The Evolving World of Accounting with Barbara Marchini-Ellis
This week on the podcast Matt sits down with Barbara Marchini-Ellis, Partner at EY. They begin the episode with Barbara discussing her journey through the accounting field, from her diverse background in Silicon Valley to leading EY’s work with Walmart in Northwest Arkansas. Barbara then walks through how the accounting industry has changed during her 35 years of experience, touching on the importance of business ethics and integrity. The conversation concludes with Matt asking Barbara what has kept her at EY for the entirety of her career and Barbara’s work with the Endeavor Board in Northwest Arkansas.
Transcript
I'd say the progression I've seen is a
Barbara Marchini-Ellis:lot of times it was entrepreneurs coming here to
Barbara Marchini-Ellis:work with the big retailers and CPGs and trucking companies and
Barbara Marchini-Ellis:now it's more companies wanting to headquarter and form their
Barbara Marchini-Ellis:home here in Northwest Arkansas.
Matt Waller:Excellence, professionalism, innovation and
Matt Waller:collegiality. These are the values the Sam M. Walton College
Matt Waller:of Business explores in education, business, and the
Matt Waller:lives of people we meet every day, I'm Matt Waller, Dean of
Matt Waller:the Walton College and welcome to the Be Epic Podcast. I have
Matt Waller:with me today, Barbara Marchini-Ellis, who's a Partner
Matt Waller:at EY. And she has been there for 35 years. Most of her career
Matt Waller:was in San Francisco and Silicon Valley. And now she's been in
Matt Waller:Rogers since 2018. Thank you so much for joining me today,
Matt Waller:Barbara.
Barbara Marchini-Ellis:Thank you for inviting me.
Matt Waller:And thank you for your involvement with our board
Matt Waller:and our accounting department. I appreciate that. So Barbara, you
Matt Waller:have a lot of experience with EY obviously. And now you're a
Matt Waller:partner. How long ago did you become partner?
Barbara Marchini-Ellis:I've been a partner for actually
Barbara Marchini-Ellis:close to 25 years. So the majority of my career with EY
Barbara Marchini-Ellis:has been in the role of partner.
Matt Waller:And you have a lot of experience with global type
Matt Waller:multinational clients. And you have lots of experience, I
Matt Waller:think, probably in part to your being in Silicon Valley with the
Matt Waller:technology industry and internet advertising, IT services,
Matt Waller:software and others. And now you're in Northwest Arkansas,
Matt Waller:dealing with retail and omnichannel retail. How was that
Matt Waller:transition for you from a from a work type perspective?
Barbara Marchini-Ellis:Yeah, you know, it's been a really
Barbara Marchini-Ellis:interesting journey. I mean, you know, obviously, when we think
Barbara Marchini-Ellis:about Silicon Valley, we think about tech, and I often tell new
Barbara Marchini-Ellis:recruits that a lot of the companies who are our core
Barbara Marchini-Ellis:clients now didn't exist when I graduated from college, right,
Barbara Marchini-Ellis:you think of the Oracles and the Googles. And, and many of those
Barbara Marchini-Ellis:companies, they didn't exist back in the 80s, when, you know,
Barbara Marchini-Ellis:when I started in the profession, so actually, when I
Barbara Marchini-Ellis:started with EY, I did start in consumer products, I worked with
Barbara Marchini-Ellis:companies like Del Monte Foods, I worked with some wineries. And
Barbara Marchini-Ellis:then I had kind of some multidisciplinary, you know,
Barbara Marchini-Ellis:financial service conglomerates that were clients, so I'd always
Barbara Marchini-Ellis:kind of gotten experience working with bigger companies.
