Accounting
The 2024 Accounting Today Salary Survey: Partners pinching pennies
Compensation for early-career accountants is a key factor in making the profession more attractive for young people. Starting salaries have lagged behind that of neighboring professions and industries; students can graduate into higher-paying jobs in finance or technology with the same level of education or less than is required for accountants.
And with the ongoing labor shortage — fewer people studying accounting, fewer completing 150 credit hours, fewer achieving CPA licensure, and even fewer staying in the profession until they make partner — accounting firms have no time to waste in raising starting salaries.
Accounting Today and its parent company Arizent conducted our inaugural salary survey in May 2024, collecting over 560 responses from accountants from firms of all sizes regarding their salaries, benefits and career trajectories. The survey found that the median base salary for a staff accountant nationwide is $65,000. For comparison, in Pennsylvania, entry-level CPAs earn $68,000, versus entry-level finance consultants at $71,000, management consultants at $87,000 and supply chain managers at $91,000, according to a recent talent retention report by the Pennsylvania Institute of CPAs. Meanwhile, graduates who majored in engineering, computer science and math are all expected to earn starting salaries above $70,000, according to nationwide projections from the National Association of Colleges and Employees ($76,736, $74,778 and $71,076 respectively).
What is keeping firms from raising starting salaries? The answer involves a complex set of factors, but the first reason is straightforward, if a bit antiquated: This is the way it’s always been done.
“There’s a mindset that this is an apprentice business. There’s a huge investment that firms make in people in the early years and as they get skilled they earn more,” said Jennifer Wilson, partner and co-founder at ConvergenceCoaching. “But that model is a mindset that’s no longer valid because most young people out of school expect that they’re going to have big investment by their employers, regardless of their chosen profession, and they’re not willing to pay dues by making less and learning more. They’re figuring, ‘I’m going to get that anywhere.'”
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The U.S. Bureau of Labor Statistics projects that Generation Z (those younger than age 28), will make up about 30% of the U.S. workforce by 2030. This cohort is already defining how their work expectations differ from the generations that preceded them, including having little desire to spend their entire lives at one company, or even in one industry, which is antithetical to the traditional career path for an accountant, where it was considered normal to progress from intern to partner all at the same firm. In that model, low starting salaries were accepted because young accountants expected to make it up once they made partner.
Younger generations aren’t sure they want to stay at the same firm that long, however, and with 47% of respondents to Accounting Today’s survey saying that it takes between 10 and 20 years to make partner at their firm, they may be less willing to forego current compensation for money that may never materialize in a role they may not even be interested in taking on.
“That idea of delayed gratification is an old-fashioned idea, and it still lives inside our profession,” Wilson said.
The second contributor to low salaries is the interests of aging partners nearing retirement, Wilson said: “The average partner comp has continued to increase over time when starting salaries have not, and that is a lack of redistribution of that wealth. I would say it’s because partners feel like, ‘I paid my dues and I deserve this.'”
Survey data reflected a median base partner salary of $125,000 for firms with fewer than 10 employees, and $205,000 for those at firms with more than 10 employees. These numbers likely skew low, as 53% of respondents reported working at firms with less than $5 million in net revenue. For this reason, partner data for midsized and big firms could not be broken out in detail with a high enough level of statistical significance. However, the data indicates the top 5% of partners at firms with fewer than 10 employees earned salaries of $250,000, and the top 5% at firms with more than 10 employees earned $700,000. (Partners at the Big Four and other billion-dollar firms can make far more than that, of course, but relatively few participated, and were treated as outliers.)
As one survey respondent, a chief operating officer at a midsized firm, put it: “Look out for yourself. Partners are greedy. Public accounting is a giant pyramid scheme.”
But accountants are not compensation experts, and they do not invest in HR expertise as they should, Wilson said. The common objection to increasing starting salaries is the assumption that if you raise starting salaries, then you have to raise everybody’s salary, and that would cost a fortune. The solution is to make the largest adjustment in the lowest salary band (staff), and then make smaller adjustments in the subsequent bands (senior, manager, etc.) to lessen the steep climb to partner salaries.
The data also reveals that an individual’s number of years of experience does not have an appreciable impact on aggregate salary ranges for each job level. The median salary for staff with less than 10 years experience was $65,000, and $71,000 for staff with more than 10 years. Similarly, seniors with less than 10 years showed a median salary of $87,000, and only $88,000 for seniors with more than 10 years.
