As part of this year’s survey for Accounting Today’s Top 100 Most Influential People in Accounting, candidates were asked: “What is the most important issue currently facing the accounting profession?”
As all the candidates had something thought-provoking or interesting to say, all of their answers -- not just those of the Top 100 -- are included below.
Increasing client expectations is a critical issue facing the accounting profession at the same time that they are facing declining expectations for firm growth (
Ever-changing and increasingly complex tax laws present an opportunity for accountants to demonstrate their value by tailoring and sharing insights matched to individual clients. For example, intelligent dashboards powered by analytics can highlight how a Tax Code change impacts a specific client. With this insight, professionals can spend their time advising clients, in the moment, on the best next steps to take. As a result, a firm can improve productivity and elevate its relationships with clients, leading to additional revenue streams.
Firms need to embrace technology, not for technology’s sake, but to drive progress, growth and to better serve their clients. We constantly look at how artificial intelligence, machine learning, robotic process automation and many other applied technologies can help accounting professionals be more efficient, productive and ready for growth.
--Karen Abramson, CEO, Wolters Kluwer Tax & Accounting
Attracting, developing and retaining the right workforce for the future is the most important issue facing the accounting profession today.
First, while positive for the economy, the historically low unemployment rate makes attracting and retaining a diverse team of high-performing, client-focused professionals more challenging. RSM is focused on continuing to create a rich talent experience that enables employees to achieve their career objectives while experiencing the power of being understood. Our focus on culture, diversity and inclusion is also helping to ensure that we are promoting the different perspectives that will be critical in the future.
Second, the future accounting workforce will encompass new skills in addition to our traditional CPA hires. Firms are looking to attract talent such as cybersecurity experts, data scientists and computer programmers to name a few. This requires redefining traditional recruiting models and ensuring that the organization’s brand is compelling to these employees. RSM is progressing in both of these areas with our “power of being you” positioning and recruitment approach.
Finally, technology and automation are poised to redefine the accounting industry. Firms are working hard to define the important role technology will play in our future workforce as blockchain, artificial intelligence and robotic process automation take hold. To that end, RSM recently appointed Jeff Johannesen as Chief Strategy and Innovation Officer. He is tasked with continuing to advance our work in this area.
--Joe Adams, Managing partner and CEO, RSM US
Freelancing is the future of work and, in many ways, the future of business, but poor freelancer payments processing has significant implications on their loyalty to an online marketplace. Half of respondents in a recent survey conducted by Tipalti noted that their payments experience with their current marketplace needs improvement, and over two-thirds of survey respondents (73.7 percent) said they would leave a marketplace because of payment issues. Payment issues are likely to increase gig economy freelancer churn, which ultimately adds costs to the marketplace’s operation, weakens its reputation, and ultimately damages the quality of the end product provided to customers. Given that nearly half of respondents stated that their marketplace job was their primary source of income, it’s important for marketplaces to address the various factors respondents deemed important to their loyalty, including being automatically notified of an online marketplace payments issue, being paid on time, and being paid accurately.
--Chen Amit, Co-founder and CEO, Tipalti
Conversations among accounting professionals focus on being future-ready. But what does that really mean? Audit firms, especially, are just now coming to understand how their seemingly modernized audit processes are failing to move beyond the robotic “Same as Last Year (SALY)” approach, fail to nurture healthy client relationships, and fail to use technology as a tool to create insights, all resulting in the perpetuation of a commoditized, stuck-in-the-past, audit.
There is a missing link between understanding that change is required to meet the needs of auditing in the future and implementing those changes within your own firm. Most firms don’t know where to begin, let alone which path towards change to take. This is why I founded A&A Leadership Leagues.
Leadership Leagues assembles future-ready auditors from firms across the country to understand the most critical issues facing auditing in the future, address their own unique challenges, and develop an implementation strategy. These members are the audit change leaders within their own firms, primed to be the missing link to auditing in the future, today.
--Alan Anderson, President, ACCOUNTability Plus
The failure of the majority of partners to embrace change. Partners tend to be too content with the status quo and are unable or afraid to see the financial and client-service benefits of doing things differently. Firms are not taking advantage of the current disruptions in the market in order to differentiate themselves from their competitors.
--August Aquila, President and CEO, Aquila Global Advisors
The way that people are educated at every level -- high school, university, CPA Exam, job training are all focused on the old way of thinking.
In the 1980s and 1990s before the internet, the sum total of information about accounting and related fields was contained in a few dozen textbooks. But today? More information is created on online today than what previously existed from the beginning of time to 2003. And that includes information about accounting.
No longer is rote learning (a memorization technique based on repetition) an effective method for people to accomplish their goals in life, careers, and in the accounting industry.
In my lifetime, major cultural changes have occurred. I remember when I lived in Oklahoma, it was taboo to be gay. In just a few short years, gay marriage is fully legalized and culturally appropriate even in remote areas of Oklahoma.
Cannabis is the most recent major cultural shift. In just a few short years it’s becoming legalized across the country and a culturally acceptable method of medicinal and recreational use.
I don’t believe the current university track of four to eight years, plus CPA or other exams, and years of work experience will continue to exist in my lifetime.
I think colleges will always exist in some format.
However, the rising costs, lack of innovation in the classrooms, and slow pace of adapting to this new world are coming together to make the university experience no longer the paragon of achievement it used to be.
People are craving educational programs that aren’t focused on the old school licenses, degrees, and certifications, but rather, programs that give them what they truly want. To actually be able to get real world results for the employers and clients.
What are “real world results”?
- Faster information.
- More accurate information.
- Increases in sales.
- Increases in profit margin.
- Reduction in taxes.
- Reduction of expenses.
And yes, accountants are helping business owners and employers in each of these categories and more.
But sadly, they're no longer learning from books. They're learning from experiences of talking with real potential clients, and learning how to solve problems.
Their greatest skill isn’t “things” stored in their memory. But rather a way of thinking. It is the mentality that, no matter what problems come my way, I'll be able to solve them. Researching on Google, hiring subcontractors and subject matter experts, incorporating niche educational programs, etc.
The value has moved from “knowing things” to “knowing how to solve new problems.” The world is changing so fast that once you memorize something … it’s obsolete.
That’s why you can see younger people like myself and others succeeding and adapting at higher levels than people with 20 to 40 years of traditional experience.
And for anyone that doesn’t adapt to this new way of thinking and learning, unfortunately they will continue to move further and further away into irrelevance
--Andrew Argue, CEO, AccountingTax.com
I think one of the most important issue facing most industries/professions, including the accounting profession, is the incredible pace of change in our world, which is disrupting businesses, but also creating many new and exciting business opportunities.
These changes are driven by social-, business- and political-related changes, but most significantly by incredible technology advancements. While these changes create heightened levels of volatility, uncertainty, complexity and ambiguity in business environments which can be challenging, the changes also create exciting new opportunities for value creation. It fosters the potential for businesses to differentiate themselves based on how they seek to transform their business models, their approach to human capital and, ultimately, the progress they make towards harnessing and leveraging game-changing technologies, such as artificial intelligence, machine learning, robotic process automation and natural language processing.
Specifically as it relates to our industry, there is a massive opportunity for us to become intensely client-focused and leverage our relationships to transform our businesses. We must seek to be more than great tax advisors and consultants, or terrific auditors or accounting experts – we must strive to become the most trusted and valuable partner to our clients, working side by side with them on their most pressing challenges and opportunities.
We need to aspire to broaden the footprint of our relationships, to include not only our accounting technical expertise as a foundation, but to layer on capabilities around strategy, business transformation, IT consulting, data analytics, outsourcing, cybersecurity and a myriad of other needs that our clients have. With these changes, there will certainly be a winners and losers and a broader opportunity for differentiation amount firms in our industry. Those firms who lean into the opportunity with an entrepreneurial spirit and commitment to innovation and experimentation will fare best in my opinion, while those firms who hold on to the past and hope that the things that made them successful in the past are the same things that will make them successful in the future have the most to lose.
--Matt Armanino, COO and MP-elect, Armanino
Clearly the most important issue is how to leverage technology to transform both the practice and the value provided to clients. The emergence of such game-changing technologies as artificial intelligence and blockchain, along with the ongoing impact of cloud computing, will drive dramatic changes in the practice of accounting. What we’ve seen in areas such as client accounting services is a prologue for what will come in the tax and audit areas – better analytical tools, greater collaboration with clients and the ability to offer higher-order services.
--Erik Asgeirsson, CEO, CPA.com
The most important issue is the shifting of roles among players both within and serving the profession. Firms are no longer looking at software publishers as strictly “vendors” (nor are software publishers looking at accountants as “customers”), but instead it’s a mutually beneficial partnership focused ultimately on client success. Accounting professionals at firms of all sizes (recently, one of my top 10 firms and a top 200 firm) approach me asking for help in building out their strategy to move to the cloud, implement value-based or fixed pricing, build their technology bundle, and even help establish their client accounting services model. As more large firms are starting to understand that they must make the shift or risk losing clients to smaller and more nimble competitors, my role has become far more consultative. Now I’m helping them map out a clear vision to establish their short- and long-term goals, and work strategically and methodically to bring all necessary human, technological and other resources together to help them achieve those milestones.
--Kim Austin, Business development manager, Intuit
Succession and the related fear. The profession has leadership that is being forced to consider substantial changes in the business. The business has been changing for 35 years. I have been part of it, but the fear now is driving many firms to spend dollars on changes they are unsure are a good investment. This fear could take investment away from the important areas of the practice like our people.
--Larry Autrey, Managing partner, Whitley Penn
It continues to be relevancy. Excessive regulation remains a close second, since over-regulated industries are not hotbeds of innovation, dynamism, and risk-taking. In that spirit, I believe the profession should relinquish (or lose) the audit monopoly, which would allow competition to bring innovations to market.
At the micro level, the irrelevancy issue is demonstrated in most firms’ business models: Revenue = Hours x Efficiency x Hourly Rates. This “We sell time” model is approaching 100 years old, and is completely suboptimal in an intellectual capital economy. I assure my colleagues that IBM is not pricing Watson by the hour (innovation eats billable hours). Innovation at the micro level is manifested in business model innovations, and while many smaller firms have embraced a more optimal model, the Top 100 Firms remain mired in the mentality that they sell time, along with a tedious quest to improve efficiency. It’s a big reason why talent is going to continue to be a challenge — intelligent knowledge workers know their value cannot be measured in six-minute increments — it’s the equivalent of plunging a ruler into the oven to determine its temperature. Lack of leadership and bold vision is responsible for this sclerotic model lasting beyond its relevance. Firm leaders talk a good game about vision and bold ideas, but what they measure and focus on is improving efficiency and realization by 5 percent. Not exactly an inspiring vision.
