(From left, Chris Jenkins, Stephen Stokes, Prateek Sharma, Michael Edens. Photo by Amy Randall Photography)

The banking industry has faced its share of challenges in recent years, but many financial experts say the economy in general looks to be in good shape.

Integrated Media Publishing hosted a roundtable discussion with four leaders in the world of finance and banking on Sept. 9, 2024. The topics ranged from consumer spending to lending to cryptocurrency.

Here are excerpts from that conversation, edited for brevity and clarity.

The participants were:

Stephen Stokes, president and managing partner, Stokes & Company CPAs

Chris Jenkins, audit partner, Cherry Bekaert

Prateek Sharma, Ph.D., clinical assistant professor of finance in the USC Darla Moore School of Business

Michael Edens, Columbia market president, First Reliance Bank

Integrated Media Publishing Editor David Dykes moderated the discussion.

Q. Let me start by throwing this question open, and as you feel compelled to answer, please do. Barron's reported Sept. 2 that shoppers have embraced spending more demurely and mindfully, but they haven't given up on it. That has kept the U.S. economy humming. And the crucial question now is when and if at all consumers will apply the brakes. Jason Furman, a Harvard economist who chaired the Obama administration's Council on Economic Advisors, wrote on X that the economy is looking in fine shape overall. Do each of you agree, and what are the immediate financial challenges facing businesses today? Michael, we'll start with you.

Michael Edens: We're starting to see somewhat of a slowdown in consumer spending. So far, delinquencies on consumer loans haven't been elevated yet. I would assume that they will start to (be elevated). When you had so much money pumped into the economy during Covid, I think a lot of people created some bad spending habits, and they burned through their Covid savings. That's pretty much completely gone. … They created these bad habits. They couldn't break these habits, so they switched from the money coming out of their saving account being loaded on to their credit card. And now credit card balances are at an all-time high. I think eventually, the shoe will drop. People will run out of credit card availability, and you'll see a pretty significant slowdown. That's my personal opinion, but things are trending that way.

Q. Dr. Sharma, you are nodding in approval.

Prateek Sharma: The spending has been pretty resilient, even with high interest rates. Consumers have been spending wisely, picking products that are less premium, more consumer-driven. But it did create a whole bunch of bad spending habits, which does happen from time to time. We're hoping it doesn't escalate into something negative for the banks, or does it increase delinquencies? But overall, yes, consumers have been pretty wise in spending, and yes, that has pushed the U.S. economy along pretty well. But there are always risks in the economy from bad spending habits.

Q. Chris, what are you finding in terms of businesses? Access to capital, forecast, profitability and spending. Are you seeing any major changes?

Chris Jenkins: I think we're seeing a lot of businesses being very conscious about cost controls and ensuring that they're spending money wisely. In regards to capital projects, I think a lot of companies right now, especially in the industrial sector, are really waiting and seeing where interest rates are going, where investments are going to be able to be made. That access to capital that you referenced is really important. A lot of private equity firms and funds have a lot of dry power still to deploy, and so we're starting to see that go into very interesting areas. Private equity is investing a lot in public accounting firms. They're also investing in insurance in other areas that maybe they traditionally haven't. I think there's still a lot of dry powder and capital out there.

Stephen Stokes: I would agree with that. Overall, at the micro level and the small businesses we deal with, I have seen a lot of uncertainty and really a lot of changes. I've been a CPA for about 20 years, and I’m seeing more businesses close or sell in the last couple of years than in previous years. Now, we're also seeing a lot of new businesses opening, so just a lot more turnover than typical, I would say. I think inflation has hit a critical point with a lot of small businesses. I think everybody's just waiting to see what happens here with tax laws, interest rates.

Q: One of the things that I've heard pretty much continually over the last couple of years, following up on access to capital, and you mentioned private equity. Still, a lot of businesses, I hear, can't find access to capital in this area. They still have to go to Silicon Valley, go to California, maybe North Carolina, to find that capital they need to expand. Is that situation improving in South Carolina, in our area, or is it still difficult to find that capital?