“Tenure means nothing anymore,” said Sandra Wiley, shareholder and president at Boomer Consulting. “The number of years you’ve been sitting in the seat at whatever firm you’re at has a lot less to do with your salary than what you bring to the table, how fast you learn it, and how fast you apply it.”
The consequences
The result is poor work-life balance in exchange for low salaries for young accountants. For some, the promise of a greater salary down the road isn’t enough to counterbalance working 80 hours a week during tax season now. “You’re going to wish you were paid hourly during busy season,” one senior tax associate at a large firm said.
“I wish I knew that public accounting firms don’t value their employees the way that they say they do. What is said and what is done does not match,” a tax accountant at a midsized firm said. “Low pay, long hours, grueling work, no internal onboarding or training to support staff. It’s a sink-or-swim mentality.”
Raises typically come through promotions and performance evaluation. Though 74% of respondents say they know what qualifications they need to be promoted, roughly one-third of staff, seniors and managers say they feel the need to jump to another job in order to make a meaningful increase in salary. In the same vein, three-quarters of respondents say they’ve worked at another firm before joining their current firm.
“If making as much money as possible is the goal, be prepared to jump firms every few years,” a tax manager at a small firm said. “Many firms do not reward long-term loyalty with appropriate salary increases after two to three years.”
It’s an employees’ market now, Wiley said. “Senior leadership has figured out, ‘If you don’t give me what I want here, I can go tomorrow and find the job that I want out there.'”
But KPMG’s vice chair of talent and culture, Sandy Torchia, doesn’t see this trend as entirely negative. While there are opportunities for moving around functions, industries and geographies within a Big Four firm, “Not everyone’s going to stay at KPMG for their entire career, but building future leaders, giving them the experiences and credentials to go and be successful at our clients, in our communities, etc., is a really important part of the ecosystem.”
The solution
Higher starting salaries are key to making the accounting profession more attractive to young people, but the solution is multifaceted.
It starts with salary transparency, both for lower-level salaries and partner salaries. KPMG is taking steps to do just that: “When we’re communicating compensation to our employees at the beginning of the fiscal year, we communicate to them pay ranges, and the pay ranges are for their base salary as well as for variable compensation,” Torchia said. “We want to make sure that they understand not only the pay ranges, but where they fall within that pay range, so that they can see what the opportunity is for growth within their current role.”
The next step is actually raising starting salaries: “Given the demographic tendencies of the people entering the workforce now, they’re not in a position where they feel like they can defer those big earnings that far out into their career,” said Lisa Simpson, vice chair of firm services at the American Institute of CPAs. “So are there ways to push it down a little earlier and make the jumps in between each level less dramatic?”
The time it takes to make partner will inevitably need to shorten too. “People are not going to wait that long,” Wiley said. “If we are true to our word that entry-level staff positions can be outsourced or automated, that means we have to start people at a different level to begin with.”
This means firms will have to start teaching and training differently. “It requires more handholding on the front end, but they’re able to get to the higher-level work faster. Therefore, the billing that you can get them to quicker is better,” Wiley said.
‘Culture is greater than salary’
The consequence of pushing off salary increases is the risk of talent exiting the profession entirely, which makes retention all the more important. The pipeline problem isn’t going away. Firms need to be competing not only on compensation but benefits and culture, too.
“Culture is greater than salary,” a manager at a large firm said. “I could jump somewhere for maybe $10,000 to $20,000 more, but I do not think I can replicate the culture of my firm. A lot of people I talk with have moved jobs for more money and almost immediately regretted it due to the work environment. I would rather take a steady, reasonable paycheck, with job security and ethical bosses, than move to a higher paying job where I’m constantly fearing retaliation or being fired.”
While noting it is difficult to make blanket generalizations for the entire profession, “I think all firms have different levers they can push if they really focus on managing that workload,” the AICPA’s Simpson said.
Small firms need to double down on strategy, carefully considering the services they’re offering, whom they’re offering them to, and how they’re delivering them. Simpson specifically said that large firms need to implement offshoring strategies and capitalize on technology. All firms can be streamlining their processes to make sure they’re pushing work through their systems effectively, and they should make sure they’re billing for their value and to keep up with cost structures — accounting is a very loyal profession and firms sometimes struggle to raise rates despite increasing costs, Simpson said.
For instance, the slam of busy season can be mitigated, she explained: “We can control that tax season by managing our client load, by managing our client expectations, and putting in processes and key metrics and keep the workflow moving throughout the year, rather than just in these crunch periods, April 15 and October 15.”