--Ron Baker, Founder, VeraSage Institute, and chief value officer, Armanino LLP
The profession is dealing with myriad issues today. Even an incomplete list of the issues is mind-boggling: regulatory environment turbulence, the PATH Act and related diligence requirements, retiring boomers, the Tax Cuts and Jobs Act, the do-it-yourself (DIY) mindset that pervades our consumer culture, a 17 percent staff turnover rate, constant pressure to improve productivity, data security as bad actors are hacking into accounting firms, cryptocurrency, and non-stop and accelerating technology changes.
Technology changes and a related new “consumer mind-set” have been impacting the profession for the past few years, but it’s now reached a point where the combination is at the forefront of the profession’s requirement to change. The resultant digital transformation is driving the biggest issue facing the profession: our overall relevancy resulting from the declining value of traditional accounting profession services.
Stated simply, in view of a rapidly accelerating and converging array of technology, the profession needs to reinvent itself in the very near term. We’ve always called ourselves trusted client advisors — which we are — but now we must also elevate ourselves beyond the traditional after-the-fact services, many of which will disappear in the face of impending automation.
Currently, artificial intelligence and machine learning capabilities are combining to simplify, machine-assist, and transform the way the profession — and virtually everyone else — finds information, interacts with applications to perform knowledge tasks, and makes decisions. The profession not only has to take a leading position in this new world, it needs to understand the impact this has on its future viability.
According to several recent studies, an estimated 86 percent of what accountants do will potentially become automated in the next few years. That means we must transform to stay in the game, and transition from relying on commodity services like tax preparation, accounting, bookkeeping, payroll, audits, and compilations and reviews, since much of the activity related to those services will be automated.
After-the-fact work won’t cut it anymore. We must become forward-looking advisors. And managing the changes required to prepare ourselves for what the profession will look like in five years in an increasingly digital world is very challenging. Why? Because we’re not used to this rapid pace of change — a pace that’s very different from what we’ve seen over the last several years. A pace that, I think we all agree, has been collectively dramatic.
But the world is very different today. The changes we’ve seen before occurred relatively slowly over a long period of time, during which we could choose our pace of adoption. Today, expansive and converging technologies are driving change much more rapidly.
Broader use of the cloud, mobile, and social has exploded since the 2007 release of the iPhone, and is a given since smartphones and apps are intertwined in everything our clients and prospects do. In fact, the cloud, social, and mobile should have been in our rear-view mirror several years ago.
With improved web connectivity and speed improvements come much higher expectations. A forward look, instant response, and 24/7 access from any device is the norm. In the last two years, we’ve moved to what many describe as the era of the smart internet, or the fourth industrial revolution.
We need to prepare for how we’ll operate in this world. And in the next few years we’ll see new and emerging technologies converge that will dwarf what we saw in the last 10 years. As a profession we need to be ready. We no longer have the luxury to adopt new technology slowly.
Machine learning/artificial intelligence/cognitive computing, natural language processing, the internet of things, augmented/mixed reality, robotic process automation, and blockchain have been hot topics the last few years. And central to this is our current ability to access, analyze, and manage big data.
We’ve historically been able to manage structured data, but now the ever-expanding web and our ability to build “data lakes” is allowing us to collect and analyze massive amounts of unstructured data in real time as well. And the amount of data we’ll have access to is rising exponentially, thanks to the IoT. According to IDC, the amount of data will double — at least — every two years. Looking out just two years to 2020, the number of connected devices will be three times the number of people in the world, according to Cisco. And more and more people will be connected, as various projects are working on connecting those not connected to the web today. Even now, more than 54 percent of the world is connected. That’s a rise of four percentage points just in the last year.
Further, today’s small-business owner and other consumers of our services may do things themselves that traditionally have been done by accountants. We’ve been seeing the impact on personal tax compliance for many years with DIY software tools.
For instance, while professionally prepared tax returns have increased 17 percent since 2010 due to tax return complexity, self-prepared returns have increased 51 percent. And the last three tax seasons have seen a drop in professionally prepared returns, while self-prepared returns continue to grow.
We may also be losing the young. Approximately 50 percent of personal returns are done by professionals overall; however, only 38 percent of 18-to-24-year-olds use a tax professional according to the IRS. With the changes from the TCJA — primarily fewer tax brackets and the shift to far fewer individuals itemizing deductions — we’re likely to see these trends continue.
What about beyond personal tax returns? Well, we’re seeing DIY in legal services and wealth management, too. New technology tools for small businesses are seemingly released daily. The inclusion of benchmarking capabilities and artificial intelligence that uses big data analytics in accounting software means we must step up our game, so our small-business clients think of the profession as their first resource and don’t feel the need to look elsewhere.
And of course, we have technology’s impact on the audit.
We’re going to see AI technology streamline the audit process as it converges with other technologies, making the data acquisition challenges we currently face go away.
In the past, audits focused on structured data. It was a struggle to gain access to unstructured data. Not anymore. With an appropriate “data lake” consisting of both structured and unstructured data — virtually all relevant data — access and analytical analysis can be performed in real time, and “sampling” will fall by the wayside as data is ingested and catalogued in total.
The concept of the continuous, real-time audit will come into play — and we’ll even be assisted in our judgments, although the human element won’t entirely disappear. Fraud detection will be easier and far faster. Blockchain will move the auditors’ role away from having to check transaction data, and it will be used to test audit assertions as well.
Wow, eh?
I won’t deny that all of this can be daunting. The net of what’s occurring today is that we’re teaching machines to learn. Given the pace of technological change, the profession will see more change in the next five to seven years than we’ve seen in the previous 50. So we must adapt at an incredible pace.
In the words of Mark Cuban, “We are going through the process where software will automate software, automation will automate automation. I would not want to be a CPA right now. I would not want to be an accountant right now. I would rather be a philosophy major.”
Personally, I don’t think it’s that bad; however, I do think it’s imperative that we reinvent the profession — fast. And we can’t let ourselves get distracted from this task by short-term things that may make us feel things haven’t changed.
An example is the TCJA, which — although well-intended — has fallen far short of the mark of simplification for many taxpayers. It takes a substantial portion of them out of the complexity of itemizing, but adds complexity for many due to last-minute compromises in the final bill. Yes, it gives the profession plenty of work in the near-term, but let’s not take our eye off the ball. The profession is still changing, rapidly and dramatically.
Keeping up with technology in general, understanding how it affects us, and changing what the profession does is critical to remaining relevant.
I think this quote from J. Paul Getty is most appropriate when I think about the profession: “In times of rapid change, experience could be your worst enemy.”
Let’s let go of the past, and forge our own future.
--Jon Baron, Managing director, Professional Segment, Thomson Reuters Tax & Accounting
The most important issue currently facing the profession is culture. When work-life balance is becoming a larger issue in the business world, accounting remains a culture that lionizes long, stressful hours. In a world where diversity has become more important, firm leadership remains older, white, and male. Firms must set the appropriate tone at the top in order to create a more sustainable, more ethical, more inclusive profession if it expects to survive the 21st century.
--Joanne Barry, Executive director and CEO, NYSSCPA
The future of our accounting profession depends on whether or not we become closer to becoming a learned profession (e.g., medical doctors) or becoming a vocation (e.g., car mechanics). Why is this distinction so important? Because we are in a battle for talent and the only way we are going to compete for that talent with the other learned professions is to become a learned profession ourselves.
So what is a learned profession? As the Pathways Commission (2012) specified as their first recommendation, we need to devote significant efforts to becoming a learned profession: “Build a learned profession for the future by purposeful integration of accounting research, education, and practice for students, accounting practitioners and educators.”
What are the current learned professions? Medicine, law, theology and some say architecture and engineering are included on this list. What do they all have in common? They use research to guide and inform their practice and teaching.
As an example, I teach in our Physician Executive MBA program at the University of Tennessee and as a consequence of that I get asked to speak at a number of physician conferences around the country. While at these conferences, I always sit in on a few sessions to observe what is going on and it always amazes me that they will have 50 percent practitioners and 50 percent academics in the same room all trying to solve the same problems. Our accounting profession is at the other end of the spectrum in the United States. We have separate organizations for practitioners (e.g., the American Institute of CPAs) and academics (e.g., the American Accounting Association), and very seldom do you have practitioners at AAA meetings and/or academics at AICPA meetings. This separation outlines, in my view, a big problem, and why is this? One of the reasons is that medical doctors are all trained the same way (in medical school) and once completed they then decide whether to become practitioners or academics. Because they all understand research and why it is important in impacting the practice of medicine, if you go to a urologist’s practice office you would more than likely find the most recent academic urology journal on his/her desk, because it is important to know the latest developments from research. If I ask accounting practitioners here in the United States how many of them have “The Accounting Review” (one of our premier journals) on their desk, the answer would probably be very few. The same could be said for the chemists. I was traveling recently with the president of the American Chemical Society and he explained that they have 160,000 members in their professional organization and approximately 30,000 of them are professors, 15,000 of which work in practice. How many accounting professors work in practice? Very few.
Our research needs to be more relevant and have more impact on practice and education. The Pathways Commission talked about the reasons this is the case and what we can do about it.
--Bruce Behn, Associate dean, The University of Tennessee
There are two issues.
The first issue is the dilution of the CPA certification. Most small- to medium-sized businesses could benefit from an audit. A good accountant (not necessarily a CPA) understands the language of business and is highly qualified to assist them in becoming more profitable, liquid and solvent. I believe that client advisory services will continue to grow and certifications other than the CPA will become relevant and valued.
The second challenge is to switch our roles from that of compliance worker to that of knowledge worker and consultant. By utilizing all of the new digital tools of AI and big data to advise clients, we can give them knowledge they can use as opposed to just giving them back work products to meet regulatory requirements.
Technology is moving at a rapid pace and people are constantly talking about AI, blockchain and cybersecurity, but who knows what the future will hold? Accountants need to harness the current technology tools while remembering that we are uniquely qualified to provide answers because of our understanding of how the numbers work and how they are connected.
--David Bergstein, Digital evangelist, Accountant Segment, Intuit
Recruiting the right people to meet the growing demand for services. We live in complex and changing times. The global economy, new technologies, regulatory changes and the growing threat of cyberattacks – to name a few -- present businesses with an expanding array of challenges and opportunities. Clients are increasingly turning to us – their most trusted advisor -- to help them meet these challenges and capitalize on those opportunities. This requires the development of teams of multidisciplinary problem-solvers with specialized skills that can adapt to an ever-changing landscape of challenges.
The ability to recruit, train and retain these problem-solvers with diverse and complementary skill sets will be a key to success for the 21st century professional services organization.
