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The Internal Revenue Service has released a new revenue procedure that expands the waiver of eligibility rules for accounting method changes for some research or experimental expenses.

Revenue Procedure 2025-08 modifies Rev. Proc. 2024-23, 2024-23 I.R.B. 1334, to modify procedures under IRC Sec. 446 and Sec. 1.446-1(e) of the Income Tax Regulations.

These regulations are for automatic consent of the IRS to change methods of accounting for research or experimental expenditures paid or incurred in taxable years beginning after Dec. 31, 2021.

The rev proc expands the waiver of the eligibility rules in Section 5.01(1)(d) and (f) of Rev. Proc. 2015-13 to accounting method changes described in Section 7.01 of Rev. Proc. 2024-23 that are made for any taxable year beginning in 2022, 2023 or 2024. 

This rev proc also permits a taxpayer to make a change under Section 7.01 of Rev. Proc. 2024-23 regardless of whether the taxpayer made a change for the same item for any other taxable year beginning in 2022, 2023 or 2024.

The rev proc will be effective for Forms 3115, “Application for Change in Accounting Method,” filed on or after public release of Rev. Proc. 2025-08, which will be in the Internal Revenue Bulletin on Jan. 21.

Companies that work with auditors who have more industry experience but charge more than competitors offering “lowball” auditing fees tend to save more money in the end, according to a recent study.

The study, co-authored by professors Birendra Mishra and Theodore Mock from UC Riverside’s School of Business, found that businesses that use auditors who specialize in the corporation’s industry see cost savings and gain a better view of their finances, increasing investor confidence, 

The researchers analyzed 32,000 audit engagements in India and found that audit partners with extensive industry experience perform higher-quality audits while also providing cost savings to clients in their initial engagements. The study referred to auditors as “partners” with their clients in the finance industry.

“Expertise matters. An experienced audit partner in your industry can navigate complexities more efficiently, saving costs while ensuring better quality,” said Mishra, a professor of accounting, in a statement. “Think of an audit partner like a skilled surgeon — the more experience they have, the quicker and more precise they are, and that efficiency translates to savings for clients.”

The research indicated companies should avoid auditors who “lowball” their fees to compensate for a lack of experience. These auditors may offer low prices during the first year but then increase their fees in subsequent years to make up for the earlier discounts. The companies then end up with higher costs and lower-quality audits.

“Audit partners with more industry experience don’t rely on low-balling,” Mishra stated. “Their efficiency allows them to offer competitive initial pricing without the need for large fee hikes later. Low-balling can compromise audit quality because the focus shifts to recovering costs rather than delivering a thorough and accurate audit.”

The professors defined audit fee lowballing as charging relatively lower audit fees at the start of an audit engagement and increasing fees subsequently to recover the initial lowballing cost. This practice, utilized to entice new clients, concerns regulators because of its potential consequences for audit quality. The study examined the relationship between audit partner industry experience and lowballing, and its implications for subsequent audit fees and audit quality. 

The results indicated that higher audit partner industry experience is associated with discounted fees but superior audit quality in the first year of the engagement, suggesting that more experienced auditors pass on cost savings from process efficiencies to their clients. 

The research relied on audit data from India, where regulations have long mandated the disclosure of lead auditors in financial reports. This data allowed the researchers to track the industry-specific experience of individual auditors.

“The Indian auditing standards are remarkably similar to those in the U.S., making the findings highly applicable internationally,” Mishra noted.

The team developed a metric they called “INDEXP_PTNR” to measure an auditor’s cumulative years of industry experience. The professors used statistical models to assess the impact of this experience on initial-year pricing, subsequent fee adjustments and audit quality.

Audit costs can range from hundreds of thousands of dollars to tens of millions of dollars, depending on the size and type of company, but good auditing can potentially boost a company’s value. 

“High-quality audits strengthen the link between earnings and stock prices, boosting investor confidence in your company,” Mishra stated.

Differences of perspective are fascinating, frustrating things. They lead people to eat and dress and dance and vote differently than we do; to see a dress as purple and black, when we all know it’s white and gold; to think a photo shows a sunset, when it’s clearly a sunrise. On the other hand, they make for horse races, and that’s surely worth something.

I’ve been thinking about this because we recently got a letter of complaint from a reader. As is the case with most of the relatively few that we receive, the subject of their complaint was a matter of opinion, and everyone is certainly entitled to their opinion — but at one point in registering their complaint, this reader referred in passing to “the decline of the profession,” and I felt compelled to object.

It seemed (and seems) transparently obvious to me that the profession is not in decline in any way; that in fact, it’s thriving. Revenues across the field are strong and growing, demand for accountants’ services is at an all-time high, and there are major new service areas opening up on a regular basis. New tools are coming online every day to make the work easier and to enable entirely new services.

It’s certainly true that the profession faces challenges. Not enough people are coming into accounting to meet the rising demand, and not enough are becoming CPAs to handle the imminent retirement of the oversized cadre of baby boomer firm leaders. Competitors are hungrily eyeing accountants’ lunch, and artificial intelligence looms like a specter.

But in all of those challenges lie opportunities — to use capacity crunches to refocus books of business on a small base of ideal clients, for instance, or to look to private equity or other potential partners outside the profession to help secure partners’ retirements. There are plenty of professions and industries that would be delighted to have accounting’s challenges.

Of course, I have a different perspective on whether accounting is in decline or not — I’m not trying to staff engagements or meet deadlines with too few employees, and I don’t need to worry about being able to find successors for my practice so I can realize the value of my life’s work. And I’m in publishing, an industry which faces so many existential threats that anything short of that seems like a cakewalk.

So perhaps I’m wrong to think that accounting is thriving, with a bright future ahead of it; perhaps the slowdown in people entering the profession really is a sign of decline, and not a short-term demographic blip. I’d love to

know what you think — reach out to me at [email protected] and let me know if you think accounting is in decline or on the rise, and why, and we’ll aim to share the results in a future edition.