Stokes: I think it is still difficult. Definitely hearing that lending standards are more stringent than they had been. Process takes a little longer. I think working capital has been an issue with small business owners not being prepared for the long haul. Those are some of the challenges.

Q: Chris, what’s the solution?

Jenkins: Not really sure of the solution necessarily. … I think that smaller deals are getting done a little bit easier than larger deals, whereas during the pandemic, 2020 to 2022, I think we saw a lot of really large deals being executed. So, we're seeing a lot of smaller deals. But a lot of my clients are still in the process of acquiring other companies. A lot of PE funds are putting together portfolio companies and then adding on strategic additions. A lot of purchases of mom-and-pop, smaller businesses and folding those into a larger portfolio company and executing on a very specific strategy. They're just smaller deals than we've seen in the past. I know that Cherry Bekaert has been looking at the private equity landscape. We've got a recent report that was just released last week and seeing a little bit of a resurgence in deal making. It'll be interesting to see how that plays out.

Q: Dr. Sharma, does that follow what you've been seeing?

Sharma: From our end, our perspective is more from the recruitment point of view. Over the past couple of years, we have seen a couple of private equity firms recruit from our school of business. Now, whether they're taking them to some other place, we're not really sure of, but we have seen, at least from a recruitment point of view, an interest in recruiting our students. If that's reflective of their investment in local businesses, that could be a different thing.

Q: Michael, are lending standards tightening these days?

Edens: It's kind of a back-door answer. On the surface, your lending standards as far as a loan-to-cost on a project, when interest rates were, say, in the fours, an 80 percent loan-to-cost deal would cash flow and work. But when rates such as the prime rate today is 8½ percent, when you're looking at rates in the sevens or eights, that debt-service coverage ratio, that cash flow may not cover because of the elevated interest rate. So, then you have to require your loan to be less so that way the numbers work. And it's not so much that banks are pulling back and being more conservative on a loan-to-cost than say, maybe only financing 60 percent is because they have to, because the cash flow doesn't work, only because the interest rate is elevated. We're lending money. We're looking for loans. I think in the community bank space that we're in, the banks are extremely healthy. They're looking for good high-yielding debt. There's a little bit of pullback only because of the prospect of the project cash flowing. Everything else, our credit quality is at an all-time record to the good.

Our non-performing asset ratio is 0.03, which is almost next to nothing. It's about $300,000 of loans we're concerned with on an almost $800 million loan portfolio.

Q: Let me follow up and ask you this, Michael. One of the informal adages you hear people being told in starting a new business is beg, borrow, and steal, not literally, but figuratively for the first three years. Is that still a decent time frame for someone starting a business, get through the first three years?

Edens: I think in some cases it can be a little bit quicker, especially in today's world of technology and e-commerce, you can get products out much quicker and deliver your services or goods. So, I would think in today's world, if you haven't hit it by three years, you may need to pivot, so to speak. But I would think at least three years would be plenty of time to start turning a profit.

Sharma: With changes in technology, things are rolling out much faster. You can hire much faster. Even credit approvals are much faster because given the amount of information you can get on your borrower. So yeah, I think three years, in some cases, would be way longer than you would expect. In some cases, within a year or so, you would know whether you're still running the shop or not.

Q: Chris, what do you tell your clients?

Jenkins: As far as a time frame?

Q: They come in to you with a business plan, and I'm sure you and Stephen have seen many business plans, some better than others. But what do you look for when they come to you that might be red flags or something you need to counsel them about?

Jenkins: I would say one of the things we see a lot is just diligence around data and being able to understand what's happening in real-time. This hits the finance function and the accounting function a lot, where companies are underspending on either technology or people to be able to have that data to make good business decisions. It becomes really crucial to establish good KPIs, key performance indicators, and to be able to hold all different areas of the business accountable. So, really the role of the CFO, is to go out and to be able to establish what is the price that we're going to sell our product, what's the margin that we're going to make, and really being able to execute on that well. And in order to do that, you need good data. So, a business starting out is really going to need to pay a lot of attention to how are we going to establish those KPIs, how are we going to execute on that, and how are we going to have good information to be able to execute the business strategy. 