--Wayne Berson, CEO, BDO USA
The most important issue facing the profession is “confusion.” Congress, experts, and publications are all doing a good job of creating this confusion. The new tax laws are undoubtedly causing a lot of confusion, and experts and publications have thrown big data, AI, and blockchain into the mix. Experts are making all sorts of predictions about the impact of these technologies. The reality is most accountants have not even taken full advantage of the cloud, which is a mature technology. So the smart thing for accountants to do is focus on what’s important today and just keep a cursory watch on what might be coming.
--Chandra Bhansali, CEO, AccountantsWorld
The key challenge for both professionals and firms is balancing the short-term and long-term view. How do you stay competitive and boost profitability, while also keeping up with technology trends and maintaining relevance as a professional? Juggling these demands is a crucial issue for every professional accountant. It requires strategic implementation of technology and an openness to change.
--Sharada Bhansali, President and Co-Founder, AccountantsWorld
After another year of allegations of “bad audits,” both in the U.S. and internationally, including the U.K. and South Africa, audit quality remains as the most important issue facing the accounting profession. With the increase in reliance on technology and data analytics, there is an opportunity to improve audit quality despite the risks associated with regulators needing to keep pace with technology.
--Ken Bishop, President and CEO, NASBA
The most important issue is the accounting firm owner’s embrace of their entrepreneurial responsibility in running their firm well. Many firms are structured poorly and prevent growth, team care, and proper client service. We coach and lead many firms, and the firm’s business model is often their greatest inhibitor towards healthy growth.
--Jason Blumer, Founder and CEO, Thriveal Network
Relevance. Mindsets, skillsets and toolsets must change for the profession to continue to add value and remain future ready. CPAs must learn to collaborate to provide the services clients want and need. The day of the rugged individualist has ended.
--Gary Boomer, Visionary and strategist, Boomer Consulting Inc.
Complacency is the most important issue. The number of changes that will impact our profession and the pace at which they are proliferating is unprecedented. At the same time, many in the accounting profession haven’t felt enough pain to force proactive change to ensure their future readiness and success.
--Jim Boomer, CEO and shareholder, Boomer Consulting Inc.
Change -- the migration away from traditional attest and tax compliance services that the profession has thrived on since inception. If firms are not willing to look beyond attest and tax, they will have a very difficult time remaining relevant and profitable. I believe attest will be here for a long time, but the way in which we go about doing those engagements will change. Same with tax: The mundane tasks will be automated, leaving the accountant to go way beyond inputting numbers from source documents into computer fields.
--Jim Bourke, Partner, WithumSmith+Brown
Hesitation about the future of accounting. Skepticism – that trait/skill/necessity that makes CPAs good at what they do can also be a huge hurdle. Professional skepticism is fundamental to being a trusted advisor, but when applied to looking at the future of the profession or the real impact of automation, I think skepticism needs to be mixed with a heavy dose of inspiration. I know skepticism isn’t just about being incredulous, but about having a questioning mind – we just need to make sure that the questions are not mixed with an automatic bias toward “It won’t happen to me,” and that questions about bots and blockchain be approached with the attitude of “What can I do with this?” A phrase I’ve been using a lot lately – “Be more curious than afraid.”
--Jennifer Briggs, President and CEO, Indiana CPA Society
I believe that data security is one of the fastest-growing issues in the accounting profession. Accountants have the most sensitive financial and personal information regarding their clients. It is known that many security data breaches of accounting firms are never reported due to the severe consequences that likely will be imposed. Regardless of the decision between a SAAS product or local software installation, it is imperative that practitioners become proactive in their education and implementation of systems to minimize the risk of a breach.
--Dawn Brolin, CEO, Powerful Accounting
Of course, artificial intelligence and blockchain technology are large issues facing the accounting profession and are challenging us to turn these disruptions into opportunities versus threats. Also, the awareness that non-CPAs are going to be a bigger part of our firms and the reality that, in many cases, they are more qualified to perform consulting services such as project managers, and those with IT, analytics, marketing and HR backgrounds. Finally, another important issue is the rush to advisory and wealth management services, so firms can earn revenue unrelated to time/the timesheet and offer value-added services to our clients beyond compliance projects.
--Greg Burbach, President and CEO, Honkamp Krueger & Co.
The utter breakdown of the tax legislative process in Washington, D.C.
--Paul Caron, Publisher and editor-in-chief, TaxProf Blog
There are at least two critical issues facing the accounting and auditing professions that I believe warrant attention. One is more short-term and global in nature. It involves the significant credibility issue that has emerged in the past year in the wake of, among other incidents, big accounting firms’ involvement in South Africa with the Gupta family corruption scandal and in the U.K. with the tragic collapse of Carillion Plc. While those events garnered greater press attention abroad than in the U.S., I would assert that the profession always has a significant reputational risk and that there’s no escaping from the interconnectedness of that professional reputation. If one high-profile firm does something wrong, it gets a lot of press, tainting the entire profession. In the short term, then, there exists an immediate need for the profession to continue to refine and pay close attention to its image, how it is viewed publicly, and whether it has the credibility and trust that it needs.
I would, however, place the most emphasis on the long-term concern that is rightly centered on artificial intelligence and the question we all must address: What does AI do to and/or for our profession? Indeed, AI and robotics process automation can be great resources for the profession. However, it is important that we be able to embrace and adopt them in a way that allows them to be a resource, rather than replicating what the accounting profession does. To that end, those in the profession would do well to engage with subject matter experts and enhance their own skills, keeping a finger on the pulse of emerging technologies and pursuing technology-relevant training. Technology has always been a two-edged sword. The reality – and the challenge – is that we will have to gain a deeper understanding of how technology can impact and change organizations and still have the courage to embrace and adapt to that change.
These two things – credibility and adaptability – will help us steer the profession in the direction it needs to go to keep our seats at the table.
--Richard Chambers, President and CEO, Institute of Internal Auditors
The quest to remain relevant and credible.
--Fayezul Choudhury, CEO, IFAC
The accounting profession is currently undergoing a rapid transformation brought about by new technology and process automation, including artificial intelligence, big data and blockchain. Accountants in all practice areas are faced with redefining themselves and their role – with the focus on adding value. Only the agile will survive!
--David Cieslak, Chief cloud officer, RKL eSolutions LLC
While technology continues to present many challenges for those of us in the accounting profession, I think the most important issues we face today are those that concern our “people.”
Similar to other professions, accounting has a “people problem.” From trying to find the right people with the right skillset to fill open positions at our firms to adopting a culture that’s more desirable to a changing demographic of employees; addressing the issues that impact our ability to recruit and retain top talent has never been more important if we have any hope of taking on other changes facing the profession. This sentiment was echoed during a recent meeting I attended with representatives from Top 30 firms and by industry leaders, such as Chris Geier, the new CEO of Sikich.
Culture is changing, but implementing a culture change is extremely difficult. The challenge will be figuring out how to remain relevant amidst all this change. As the profession continues to evolve, more emphasis will be placed on our ability to provide advisory services, which means the future of firm leadership may not lie solely with CPAs. Those with a vastly different set of skills and a fresh perspective will be tapped to navigate the accounting industry into the future.
As we forge ahead to the future of the accounting profession, our ability to understand the “whole” client will be more important than ever before. Our clients are changing and it’s up to us to be prepared to accommodate these changes by ensuring that the people we hire and the people tapped to lead are in tune with the changing demands of our clients. Yes, undergoing a culture change is difficult, but as the need for advisory services grows and technology continues to change the landscape of our profession, culture change is absolutely necessary.
--Lauren Clemmer, Executive director, Association for Accounting Marketing
Clarification of tax and accounting rules/regulations as they pertain to cryptocurrency/blockchain by regulators.
The second-most important is for incumbents to start learning to adapt to the ways that consumers and companies want to interact with the profession.
--Mario Costanz, CEO, Happy Tax
Technology – the current and growing impact on our profession and the need to reconfigure our business model.
--Gale Crosley, President, Crosley+Co.
Embracing ongoing technology innovation. Accounting was an early application of computers and specialized machines.
- Business is increasingly global.
- The digital economy grows every day.
- Increasing regulations and disclosures demand for greater transparency.
- Significant demographic shifts are underway within the profession.
Technology is inherently part of the solution for all of the issues above. But technology innovation is going to drive change all by itself. Whether we’re talking cloud, robotics or blockchain, the need to embrace technology is here for the foreseeable future.
--Ken Crutchfield, Vice president and general manager, Bloomberg Tax
Our profession’s values of integrity, expertise and transparency have withstood the impacts of rapid global change and are crucially important. With public trust in governments and institutions at an all-time low, trust is in crisis, and our own profession faces questions about the adequacy of its standards and its performance in relation to those standards.
There is an urgent need and a real opportunity for the accountancy profession to speak into the public conversation on rebuilding trust, with an authority built from decades of advocacy for transparency and accountability.
--Kevin Dancey, Incoming CEO, IFAC
1. Future. The future integration of information and innovation. We are overloaded with information and data. How we use this information to innovate change in our profession is key to continued success. The better we are able to innovate and morph into a new and improved information provider, the more valuable we become to our customers, clients and the public. Our job has been to collect, validate and report out on data. Our job now and in the future should be to analyze information and innovate for enhanced business and personal success.
2. Expertise. The proliferation of areas of expertise is continuing as the profession becomes more complex. Many accountants specialize in particular areas such as forensics, wealth management, and technology. The appropriate framework on how we categorize and acknowledge these areas of expertise is a challenge. We must recognize specializations but must also not compromise the value related to the CPA brand.
--Loretta Doon, CEO, CalCPA
Using emerging technologies to conduct high-quality audits and ensuring they are aligned with applicable professional standards. By tapping into the power of new and evolving digital tools, accounting professionals will enhance their ability to deliver quality audits that meet the needs of those using financial statements. At the same time, building a workforce for the future, which entails hiring top talent and broadening inclusion and diversity efforts, is critical.
--Lynne Doughtie, Chairman and CEO, KPMG
Audit quality has, without a doubt, improved significantly as a result of the PCAOB inspections process and the work by the firms. Notwithstanding these improvements, many firms appear to have plateaued in their progress toward achieving improved inspection results. Therefore, now is an excellent time for us to consider the potential reasons for those plateaus, including considering the continuing effectiveness of our current inspection approach in driving further improvement in audit quality.
We are asking ourselves questions such as:
- Are there targeted actions we can take in our inspection approach to drive improvements in specific areas of continuing concern?
- Can we more effectively integrate research from our economic and risk analysis efforts in shaping our inspection priorities and approach?
- Can we more effectively leverage the data we have collected through our inspections and other sources to identify meaningful insights to further audit quality, including sharing these insights with audit committees, audit firms, and the investing community?
