Solving America’s shortage of accountants

This is an audio transcript of the FT News Briefing podcast episode: ‘Solving America’s shortage of accountants’

Josh Gabert-Doyon
Good morning from the Financial Times. Today is Tuesday, September 5th, and this is your FT News Briefing.

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UK banks want their employees back in the office. A shortage of accountants is causing problems in the US. And a new FT podcast investigates a controversial Russian banker who fled to the US.

Courtney Weaver
As I started making calls on the story, two people I’d known from when I was reporting in Russia at the time, it just became clear that the story was much murkier.

Josh Gabert-Doyon
Plus, Brazil’s former president, Jair Bolsonaro, is caught up in a jewellery scandal. I’m Josh Gabert-Doyon, in for Marc Filippino, and here’s the news you need to start your day.

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Some British banks are trying to bring about an end to the work-from-home era. Starting this week, Lloyds Banking Group is requiring staff to come into the office at least two days a week and throwing in free food to lure them back. HSBC and the US bank Citi have already told their workers in the UK they must be in the office at least three days a week. Bank executives and managers say it’s necessary to increase productivity. That’s especially as they head into September, a typically busy month in capital markets after the summer lull.

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There is an accounting crisis brewing in the United States, and it’s starting to have some unexpected impacts on how the country’s economy works day to day. The problem? There just aren’t enough auditors to go round, mostly because it’s really hard to become an accountant. Now a growing movement is trying to make it easier. The FT’s US accounting editor Stephen Foley told us more.

Stephen Foley
We have a dramatic decline in the number of people taking the exam to qualify as an accountant, and that is a kind of the knock-on consequence of there being fewer students going to university because of demographic trends and fewer of those taking accounting degrees. And this is all happening at the same time as we’re getting a wave of baby boomer retirements that’s thinning out the top of the profession as well.

Josh Gabert-Doyon
Stephen says that one of the biggest issues is the educational requirements needed to actually be allowed to sit the certified public accountant exam.

Stephen Foley
Twenty, 30 years ago, there was a movement to elevate the profession by making it something equivalent to a law degree requirement in higher education. Instead of just a four-year degree — 120 hours of education — you actually need a fifth, taking you up from 120 to 150 hours.

Josh Gabert-Doyon
Today, this 150-hour requirement is turning people off from becoming accountants. With fewer people getting into accounting, a shortage is starting to be felt if not quite yet by the big accounting firms, then definitely for the smaller ones.

Stephen Foley
The knock-on consequences of that is that some of them are now starting to shed some of their clients in niche areas such as fire insurance, pensions and watershed districts, the small government areas that make America tick. And we’re starting to see people losing their auditor and having to scramble to find new ones. We’ve seen credit ratings being dropped from some municipal debt issuance because they haven’t been able to file timely accounts. And obviously, if this is a crisis that is starting in these areas, if it starts to spiral, then quite a lot of our financial system is going to be under pressure because audits are a fundamental part of how we run our financial system.

Josh Gabert-Doyon
Now, some states are pushing for legislative change to help solve the crisis.

Stephen Foley
Minnesota has been the first out of the gate. South Carolina is coming up with legislation of its own that will create at least the option of allowing people into the profession with 120 hours. But this is freaking out people on a national level, because what this threatens, according to national associations, is undermining the reciprocity that we have across all 50 states. If it’s easier to qualify in Minnesota and South Carolina, will those accountants be able to practice in the other 48 states? So the national associations are saying, “Please hold your horses. This is going to untangle and unravel a very delicate system”.

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Josh Gabert-Doyon
Last year, a prominent Russian banker was granted asylum in the United States. It was a rare instance of a member of the country’s business elite pushing back against the Putin regime. But the story of Sergei Leontiev turned out to be a lot more complicated than it seemed at first glance. Was he fleeing persecution by Moscow or was he a fraud, as the Russian authorities claimed he was? That question is the subject of a new FT podcast co-hosted by Courtney Weaver, the special correspondent for eastern Europe, and Stefania Palma, US legal and enforcement correspondent. Courtney joins me now to talk more about the podcast. Hey, Courtney.

Courtney Weaver
Hey, how’s it going?

Josh Gabert-Doyon
So let’s start with the basics: who is Sergei Leontiev? Who is this guy?