Barbara Marchini-Ellis:And then as the demographic of the Bay Area, and Silicon Valley
Barbara Marchini-Ellis:changed, I started working more in tech. So everything from
Barbara Marchini-Ellis:technology hardware, like a Hewlett Packard, and then you
Barbara Marchini-Ellis:know, higher end networking equipment and and, you know,
Barbara Marchini-Ellis:eventually into internet advertising with companies like
Barbara Marchini-Ellis:Google and Facebook, and so built a pretty, you know,
Barbara Marchini-Ellis:diverse background. And, and so the opportunity came up to lead
Barbara Marchini-Ellis:our work with Walmart, and with really the changing profile of
Barbara Marchini-Ellis:the company there and all their varied interests, sort of that
Barbara Marchini-Ellis:history that I had had of, you know, everything from consumer
Barbara Marchini-Ellis:products to tech was was was very, very interesting. So
Barbara Marchini-Ellis:that's what brought me to Rogers, four or five years ago.
Matt Waller:You you've been in accounting, your career during
Matt Waller:your career and accounting has changed accounting firms have
Matt Waller:changed. What are some of the big changes you've seen over
Matt Waller:your career?
Barbara Marchini-Ellis:Yeah, you know, you mentioned the
Barbara Marchini-Ellis:firms have changed when I started, there were eight, eight
Barbara Marchini-Ellis:major multinational firms.
Matt Waller:I still want to say the big eight.
Barbara Marchini-Ellis:Yeah. So do I some days. You know, now
Barbara Marchini-Ellis:we're, we're at four multinational firms. I think
Barbara Marchini-Ellis:that clearly, when I started in the industry, we were not a
Barbara Marchini-Ellis:regulated industry. Currently, we are a regulated industry.
Barbara Marchini-Ellis:And, you know, I think, for everyone who's been through that
Barbara Marchini-Ellis:journey, that that does make some changes. I mean, our
Barbara Marchini-Ellis:general our, our oversight by a regulator certainly has, you
Barbara Marchini-Ellis:know, increased quality of the of the industry in the
Barbara Marchini-Ellis:profession and that's, that's always a good thing. You know, I
Barbara Marchini-Ellis:think clients have become more sophisticated. I mean, when you
Barbara Marchini-Ellis:think about when I started auditing, you had ERP systems,
Barbara Marchini-Ellis:but nothing like what you have today, right? And and, you know,
Barbara Marchini-Ellis:we I always tell people I could never be a staff accountant
Barbara Marchini-Ellis:today because, you know, we wrote everything out by hand
Barbara Marchini-Ellis:clients would hand us binders of information to evidence
Barbara Marchini-Ellis:transactions. And now, you know, we audit in a much, much
Barbara Marchini-Ellis:different way. And it's not only how we memorialize what we do
Barbara Marchini-Ellis:being, you know, electronic versus manual, but it's also
Barbara Marchini-Ellis:just the way that we approach the way we audit, we, you know,
Barbara Marchini-Ellis:we take data sets out of ERPs. And, and look at how data is
Barbara Marchini-Ellis:moving through systems, and then also look at, you know, evidence
Barbara Marchini-Ellis:of real information to get comfort, right, that what's
Barbara Marchini-Ellis:moving through these systems is, is based in reality and real
Barbara Marchini-Ellis:transactions our clients are entering into, but it's a much
Barbara Marchini-Ellis:different, a much different way of auditing than when I started.
Barbara Marchini-Ellis:And then the profession in general, you know, has also
Barbara Marchini-Ellis:moved from opining just on financial statements to also
Barbara Marchini-Ellis:opining on internal control. And so that's certainly brought
Barbara Marchini-Ellis:another big change to the profession since, you know,
Barbara Marchini-Ellis:since I started 30 plus years ago,
Matt Waller:So, you know, there's all of these industries
Matt Waller:are changing, you know, if you look at retail, for example,
Matt Waller:retail is changing dramatically, especially with omni channel,
Matt Waller:people are able to go in the store order in the store, get
Matt Waller:pickup, get delivery, get delivery in home, delivery
Matt Waller:through drones, just so many different, retails become very
Matt Waller:complicated. For the the retailers, the number of
Matt Waller:suppliers, they have to have has gone up dramatically, especially
Matt Waller:for dot com type stuff. And all of that is really driven by
Matt Waller:technology on the one hand and, and competition on the other.
Matt Waller:But how do you see accounting and auditing changing over the
Matt Waller:next decade or so?