- Can, and should, we calibrate our inspection process to focus firms more directly on the role of quality control systems in preventing audit deficiencies?
- Would modifying our approach to selecting individual audits by increasing the number of random selections provide potentially greater insight into the overall state of audit quality?
- Should we decrease the number of individual audits we inspect at specific firms that have shown improvement in Part 1 findings, and refocus our inspection procedures to drill more deeply into those firms' quality control systems?
- Should we modify the timing or frequency of our inspections of certain firms, based on the nature and degree of their demonstrated audit quality (or lack thereof) over time?
- Is there additional guidance or transparency that we can provide about our remediation decisions?
- Finally, does our inspection approach introduce unnecessary and unexpected costs into the financial reporting system, without achieving corresponding benefits to audit quality and thus investor protection?
--William Duhnke, Chair, PCAOB
I believe the biggest challenge our profession faces is one of mindset. Many people in this profession seem to be motivated by fear. They are afraid to let go of control and old ways of doing things to let the light of possibility shine through. CPAs are used to being problem-solvers and having all the answers … but these answers are no longer serving us in the same way they used to.
There are also many brilliant young CPAs who have big hearts and want to make a difference. They are seeking purpose and fulfillment, but oftentimes feel stuck and dissatisfied because they don’t see how they fit into the traditional model.
The CPAs who are ready to take a leap to move past their fears and let go of having the answers and control – those who seek out new possibilities with an open mind and an open heart – these people will create the new possibilities our profession is in dire need of.
--Sarah Elliott, Co-founder and principal, Intend2Lead
Technological advancements are driving rapid changes in the accounting profession. The who, where, and what of how work gets done is evolving quickly — and it’s only going to continue. We’ll see more automation, more cognitive technology and analytics, and more “off-balance-sheet” talent within the profession. As new tools augment our profession and streamline certain tasks, accountants will not only have to embrace new ways of working, but take on expanded roles — as data analysts and other specialists. Human capabilities such as judgment, insight, skepticism, courage, and integrity will become more important than ever — and the profession will have to continuously cultivate these skills to keep pace with our clients, technological disputing and continue to protect and create value for our capital markets.
--Cathy Engelbert, CEO, Deloitte
For small and midsized firms in particular, it is the continuing erosion of margins on compliance services.
--Domenick Esposito, CEO, Esposito CEO2CEO
It is hard to pick just one, but I’m going to say: a lack of diversity. I don’t say this because of my current role. I say this because I believe we are on the verge of a human capital crisis, the impact of which will ripple through every aspect of the profession and potentially exacerbate the other major challenges. This is a people business, and we are only as good as the people we hire, develop, promote and retain – being human is our No. 1 differentiator. After all, computers cannot replace our ability to identify opportunities, navigate subtleties, consider emotional or cultural impacts, or contemplate social, ethical, political or environmental complexities. According to the 2017 PCPS CPA Firm Top Issues survey, finding and retaining qualified staff were the No. 1 or No. 2 issue for firms of every size, except for sole practitioners. This is troubling enough in light of recent decline in the trend of accounting graduates (down by nearly 3 percent), which is the first overall decline since the mid 1990s – of which the majority are still male (52 percent) and white (63 percent). Projected shifts in demographics may also result in a sharp decline in CPAs. As of 2017, CPA firm partners were 77 percent male and 95 percent white. This is a notable difference from the general population, which is roughly 49 percent male and 61 percent white. Demographic projections forecast that minorities will become the majority by 2044. That may seem like a long time, but it may take 10 to 12 years to reach the partner level in some firms.
Taken as a whole, the math doesn’t look good. If we don’t address the lack of diversity in the pipeline, build inclusive cultures, and identify effective strategies to develop, retain and promote minorities, it is only a matter of time before firms will increasingly struggle to replace retiring partners, develop in leadership programs or recruit as new hires. It is time we get serious and intentional about resolving this issue. Otherwise, we face a very real, profession-wide human capital shortage that impacts every other aspect of CPA firm culture, operations and value.
--Jina Etienne, Director of diversity and inclusion, Grant Thornton
The challenges within the human capital arena continue to be important and rank among the most challenging. Resources continue to be focused on this issue and various issues within the scope of human capital will be on everyone’s priority lists. Having said this, we need to keep our eye on technology as it has an impact on human capital, marketing, business development, firm management, client service and regulatory. Each project or initiative that a firm implements is impacted by technology. Because of the constant changes, it’s difficult to stay ahead.
--Kim Fantaci, President, CPAFMA
New technology will have the most dramatic impact on accountants in the coming years.
New accounting technology, including blockchain business applications, will have a significant impact on accountants and the way auditors execute engagements.
Accountants will most likely start relying on artificial intelligence to both increase productivity in areas such as research and compliance as well as to identify financial issues and trends that impact their clients. With the rise of Siri, Alexa and Google Home, there’s a strong likelihood that accounting professionals will become accustomed to talking to their devices and research services.
Research services are likely to be more interactive. Answers to complex questions will be quickly accessed on platforms in which users will input the relevant details of a given transaction and receive authoritative guidance.
--George Farrah, Editorial director, Bloomberg Tax
There are many issues facing the accounting industry, from blockchain to the continued growth in the use of artificial intelligence.
In addition to these technological changes, the sea of changes affecting U.S. multinationals and non-U.S. companies will require that accounting firms — from the Big Four to smaller firms servicing the growing number of midsized businesses doing business globally — to be proficient in global tax issues.
For example, there are tremendous challenges and uncertainty ahead for mostly U.S.-based global digital companies faced with fractious views from the European Union on how to tax the growing digital economy. The EU plans to issue a levy on their businesses while awaiting proposals for potential solutions from the Organization for Economic Cooperation and Development. Most countries are grappling with issues of how to tax gains by companies in the digital space. And this will ultimately require accountants in firms and corporations to have a wider knowledge and access to a broader set of resources to comply with an increasingly complex set of global tax requirements.
In addition, companies’ global accounting practices are increasingly under public scrutiny with increased reporting and detailed data disclosure requirements. This new transparency will put more weight on accountants … increasing their role in protecting their client’s or company’s reputation.
--Lisa Fitzpatrick, President, Bloomberg Tax
Fostering understanding of the CPA's critical role is a top issue facing the accounting and auditing profession, particularly in the face of technological advancements and other developments. CPAs are instrumental in investor protection, building confidence in the high-quality information that any market must have to function. Accountants and auditors must energize their efforts to foster understanding of their important role, how that role has been strengthened in recent years, and how it can evolve to the benefit of investors and other stakeholders.
--Cindy Fornelli, Executive director, CAQ
Staying in front of the technology curve is and will continue to be our most important issue as a profession. Not only do our customers adopt new technologies that we need to know and be aware of, the market creates new technologies like the blockchain/distributed ledger. We must understand not just the capabilities of these new technologies but also their limitations and drawbacks. There is no “perfect” technology. Criminals are the fastest adopters of new technologies -- often driving innovation themselves -- in an effort to stay a step ahead of the authorities and the overseers. We must be vigilant in our quest for truth, and a big part of our success depends on our ability to understand, evaluate and utilize new technologies.
--Brian Fox, Founder and president, Confirmation.com
The profession will need to adapt to a changing world where more and more routine compliance functions are being automated. How will the firms of the future continue to add value to their clients?
--Lee Frederiksen, Managing partner, Hinge
Keeping up with the enormous changes in technology that are transforming virtually every aspect of how accounting firms do business, how they serve their clients, rapidly changing client expectations, and acquiring the “right” talent” that will enable professional firms to remain competitive and even relevant. The traditional CPA skillset is no longer sufficient to meet the rapidly evolving demands of the profession.
Key emerging technologies include:
- Blockchain (cryptocurrencies) will streamline key accounting functions;
- Edge computing will be a cost-effective alternative to the cloud;
- AI and machine learning will increase automation of accounting tasks and change the very nature of how accountants perform their jobs.
--Mark Friedlich, Senior director of global content, Wolters Kluwer Tax & Accounting
Advances in technology will be the biggest and most important change facing the profession.
--Glenn Friedman, Co-managing partner, Prager Metis International
While AI and automation are incredibly important and exciting, it just brings more attention to the human side of the accounting profession. Attracting and retaining talent, and the right talent, will continue to be an issue for top-performing organizations. That starts with recognizing that the definition of the “stereotypical accountant” is completely upside down. Accountants are real people that have a wide variety of passions and interests outside of work. Unless we start believing it and celebrating it ourselves, the profession as a whole is going to lose some incredibly talented people. Companies and firms say that they hire people because of their extracurricular activities, but then they never give them time to go do those extracurricular activities, let alone encourage them to share these activities with others at work. If you want to attract and retain the top talent, remember that you hired the whole person, not just the accounting part.
--John Garrett, The Recovering CPA
The accounting industry is very ripe for disruption. Technology and the use of technology-driven tools and solutions will dramatically change the way the industry operates by delivering client solutions in a much different — still undefined — way. I am positioning Sikich to be at the forefront of that transformation, placing significant emphasis on artificial intelligence, business intelligence, machine learning, blockchain technologies, robotic process automation and, of course, human capital. We continue to stay focused on attracting top talent and developing our employees. In the near future, technology will sit at the center of all our solutions with expert consultants surrounding the technology. My motto for our firm is, “Embrace change and learn to adapt, it’s inevitable in business that you will need to do both well.” The profession must change and adapt in order to stay relevant. Free markets, efficient and competitive, will drive solutions notwithstanding past practices.
--Chris Geier, CEO and managing partner, Sikich
Without question, federal tax law changes present the most important issue. The sweeping changes in federal tax laws that occurred with the enactment of the Tax Cuts and Jobs Act of 2017 affect individuals, businesses, and tax-exempt organizations. This law also contains 119 new provisions that are administered by the IRS and affect taxes paid on both U.S. and foreign income. Given the scope of the changes, they will present a significant challenge for accountants in many areas of tax accounting and tax planning.
--J. Russell George, Treasury Inspector General for Tax Administration
There is a lot of excitement about new technology, and the positives and potential pitfalls it presents for our industry. The biggest issue we face is, among all the noise, forgetting that at the end of the day, our profession is about helping people. In the U.S., only 32 percent of small-business owners have an accountant. And we know that by leveraging the help of an accountant, small-business owners can dramatically increase their odds of success. Connecting more accountants to more small-business owners will require a dramatic shift in the industry.
--Keri Gohman, President, Xero Americas
The most important issue facing the profession can be expressed in two words: change management. Within our profession, accountants are facing unprecedented changes in accounting standards and technology. External changes in the regulatory environment, including new tax laws, are adding to that workload. The profession’s ability to evolve to meet the challenges ahead will require close collaboration among many groups, including accounting firms, public and private companies, trade organizations, regulators, standard-setters, and other capital market participants.
