists on the purpose of work. Like most trainees, I’m still deferring the decision on what I will do after I qualify. But I will enjoy the time in between.
Work isn’t meant to fulfil your Ultimate Life Purpose™. It isn’t your whole identity. But it is OK to have fun auditing.