Barbara Marchini-Ellis:You know, think there's going to be
Barbara Marchini-Ellis:a continuation of what of what we've currently seen, in terms
Barbara Marchini-Ellis:of, you know, moving more into a digital way of auditing and, and
Barbara Marchini-Ellis:looking more at reliance upon systems, trends in the data and
Barbara Marchini-Ellis:looking at full data sets. Versus a lot of times, you know,
Barbara Marchini-Ellis:traditional auditing was focused more on testing through
Barbara Marchini-Ellis:sampling, right. So you have millions and billions of dollars
Barbara Marchini-Ellis:of revenue, and you pick samples of hundreds of transactions that
Barbara Marchini-Ellis:are deemed to be statistically valid samples. And you draw
Barbara Marchini-Ellis:conclusions that way. Now, right, we take entirety of
Barbara Marchini-Ellis:datasets, and can look for the anomalies, and test to make sure
Barbara Marchini-Ellis:that we understand the process about how all of these
Barbara Marchini-Ellis:transactions make it into the system. So it's, it's a very
Barbara Marchini-Ellis:different, different way of doing that. And I think we're
Barbara Marchini-Ellis:really just at the forefront of that as a profession in terms of
Barbara Marchini-Ellis:deploying those types of procedures, and where, you know,
Barbara Marchini-Ellis:how it can fundamentally change our audits. And it's, you know,
Barbara Marchini-Ellis:it's an exciting thing for our people, because it gives them
Barbara Marchini-Ellis:the bigger picture more quickly, in terms of how, how companies
Barbara Marchini-Ellis:operate, and, and how we can, you know, draw conclusions,
Barbara Marchini-Ellis:really, with, hopefully higher levels of assurance and higher
Barbara Marchini-Ellis:levels of certainty than we're able to, you know, today, the
Barbara Marchini-Ellis:way our audits are designed.
Matt Waller:You know, one thing that we started. So when I
Matt Waller:became Dean eight years ago, I went around and talked to a lot
Matt Waller:of our alumni. I would say 100 most successful alumni all over
Matt Waller:the world, and asked them a couple of questions in different
Matt Waller:ways. One was, what could we do as a college that would make you
Matt Waller:more proud to be an alum? And what do I not know that if I
Matt Waller:knew would help me manage better and lead better as Dean. I said
Matt Waller:it in different ways, but those were the two things I was trying
Matt Waller:to get at. And one thing wasn't necessarily number one, but it
Matt Waller:was up there and it was frequent. And, you know, some of
Matt Waller:these alumni went through our undergrad program somewhat
Matt Waller:through our masters, one of our master's programs, some went
Matt Waller:through both. But something that came up a lot was business
Matt Waller:ethics. And they basically said, you know, we think you could do
Matt Waller:more on business ethics. You know, with academic institutions
Matt Waller:changing curriculum is very complicated. It's done through
Matt Waller:the faculty. It's not top down, and it can't be. It just doesn't
Matt Waller:work that way. But faculty are aware of what they're doing and
Matt Waller:what their their specific areas are. And they naturally update
Matt Waller:things. I met the Chief Ethics Officer of Walmart, she had been
Matt Waller:Chief Ethics Officer for like 20 years at Walmart, Cindy
Matt Waller:Moehring, you may know her I don't know. So when she retired,
Matt Waller:she came on board, and began, she founded and started leading
Matt Waller:the Business Integrity Leadership Initiative. But when
Matt Waller:she did it, she found out that only about 15% of our students
Matt Waller:were getting any substantive education in business ethics.
Matt Waller:And so she, she really, she did a good job of working with
Matt Waller:faculty to change the curriculum. And now 100% get it.