The accounting profession is an excellent vehicle for wealth building, with large salary trajectories in store at the partner, owner and managing partner levels. But the profession needs to raise starting salaries to attract young talent, be transparent about their earning potential in each role, and meet their demands in order to retain that talent.
“Another way to think about this is the word ‘stewardship,'” Wilson said. “‘I should be a steward of my firm and careful to make sure that I am investing in it as much as I am taking out of it.’ I do think sometimes we lose sight of our stewardship.”
The Financial Accounting Standards Board met this week to discuss its projects on accounting for transfers of cryptocurrency assets and enhancing the disclosures around certain digital assets, such as stablecoins.
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During Wednesday’s meeting, FASB’s board made certain tentative decisions, according to a
At a future meeting, the board plans to consider clarifying the derecognition guidance for crypto transfer arrangements to assess whether the control of a crypto asset has been transferred.
FASB also began deliberations on the
The board decided to provide illustrative examples in Topic 230, Statement of Cash Flows, to clarify whether certain digital assets such as stablecoins can meet the definition of cash equivalents. It also decided to include the following concepts in the illustrative examples:
- Interpretive explanations that link to the current cash equivalents definition;
- The amount and composition of reserve assets; and,
- The nature of qualifying on-demand, contractual cash redemption rights directly with the issuer.
FASB plans to clarify that an entity should consider compliance with relevant laws and regulations when it’s creating a policy concerning which assets that satisfy the Master Glossary definition of the term “cash equivalents“ will be treated as cash equivalents.
“I agree with the staff suggestion to look at examples,” said FASB vice chair Hillary Salo. “From my perspective, I think that is going to help level the playing field. People have been making reasonable judgments. I agree with that. And I think that this is really going to help show those goalposts or guardrails of what types of stablecoins would be in the scope of cash equivalents, and which ones would not be in the scope of cash equivalents. I certainly appreciate that approach, and I think it has the least potential impact of unintended consequences, because I do agree with my fellow board members that we shouldn’t be changing the definition of cash equivalents, and it’s a high bar to get into the cash equivalent definition.”
“I’m definitely supportive of not changing the definition of cash equivalents,” said FASB chair Richard Jones. “I believe that’s settled GAAP in a way, and we’re not really seeing a call to change it for broader issues. I am supportive of the example-based approach. The challenge with examples, though, is everybody’s going to want their exact pattern, but that’s not what we’re doing.”
The examples will explain the rationale for how digital assets such as stablecoins do or do not qualify as cash equivalents and give a roadmap for other types of digital assets with varying fact patterns to be able to apply.
“We really don’t want to be as a board facing a situation where something was a cash equivalent and then no longer is at a later date,” said Jones. “That’s not good for anyone, so keeping it as a high bar with certain rigid criteria, I think, is fine.”
Stablecoins are supposed to be pegged to fiat currencies such as U.S. dollars and thus provide more stability to investors. “In my view, while a stablecoin may meet the accounting definition established for cash equivalents, not every one of those stablecoins in the cash equivalent classification represents the same level of risk,” said FASB member Joyce Joseph.
She noted that the capital markets recognize the distinctions and have established a Stablecoin Stability Assessment Framework to evaluate a stablecoin’s ability to maintain its peg to a fiat currency. Such assessments look at the legal and regulatory framework associated with the stablecoin, and provide investors with information that could enable them to do forward-looking assessments about the stability of the stablecoin.
“However, for an investor to consider and utilize such information for a company analysis the financial statement disclosures would need to include information about the stablecoin itself,” Joseph added. “In outreach, the staff learned that investors supported classifying certain stablecoins as cash equivalents when transparent information is available about the entities at which the reserve assets are held. Therefore, in my view, taking all of this into consideration a relevant and informative company disclosure would include providing investors with the name of the stablecoin and the amount of the stablecoin that is classified as a cash equivalent, so investors can independently assess the liquidity risks more meaningfully and more comprehensively by utilizing broader information that is available in the capital markets and its emerging information.”
Such information could include the issuer, reserves, governance and management, she noted, so investors would get a more holistic look at the risks that holding the stablecoin would entail for a given company.
The board decided to require all entities to disclose the significant classes and related amounts of cash equivalents on an annual basis for each period that a statement of financial position is presented.
Entities should apply the amendments related to the classification of certain digital assets as cash equivalents on a modified prospective basis as of the beginning of the annual reporting period in the year of adoption.