--Russell Golden, Chairman, FASB
So many choices(!) but the overarching theme is that the old ways of running and trying to grow a firm isn’t working any more. The biggest thing holding firms back from making essential adjustments is that, as firm leaders, we don’t get out of our own way! To help, a great read right now is “Liminal Thinking: Create the Change You Want by Changing the Way You Think” by my fellow St. Louisian Dave Gray.
--Michelle Golden River, Owner, Fore LLC
In my opinion, the most important issue facing the accounting profession is the change in demographics that make up the CPA industry. For example, baby boomers are retiring, leaving millennials as the next generation to fill the void in the positions/practices left behind. I believe this will leave a void in knowledge in the more technical areas of accounting. While millennials will cause a stronger shift towards the cloud and value-based services, the void will remain for the technical areas of accounting such as public company audits and high-level tax planning/compliance services, where a deep understanding is required. Public company audit specializations could be hit the hardest with an increasing number of firms terminating their SEC practices. There has been a 20 percent decrease in US based PCAOB-registered firms in the past four years alone (2014-2017). Accordingly, there will be fewer opportunities outside the top firms to gain experience with SEC accounting requirements and securities law. In turn, there will be fewer qualified individuals to fill the CFO roles of tomorrow for our public companies, during a time in which the SEC is trying to make it easier for companies to go-public and reach the capital markets.
--David Gosselin, Partner, dbbmckennon
The rapid change in technology and the use of that technology in the auditing and accounting environment. All of this change related to technology and artificial intelligence will affect small firms and require close monitoring. With resources limited for small firms, it could affect their abilities to audit clients and thus further diminish the pool of auditors available to provide services to smaller clients in an economical manner. Individuals with specialties in technology are and will be increasing their involvement in the audit process and how this will affect public accounting firms will need to be followed closely.
--Janice Gray, Vice chair, NASBA
As technology and AI keeps having an impact on the profession, new needs will drive servicing the public. The profession has to move from more compliance and historian to a forward-thinking and advising role.
--Larry Gray, National government liaison, NATP
The accounting industry is in a state of great transition. The services clients need, the methods of how to best serve them, the makeup of the firm’s professionals, the methods of how to recruit, train and retain them, and the business model of the traditional accounting firm are all in transition. This makes for the biggest issue in the accounting profession. The firm leaders who step up to navigate their firms through the opportunities and challenges in front of them will realize a tremendous amount of success in the coming years. Those who bury their heads will continue to have rude awakenings as competition increases and those things which made their firms successful in the past will no longer produce the same results.
Technology is the biggest catalyst in the changes we are seeing due to the ease of information transfer, the compilation of data and the use of big data, the changing currencies we now have access to, and the way that people communicate, share and work together is evolving. No longer can we sit back and say, “This is how we have always done it, so learn our way to be successful at the firm.” We must change our thinking to “How can we best navigate these changes so that we offer the best value to clients, quickly and efficiently, while focusing on how to help them be successful as business leaders and owners?” and “How can we create a culture where we attract and retain the best professionals (CPAs and other non-CPAs) who can bring their highest and best use to our firms to take us to the next level?” These will include data analytics professionals, engineers, attorneys, statisticians, economists, etc., as well as CPAs.
--Angie Grissom, President, The Rainmaker Companies
One major issue is that two major forces, the proliferation of data combined with increased computing power, could erode the demand for highly aggregated, general-purpose, audited, historical financial reports. This threat is only likely to be exacerbated by the second force, which is the sea change in interest among investors for information about environmental, social, and governance performance, which is often not captured in traditional financial statements.
--Jeffrey Hales, Chair, SASB
I believe there are a number of important issues facing the profession, including the impact of technology on the services we provide. I made a comment during my speech at Engage in June that “the pace of change will never be as slow as it is today.” I truly believe that to be reflective of the environment we are operating in today. I also believe trying to just “keep up” is not enough. We will have to be bold, self-disruptive and willing to invest in order to remain relevant and successful in the years to come.
--Eric Hansen, Chair, AICPA
I’d say technology without hesitation. If we look around us we can see that it’s already significantly affecting the way we work, requiring us to constantly learn, unlearn and relearn to future-proof our careers and bring additional value to the businesses we work for.
With their unique skillset combining technical expertise, analytical thinking and business acumen, management accountants play a key role within their organisations. They are in a unique position to identify potential risks and opportunities to help them rethink their business models to integrate new technologies, improve strategic decision-making and overall efficiency.
New technologies aren’t a replacement but an extension of our human capabilities. We need to keep up with, and more importantly embrace, the digital revolution to ensure that we continue to offer valuable contributions for our colleagues, our organizations and the economy as a whole.
--Andrew Harding, Chief executive, management accounting, Association of International Certified Professional Accountants
Change!
Our willingness to change in a world and a profession that is facing rapid change. Our old way of doing business may work for the clients we currently have, but it will not attract the clients of tomorrow. Clients can now take care of most of their compliance needs in many ways and will not turn to us for those services in the same numbers as they did before. These clients will continue to look to us for our knowledge and advice. We must move our companies to advisory and planning services and away from compliance work. This also means embracing new technologies and new pricing models to offer and price these services in this new environment.
We historically have been a profession that fought change unless it was a change in tax law. Even as we saw companies around us go through major changes, we somehow thought we were different. It’s time we come to grips with the fact that we are not different than everyone around us. We either accept the change facing our industry or we may face declining value in the eyes of our clients and successors.
--Roger Harris, President and COO, Padgett Business Services
Speed. As the waves of change and disruption get bigger and come faster, the question is can CPAs move fast enough and adapt to these changes fast enough before getting disrupted.
--Tom Hood, CEO and executive director, MACPA
I believe the most critical issue surrounds how we manage business model change to successfully transform our firms. There are multiple change model shifts all intersecting at the same time within the accounting profession. Technology change is causing a seismic shift to firms’ business models. Blockchain, better AI, improved automation, the rise of the “gig economy” and the amount of freelance work that is both needed and available are all momentous changes that firms must address in their business model. And another major change is moving away from a dependence on compliance towards a consulting business model.
All these changes are happening simultaneously, which requires clear vision, direction and leadership to successfully perform during the transformation. Unfortunately, I see a lot of firms chasing all these shiny objects but without a clear and distinct future vision and direction. They’re putting a lot of “irons in the fire,” but without a methodical innovation process, so things are getting messy. To be successful, firms need to create a compelling vision and align an actionable plan of attack.
--Dustin Hostetler, Consultant, Boomer Consulting Inc.
The digital transformation of finance, including machine learning and the API economy, has significant benefits for business and for our communities. But it will also transform the way accountants work.
The accounting profession is largely built around periodic and predictable cycles -- from annual closes to internal audit processes to periodic tax reporting. As businesses and regulators continue on their digital transformation journey, these cycles will quickly shift to continual loops, driven by machines, not people.
In tax, we’re seeing it already. For the past decade, Sovos has been working to help reduce the friction between businesses and governments, enabling continual audits to e-invoices in 60-plus countries.
That process has shifted tax enforcement to the transaction level, posting tax in the middle of every major accounting process -- and closing tax loopholes, including a $50 billion tax gap in Brazil.
For accountants, that means the end of period tax reporting is on the horizon. Imagine assessing and remitting income tax every time you issue a paycheck. That’s what we now support for value added tax in Latin America, Europe and Asia Pacific.
But tax is only an example. Nearly every accounting practice will follow a similar path. So, accountants must now prepare for continual closes, rather than annual ones. They must ready themselves for technology-driven audits, rather than human ones.
--Andy Hovancik, President and CEO, Sovos
Determining how firms will begin to adapt and pivot to the changing business model given all the anticipated and current change in the profession. Most firm’s aren’t in a position to invest in research and in some regards will be reliant on software companies, regulators and banks to make the changes before they can full respond. However, the biggest change within their control right now is education and learning -- what they are doing to learn about the future and what they are doing to shift their firm’s positioning, lines of business and industries focuses to remain relevant.
--Sarah Johnson Dobek, President and founder, Inovautus Consulting
The abundance of fear around automation and the perceived ability of technology to disrupt or eliminate the profession. I believe that accountants need to embrace these advancements and look to innovation for new ways to evolve their firms, rather than be stuck in the past of what their role was as a recordkeeper.
--Kacee Johnson, Strategic advisor, CPA.com; founder, Blue Ocean Principles
Managing transitions, including but not limited to: emerging technologies such as artificial intelligence, machine learning, and blockchain; retirement and transition of leadership with a possible reduction in the number of accounting professionals; selecting meaningful services for clients beyond audit and tax; and managing time to learn new skills to support additional services.
--Randy Johnston, Executive vice president and partner, K2 Enterprises; CEO, NMGI
The most important issue facing the accounting profession is the intersection of technology and talent.
As artificial intelligence and robotics begin to consume more routine and entry-level tasks, accountants and finance professionals will need to develop their skill sets. Because of this shift, educators need to acknowledge that the entry-level jobs of the future are what we currently consider positions that require at least two to three years of experience.
Seasoned accountants need to understand that the future of the profession is changing and ensure that they are continuing to upskill when possible. This means learning new areas where they might not yet have any experience, such as cybersecurity. ACCA USA recognized this in recent years and partnered with Pace University in New York City to develop a cybersecurity certification for finance professionals.
Additionally, as cloud technology enables easier remote working, employees have more flexibility to live and work where they choose. Geographic boundaries are not as important as they once were, so employers must recognize the opportunities created by a remote workforce and should embrace this to access a larger pool of candidates.
--Warner Johnston, Interim head of North America, ACCA
The number of college grads with eligibility to sit for CPA Exam, but choose not to do so. As seasoned professionals transition to retirement or a lesser workload, the CPA profession needs aspiring leaders. The five- and 10-year outlook of preserving the CPA brand is a concern given advanced endeavors in the accounting profession. The need for CPAs is more prevalent than ever.
--Bridget Kaigler, Founder and president, Bringing Leadership Back
Identity theft and cybersecurity, IRS service levels, and limited IRS resources have been issues I’ve mentioned in the past and they remain as prominent issues impacting the accounting profession. Last year I pivoted to an issue that was conspicuously displayed in the news for the remainder of the year – tax reform – which passed in December.
