Have CPA, Will Travel?

There's a new raw-material shortage plaguing global business — only this one is in the finance department.

While the Sarbanes-Oxley Act has sent U.S. companies and accounting firms scurrying for financial talent, the problem is not limited to these shores. "There's a shortage of accountants throughout the industrialized world," says Rick Robertson, a professor of accounting at the University of Western Ontario.

While there are no exact numbers, the widespread push for stronger financial controls and improved governance has increased demand for accountants from Canada to India, where there are just 130,000 accountants currently chartered (versus more than a million in the United States). In addition, nearly 100 nations, including those in the European Union, are striving to implement International Financial Reporting Standards (IFRS), further driving demand.

The situation is particularly acute in China. By some estimates, a booming economy will leave the country more than 100,000 accountants short. Due to a long history of state-run business, accountants with experience preparing Western-style financial reports are few and far between. "There's a need for a particular level of reporting, legal, and regulatory expertise in a capitalist society that you don't have in a centrally managed economy," says Chris Higson, a professor of accounting at London Business School. "Those higher-level accounting skills are still largely absent in China." The Chinese government also announced this year that the country would be adopting IFRS, sharpening the need.

There is no quick fix. Students in Ireland and the UK continue to flock to the subject area, in part due to the high — and rising — salary levels and the opportunities for global work, says Peter Clarke, head of the accounting department at University College Dublin's Michael Smurfit School of Business. "We have more people taking accounting now than we have had in years," concurs Robertson. But training takes time; the benefit for business from today's bumper crop of students is likely five or six years away.

Different regions are approaching the supply problem in different ways. India's Institute of Chartered Accountants has reduced the required number of years of training to four from more than five. CPA Australia and the Australian government have launched a program to lure retired accountants back into the workforce. Meanwhile, China has enlisted England's Institute of Chartered Accountants to train 50 Chinese students a year. — Kate O'Sullivan

Global Shortage
Countries and regions seeking accountants

Australia
Canada
China
Eastern Europe
India
Japan
United Kingdom
United States

Source: News reports

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Expending Energy on Energy

Like consumers, companies are feeling the squeeze from rising energy prices. On average, electric rates are rising 15 percent per year. Wholesale natural-gas prices have tripled over the past several years. "As a nation, we're in the middle of a perfect storm," says Richard G. Lubinski, president of energy consultant Think Energy Management LLC. "CEOs, COOs, and CFOs realize they are looking at a budget-killer."

Take Carquest Corp. For years, energy was an afterthought at the auto-parts retailer and distributor. That changed last summer, when the Raleigh, N.C.-based firm learned its $21 million annual energy bill might top $30 million in 2006. Suddenly, energy was a high priority. "To the finance folks, a 25 percent increase sounded like extortion," recalls Adam Rice, director of energy and facilities management. "We had to learn to manage energy or energy would be managing us."

Energy consultants were dispatched to Carquest's 1,500 stores and 43 distribution centers. Thousands of utility bills were scrutinized. Stores and warehouses got energy makeovers. Automatic timers were installed to control heating, lighting, and air-conditioning. Even lowly lightbulbs were swapped for longer-lasting replacements.

In a similar move, hotelier HEI Hospitality sought to curb its energy bills last year. The effort began with a detailed analysis of energy use at the Norwalk, Conn.-based company's then 27 hotels. From there, HEI instituted a program to cut usage. In back offices, lights were dimmed or turned off at the end of business; energy-efficient doors were installed to reduce heat loss. "Understanding our consumption was a first, big step," says CFO Ernie Freedman.

Other firms are turning to Energy Star, a federally backed program that provides information on energy efficiency. One of its tools rates commercial buildings on a scale of 1 to 100, based on a year's worth of bills for lighting, heating, and cooling. Savings are also being found on the supply side. World Energy Solutions Inc., an online energy broker, conducts reverse auctions for clients seeking electricity or fuel in wholesale and retail markets. Recently, World Energy fielded 38 electronic bids from four suppliers interested in supplying a Massachusetts life-sciences firm. The winning bid was $300,000 lower than the local utility's.

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