Courtney Weaver
So Sergei Leontiev was a Russian banker. He founded a private bank in Russia right after the fall of the Soviet Union. And he helped build this bank kind of in the 1990s and 2000s when Russia’s economy was getting off the ground after the fall of the Soviet Union. And then it all came crashing down. In 2015, the Russian central bank revoked one of his main bank’s licenses and he fled the country. And ever since, Russia has been pursuing a legal vendetta against him all over the world.

Josh Gabert-Doyon
OK, right. So that’s the other side of the story, which is the charge that the Russian government made against Leontiev, basically saying that he was a fraudster. Can you explain what he’s been accused of?

Courtney Weaver
Sure. So basically, they allege that he was embezzling money from the bank, that he was using all these offshore structures to take money from the balance sheet. They basically say he’s defrauded all these bank depositors and that’s why they’re pursuing all these court cases against him, you know, in places like Liechtenstein and the US. That’s why there was an Interpol red notice out against him that they’re just trying to get the money back for these Russian depositors. And obviously, Leontiev firmly denies that version of the story, and there’s a lot of reason now to question Russia’s motives in these sorts of cases. So that’s really what we were trying to get to the bottom of, you know, who was telling the correct story here and was it as black and white as it initially seemed as it was presented to us?

Josh Gabert-Doyon
And how did the war in Ukraine affect Leontiev’s asylum case in the US?

Courtney Weaver
So Leontiev received asylum in New York a few weeks after Russia invaded Ukraine. You know, on the surface, it was this kind of classic story of Leontiev said he was an ally of Alexei Navalny, who, of course, is the main opposition leader in Russia, and that he had been politically persecuted by the Putin regime because of these links. But as I started making calls on the story to people I’ve known from when I was reporting in Russia at the time, it just became clear that the story was much murkier. And in Russia, it’s kind of hard to see where the truth lies, especially when you’re talking about Russian business that was started in the 1990s and went through the 2000s. And it’s really hard if you are a country like the US trying to decide if someone deserves asylum or not. How do you kind of do your due diligence on these sorts of stories?

Josh Gabert-Doyon
What do you think Leontiev’s story tells us about Russia?

Courtney Weaver
I think people in the west were a lot more receptive to Leontiev’s story after the invasion. You know, I think there obviously were people leading up to the war who were obviously deeply sceptical of the Putin regime and what it would do to its enemies. But I think you’ve kind of seen in the year and a half since the war began businessmen who are coming out against Putin. A lot of people are looking at this as a potential card to play. And I also think it’s important to point out, you know, there are a lot of very wealthy Russian businessmen who were on the outs with the Putin regime before the war broke out, not because of any political stance, but because, you know, they were fighting with other powerful people in the Russian government or someone else wanted the asset. Like there are a lot of reasons to fall afoul of the Putin regime. And politics is not the only reason.

Josh Gabert-Doyon
Courtney Weaver is the FT special correspondent for eastern Europe. The first episode of “The Russian Banker” podcast is out now and available on the FT’s Behind the Money podcast feed. Thanks for speaking with us, Courtney.

Courtney Weaver
Anytime. Thanks.

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Josh Gabert-Doyon
Before we go, let’s talk about the former president of Brazil, Jair Bolsonaro. Two months ago, Brazil’s top election court banned the rightwing populist from running for office until 2030, setting a number of campaign violations before last year’s election.

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Josh Gabert-Doyon
And now Bolsonaro is having a bit of a bling issue.

News clip 1
Brazil’s federal police interrogated former Brazilian president Jair Bolsonaro and his wife, Michelle, regarding the jewellery gifts he received from Arab heads of state.

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The items in question: a necklace, a ring, a watch and a pair of earrings.

Josh Gabert-Doyon
Bolsonaro received the items on official trips to Saudi Arabia and Bahrain while in office. But under Brazilian law, these kinds of gifts are supposed to enter the public collection. And now police are investigating claims that the former president and people in his inner circle conspired to sell the expensive jewels.

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The 68-year-old denies any wrongdoing. But if he were to be convicted, he could face jail time.

Josh Gabert-Doyon
But don’t write off Bolsonaro’s influence on Brazilian politics just yet. A recent opinion poll said that he’s just as popular today as he was on election day last year.

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You can read more on all of these stories at FT.com for free when you click on the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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