Q. Stephen?

Stokes: I would agree with that. I would say most small business owners I've talked to and small business plans I've looked at tend to probably overestimate the revenue and how soon that's going to come in, and probably underestimate the expenses. I think just by nature, a lot of entrepreneurs are very positive, which is good in starting up these businesses, but they tend to not look enough at the data like Chris said and not prepare for the unexpected or the ups and downs of running a business, which again goes back to having enough working capital, being prepared, having a strong relationship with your bank, and just looking at the whole picture of the business, not just like that you have a good product.

Q: Let me follow up with that. In your experience, and this, I think, applies to all of you. In a partnership, a lot of folks who start partnerships may not understand the significance and importance of having a managing partner. Is that a mistake that small businesses are still making these days? Stephen, do you want to start?

Stokes: I'll start with that. I think it still is an issue. I mean, I was always told no ship sinks faster than a partnership, and definitely I've seen my fair share of challenges with that. I think a good partnership is going to spend a lot of time doing a lot of due diligence about working together, having a good operating agreement, a good attorney they're working with, and try to lay out as much as possible before the partnership starts operation. If you got different kinds of partners, you got the operating partners, you may have limited partners, and everybody has their different expectations, expertise. It can be very complicated, but a partnership can also be very powerful and allow a business to thrive more than a solo practitioner could with all the additional help.

Q: Chris, is that a red flag to you if you have a partnership and there's not a managing partner?

Jenkins: Like Stephen was mentioning, there’s working with a good attorney, having a good operating agreement, knowing the role of each person in the business and each of the partners is going to be really critical to executing the business plan. If you had a business plan and you don't really know who's responsible for executing on each of those strategic objectives, that can be really challenging. Having active partners that are involved in the business and bringing that to fruition is really important.

Q: Dr. Sharma, does there need to be a gatekeeper identified as a managing partner?

Sharma: Yeah, definitely. That's what we've observed. In partnerships, you can sometimes get stuck on the same idea because you just tend to agree with each other. You obviously need at least someone from the outside, be it a managing partner, be it an attorney, be it an accountant, someone to tell you what you're doing right, what you're doing wrong. Otherwise, from a business owner's point of view, they are always right. But someone needs to tell them when things are not going right. That definitely adds value.

Q: Michael, I don't know if you've seen in a loan situation where you have a partnership and one of the partners is in charge of financial responsibility, keeping the books, paying the bills. The other partner, who may be the majority shareholder, decides that he wants to pay his chiropractic bill out of your business account, unbeknownst to the partner who's keeping the books. Do you encounter situations like this? And what's your counsel?

Edens: Very rarely. But the counsel, I would say, is at the origin of the partnership to have very clearly defined job functions for each member of the partnership, which is obviously outlined through your articles of organization operating agreement to make sure everybody knows exactly what to do, how to do, when to do. I'm a football guy, the old football saying, when a coach says, Yeah, we've got two quarterbacks, that means you got no quarterbacks. So, making sure that you've got someone that's the point of contact at the point of control to manage the partnership, I think is crucial.

Q: OK Michael, let me come back to you on this one. According to the Wall Street Journal, the head of America's biggest retail bank, JPMorgan, has a warning for its 86 million customers: prepare to pay for your bank accounts. The warning, according to the Journal, new rules that would cap overdraft and late fees will make everyday banking significantly more expensive for all Americans. No. 1, is that true? And what lessons have we learned from the recent banking turmoil and the evolution of governance practices?

