Accounting firms have been making more errors, but bosses are split on whether remote work is to blame

• 156 accounting executives and partners were interviewed about why firms have been making more auditing errors.
• The auditors were split on whether a better work-life balance could reduce the number of errors.
• But they also have to consider whether remote work could help attract Gen Z workers amid a nationwide accountant shortage.

US accounting firms are split on how to deal with the shift to remote work, a report published by the Public Company Accounting Oversight Board (PCAOB), a government-backed audit oversight board, has found.

The report, published in December 2024, was part of the PCAOB's investigation into why auditing errors have surged following the pandemic and whether internal culture has contributed. Though deficiency rates slowed in 2023, they have consistently risen since 2020. Accounting errors can lead to embarrassing and costly legal challenges and can damage business integrity.

The report was based on inspections of quality control systems and anonymous interviews with 156 executives and partners at six major firms: Deloitte, EY, KPMG, PwC, BDO, and Grant Thornton.

64% of respondents said that improving work-life balance for firm personnel improves audit quality.

However, roughly a third of senior executives and partners from the six major firms surveyed said that contemporary remote and hybrid work culture has negatively affected auditing firms' quality control.

They said a loss of in-person interactions was making assimilation into the firm's culture more difficult, leaving newer recruits less attuned to the cultural importance of audit control.

Development opportunities were another concern, with some respondents saying firms were losing the "apprenticeship culture" they traditionally favored.

"The delayed development of firm personnel affected productivity and made it difficult for some to meet deadlines and expectations," some respondents said.

At one of the audit firms, managers and partners were stepping down a level to do audit work traditionally performed by more junior personnel. This led to reduced scrutiny of the audit work, respondents said.

The Gen Z problem

Tied up with the questions about work-life balance and audit quality is the other big issue facing accounting firms: how to attract Gen Z talent.

Respondents from all six firms included in the survey said that "resource challenges," in terms of hiring were a factor in the increasing audit deficiencies or were an overall concern for their companies.

In recent years, auditing firms have struggled to attract younger generations who expect a better work-life balance.

"The younger generation have differing views on careers than their older counterparts, with many viewing their work more as a job, rather than a career, and are therefore more likely to leave the profession if presented with more attractive opportunities," the PCAOB found.

The American Institute of Certified Public Accountants says about 65,000 students in the US completed bachelor's or master's degrees in accounting in the 2021-22 school year, 18% fewer than a decade earlier. Of those who study accounting, only a portion become certified public accountants. About 30,000 people took the CPA exam in 2022, compared with nearly 50,000 people in 2010.

The fear of personnel leaving was one reason that return-to-office policies weren't being pushed at firms, according to some respondents.