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When leaders tolerate the intolerable

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Working with senior leaders for over 30 years has afforded us some observations that may be helpful to others who are navigating difficult situations. Most situations are problems that leaders must deal with. First off, problems are par for the course in leadership — handling them is what leaders do. And usually, they are handled successfully and leaders and their firm move on. 

However, some situations evolve beyond mere problems and become intolerable. These are the ones that truly test a leader’s mettle. 

The most common intolerable situations involve people. Whether it’s the toxic client you can’t afford to lose, the partner who refuses to align with the firm’s vision and values, or the superstar employee who won’t cooperate, these high-stakes scenarios inevitably have a negative impact on the firm. And, it’s up to the leaders to address them. Fun, right? 

But here’s the thing: intolerable situations rarely crash into the boardroom like a wrecking ball. Instead, they start as little speed bumps — actions or behaviors that push boundaries. Maybe you notice them, but instead of addressing the issue, you let it slide. “I went against my better judgment to keep the peace,” you tell yourself. (Who hasn’t been there?) 

Before long, these behaviors become normalized. You hear phrases like, “Oh, that’s just how they are.” Sure, it’s annoying, but hey, nothing too disruptive, right? But life doesn’t stand still, and soon enough, those tolerable annoyances turn into giant, festering problems. And now, more people are feeling the heat, asking, “Why are we still putting up with this?” Eventually, leaders finally acknowledge their miscalculation of the impact of their toleration. “I didn’t think it would come to this.” What was once ignored and then tolerated has blossomed into a fully intolerable situation. 

Now leaders are in a pickle. Because it has been going on for some time and the situation has been normalized and tolerated, it’s difficult to know how to intervene. How do you fix what’s become deeply entrenched without further damaging relationships or the firm? Even the best leaders can end up knee-deep in chaos. Moving forward from here is about figuring out how to effectively untangle the decisions that contributed to the chaos. 

Now it’s time to pause: take time to reflect on the three culprits that probably brought you to where you are now: 

1. The hunt for an easy way out: Spoiler alert: there’s no easy way out. If you’ve been holding off, hoping for a quick, painless solution to magically appear, it’s time to face the music. Accept that the situation is what it is, weigh the options, and get ready to tackle the consequences head-on. 

2. The sunk cost trap: Whether it’s a financial investment or a longstanding relationship, intolerable situations often come with hefty sunk costs. You’ve invested years in that toxic client, or decades into that wayward partner. But guess what? All those costs are in the past. The real question is, how much more are you willing to pay moving forward? 

3. Blame shifting: It’s easy to pin the blame on the person causing the trouble, but here’s the hard truth: it’s not them — it’s you. You allowed the behavior to continue, and now it’s time to own up to it. The good news is, owning up with genuine humility can actually help you turn things around. 

Here’s how to get the ball rolling: start with a simple but powerful admission. “I owe you an apology. I have allowed you to believe for a long time that your actions have been acceptable. I have not been fully honest with you and have done you a disservice in not speaking up. I am sorry that I misled you.” 

This kind of direct, humble approach sets the right tone for the conversation. From there, explain how the behavior or actions have been tolerated, and let them know that things have changed — that it’s now officially intolerable. And don’t get derailed by arguments or references to past incidents; stay focused on the behavior at hand. 

After laying it all out, it’s important to take a break. Both parties will need time to digest the conversation, and you’ll want to schedule a follow-up to discuss how to move forward with new behaviors in place. Here’s where it gets tricky: there’s no guarantee how the situation will evolve, and you’ll need to stay firm but flexible. We have found that coaching our clients through this “valley of the shadow” is difficult because there is no manual on how to do it right or best. And often, the choices are all hard. 

Lessons learned 

Now, the real goal is to avoid these intolerable situations in the first place. As leaders, here are a few key lessons that can help: 

1. Don’t freeze in the face of the unknown: When we encounter unfamiliar situations, it’s easy to freeze — whether by delaying, ignoring or minimizing the issue. But inaction only lets the problem fester, and before you know it, you’re in intolerable territory. 

2. Don’t avoid difficult situations just because you don’t know how to handle them: Being a leader doesn’t mean you have to handle every situation personally — it means ensuring that it gets handled. Don’t let unfamiliarity be your excuse for inaction. 

3. Stop letting worst-case scenarios rule the day: We all have a tendency to catastrophize. “If we push too hard, the client might leave!” or “If we confront the partner, they could cause chaos!” But worst-case thinking leads to indecision, which allows intolerable situations to thrive. 

4. Don’t go it alone: When facing tough decisions, seek the counsel of a trusted confidant, mentor or third party. Whatever situation you’re dealing with, odds are someone else has seen it before and can offer valuable perspective. 

Tolerating the intolerable may give a false sense of stability when hidden, but it will soon rear its ugly head and be known by and affect others. It benefits leaders to step up and handle situations before they become so disruptive that they take center stage and suck up hundreds of hours of conversations and efforts to assuage the situation. The good news? You can get through it — and get back to what really matters.

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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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