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The power of immediate feedback at your accounting firm

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We all love our pets, but we sometimes forget to reward them promptly for the positive behaviors we’re encouraging.

Take dogs, for instance. Studies show the longer we wait to reward our pups for a behavior, the less effective the training becomes. Even waiting five or 10 seconds to praise Roscoe for being a “good boy” can diminish the learning effect. He’ll be very confused if you wait until the next morning to reward him with a biscuit. And if he happens to be barking at the postal carrier at the time, he’ll think he should get a biscuit every time he barks at the postal carrier. That’s not the behavior you want to reward. 

The same is true for our team members. If we wait for the annual or quarterly review to give them feedback about their performance, it’s ancient history by then and doesn’t carry much weight. Instead, let’s think about ways to shorten the feedback cycle to create more consistent behaviors in our firms. It could simply be public praise as in: “We received excellent feedback from our client 20 minutes ago. Great job, Sarah!”

Sarah worked late several evenings last week to track down a traveling senior partner so he could resolve a complex client issue. However, if the firm didn’t acknowledge Sarah’s effort promptly, she (and her colleagues) would assume they didn’t appreciate the extra effort. Mentioning the extra effort at her next formal review wouldn’t mean much, either.

As a firm leader you have hundreds of opportunities every week to give positive feedback to your team. By giving out kudos and rewards in small frequent doses, you build positive momentum. It’s a great way to keep your team motivated and engaged because it shows you’re paying close attention to their efforts. Compare this approach to what most of us default to: We wait until the annual or quarterly review to acknowledge our team’s efforts. That’s not soon enough, and the message won’t sink in.

The same is true for compensation. You may want to pay a talented person way above market rate to join your firm. The pay bump might get them in the door, but it won’t keep them motivated and engaged once they’re onboard. To keep them motivated and aligned with the firm’s vision during their tenure, you’ll need to provide consistent, real-time feedback.

Suppose a team member stepped up and tackled a thorny challenge that no one else at the firm wanted to deal with. That’s huge. Their efforts should be celebrated ASAP in front of the whole firm. You could give the team member a gift card to a great restaurant or a store they like. Or you could give them a company credit card and tell them to put a nice meal on it with their significant other. Everyone else will get the message: “OK, this is what the firm is paying attention to.” Don’t wait until their quarterly or annual review to show your appreciation. 

Creating micro-feedback

Start by making it a point to keep your ear to the ground. Make sure everyone on the team knows you’re paying close attention to all the small wins that are occurring daily. You can even use tools like Bonusly to help you keep track of those wins and reward team members points for their efforts. Like pets, humans are trainable. Figure out which types of positive behaviors you’re trying to drive and then incentivize your team with micro-rewards along with prompt, clear feedback. That way, your organization is continually learning and teaching. I’ve found it’s the best way to create engagement when people clearly understand what firm leaders are paying attention to. 

The great thing about accounting firms is that almost everything your people do is tracked. It should be easy to find all kinds of little wins that add up to positive momentum. Unfortunately, too many of these wins go unnoticed and just get rolled into the employees’ annual billing total.

As the old saying goes: “If a tree falls in a forest and no one is around to hear it, does it make a sound?” When Friday rolls around, if a team member had an amazingly productive week, make sure they are publicly praised and receive a mini reward such as a $200 gift card. If you think about it, giving out 50 weekly gift cards at $200 each is equivalent to a $10,000 year-end bonus. However, the gift cards come with a bigger kicker — public acknowledgment. You can’t put a price tag on that. Which type of “bonus” do you think will keep team members more motivated? 

The key is to commit to finding ways to reinforce the behaviors that you want faster and more consistently. By the time you get to quarterly or annual reviews, you’re not reinforcing anything. You’re just rehashing something that happened in the distant past. It’s not a good use of your team or the team member’s time. 

Addressing negative behavior promptly

The same approach works for negative behaviors you’re trying to correct. If you see someone engaging in negative behavior, that needs to be addressed promptly as well. When it comes to correcting negative behavior, however, you want to deal with that privately, discreetly and very clearly. Public praise can be enormously effective for building a high-performing firm. Public humiliation can be toxic. 

If you see positive behavior that you want to see more of, don’t hesitate to make it a huge deal. Don’t hesitate to overdo it with accolades and praise for team members who go above and beyond. You’ll get more back than you ever imagined possible, and it will make you feel good about yourself, too. It’s not so much about the reward itself; it’s about when you dish out the reward.

What is your firm doing to provide faster, more meaningful feedback to team members? I’d love to hear from you. 

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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