Edens: It's interesting in a capitalistic economy, there's a lot of brilliant minds that always figure out a way to outsmart the government. When the government passed the Durban Amendment to cap interchange fees, they said, Oh, the consumers are going to win because all of these businesses are going to pass on the savings to the end user of products and services, and it just didn't happen. The more regulation that we have, I think it becomes more expensive. Those expenses are always passed on to the consumer, be it in banking or any other industry or financial sector. As far as paying for banking services, we went through this during Dodd Frank. Everybody that I know of is still, for the most part, offering free checking if you have direct deposit or a required minimum balance, so I think a lot of it is just talking points, scare tactics. We’ll see how it plays out, but that's just my personal perspective.

Q: Dr. Sharma, I don't think I've met a banker yet who thinks that they're underregulated. What are the trends these days?

Sharma: In terms of regulation?

Q: The lessons that we should have learned from the banking turmoil and the continued and constant discussion about governance and regulation.

Sharma: Well, had we learned the lessons, we wouldn't have had things like Silicon Valley Bank and others that we had a year and a half ago or something. We have a whole bunch of regulators. I think any bank on an average has what, three to five different regulators. You got the state, you got FDIC, you got OCC, you got the Federal Reserve. And in spite of that, we still had a banking crisis. So, did we really learn our lesson? Well, I don't think so. Do we need more regulation? If it comes down as a top-down thing that regulators decide this is what is right and this is what should be done, not really. It should more be in consultation with the banks. It has to be a two-way thing. What we think proper regulation is and what we can agree with the bank is the proper way to regulate banks. That would be a more prudent approach rather than just the regulators handing out stuff like, OK, do this, do this, do this. That kind of thing.

Edens: I want to interject there. Additional regulation would have not eliminated what happened in March of 2023. Enforcement of current regulation would have stopped what happened in March of 2023. So, it's not a matter of additional regulation. It's a matter of enforcing the current regulation, which those banks, especially SVB, were cited, but they were never punished or enforced to make changes during that scenario. So, I don't think additional regulation, and you're right, you've never met a banker, neither have I, that thinks we're underregulated. I think proper adherence to the regulations that we currently have would be better suited for our industry than just bringing on additional regulation.

Q: My next question to you, Michael, would be outside of the world of regulation. The bank that I currently use now, when I go through the drive-through window for a simple deposit or some simple transaction, they send a code to my phone that I have to acknowledge and punch into my phone before the transaction can be completed. Now, I've been banking with this bank for a long time. I know the tellers who are in the window, but they still have to do that. That seems to me to be overkill and in a direction I don't really want to go. Why is that?

Edens: I agree with you. To me, that seems like overkill. We have a simple saying in banking, know your customer. I think that in a situation where if you are going to that drive-through and you see Samantha and Cindy and John back there that you've known forever, I think that's a little bit of overkill. I will tell you, fraud is so rampant today in so many different aspects, both from technology all the way down to paper counterfeit and fraud checks, wire fraud. It's just really rampant. And with this artificial intelligence stuff that's coming online that's so new, I think it's only going to get worse. So, I think banks are trying to mitigate as much risk as possible. To me, that's a bigger bank. Your scenario, that's a bigger bank issue where they may not know all of their clients like they should. … We do what we call wire callback. So, David, if you send a wire request to me via email that's got the wiring instructions, we're going to plug it all in, and then I'm going to pop on the phone with you and talk to you and verify that wire.

Sometimes I'll even call the recipient of the wire to verify their information as well. We are trying to require our business banking customers, if they do wires, to do them themselves in their office with a token password and initiate the wires themselves because that also helps in eliminating wire fraud because we have seen where, for instance, a real estate closing is going to happen, and on the day of closing, Hey, change of plans. ABC law firm’s now going to handle the closing for us. I know this is a last minute change, but can you send the loan proceeds to this bank? Well, the person's email had been hacked, and so they changed the banking information to where the wire was going to get sent, and it gets sent off to some other fraudulent account. As soon as the wire hits, the money is gone because a wire is an immediate fund. So, it's a balancing act between customer service and protection of the bank's assets as well.

Q: Dr. Sharma, is AI good for banking?