In surveys regarding top issues impacting CPA firms, “keeping up with changes and complexity of tax laws” has consistently been a top tier issue. No wonder. The proliferation of new income tax provisions since the 1986 tax reform effort has led to compliance hurdles for taxpayers, administrative complexity, and enforcement challenges for the Internal Revenue Service. The accounting profession has consistently supported simplification efforts because such actions will significantly reduce taxpayers’ compliance costs and encourage voluntary compliance through an understanding of the rules. Relatedly, implementation of tax reform and the critical need for guidance is a hugely impactful issue facing practitioners. CPAs and others are attempting to assist their clients in navigating the significant changes but even basic decisions, such as choice of entity, are a challenge in an environment devoid of the guidance necessary to make those decisions.
Within days of the tax reform bill’s passage, we received thousands of questions from CPAs. Much of those questions and other feedback we received was “translated” into general and specific feedback submitted to the IRS, Treasury and staff on the Hill. Our involvement in the guidance process has continued throughout 2018 and we intend to be engaged for the remainder of the year and beyond as proposed regulations and other forms of guidance continue to be released.
--Edward Karl, Vice president of taxation, AICPA
The accounting profession is, of course, made up of very large firms down to very small firms. The AICPA tells us that there are 40-some-thousand smaller firms and just two to three thousand of the larger variety. During the last few years, I have had the opportunity to work more and more with the ones on the smaller end of the scale. As mentioned, this is the vast majority of what we call the accounting profession. It is my observation that the vast majority of these firms are continuing to be slow and hesitant to change. There are a few shining examples among these firms but, again, they are few. To maintain the credibility and prestige of the CPA profession alive and well, profession leaders must find better and more effective ways of reaching these practitioners and help them truly grasp the reality of the future they are facing.
--Rita Keller, President, Keller Advisors
Accountant’s slow acknowledgment of the digital changes/revolution that are occurring. While blockchain and cryptocurrency are garnering core attention, advances in big data analytics, robotic process automation, and cognitive programming capabilities are invading the traditional CPA space at an accelerating pace. I believe if we don’t embrace these changes and learn to use these business data tools to proactively impact clients, much of our work will be at risk of being disintermediated from other providers/professions.
--Roman Kepczyk, Director of consulting, Xcentric-a division of Right Networks
Relevancy. Small to midsized firms are the backbone of the accounting profession. While smaller firms may promote a client service model that emphasizes personalization, these same firms are disproportionately challenged across the technology landscape. In the age of big data and cloud computing, smaller firms, by virtue of their size, do not have the resources to compete. This resource disparity can create obstacles to maintaining the most relevant technology, and to attracting and retaining a diversity of talent that empowers the most relevant service model. Concurrently, regulators must adapt auditing standards more quickly in order to address the significant use of technology and how it impacts the execution of an audit.
--Lexy Kessler, Chair, Aronson LLC
It was and continues to be the ability of professionals themselves to adapt to the drastic changes that are occurring with regard to technology. Artificial intelligence and blockchain will alter the work that far too many accountants still do today. The pace of change itself is accelerating. Darwin did not say, “Survival of the fittest.” He spoke of survival of the most adaptable. Far too many accountants are not adaptable.
--Ed Kless, Senior director, Sage
The most important issue currently facing the accounting profession is scarcity of capital. I say this because of the upcoming investments that firms will need to make, in terms of both technology and the buildout of various consulting and advisory services that clients will both want and need. Without these, being a compliance shop won’t go away, but they sure will become much less profitable if that’s all a CPA firm is doing.
--Allan Koltin, CEO, Koltin Consulting Group
Disruption and change management. As technology evolves by the minute, are firms and companies keeping up? Firms that have the appropriate change management in their firms will continue to prosper, while those who fight the change will have a challenge competing.
--Mark Koziel, Executive vice president – public accounting, Association of International Certified Professional Accountants
Failure to adopt more innovative thinking and invest adequately in the future of our practices. While there are several luminaries in our profession who absolutely drive this thinking, they are the exception. Too many firm leaders may be sitting on the sidelines waiting for a solution. But what happens when nearly an entire profession (or industry) is waiting on the sidelines and disruptive forces begin their work? What Netflix has done to cable, what Amazon has done to retail, and what Uber has done to the taxicab industry. Is our profession the next taxicab industry? What can and should we learn from these transformations that have happened right before our eyes?
--Art Kuesel, President and owner, Kuesel Consulting
The most important issue facing the accounting profession today is about mindset. I see too many CPAs trying to hold on to old ways of thinking and doing based on a desire to have all the answers and avoid risk based on a fear of failure. But now, in today’s ever-changing environment, we have to embrace “not knowing” so we can enter into our challenges as beginners who are ready to:
- Challenge the status quo of what is possible.
- Innovate what we do in completely new ways.
This includes taking more risks and in some cases failing, and embracing failure as learning opportunity. If we do not embrace this beginner mindset and truly innovate, outsiders will.
So, we need to challenge our mindset from one of the constant expert to one of a continuous beginner and learner. We can do that if we:
- Decide to listen first! Let’s create real space in our relationships where exciting possibilities come alive.
- Challenge our thinking that all of our value is tied to having all the answers. Instead, let’s focus on asking better questions.
- Embrace a curiosity about those we support -- their challenges and their opportunities. How can we, together, truly innovate to make their lives easier?
--Brian Kush, Co-founder and principal, Intend2Lead
Firms must intensify focus on the client experience, and that calls for agility. With tax reform, new technologies such as AI, and an overall more competitive environment, accountants must re-evaluate the status quo and focus on what’s best for clients – and do so quickly. This will push many firms beyond their comfort level, but the client-first approach will position the firm for long-term success. Simply put, it means creating the best client experience possible. Executing in a timely manner underscores that commitment.
For example, a recent survey showed that businesses reap positive benefits from client accounting services. CAS-related advice from accountants helped the respondents simplify accounting, be more prepared for business decisions, and even increase profit. It’s a service that emphasizes the expertise practitioners bring to clients, both in terms of knowledge and technological savvy. Offering CAS and these benefits (and more) can provide a valuable competitive differentiator and a new revenue stream. But this isn’t something you can put off for years or even one year.
--Rene Lacerte, Founder and CEO, Bill.com
It’s a great time to be a CPA. We’re experiencing solid revenue growth and rising per-partner income. Unfortunately, this success often masks the importance of planning for the massive changes that are coming to our profession. Technology, globalism, and generational differences will radically transform accounting over the next 10 years. Those that can’t (or won’t) change will perish.
--Gregory LaFollette, Strategic advisor, CPA.com
I believe the need to attract and train qualified professionals continues to be the most important issue facing the profession. In addition to core competencies, the need for these professionals to understand how new technology impacts our profession and society as a whole, and for them to embrace it, is critical. Cloud technology, blockchain technology, and robotic process automation are poised to have a significant impact on the profession, and we need professionals who understand them.
--Michael Levy, Director of internal audit, Student Transportation Inc.
We think are several issues that are linked, causing a domino effect inside firms. It is clear, succession is a major problem. Many firms do not have a realistic understanding of how to exit and we are being flooded with firms asking us to merge them upward or sell. They could not build their internal succession because they did not invest in their staff. They did not teach them how to sell. How to network. How to lead. And they did not provide a clear path to partnership and how it is funded. As a result, they chased staff off, kept feeding their loyal stars that stayed with too much work and/or the complex work. Firms became filled with workers, but not leaders and definitely not professionals who can bring in work.
Now many are at an age where it is too late to fix the problem. They want a legacy but put themselves in a corner by not training their succession team. Firms need cash to buy out partners and if the exiting partnership team feels the ones who will be left cannot create that cash, they have limited choices. On top of that, the loyal staff eventually sees no solution coming and they leave.
The most important issue: lack of training staff how to lead and bring in work.
--Bob Lewis, President, The Visionary Group
Not confronting the many changes head on and being complacent or taking a “wait-and-see” approach is the No. 1 issue facing CPAs. CPAs must act now – both in their personal learning and skills development and in their firms and organizations. CPA leaders must place their bets on a few changes to drive now to stay relevant and competitive and meet the demands and needs of their clients and organizations.
--Tamera Loerzel, Partner, ConvergenceCoaching
This is not your grandfather’s or your father’s accounting profession, and in fact it is not even the accounting profession most of today’s practitioners have experienced. We are on the shores of a sea change as sweeping as any we have ever experienced in this profession. The turbine behind this change is technology – and artificial intelligence in particular. Follow the arc of technology and you can see how it was the primary force in eroding geographic borders and the creation of a truly interconnected global economy. Add to that the impact of technology on business processes, accounting procedures, the supply chain and even demographic expectations and the re-imagination of what work-life integrations looks like. With artificial intelligence reaching a tipping point, professional accountants will soon be chased up the value chain, with AI and robotics overtaking higher and higher order services. Data analytics and intuition, communication and consensus-building will all be required for professional accountants who want to offer more than the latest bot that is nipping at their heels.
--Janice Maiman, Executive vice president of communications, PR and content, Association of International Certified Professional Accountants
I feel that the most important issue currently facing the accounting profession continues to be the risks associated with cybersecurity. It seems that a day does not pass where we don’t hear about another business suffering a data breach. Unfortunately, these breaches are not just related to large, public enterprises (i.e. those that you see on the evening news). Despite the efforts of the national accounting organizations and the IRS’s Security Summit, more and more CPA firms appear to be getting breached. The scary part is that many more firms have been breached, but have yet to realize this fact. As a profession, we must realize the risks associated with the level of personal identifying information that we house in our systems and take steps necessary to mitigate these risks.
--Stephen Mankowski, President, NCCPAP
Fear to adapt and leverage knowledge. The people and firms that are growing and seeing the greatest opportunities are finding the clues to their future success through powerful connections and a willingness to participate in new opportunities. Success leaves clues, and the influencers of today are not only leaving clues for others, but they also have a willingness to support the profession. Knowledge that is outside the accounting profession should also be considered and applied to accelerate resolutions to underlying issues that are putting pressure on the profession. The profession’s leaders of tomorrow will look more progressive than what are considered “traditional” accountants. Progressive firms will have a clear vision that supports their business strategies, teams, technology, management and leadership.
--Robert “Sean” Manning, CEO and Founder, Payroll Vault
There needs to be innovation applied to redefining what a career path in accounting looks like and how professionals should build their experience. Every conference speaks to the influence of technology; some of this dialog makes it sound as though the role of the accountant is diminishing, but that is only the case if the profession does not recalibrate what their roles are. With automation minimizing many entry-level roles, the profession needs to identify how young professionals gain experience and knowledge, so they can become valuable advisors. Though technology will augment their knowledge, the insights that come from years of experience and working with many industries will need to be developed in new ways. Techniques like mentoring will become key to developing additional understanding and skills needed to be successful.
--Samantha Mansfield, Director of professional development and community, CPA.com
Tax reform: We haven’t seen tax reform this significant in decades, and it represents an opportunity for accountants to position themselves as the go-to source for information on how to best navigate the various changes. In addition to having an obligation to uphold regulatory requirements and ensure compliance, the accounting function remains mission-critical to all sizes of business and their success.
