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A plague on both your (political) parties

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While the accounting profession is divided in its preferences for the 2024 presidential election, it is united by a profound distaste for politics in general.

Over three-quarters (76%) of accountants surveyed by Accounting Today in late September said they were “very dissatisfied” with the current political climate, and another 15% were “somewhat dissatisfied.” (See the survey results.)

When asked to explain their dissatisfaction, a small-but-vocal minority blamed it squarely on one side of the political spectrum or the other, with varying levels of intemperate language — describing the party of Vice President Kamala Harris as the “democRATs,” for instance, or calling former President Donald Trump “the Orange Idiot.”

For the majority of accountants, however, that sort of vituperation is precisely the problem.

“The lack of cooperation and working together for all citizens is appalling,” said a manager from a small accounting firm in the Midwest who is a registered Republican. “The nastiness and name-calling is childlike. I expect better from all elected officials. We need solutions and actions, not harsh words about others. Our political leaders need to work together for solutions. Perhaps the problem is we do not have real leaders; we have elected personalities.”

“It’s too adversarial, and never in my lifetime has it been less about what is good for the people,” agreed a Democrat who is the owner of a small firm in the West.

“Politics seems to be about ways to ‘get’ the other guy, not about helping the people of America,” added a staff member, a Republican, from a small firm in the South.

Donald Trump and Kamala Harris at the second presidential debate in Philadelphia.
Donald Trump and Kamala Harris at the second presidential debate in Philadelphia.

Doug Mills/The New York Times/Bloomberg

A number of respondents expressed serious concern about what they see as deepening divisions between Americans, and the way politicians exploit those.

“This country is so divided,” warned a Republican department head from a midsized firm in the Midwest. “People are making decisions based on emotion, rather than facts and policy. There are blatant lies around every corner and people ignore it or are misinformed. Sadly, people are choosing to break ties with lifelong friends and family rather than seeing the truth: These politicians do not really care about us.”

A registered Independent who owns a small firm in the South agreed: “There is too much division,” he said. “Compromise is not a dirty word.”

The practical results of politics

The unwillingness to compromise is having serious implications for taxpayers.

“There is a lot of animosity which is preventing important legislation from being passed,” warned a senior executive from a midsized firm in the Midwest who is registered as a Republican. “For example, the technical corrections related to research and development credits was not passed because the parties cannot work together on a common goal. A simple bill like this should have been proactively passed with little hesitation; however, the bill was littered with other propaganda that made it impossible to pass.”

All of that matters to tax professionals because there are major issues they are hoping to see resolved after the election — in particular, the impending end of a number of provisions of the 2017 Tax Cuts and Jobs Act.

“The sunsetting of TCJA will greatly impact my small-business owners,” said the owner of a small firm in the Northeast who is a Democrat. “I expect tax liabilities to go up post-election.”

“There’s a four-page list of expiring tax breaks,” noted a staff member from a very small firm in the West who is an Independent. “Congress is doing nothing to help the people, they are only interested in what goes into their pockets, not how to get the economy moving. If all the TCJA [provisions] expire in 2025, I don’t want to be doing taxes anymore. Clients think we are not looking out for them, or we are ‘taxing’ their Social Security, but they don’t understand we are just trying to follow the ever changing laws.”

Some said that the election will inevitably cause problems for accountants — regardless of whether the winners actually resolve any of the issues the profession is concerned about.

“I believe there will be compliance issues related to whomever is elected,” said a department head from a midsized Midwest firm, a Republican. “As anyone in accounting can tell you, the continuous changes to the Tax Code are a huge burden on CPA firms, particularly those that are smaller. Large firms have teams dedicated to navigating changes, so they are able to pivot quickly but smaller, regional firms are in a perpetual game of catch-up, it seems.”

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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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