Matt Waller:But one of the things that we've done is we have a lot of guests
Matt Waller:come and speak to our college and meet with us. And we created
Matt Waller:badges, achievement badges for learning certain things in
Matt Waller:business ethics. So recently, we had the whistleblower for
Matt Waller:Theranos, Erika Cheung came in, and she spoke to us but she also
Matt Waller:like, our leadership team had lunch with her and we had
Matt Waller:different, she had several meetings with us over the time
Matt Waller:she was here. This doesn't have anything to do with accounting,
Matt Waller:per se, but but then we also had the whistleblower for Enron come
Matt Waller:in, as well. And, of course, we're off. I mean, these are big
Matt Waller:time scandals you know that I, I mentioned, but there's lots of
Matt Waller:them that occur. But I remember when I was talking to when we
Matt Waller:were talking to the whistleblower for Enron, you
Matt Waller:know, she said, she didn't think she was uncovering something
Matt Waller:real big. It was more, she was thinking, there's a problem
Matt Waller:here. And it needs to be addressed. And of course,
Matt Waller:eventually, she was asked to talk to the CEO about it. And
Matt Waller:she thought that's kind of strange. But, but in many cases,
Matt Waller:these people that blow the whistle are accountants, not
Matt Waller:always like Erika Cheung was a scientist. But many times they
Matt Waller:don't know they've uncovered something so big. And they're
Matt Waller:always surprised that how many people have gone along with
Matt Waller:everything up to that point.th
Barbara Marchini-Ellis:Yeah. Yeah.
Matt Waller:Do you have any advice for us as a college,
Matt Waller:around things that you think are worth looking into, you know,
Matt Waller:from a business integrity, ethics perspective, and
Matt Waller:furthering?
Barbara Marchini-Ellis:You know, I think, to your point,
Barbara Marchini-Ellis:business ethics is sort of the foundation of everything, you
Barbara Marchini-Ellis:know, when when we look at working with companies and
Barbara Marchini-Ellis:accepting clients, one of the first things we do is, is
Barbara Marchini-Ellis:background checks, both on the company and on the key
Barbara Marchini-Ellis:executives of the company, and, and selecting clients that we
Barbara Marchini-Ellis:believe are ethical and trustworthy and forthright and
Barbara Marchini-Ellis:motivated to do the right thing. Are is sort of the foundation
Barbara Marchini-Ellis:of, you know, how, how we we built a practice and decide who,
Barbara Marchini-Ellis:you know, who we want to be associated with. But to your
Barbara Marchini-Ellis:point, you know, a lot of people as as these things come to
Barbara Marchini-Ellis:light, a lot of times it is a history, right? It's a history,
Barbara Marchini-Ellis:it's a culture, it's been there, and those types of things can
Barbara Marchini-Ellis:change on the margin very slightly to where it just
Barbara Marchini-Ellis:becomes, you know, feels normal. Right, and that, that becomes
Barbara Marchini-Ellis:challenging. And so, you know, I think a lot of it is making sure
Barbara Marchini-Ellis:that in every, in each and every one of us, whether you're on the
Barbara Marchini-Ellis:service provider side or the client side, right, you you just
Barbara Marchini-Ellis:have that strength and moral fortitude to keep your you know,
Barbara Marchini-Ellis:your moral compass where it where it needs to be and to ask
Barbara Marchini-Ellis:questions, and when something just doesn't, doesn't feel
Barbara Marchini-Ellis:right, or you don't understand it. I think, you know, a lot of
Barbara Marchini-Ellis:it from you know, and the public accounting profession isn't
Barbara Marchini-Ellis:isn't immune to those matters, either. Right? We've had our own
Barbara Marchini-Ellis:challenges and from time to time, their behaviors in the
Barbara Marchini-Ellis:organization, including EY that, you know, are other than what we
Barbara Marchini-Ellis:aspire to, and you have to deal with those and recognize those
Barbara Marchini-Ellis:and a lot of it becomes a big culture shift, right? There's,
Barbara Marchini-Ellis:there's consequences for individuals, but then, you know,
Barbara Marchini-Ellis:you have to kind of step back and say, Is this part of our
Barbara Marchini-Ellis:culture and what do we want and need our culture to be? So I
Barbara Marchini-Ellis:think a lot of it is is just each and every individual, like
Barbara Marchini-Ellis:I said, really having the strength and the conviction that
Barbara Marchini-Ellis:if it doesn't seem right, or it doesn't feel right, you know,
Barbara Marchini-Ellis:you need, you can't audit, you know, you shouldn't
Barbara Marchini-Ellis:automatically assume there's something malicious going on.