Sharma: It will be, eventually. I think AI can do at least a whole bunch of number-crunching, data processing much faster than humans. But then again, with AI, the biggest thing is garbage in, garbage out. It depends what you feed it. If you feed it random unstructured insensible data, it'll give you insensible output. We have a bunch of issues with AI, a bunch of ethical issues as well. Like any new technology, It's still coming up, and eventually it should be good for banking, but we'll see how it goes.

Q: Do you think we’re headed in the right direction?

Sharma: I think we're headed in the right direction in most of the cases. But of course, there will always be some nefarious elements out there who might try to rush a product into products that's not complete. That may not eventually be helpful to the customers or to the banks. But overall, I think, yes, we're headed in the right direction with AI, and AI could help us speed up banking the way it is right now.

Q: Chris, how does AI affect your work, your firm's work, but also your clients?

Jenkins: Yeah, it's really interesting. At Cherry Bekaert, we're using artificial intelligence. I'm on the audit side of the business, and we use it to look at large data sets. And what it's allowed us to do is to do a lot more effectively and more efficiently. And so, we're looking at large data sets, matching up cash transactions to revenue, and being able to prove that out. Then we're only looking at exceptions and then verifying a more limited set. Whereas normally, say if I was auditing a company and I would look at 100 or 150 revenue transactions, I'm now able to look at 25 or 40. Then I'm also looking at a set of exceptions. We're able to look at more, have a higher quality audit, and use less time. I think it's very impactful for our business. The ethical issues, I think, are very important and need to be addressed. We'll see where that goes and what large corporations, universities, and other institutions that are affecting AI, how that will transpire. I think it's imperative for business owners and for those that are running businesses to be looking at artificial intelligence, how they're integrating it into their business, because I'll tell you, their employees are using it. You just may not know about it. You really want control that data so that you're not having leakage out of your enterprise, making sure that your customers’ data is secure, making sure that there's clear communication with your employees of how do we use this technology in our business. But I think it’s a very powerful tool  that will be able to assist employees and businesses in the future.

Q: Stephen, at Stokes & Company is AI a topic of a lot of conversation?

Stokes: It is a topic of a lot of conversation. We are, I would say, pretty slow to roll it out in use. One thing Chris just said about having a policy for use is where we're at right now is developing that policy for how we would use AI. We may be a little later to the game there. … I’m talking about our firm specifically, and I would probably say a lot of our small business clients as well. Just having somewhat limited resources for the types of AI that are available, the less expensive seem to have less control with the product you get from AI. A lot of what I see, as we are studying it a lot, is somewhat like the Wild West a little bit, too. There's just all kinds of information floating out there. Every day there's a new AI technology. Some get better, but then there are new ones. It can be very confusing, and a lot of people are confused about how to use AI and what they're getting from it.

Q: I think each of you has touched on for small businesses, investing in technology is so important. But when you're a startup and you've got payroll and health care to worry about and other things of starting your own business. Technology, it's not inexpensive. So how do you counsel companies on prioritizing technology? And, Stephen, I'll throw it back to you.

Stokes: The first thing that comes to my mind when you talk about technology is, I'm thinking about high labor cost has been a struggle for almost every business as they try to increase their pricing. They’ve got higher labor costs. Seems like they're just spinning their wheels and not making any progress. So, one of the best areas to probably look at improvement is with technology. So, I think that businesses have to allocate resources, their budget to technology. I don't think sitting back and saying they're not going to use technology is definitely not going to get them to where they need to be. I think if they need to start small, allocating some of their budget to technology. But I think it's a must to have in every business a good use of technology, improvement, to be able to compensate people like you should, just any way to be more efficient, increase margins through the use of technology.

Q: Chris, do you agree?

Jenkins: I do. I think it's really important that as companies are investing in technology, that they're working with a strategic partner like a CPA firm or another organization that's skilled and knows what's happening in the market so that they can deploy technology in helpful and good ways. I think just investing in technology and just spreading dollars out there is not good. We see a lot of companies that deploy new ERP solutions, new accounting solutions, new technology solutions, and a lot of times those projects fail. And so, a lot of the services that we're offering to our clients revolve around digital transformation and understanding what are the objectives of this project and making sure we have a good roadmap for implementation so that the dollars that are spent are spent in a way that will ultimately be successful and beneficial to the business.