FASB decided that entities should apply the amendments related to the disclosure of the significant classes and amounts of cash equivalents on a prospective basis as of the date of the most recent statement of financial position presented in the period of adoption.
The board will allow early adoption in both interim and annual reporting periods in which financial statements have not been issued or made available for issuance.
FASB also decided to permit entities to adopt the amendments to be illustrated in the examples related to the classification of certain digital assets as cash equivalents without the need to perform a preferability assessment as described in Topic 250, Accounting Changes and Error Corrections.
The board directed the staff to draft a proposed accounting standards update to be voted on by written ballot. The proposed update will have a 90-day comment period.
Senators introduced several pieces of tax-related legislation this week, including measures aimed at improving customer service at the Internal Revenue Service, cracking down on tax evasion and curbing the carried interest tax break, in addition to efforts in the House to repeal the Corporate Transparency Act.
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Senators Bill Cassidy, R-Louisiana, and Mark Warner, D-Virginia, teamed up on introducing a bipartisan bill, the
The bill would establish a dashboard to inform taxpayers of backlogs and wait times; expand electronic access to information and refunds; expand callback technology and online accounts; and inform individuals facing economic hardship about collection alternatives.
“Taxpayers deserve a simple, stress-free experience when dealing with the IRS,” Cassidy said in a statement Wednesday. “This bill makes the process quicker and easier for taxpayers to get the information they need.”
He also mentioned the bill during a
“I’m happy to meet with the team … and do all I can to make it as good as you want it to be,” said Bisignano.
“My bill would equip the IRS with the legislative mandate to create an online dashboard so that taxpayers can monitor average call wait time and budget time accordingly,” said Cassidy. He noted that the bill would allow a callback for taxpayers that might need to wait longer than five minutes to speak to a representative, and establish a program to identify and support taxpayers struggling to make ends meet by providing information about alternative payment methods, such as installments, partial payments and offers in compromise.
“I know people are kind of desperate and don’t know where to turn for cash, so I think this could really ease anxiety,” he added. “This legislation is bipartisan and is likely to pass this Congress.”
Cassidy and Warner
“Taxpayers shouldn’t have to jump through hoops to get basic answers from the IRS — and in the last year, those challenges have only gotten worse,” Warner said in a statement. “I am glad to reintroduce this bipartisan legislation on Tax Day to ease some of this frustration by increasing clear communication and making IRS resources more readily available.”
Stop CHEATERS Act
Also on Tax Day, a group of Senate Democrats and an independent who usually caucuses with Democrats teamed up to introduce the Stop Corporations and High Earners from Avoiding Taxes and Enforce the Rules Strictly (Stop CHEATERS) Act.
Senate Finance Committee ranking member Ron Wyden, D-Oregon, joined with Senators Angus King, I-Maine, Elizabeth Warren, D-Massachusetts, Tim Kaine, D-Virginia, and Sheldon Whitehouse, D-Rhode Island. The bill would provide additional funding for the IRS to strengthen and expand tax collection services and systems and crack down on tax cheating by the wealthy.
“Wealthy tax cheats and scofflaw corporations are stealing billions and billions from the American people by refusing to pay what they legally owe, and far too many of them are getting a free pass because Republicans gutted the enforcement capacity of the IRS,” Wyden said in a statement. “A rich tax cheat who shelters mountains of cash among a web of shell companies and passthroughs is likelier to be struck by lightning than face an IRS audit, and Republicans want to keep it that way. This bill is about making sure the IRS has the resources it needs to go after wealthy tax cheats while improving customer service for the vast majority of American taxpayers who follow the law every year.”
Earlier this week. Wyden also
The Stop CHEATERS Act would provide the IRS with additional funding for tax enforcement focused upon high-income tax evasion, technology operations support, systems modernization, and taxpayer services like free tax-payer assistance.
“As Congress seeks ways to fund much-needed policy priorities and address our growing national debt, there is one common sense solution that should have unanimous bipartisan support: let’s enforce the tax laws already on the books,” said King in a statement. “Our legislation will make sure the IRS has the resources it needs to confront the gap between taxes owed and taxes paid – while ensuring that our tax enforcement professionals are focused on the high-income earners who account for the most tax evasion. This is a serious problem with an easy solution; let’s pass this legislation and make sure every American pays what they owe in taxes.”