Whether you’re a small-business owner, global corporation or an individual tax payer, the changes are significant — and to gain the full benefit of the new code, it takes an informed and trusted advisor.
The convergence of information and software is becoming more and more relevant to the professional; the magnitude of change in the Tax Cut and Jobs Act requires new ideas and solutions to be able to connect the client to the impact of a specific regulation and to the decisions they make for their business.
--Jason Marx, CEO, Wolters Kluwer Tax & Accounting North America
Technology enabling many accounting and tax preparation tasks such as data entry to be automated, thereby eliminating or reducing the need for many accountants and tax preparers. Machine learning and artificial intelligence will also begin to become major drivers of change in accounting.
--Chuck McCabe, Founder, president and CEO, The Income Tax School
The most important issue is rapid change. Not only in obvious areas like technology (as professionals scramble to understand and prepare for blockchain), but in our attitudes and outlook on diversity and inclusiveness, and how employees should expect to be treated and conduct themselves in the workplace. Add to that the changes in client expectations of value delivered by their firm, with much more emphasis being placed on business advisory services.
All of these areas of change are affecting firms, in the midst of widespread M&A activity and shifts such as the race to serve small-business clients. And perhaps most significant, recent tectonic shifts, including historic tax reform and the Supreme Court’s overturning of the 1992 Quill decision have resulted in additional complexity and uncertainty for professionals and their clients. Government-mandated change, and enforcement bolstered by better technology, will push firms with great velocity to adapt, adopt and implement new strategies, tactics and tools for meeting client needs and expectations.
--Scott McFarlane, Co-founder and CEO, Avalara
One of the key areas of focus this year centers on audit services and how firms need to improve audit in two specific ways -- documentation and risk assessment to overcome prevalent peer review problems.
Here is what we know:
1. For firms to continue to grow and be profitable they need to become much more efficient doing their audits and reviews. They also need to offer higher-value services.
2. Auditors need access to all their client’s data because it will no longer be acceptable to audit just the ending balances, and because the data will give insights into their clients, allowing much more effective conversations.
3. Providing a quality audit is getting harder. Using a traditional checklist approach continues to result in common peer review deficiencies.
--Jim McGinnis, Executive vice president, Wolters Kluwer Tax & Accounting
Disruption. Our industry is being disrupted by accelerating change driven by technology. With every technological advancement, our work becomes less about rote accounting tasks, and more about solving business problems, mitigating risks and creating solutions in a complex and changing world. This disruption is changing everything about our profession, including the talent profile that will drive the profession in the future.
--J. Michael “Mike” McGuire, CEO, Grant Thornton
As fast as things are changing in the business world, the current pace of transformation is the slowest we’ll see in our lifetime. Navigating this accelerating change is the biggest challenge – and opportunity – we face. Automation is already reshaping every major area of practice, and emerging technologies such as artificial intelligence and blockchain will fundamentally alter the way we conduct audits and offer guidance as trusted advisors. To flourish, we need to do two things: transform our services to reflect evolving business needs, and ensure that we continue to attract the best talent into the profession, and back that with a commitment to provide the most innovative learning tools and curriculum to expand our skills.
--Barry Melancon, President and CEO, AICPA
There are two issues that are linked together: adapting to technology and staffing. Technology is rapidly becoming a game-changer for our profession. Artificial intelligence and robots are quickly entering the mainstream of auditing and analytical services and this will make accountants the go-to advisors as businesses catch up and look for the entry that accountants will lead them in. While auditing is person-centric, the technology will free up staff and thrust them toward using what they are experiencing with auditing to applications that clients will need and want making us the leaders. Staffing is an age-old issue and there are significant changes toward less brute force and more imaginative and creative thinking. Firms will need to look for different educational backgrounds than the traditional accounting programs, which seem to be mired in the past and will be hiring many more non-accounting majors than they ever considered even a half dozen years ago.
--Edward Mendlowitz, Partner, WithumSmith+Brown
Our past. As a profession we are struggling with letting go of the past and the way things have always been done to embrace an ever-changing economic model. Our clients and our future leaders that we are recruiting to join this profession are demanding innovation and a change in mindset or we face irrelevance in the market. Although the movement is underway, I am amazed at the lack of widespread support and the lack of action for change in our profession. It is not only a technology disruption, it is a generational disruption that is occurring causing us to rethink our cultures and our strategies for recruiting and retention, and forcing us to face uncomfortable questions about our purpose.
--Wesley Middleton, Managing partner, MiddletonRaines+Zapata
The need to develop a business advisory mindset and approach. Rapid technological advancements and intensifying competition are forcing professionals to take a more holistic and collaborative approach in order to stay relevant.
--D. Scott Moore, Shareholder and executive vice president, The Rainmaker Companies
Determining the most cost-effective way to implement emerging technologies to improve service delivery to clients. Whether you like it or not, technology is going to have a significant impact on how the accounting profession stays relevant and I’m concerned that many firms aren’t really planning for the digital transformation that is facing them in the very near future. The firms that are transforming their audit, tax and consulting processes using technologies such as artificial intelligence, machine learning, robotic process automation, etc. are going to have competitive advantages over those that don’t. It’s important that all firms, large and small, review how technology is going to change how they do business and determine how they are going to move forward.
--Stan Mork, President, ITA
The most important issue facing the profession today is unquestionably succession planning. Over the past few years baby boomers have been recovering from their financial losses from the 2008-2010 economic downturn. They are, of course, now older (well into their 70s) and now feel the pressures of age, pressures from younger partners and the pressure from family to spend their remaining viable years enjoying the fruits of their labor. Plus younger partners are eager to “take over” and it’s time to let them. … Some consultants want the profession to believe the merger mania process is slowing down. Most acquirers have spent their cash or have absorbed the volume and partners desired and now need to solidify the acquisitions or mergers they executed over the past few years. For all the above reasons, firms now need to focus of their own succession plans and their hope to sell may no longer be viable. Additionally those who have waited for better values or wanted to take more cash out before selling or may not be a desired candidate need to start rethinking what the plan is for continuity and securing the value of their practices.
--Jay Nisberg, President, Jay Nisberg & Associates
Retaining talent all the way through the partner track in a traditional billable-hours-and-busy-season-driven industry. Can we keep the next generation engaged throughout an entire career?
--Tony Nitti, Partner, WithumSmith+Brown
Adopting the right mindset to change.
The perceived sudden impact of technology on the profession is impacting those who didn’t see it coming. The longer that things have stayed the same, the more challenging it is when change arrives or is trust upon us.
Whilst the profession as a whole is grappling with cloud, automation, blockchain, AI and the like, I see individuals embracing the future opportunity and re-engineering themselves and their firms to remain in tune and relevant to the needs of their clients (now and in the future).
--Clayton Oates, Chief solutions officer, QA Business
The global talent shortage for highly skilled labor.
With unemployment for accountants in the United States below 2 percent as of Q1 2018, it’s already getting difficult to hire and retain top talent. But it’s going to get worse. The consulting firm Korn Ferry projects that by 2030, the global talent shortage will reach
The talent crunch will result in skyrocketing labor costs. In the United States, employers can expect to pay
Managers of accounting teams will need to figure out how to do more with fewer people. The good news is that the technology is available now to automate as much as 50 percent of the work. Implementing cloud and automation technology makes staff more efficient and more satisfied in their jobs. The challenge is that our education system is doing a dismal job of preparing accountants to work deeply with technology.
--Blake Oliver, Senior product marketing manager, FloQast Inc.
The business model of the traditional firm needs to drastically change in order for firms to be able to adopt new ways of doing business to remain relevant. Without a change in business model, innovation cannot happen. And without the innovation to change what and how firms deliver, sell and express value, I’m afraid no one will buy what firms sell today in five years. Technology is pushing the disruption faster than ever before and unfortunately, although I see managing partners who want to evolve, their partner groups are holding them back.
--Jody Padar, CEO and principal, New Vision CPA Group
After years of incremental innovations built by the internet, cloud and increasing computing power, the accounting profession is staring at the horizon of real breakthroughs emerging due to the hurricane of transformative winds that new technologies are ready to unleash on the profession.
How will accountants prepare for the new outcomes they will need to deliver in the realms of the new technological landscape?
Entrepreneurship is about imagining new outcomes with existing resources, or even with resource constraints. Entrepreneurship in the accounting profession has altogether a new challenge -- that of reimagining and preparing for the new outcomes -- not within existing resources -- not with resource constraints -- but with newly available and emerging, truly break-through technological resources. Such transformational hurricanes that redefine the very landscapes of the professions are experienced once, at the most just twice in the lifetimes of professionals. And accounting professionals are right now faced with that powerful force which is about to redefine the profession’s fundamental landscape. The real issue is not the new technology. It is the ability (or otherwise) of accountants to reimagine the new outcomes with new resources.
Accounting -- the language of the business -- with the alphabets that define trust, has been the tradition for decades and centuries. Even with accelerated technological advances over the last couple of decades, Accountants provided that true trust in the financial world. Economies survived and thrived based on the trusted compliance flag-bearers -- the accountants -- even in the times of technological upheavals. No wonder, accountants could dive into even non-traditional, highly technological fields, e.g., cybersecurity. The sheer volume “human-intelligence” and “human-time” -- and the cost thereof -- required to maintain and uphold the trust was colossal, despite technology. But all that is threatening to change into an unrecognizable form, in hitherto unprecedented ways. Because after a few decades, we are now witnessing technologies that are nothing like what we have seen and grown up with.
Artificial intelligence, machine learning, the resultant pace of automation and blockchain - combined together - can and will deliver entirely new, evolutionary, transformational possibilities, new outcomes and hence altogether new business models of accounting firms -- as new clients, who would be comparatively far more in tune with these technologies will feel, see and start expecting totally new outcomes and value from the accountants. These technologies, which have dramatically evolved over the last year, are slated to automate about half the highly predictable, repetitive, structured data collection, processing and organizing activities. The workplaces, workflows and work outcomes will transform as accountants will work more with machines.
Humans take time to understand what they cannot feel through their five senses. One of the key common factors among all the new technologies mentioned above is they all are “under the radar” -- i.e., cannot be felt by using the five senses. Ironically, they all hover in the realms of the “sixth sense.” And it means, to prepare for this pervasive sixth sense, accountants will need technologists to shape these technologies so that accountants can touch, see and feel them -- in the form of software that they are used to “handle” or reports/intelligence derived from it.