Q: Dr. Sharma, what has your experience been?

Sharma: I think I would totally agree with Chris. Firms need to partner with someone like a strategic technology partner who can help them right from the onset of a startup to how the technology can be scaled up as the business grows. Of course, every firm does not need AI, at least not when they're starting up. Maybe once they've reached a particular scale, yes, other technologies might come in. So, a strategic partner definitely is a must for any kind of firm because they understand technology way better, the lifeline of that technology, lifetime of that technology, and the scalability of that technology. So, firms should definitely get a strategic technology partner.

Q: Michael, when you're looking at a P&L or a business plan, how deeply do you drill down to look at technology as part of the proposal?

Edens: Well, I think if you're not utilizing technology and now AI, you're a dinosaur. I think in any business, technology has got to be a key part of it. It is expensive, but it could also save you a lot of money. If you've got the ability to have some technology do the work of three or four or five FTEs, then hopefully you end up saving on that end. We do look at technology and the expense of technology and how a business is using that to better utilize the technology to create profits. From our institution, we're constantly looking at all different facets of technology from your online access, your mobile banking, digital account opening. We have chatbots that you can go online. If you have a question, you can ask the chatbot or whatever a question. What's interesting, though, is it also has a person behind that chatbot. So, if you hit a dead end with the artificial intelligence piece, it can take you to a live person. Apparently, say, Hey, look, I don't think the technology was understanding what I was asking. Then you can go and ask a human. Like it or not, everybody's got to keep technology at the front and center of what they do every day. If not, you can get left behind.

Q: Since you have the floor, let me pivot to what are your views on cryptocurrency?

Edens: I guess I'm old school. Maybe I'm a dinosaur from this perspective, but I'm not a fan of it. Most bankers are not. As an investment, if you wanted to take some of your personal money and invest in some sort of cryptocurrency, then that's your prerogative, and I'm OK with that. I'm not saying that I wouldn't even do it myself. As far as it being some sort of trading currency or accepted in banks, I think there's too much volatility in it. Two or three months ago, I think Bitcoin was trading in the mid $70,000 range. I think today, or at least recently, it was in the mid $55,000 range. That's a pretty large swing to be pegging something that needs to be stable and dependable. So not a huge fan of it.

Q: Dr. Sharma, would you invest in crypto?

Sharma: So, I do, I do invest in a bunch of coins. But again, if you want to invest in it, you need to understand the risk associated with it. And investing is your prerogative. If you can handle that amount of risk, yeah, sure, go ahead and invest in it. In terms of crypto becoming a currency that we use on an everyday basis, again, we're not there yet. I certainly believe we'll get to that state someday. It won't replace our traditional banking system. It'll just add on to what we have. It won't replace the dollar. But yes, in certain cases, cryptocurrencies will enable certain transactions in a much easier way than our current systems can do. So, I'm definitely looking forward to it, and I believe cryptocurrencies do have a future. Maybe not yet, but yeah, going forward … cryptocurrencies will be a part of our lives.

Q: Do you invest in crypto over stocks, bonds, mutual funds?

Sharma: So again, that is the discretionary part of my portfolio. That's the portfolio where … even if you just lose out the entire amount, you should be OK with it. It should definitely not be a part of your core portfolio. Definitely, definitely do not put your retirement savings in there. It’s like a gamble if you can afford lose. At this point of time, cryptocurrency is a gamble. If you're going to afford to lose, sure, go ahead.

Q: Chris, do you invest in crypto?