Carried interest
Wyden, King and Whitehouse also teamed up on another bill Thursday to close the carried interest tax break for hedge fund managers that
Carried interest is a form of compensation received by a fund manager in exchange for investment management services, according to a
Under the bill, the
“Our tax code is rigged to favor ultra-wealthy investors who know how to game the system to dodge paying a fair share, and there is no better example of how it works in practice than the carried interest loophole,” Wyden said in a statement. “For several decades now we’ve had a tax system that rewards the accumulation of wealth by the rich while punishing middle-class wage earners, and the effect of that system has been the strangulation of prosperity and opportunity for everybody but the ultra-wealthy. There are a lot of problems to fix to restore fairness and common sense to our tax code, and closing the carried interest loophole is a great place to start.”
Repealing Corporate Transparency Act
The House Financial Services Committee is also planning to markup a bill next Tuesday that would fully repeal the Corporate Transparency Act, which has already been significantly
If enacted, the repeal would eliminate beneficial ownership reporting requirements, removing a transparency measure designed to help law enforcement and national security officials identify who is behind U.S. companies.
“This repeal would turn the United States back into one of the easiest places in the world to set up anonymous shell companies, something Congress worked for years to fix,” said Erica Hanichak, deputy director of the FACT Coalition, in a statement. “These entities are routinely used to facilitate corruption, financial crime, and abuse. Rolling back the CTA doesn’t just weaken transparency, it signals to bad actors around the world that the U.S. is once again open for illicit business.”
The Internal Revenue Service rarely penalizes taxpayers who have high balances in foreign bank accounts and fail to file the proper forms, according to a new report.
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The
Taxpayers with specified foreign financial assets that meet a certain dollar threshold are also required to report the information to the IRS by filing Form 8938. Failure to file the form can result in penalties of up to $60,000. However, TIGTA’s previous reports have demonstrated that the IRS rarely enforces these penalties.
The IRS created an Offshore Private Banking Campaign initiative to address tax noncompliance related to taxpayers’ failure to file Form 8938 and information reporting associated with offshore banking accounts, but it’s had limited success.
Even though the initiative identified hundreds of individual taxpayers with significant foreign bank account deposits who failed to file Forms 8938, the campaign only resulted in relatively few taxpayer examinations and a small number of nonfiling penalties. The campaign identified 405 taxpayers with significant foreign account balances who appeared to be noncompliant with their FATCA reporting requirements.
The IRS used two ways to address the 405 noncompliant taxpayers: referral for examinations and the issuance of letters to them.
- 164 taxpayers (who had an average unreported foreign account balance of $1.3 billion) were referred for possible examination, but only 12 of the 164 were examined, with five having $39.7 million in additional tax and $80,000 in penalties assessed.
- 241 noncompliant taxpayers (who had an average unreported account balance of $377 million) received a combination of 225 educational letters (requiring no response from the taxpayers) and 16 soft letters (requiring taxpayers to respond). None of the 241 taxpayers were assessed the initial $10,000 FATCA nonfiling penalty.
“While taxpayers can hold offshore banking accounts for a number of legitimate reasons, some taxpayers have also used them to hide income and evade taxes,” said the report.
Significant assets and income are factors considered by the IRS when assessing whether taxpayers intentionally evaded their tax responsibilities, the report noted. Given the large size of the average unreported foreign account balances, these taxpayers probably have higher levels of sophistication and an awareness of their obligation to comply with the law.
TIGTA believes the IRS needs to establish specific performance measures to determine the effectiveness of the FATCA program. “If the IRS does not plan to enforce the FATCA provisions even where obvious noncompliance is identified, it should at least quantify the enforcement impact of its efforts,” said the report. “This will ensure that IRS decision makers have the information they need to determine if the FATCA program is worth the investment and improves taxpayer compliance.
TIGTA made three recommendations in the report, including revising Campaign 896 processes to include assessing FATCA failure to file penalties; assessing the viability of using Form 1099 data to identify Form 8938 nonfilers; and implementing additional performance measures to give decision makers comprehensive information about the effectiveness of the FATCA program. The IRS disagreed with two of TIGTA’s recommendations and partially agreed with the remaining recommendation. IRS officials didn’t agree to assess penalties in Campaign 896 or with implementing performance measures to assess the effectiveness of the FATCA program.
“From our perspective, TIGTA’s conclusions regarding IRS Campaign 896 are based, in part, on a misguided premise and overgeneralizations, including the treatment of ‘potential noncompliance’ as tantamount to ‘egregious noncompliance’ that warrants a monetary penalty without contemplating the variety of justifications that may exempt a taxpayer from having to file Form 8938,” wrote Mabeline Baldwin, acting commissioner of the IRS’s Large Business and International Division, in response to the report.
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