Wise Words from Global Leaders of the Accounting Profession
by Cathy Lockman
With a standing-room-only crowd of ILLINOIS accountancy students and three prominent alumni taking center stage at the Department of Accountancy's recent Lyceum, the Deloitte Auditorium couldn't have been more orange and blue--or more Deloitte for that matter. All three speakers are not only loyal ILLINOIS supporters, but they are also experienced, long-time leaders at Deloitte.
Stephen Van Arsdell, Chairman and CEO of Deloitte & Touche LLP, and Chris Lu, CEO of Deloitte China, provided the overflow audience with their perspectives on today’s accounting profession. Howard Engle, partner at Deloitte Tax LLP, was the Lyceum's moderator. With more than 100 years of public accounting experience between them, the speakers have an intimate understanding of the challenges and opportunities currently facing the profession.
"When I arrived in Shanghai, there were 35 people in the office," says Lu, who graduated with a master's degree in accounting science and worked in Deloitte's Los Angeles and Taiwan offices before relocating to China in 1994. "Now we have more than 11,500 employees, and we continue to grow."
And growth, he says, whether it's professional or personal begins by seizing opportunities. For Lu that meant venturing out of the United States when called to Taiwan and taking on "the Wild West" when the Shanghai position was offered. It's a strategy he suggests is critical in today's global business environment and during what he predicts will be a period of continued growth in demand for valuable services offered by accounting professionals.
Van Arsdell, who earned his bachelor's and master's degrees in accountancy from ILLINOIS, agrees that "a level of global experience is necessary" for the accounting professional and assured the students that "at ILLINOIS you are getting a global experience." Like Lu, he also sees a bright future for today's accountancy graduates. "The demand for accountants across the board is only increasing, as is the demand for accountancy Ph.D. graduates. This is a vibrant profession, where opportunities abound. That is why we just invested $300 million in Deloitte University's leadership center and are investing a similar amount in a new, groundbreaking accounting software platform."
Many of those opportunities will be determined by how the profession adapts and responds to its challenges, says Van Arsdell. "Globalization of our capital markets enhances the need for our services, so we have to be brave enough to take advantage of all the opportunities. Litigation and regulation are challenges, but they pale in comparison to the opportunities they accompany in terms of the value we provide to global investors. The investing public wants us to take on additional responsibilities. If these responsibilities fit our area of expertise, we shouldn't turn away from it; we should be willing to take on the challenges."
One of those challenges comes from the need to provide advisory and auditing services to underdeveloped countries. "As the majority of the world's output increasingly comes from these areas of the world, we have the responsibility and opportunity to determine how we can serve them by providing global best practices," says Lu, who adds that meeting those expectations requires a commitment by the profession to continuous global recruiting. "In China, as well as in other countries, the profession is still in a development path, so the potential is great," he says, explaining that in the Shanghai office alone there are professionals from 26 countries.
Tapping that potential is a challenge. "In this profession, we're engaged in a war for talent," says Van Arsdell. "It's true in China; it's true in the U.S.; and it's true across the world."
Other challenges arise from adoption of IFRS, auditor responsibilities for detecting fraud, and the lingering perception by the public that there has been a decline in audit quality in recent years, a perception that has been amplified by the mortgage meltdown and resulting financial crisis. One of the consequences of the concern about audit quality is a new call for mandatory rotation of audit firms. While Van Arsdell believes the idea merits some discussion, he emphasizes that "short-term rotation isn't the answer. Knowing your client’s business is extraordinarily important, and coming to deeply understand some clients’ businesses can take a long time. Continuity of information is also very important, so a rotation of 5 or 7 or 9 years would be a disaster. That said, rotating every 20 years might not be bad. But the central question is what problem are you trying to solve. To me, it seems that rotation is more of a solution looking for a problem."
Lu agrees. "I think that audit quality has not declined," says Lu. "In fact, I would argue that it has actually improved and that our focus on internal controls is very strong. Professional skepticism is what will solve an audit quality problem, not rotation."
That and strong ethics. "As an auditor, I wouldn't risk the reputation of my firm for any client," says Van Arsdell. "We always have to put the interest of the investing public ahead of our interests. The essence of the profession is that ethical context."
It's what both Deloitte leaders say they have learned not just from their time in the profession, but from their ILLINOIS education. "What I took away from my time at ILLINOIS was a grounding in values and principles," says Lu. "You will always have so many opinions and so much data coming at you. How do you make informed, professional judgments that are objective with so much information to consider? Your education here helps you frame those judgments."
Van Arsdell adds: "At ILLINOIS, I learned that you've got to do the right thing every time and that you should build quality into everything that you do. This sense of professional ethics is at the heart of all your interactions. When you operate from an ethical position, the client and the marketplace will see your value, and the profession will be better for it."