Connect with us

Accounting

Close 2024 election polls drive CEO angst over tariffs, taxes

Published

on

Company executives can’t stop talking about the U.S. election.

Earnings calls in recent weeks have been filled with talk of uncertainty about the aftermath of Tuesday’s election, which has delayed spending as potential policy changes loom large.

And things are more intense in this presidential election cycle. Mentions of “election” near the word “uncertainty” on S&P 500 companies’ quarterly earnings calls this year are markedly higher than they were before the 2020 election. 

A Vote Here Today sign at a polling location in North Carolina.
A sign at a polling location in North Carolina.

Al Drago/Bloomberg

“Welcome to the Mad Hatter’s tea party,” Nicholas Pinchuk, tool maker Snap-On Inc.’s chief executive officer, said on the company’s Oct. 17 third-quarter earnings call. “Nobody knows what actually is going to happen, so you can’t even make a pronouncement.” 

Much of the C-suite angst is over the risk of additional tariffs, particularly if Republican Donald Trump wins another term. Business leaders say new fees on imported goods could increase costs up and down the supply chain, and force some companies to rethink manufacturing and sourcing. Democratic candidate Kamala Harris’ support for higher corporate tax rates is also a source of concern.

It’s not just companies hitting the pause button until voters decide which party will control the White House and Congress.

A recent survey by research firm Circana found that 16% of U.S. consumers said they would wait until after the election to start their holiday shopping, and 17% said they would spend more or less depending on who won.

Etsy Inc. CEO Josh Silverman said last week that the nonstop political noise is “an incredibly distracting mind-share event.”

House builder D.R. Horton Inc. said it wasn’t just higher interest rates holding back potential home purchasers. “The volatility of rates combined with general uncertainty during the election season is causing some buyers to stay on the sidelines in the near term,” CEO Paul Romanowski told analysts.

Car parts retailer O’Reilly Automotive Inc., mattress-maker Sleep Number Corp. and indoor-cycling specialist Peloton Interactive Inc. also cautioned about election-related sales sluggishness on their latest analyst calls.

Fewer people are traveling around the election, impacting airlines and hotel chains. Park Hotels and Resorts Inc., expects bookings to be down about 13% on election week and another 11% the following week as people stay close to home. 

Bombarded by campaign ads

Companies are also finding it harder to get their messages across through the relentless campaign advertising

“Media is more expensive,” Jim McCann, CEO of 1-800-Flowers.com, said on his company’s latest call. “The election does have a big, big impact on what we pay for things both digitally and in traditional media.”

The U.S. political future also weighed on the minds of analysts monitoring earnings calls. 

Chris McNally of Evercore asked on the General Motors Co.’s call about future electric vehicle losses, adding: “It’s sort of my way of asking the election question without asking the election question.” 

CEO Mary Barra answered that later by saying GM — which has invested billions of dollars in EVs favored by one candidate and loathed by the other — is prepared to deal with any eventuality.

At least one chief executive is brimming with confidence no matter what the outcome. 

“Both presidential candidates are now courting the crypto voter,” digital exchange Coinbase Global Inc. CEO Brian Armstrong said on his company’s third-quarter earnings call. “No matter what happens in this election, it’s going to be the most pro-crypto Congress ever.” 

Continue Reading

Accounting

IAASB tweaks standards on working with outside experts

Published

on

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.  

Continue Reading

Accounting

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

Published

on

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.

Continue Reading

Accounting

At Schellman, AI reshapes a firm’s staffing needs

Published

on

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.”

Continue Reading

Trending