Barbara Marchini-Ellis:But you just have to raise your hand and ask questions. You
Barbara Marchini-Ellis:know.
Matt Waller:So Barbara, you have elected to be in the
Barbara Marchini-Ellis:Yeah, it's a great question. Given
Barbara Marchini-Ellis:our, what we do in our profession, and having sort of
Barbara Marchini-Ellis:profession, your entire career. And you've been with EY for 35
Barbara Marchini-Ellis:annual cycles, that that, that that that come to a close each
Barbara Marchini-Ellis:year, there's a natural opportunity for reflection. And
Barbara Marchini-Ellis:in asking yourself, how have I grown this year? Is this a
Barbara Marchini-Ellis:career I want to continue to invest in? And I'll have to say
Barbara Marchini-Ellis:that, you know, in public accounting, and with Ernst and
Barbara Marchini-Ellis:Young specifically, I've felt that each year I've grown, I've
Barbara Marchini-Ellis:pushed myself, you know, beyond my comfort zone, and I'm doing
Barbara Marchini-Ellis:things that I would not have thought possible even a year or
Barbara Marchini-Ellis:two, prior, you know, and that continues, frankly, continues
Barbara Marchini-Ellis:today, you know, 35 years into my career. So it's, it's really
Barbara Marchini-Ellis:been the growth opportunities that come with the profession,
Barbara Marchini-Ellis:the ability to, and that comes to being able to see different
Barbara Marchini-Ellis:companies being able to talk to different different people at
Barbara Marchini-Ellis:different companies and in your younger years, right? It's,
Barbara Marchini-Ellis:you're you're working with, with control younger folks within
Barbara Marchini-Ellis:within your clients. But then as you progress, right, you're
Barbara Marchini-Ellis:years. So, two questions. What is it that's kept you in the
Barbara Marchini-Ellis:starting to work with more senior executives. So over the
Barbara Marchini-Ellis:profession this long? And two, what is it that's kept you with
Barbara Marchini-Ellis:years learning perspectives from from the CFOs, and CEOs, at at
Barbara Marchini-Ellis:the clients I've worked with has just been very, very valuable.
Barbara Marchini-Ellis:And I think what's also been rewarding is when you kind of
Barbara Marchini-Ellis:pivot from, hey, you're the auditor to, when you walk into
Barbara Marchini-Ellis:the office of an executive later in your career, and they're
Barbara Marchini-Ellis:really looking to you for counsel and advice, right, you
Barbara Marchini-Ellis:become a trusted adviser to them. That is hugely, hugely
Barbara Marchini-Ellis:firm so long?
Barbara Marchini-Ellis:rewarding. As I've entered into the the later stages of my
Barbara Marchini-Ellis:career, it's also been taking that out into the public. So
Barbara Marchini-Ellis:I've had the opportunity recently to to join some boards,
Barbara Marchini-Ellis:you know, board here in Northwest Arkansas that I'm on
Barbara Marchini-Ellis:is in, you know, the Endeavor board. So working with early
Barbara Marchini-Ellis:stage entrepreneurs. And again, that ability to kind of give
Barbara Marchini-Ellis:back to early stage entrepreneurs, based on the
Barbara Marchini-Ellis:experiences gained with a variety of companies has been
Barbara Marchini-Ellis:huge. So for me, it's really been just continuous growth. And
Barbara Marchini-Ellis:I see that, you know, continuing through the remaining years, of
Barbara Marchini-Ellis:my my career as well.
Matt Waller:Well, you know, serving on Endeavors board,
Matt Waller:helping entrepreneurs, you're a perfect fit for that, because of
Matt Waller:your experience in Silicon Valley, I would think. Endeavor,
Matt Waller:here in Northwest Arkansas, it's a global organization. But there
Matt Waller:is an office here, for those listening that don't know about
Matt Waller:it. They really look for what they call high impact
Matt Waller:entrepreneurs, people who are dreaming big, they want to scale
Matt Waller:faster. They've got good leaders in place. And they but endeavor
Matt Waller:is, is doing really well here. And I think, you know, globally,
Matt Waller:they've they've had a huge impact. They've had lots of
Matt Waller:early stage founders that wound up with unicorns, inside and
Matt Waller:outside of the US. So how long have you been working with Endeavor?