Jenkins: I have in the past. I don't currently hold any cryptocurrency in my current investment portfolio. I think it's interesting. There's really two parts to crypto as a generic term. One is the blockchain and the technology behind it. I think it's very fascinating. I've always been interested in cryptography, and so it's very fascinating how it works. I think its applicability to business right now is very limited. A lot of ERPs and other computer systems are able to do what cryptocurrency or the blockchain promises to do at a much lower energy output at a lower cost. I think as a technology, we're not really to the point where maybe it's going to be a huge part of business and what we do. As an actual currency, I think, obviously, there's a big warning to everyone out there that there’s a lot of fraud in the space. If you've been following cryptocurrency and crypto investments over the past four to five years, there's been a lot of attempts to create a mini banking system. We've had a lot of firms that have gone under. … So, there's a lot of risk out there. There's a lot of fraud. I would just really caution everyone on that front. I think as a specula of investment, as long as you realize what it is, I think It's interesting, it's fun, and I'm curious to see where it takes us in the future.

Q: Stephen, are many or any of your clients investing in crypto?

Stokes: Some of our clients are invested in crypto. My personal opinion about it is I agree with Chris and Dr. Sharma here that it is a good business tool for some businesses currently. I think it has a lot of potential. I think for the average unsophisticated investor like myself, investing in crypto would probably not be the best idea, but someone who understands what they're invested in more than just trying to make a quick return or gamble could be a good investment for them. But I think just in general public information, I think it's been misunderstood, like what crypto is for. It's not just to make a quick return. Just like a fun thing to do.

Q: Can you give us an example of a business that should be considering crypto investing?

Stokes: Yeah, I think definitely I'm just thinking of a global business. … Again, this is not my area of expertise, but I believe crypto is used more in the global market than, say, even in the U.S. market. So, I think a business that is wanting to do business globally or internationally should probably understand how they might utilize crypto for transactions or different suppliers they work with, just to have a good understanding of how that might work.

Q: Well, let me start with this question for Chris, you and Stephen. The Wall Street Journal says fewer people are leaving college with bachelor’s or master’s degrees in accounting. It says, the lack of a strong pipeline of accountants is particularly concerning given, for example, the role auditors play in ensuring trust in the capital markets. The Journal says that businesses and accounting firms need to further increase salaries, which would in turn attract more students to an accounting major. That true?

Stokes: Yes, definitely. I don't know about you, Chris, this, but every CP or I go to everything, this is pretty much the dominant topic. Like 90 percent of the time is spent talking about the need for more accounting professionals. I'm a part of the South Carolina Association of CPAs, and we're forming a new committee just specifically for growing the accounting profession and looking for new and better ways to do that. This is a huge challenge. It has been for a long time, and it's just gotten progressively worse. There are a lot of good ideas out there. I'm hopeful of some solutions coming up. As you mentioned, starting salaries have not kept up with other professions. Not only has this starting salary not kept up, we've increased the amount of education required to get a CPA license. I'm very proud of the profession and what the standards that people have to uphold to be a CPA, but what we're doing right now is not working. We got to try some different things. With the association I'm part of, and a lot of smart people are working towards that. I'm very hopeful of some solutions in the near future.

Q: Chris, how serious is the situation?

Jenkins: I think it's like anything; it comes in waves. I lead recruiting efforts in South Carolina for the firm. Just recently at a large university in the state and just experiencing the buzz in the room at that specific accounting recruiting event. I think it was just a lot more buzz than in prior years. I feel like with the labor markets as they changed, that it felt like candidates were a little more hungry for positions and for work, whereas two years ago, I think there was just a lot of anyone who could walk and chew gum was getting a job. I think the markets will continue to shift and change as we go through just regular economic and other business cycles. I think Stephen's right. As a profession, we need to address the barriers to entry in the profession and how are we able to get good candidates into the profession to train them and to protect the CPA brand and making sure that from a licensure perspective and from an education perspective, that CPAs are well-equipped to serve clients and to protect the interests of the public. A lot of firms are doing some interesting things. One of the things that we're doing at Cherry Bekaert is we have a program that will help some of our current employees who maybe don't have all the education requirements needed to achieve a CPA.

We'll actually help them with up to 30 credits and going back to school, getting the education that they need, and then assisting them in applying and taking the CPA exam.

Q: When you say help, are you talking about financial help?

