In this article we chat with John Bernauer – the oldest living retired EY US firm partner.
John Bernauer considers himself a lucky guy. At 103, he is the oldest living retired US firm partner, and his life is a testament to the sustaining power of relationships. John joined the Chicago office of Ernst & Ernst in 1938 as a newly minted CPA. The Great Depression had spawned a plethora of government regulations, and the firm was creating new services to help businesses address them. By the time he retired in 1976, John had led the Chicago tax practice to record-setting revenues. He had built many deep friendships that would endure, even until today, and he still makes it to the triennial Retired Partner and Principal Meeting.
While many things have changed since his first audit, he says the roots of EY’s culture run deep: collegiality, exceptional client service and the commitment to developing our people are built into our very foundation. John might credit good luck, but his story speaks volumes about the value of determination. He recently spoke with us about the importance of living intentionally, embracing adventure and investing in the people around us.
Tell us how you came to join Ernst & Ernst.
After graduating from Northwestern University and starting my career, I approached Herb McAnley, who was head of the management services division of the Chicago office. He said, “How do we know whether you’re qualified to work for us?” I said, “Well, I’m a CPA.” He said, “Well, let’s see if you are.” So, he gave me an examination, and of course, I passed, so he hired me. I was so happy, but I did not realize at the time that they only hired seasonally. When March 15 came around, partner Murray Mendel said: “Thanks for your fine audit work. Come back next fall.” And I said to myself, “Baloney!”
That’s a rude awakening.
Things were so different back then. You can’t even imagine. So I went and found a summer job, and a little while later, I got another call from Mr. Mendel, and he said, “John, we’re sorry that you couldn’t stay with us, but if you’re willing to go to Atlanta, they are willing to hire you the day after Labor Day.” Atlanta was a heck of a long ways from Chicago, and I had a very serious girlfriend, Dorothy Grady. So, I thought to myself, I’ll go down there and stay for about two years and then come back to Chicago and probably get a job in a private company. But Dorothy said she’d be willing to join me in Atlanta at some point. So, I went down to Atlanta, worked on the Coca-Cola audit, then went back to Chicago and married Dorothy on Thanksgiving Day, and she came back to Atlanta with me.
Sounds like an exciting way to start your life together. When did you first realize you were very good at your job?
In the spring of 1943, Hardaway Contracting Company was our biggest income tax client in Columbus, Georgia, and we used double depreciation in preparing their tax return during the war, of course, so we had written all of their stuff off. Because this resulted in a large refund, to be received in 1945, the case was assigned to the Washington office, and their engineering department came down to examine what we could do. They suggested not only that Hardaway not get a refund in 1945, but also that Hardaway owed taxes in each of the previous years, more than they had already paid. That was a big problem. The assistant manager of the Atlanta office, Del Paige, and I met with the team in Washington, where I suggested an entirely new depreciation schedule for Hardaway’s equipment. As a result, Hardaway didn’t have to pay any tax for those other years and didn’t get a refund, but now had more equipment to write off in future years. After our meeting in Washington, Del said: “John, you’ve done a good job. If we had a tax department in Atlanta, you’d be the head of it.”
That must have been quite an ego boost for a young man. How did that vote of confidence affect you?
It told me I was valuable to the firm. Our son was about 2 years old at the time, and we decided it was time to go home to Chicago, where all his grandparents lived. But all the boys were coming back from the war soon, and Ernst & Ernst was obligated to give them their jobs back. I called Murray Mendel and said, “If you guys can’t find room for me in Chicago, I’m going to have to look for work somewhere else.” He said, “Well, come back and let’s see how it goes. If you compete with those guys who are coming back, you’ll be OK, and if our business grows, we’ll need more guys.” Fortunately, after the war, things did get much better.
Eventually, you did make your way over to Tax. How did that come about?
In 1951, Paul Johnson, who was head of the tax department in Chicago, pulled me aside and said, “John, you are a good auditor, but you are a very good tax man.” So I moved over to Tax, and then a couple years later, I was made a partner. A lot of things happened after that, including getting the Lincoln National Life Insurance Company as a client. I was sort of the godfather of our insurance business in Chicago. I did that for 10 years and took over as the head of the Chicago tax department. By 1976, our Chicago office had the largest income of all the offices, and my tax department not only had the greatest revenue, but was also the most profitable. [Managing Partner] Richard “Dick” Baker came over and congratulated me and Neil Faulk, who was head of the Chicago office.
That’s quite an achievement. At that point, you were nearing retirement age but still going strong. What made you decide to retire?
Well, Neil and I had talked about it. I was 62 years old and he was about 61. He said, “We are doing a great job this year, but next year, who knows, so why don’t we retire, like we should?” We did, and I never was sorry.