Barbara Marchini-Ellis:I've been on the board now three
Barbara Marchini-Ellis:years. And working with Canem and the rest of the board there.
Barbara Marchini-Ellis:It's been a great experience.
Matt Waller:Do you think your your connections and just
Matt Waller:experience in Silicon Valley, do you see things that we're
Matt Waller:missing here a bit that we need in Northwest Arkansas? Or are
Matt Waller:you able to kind of fill in the gaps for some of these early
Matt Waller:stage companies?
Barbara Marchini-Ellis:You know, I think it's been
Barbara Marchini-Ellis:interesting for me to watch over the last three, four years, how
Barbara Marchini-Ellis:the the maturity profile of the companies that we work with in
Barbara Marchini-Ellis:endeavor has changed, you know, initially, you know, maybe the
Barbara Marchini-Ellis:business models weren't as broad the level of tractions that
Barbara Marchini-Ellis:companies had were not as extensive But over time, I think
Barbara Marchini-Ellis:because of much of the mentoring that a lot of the
Barbara Marchini-Ellis:entrepreneurial support groups to Northwest Arkansas have
Barbara Marchini-Ellis:attracted here a lot of the mentoring they've been able to
Barbara Marchini-Ellis:provide. It's been huge, right? Whether it's executives like
Barbara Marchini-Ellis:Marc Lore, who maybe would have never thought about Northwest
Barbara Marchini-Ellis:Arkansas, right, had it had it not been for Jet being acquired
Barbara Marchini-Ellis:by Walmart, or, you know, various other resources being
Barbara Marchini-Ellis:attracted to the middle of the country. There's greater
Barbara Marchini-Ellis:awareness of Northwest Arkansas, and all and more resources
Barbara Marchini-Ellis:coming here to provide that mentoring and support that I
Barbara Marchini-Ellis:think continue to help mature the entrepreneurial ecosystem. I
Barbara Marchini-Ellis:mean, I think the other the other angle to it is that the
Barbara Marchini-Ellis:capital needs to follow. You know, we we we have, you know,
Barbara Marchini-Ellis:some of our our venture capital folks that have visited here in
Barbara Marchini-Ellis:Northwest Arkansas and some of the conferences and so forth
Barbara Marchini-Ellis:over the last few years. And I think whether it's corporate VC
Barbara Marchini-Ellis:funds, contributing more or attracting other sources of
Barbara Marchini-Ellis:funding to the middle of the country, that's we're seeing
Barbara Marchini-Ellis:more of it than we did when I first came here in 2018. But I
Barbara Marchini-Ellis:think that's, that's sort of the next step. You know, I'd say the
Barbara Marchini-Ellis:progression I've seen is a lot of times as entrepreneurs coming
Barbara Marchini-Ellis:here to work with the big retailers and CPGs and trucking
Barbara Marchini-Ellis:companies, and now it's more companies wanting to headquarter
Barbara Marchini-Ellis:and form their home here in Northwest Arkansas. So I think,
Barbara Marchini-Ellis:you know, bringing in that support, mentoring and
Barbara Marchini-Ellis:financial, is really going to be the foundation of, of growing
Barbara Marchini-Ellis:the entrepreneurial community here.
Matt Waller:Well, Barbara, I'm glad you're here in Northwest
Matt Waller:Arkansas, and all you're doing and thank you for hiring our
Matt Waller:students and for engaging with our college really appreciate
Matt Waller:that. It was pleasure visiting with you and thank you so much.
Barbara Marchini-Ellis:Yep, thank you.
Matt Waller:On behalf of the Sam M. Walton College of
Matt Waller:Business, I want to thank everyone for spending time with
Matt Waller:us for another engaging conversation. You can subscribe
Matt Waller:by going to your favorite podcast service and searching Be