Jenkins: It's a reduced tuition program. The employee would also have some responsibility there in investing in their future. But it's just that we're trying to break down the barriers to becoming a licensed CPA and just supporting our employees in that. Some of the big four firms in the country are doing a lot of very interesting things and trying new programs. I've heard of some where they're doing more of an apprenticeship model where they're bringing in candidates, maybe to have a fully completed college, and they're assisting them in both completing that and then providing more of an apprenticeship program where they're learning as they're being educated, so that we can expedite the education of CPAs and employees in public accounting. So, there's a lot of interesting things that are happening right now. But overall, I'm very hopeful. I think the other thing that we haven't really talked about is just how technology will influence this. I think both offshoring and technology will help us to close the gap as we serve our clients and being able to do good work and to achieve good results while dealing with a little bit of a shortfall here in experienced CPAs.

Q: When you say offshoring related to accounting, are you talking about offshoring the accounting work?

Jenkins: Yeah. A lot of large firms, including Cherry Bekaert, we have two offices in India where we're working with associates. We directly integrate them with our audit teams. We use them on the tax side and advisory services as well. It's really just that we have a lack of experienced candidates, and so we're just having to broaden our scope to where are we hiring internationally. There's a lot of experienced folks throughout the world. If we don't have all of the candidates that we need in the U.S., how can we create pathways to efficiently and effectively get that work done for our clients. We're actually doing 20 to 30 percent of our audits now offshore, and we're moving those hours offshore. That's helping a lot. We have associates in our India offices that are directly integrated with our U.S. offices. We're working and scheduling them just like we would our U.S. associates. It's very powerful and effective in being able to get a lot of work done quickly. We now have work cycles where we're now, as a firm, we're working 24 hours a day because of having a worldwide presence and having a workforce that's going to bed and transitioning some work to another workforce in another country. Then when we get up, we're collaborating with them and handing that off. So very interesting.

Q: Dr. Sharma, from your academic perspective, how serious is the situation?

Sharma: From the academic faculty recruitment, I think the job market has been pretty robust. So, if that's an indication of universities out there hiring faculty in anticipation that they would get students, then I think we're headed in the right direction. But yeah, just to add on to what Chris said, I would definitely be interested in knowing how technology is impacting. Is it the demand side for most CPAs? Is it the supply side? Students not interested in accounting anymore, pivoting to much more fancier roles in other places or something. So yeah, it would be interesting to know the impact of technology on CPAs.

Jenkins: Well, this isn't scientific evidence, but I speak to a lot of candidates, I interview a lot of candidates each year and go to a number of schools in South Carolina and North Carolina. I think that the thing that we're seeing is that candidates are looking at starting salaries and education requirements, and they're saying, why would I go get a five-year education and earn less money than getting a four-year education and straight into data analytics or something like that, especially where something like data analytics is a big buzzword, big data. Folks are very interested in that, and young candidates are very interested in that. So that's where I think it's imperative on our profession to really make it attractive to candidates to be able to participate and to see the value in public accounting and what that can eventually lead to. I know as a firm, we're doing a lot of work on that. And as a profession, we have some more work to do.

Q: Michael, what about the bank? Are you adequately staffed with accountants that you work with? Is that a constant source of hiring concern?

Edens: From my perspective, we don't have a ton of interaction with accountants. Our accounting staff in the bank, which is not a lot, is fine. I will say they're more towards the end of their career than they are towards the beginning of their career, so that may speak to a little bit of the shortfall. Personally, I was with an accounting firm for my personal taxes and went through, over the course of six or seven years, three different personal CPAs. So, I got to experience a little bit of that firsthand. It got frustrating to the point to where I actually switched CPA firms this year. But as far as my interaction with accountants, I mean, everything's been good on the business end, personally. Like I said, I did experience some of the frustrations of not having the same person to deal with year in and year out.

Q: I want to thank each of you for your time this morning. It's been a very, I think, productive discussion. Hope you've enjoyed it. Again, thank you very much.