Reimagining new outcomes is not a dinner discussion topic. Not even for a roundtable. It is a necessity. Like oxygen -- necessary for living. It needs to be addressed right now, to prepare for -- to define the profession’s adapting strategies and then growth strategies for the future. Traditionally, the accounting profession has been the consumer of related technologies, not the creator. The emerging technologies are even more complex -- technology-wise. It means even in the future, accountants will not create and own these technologies themselves. The technologists will define the speed, and the magnitude of the development -- which can be expected to be much faster than the speed of adoption by accountants. It is therefore absolutely essential that accountants start preparing, now. The actions (or inactions) of accountants will place them under four distinct categories:
- Players: The pioneering leaders who define how the work will be done in the future.
- Affirmers: The firms that adapt but only to follow the leaders who set precedents.
- Elicitors: The firms that are nimble and experimental but lack resources to transform.
- Sleepers: The unprepared, unwilling laggards who hope to somehow survive. …
The critical difference -- which defines the most important issue facing the profession -- is the “how.” Accountants’ entrepreneurial drive can lead them to adapt them for the future but preparing for the future requires several actions within the firm.
--Hitendra Patil, Director of practice development, AccountantsWorld
The global trend toward transparency is the single strongest force driving the development and adoption of automation and emerging technology, such as blockchain, in our industry. As governments around the world seek to increase transparency in an effort to curb tax corruption and ensure their fair share of tax revenue, they have been charting the course in adopting technologies to facilitate the collection of tax data. In order to help their clients thrive in this era of accelerated change, accounting professionals must keep pace with the ongoing technological disruption by continually growing their skills and seeking out talent that is forward-thinking in planning for and addressing the larger trends that are driving disruption.
--Brian Peccarelli, Chief operating officer, Thomson Reuters
The impact of changing technology on small and medium-sized firms.
--Carl Peterson, Vice president of small firm interests, AICPA
Being able to quickly and accurately respond to clients about the impact from the back-to-back tax changes of federal/state income tax reform and the Supreme Court’s Wayfair decision. Either one would have created tremendous pressure on the profession, but both happening within eight months is a challenge even for the largest and most capable of firms.
--Scott Peterson, Vice president of U.S. Tax Policy and Government Relations, Avalara
I think the talent shortage and turnover at CPA firms is still the most important unresolved issue in the profession. Small CPA firms are having great trouble finding young talent, which leads to needing to sell or walk away from the firms. Midsized and large firms are losing valuable talent at high rates. But there are solutions. We are showing firms the value of building U.S.-based remote teams that opens the firm up to a much larger talent pool. We also advise firms to pursue per-diem independent contractors who can bring a great deal of expertise and performance without making long term commitments of joining a firm full time. These are real solutions to the talent problem, yet far too few firms are adopting this.
Don’t get wrapped up in talking about how your firm is going to tackle blockchain and crypto if you haven’t embraced remote work yet!
--Jeff Phillips, CEO, Accountingfly
The most important issue currently facing the accounting profession is educating people in the right behaviors (e.g., recognizing patterns/trends, learning new knowledge, demonstrating effective interpersonal communication, etc.) to be successful in our profession because accounting jobs are requiring new skill sets, especially in technology and consulting.
Accounting firms are acquiring technology companies to obtain diverse competencies in people and product offerings. Additionally, the large accounting firms are hiring fewer accounting graduates and hiring more non-accounting graduates that can expand competencies (e.g., strong data analysis skills, IT systems savviness, technology expertise, etc.) within the organization.
We need to determine how to best educate accounting students and professionals already in their accounting careers on how to build more skills outside of mastering technical accounting so we can better compete with people outside of our profession for the jobs we want to do.
--Elizabeth Pittelkow Kittner, Controller, Litera Microsystems
Whether it’s disruptive technologies, globalization or the increasing size and complexity of business, the future will belong to those who have the financial resources and the inclination to adapt. My fear is that this will lead to non-stop consolidation. We need to be shaping a future where there continues to be a role for small and midsized firms, which means they need access to technology, but it also means that we need to find more areas similar to cyber-attest, where CPAs can use their core competencies to help businesses through these turbulent times, without the strength of a global firm behind them.
--Amy Pitter, President and CEO, Massachusetts Society of CPAs
The pace of change in technology innovation, and how it affects the availability and consumption of financial information. While these changes have the potential to revolutionize financial reporting, they also present a challenge: Will users (investors, for example) be able to differentiate between audited information they can rely on and information that may be less reliable?
--Terri Polley, President and CEO, FAF
The most important issue currently facing the accounting profession is technology. Blockchain is already starting to have a huge impact on our industry, and as the technology develops while more accountants get access to the technology, I think it will create a revolution in our industry.
The other technological issue is the remote office. More and more apps are coming out that allow remote connections, remote workgroups that were not possible before. As us accountants adapt to using this technology, our clients are also becoming more favorable to using it. As these develop more, I believe this will be a great recruiting tool on campuses for the next generation of accountants.
--Nick Preusch, Tax manager, PBMares
Technology is clearly going to transform the profession in as little as five years. As much as 40 percent of the time that is now spent on audits, tax return preparation, and accounting services may be eliminated. This is going to transform the organizational structure of accounting firms as lower-level staff are replaced with technology. However, what is potentially even more profound is the potential impact on profitability. Can firms transition from the traditional hours-times-rates system of pricing services to capture the value of technology as hours are reduced? The need to embrace value-pricing models may become the basis for financial survival in many firms.
--Terry Putney, CEO, Transition Advisors
Like many professions, the accounting profession is facing the profound changes that will impact it due to the ever-accelerating rate of technological innovation. Among these changes and innovations are blockchain technology, artificial intelligence and machine learning.
In addition, the ongoing challenges associated with a lack of new talent entering the accounting profession are a challenge that will need to be addressed.
--Ron Quaranta, Chairman, Wall Street Blockchain Alliance
Technology disruption to both how accounting pros work with clients and how clients choose whom to work with.
How accountants adapt to these changes will create a divide between those that are dying out in the professional and those that will prosper with new business models.
A new threat to the traditional accounting practice will come from anywhere/anytime access to software and data. Accountants are no longer required to work at a shared office. Remote engagements, online onboarding, and automated tools will make it easier for independent accountants to complete with traditional accounting firms. Your online reputation and digital authority will become more important than ever in winning new clients. The cloud helps break down borders and state lines. Building and maintaining trust through online reviews, user experience and social media prominence will be a driving factor behind who is successful.
More emphasis will be on how accounting professionals analyze the data, not necessarily how the data is collected. Integrated systems allow for real-time views on how a business is doing, versus the traditional historical lookup.
Accountants who move to monthly advisory packages and provide virtual CFO services will be the big winners. Automation will be widespread. But with faster data comes more questions on what it all means. The definition of a number cruncher will evolve as more systems talk to each other.
--Lee Reams II, CEO, ClientWhys
Evolving technology and automation.
--Lee Reams Sr., Chief technical officer, ClientWhys, TaxBuzz and CountingWorks
In a word, security. Accounting firms are under attack by organized criminals more than ever. Firms neither have the understanding or the technical skill set to protect the data that clients entrust to their firms.
--Darren Root, CEO, Rootworks & Liscio
More than ever before, this question can only be answered in two ways: short-term and long-term.
Short-term. The biggest issue continues to be “staff.” Finding them, training them, mentoring them, developing them as leaders, retaining them and getting them to want to be partners. The triggers are two-fold: external because the labor market is woefully inadequate and internal because partners continuing to struggle committing their time and energy to developing staff.
Almost every new firm I meet with quickly begins describing the problems they have in all staff areas, mainly not enough staff (hinders growth) and not enough high-quality staff with partner potential (makes succession planning difficult). This is especially acute for firms with boomer partners seeking an exit strategy. Partners think about these staff issues every day and every night.
Long-term. The biggest no-brainer is to cite the coming disruption to firms due to blockchain, data analytics, artificial intelligence and all the related operational issues such as the dramatic reduction of traditional compliance work and the need to replace the lost revenue. Though the full impact of these changes is several years away for local firms, they are getting more anxious by the day.
--Marc Rosenberg, President, The Rosenberg Associates
Maintaining relevance in a new world of automation. Machine learning and the subsequent automation of repetitive tasks, like recording transactions, posting to ledgers, managing receipts, and reconciling transactions, has changed the nature of accounting. Automated processes will reduce the chances of human error while simultaneously freeing up man hours for higher-level work. But the profession is not ready – few accountants have the skills needed to make the transition. They need to understand more about technology, automation, integration, and business processes in order to serve their clients successfully.
--Jon Roskill, CEO, Acumatica
The need to change to a more consultative approach and offer broader services away from pure compliance work. Technology is going to radically change the profession in the next few years, and traditional tax prep and audit work is going to start fading away. The profession needs to position itself as knowledgeable business consultants, and those firms that are doing this will be in a better position to survive, and thrive.
--Bonnie Buol Ruszczyk, President, bbr companies
The most important issue facing the accounting profession is the disruption caused by changes in technology. The continuous development of artificial intelligence, automation, and blockchain technologies are forcing changes to the way accountants must do their work in order to stay competitive in the market. These technologies have made global trade commonplace to SMBs. While the adoption of blockchain will simplify transactional accounting, the challenge our industry will face is the increasing complexity and application of international laws and regulations that go along with it. Accountants will need to stay on top of both U.S. and international laws and accounting practices to service clients that are trading in the world market.
Those that do not invest in their own technical knowledge and leverage these new technologies will be at a grave disadvantage from their peers that do. The early adopters of these technologies in the accounting industry will be the ones who impact future changes to rules, regulations, and policies in the profession.
--Heather Satterly, Owner, Satterly Training & Consulting
A “business as usual” mindset is going to trip up many accounting professionals and their organizations. Despite technology advances, evolving client needs and the continued shortage and changing expectations of talent, inaction persists. We know that these trends will not rest but we can swiftly adapt our roles and our teams through a keen sense of awareness, action and adventure!
- Awareness. If we get in the habit of regularly looking up from the important work on our desks to evaluate the impact and opportunities these trends have, then we can quickly align our mindsets with new realities so we can continue our important work as critical advisors into the future.
- Action. We can think forward but act now by designing a plan for our teams that responds to pertinent signals of change by evaluating where we are, where we need to go and what daily progress looks like to get to there.
- Adventure. Let’s find our sense of adventure. We do not know exactly what to expect but that’s the thrill of exploring new possibilities!
--Natasha Schamberger, CEO and president, Kansas Society of CPAs
My general perception, which I shared with Accounting Today in 2017, still holds true in 2018. Industry consolidation is a fact of life for the accounting profession.
Over the last decade, the accounting profession has been characterized by a “grow or die” mentality, which has led to the unprecedented consolidation of accounting firms through M&A activity. Small accounting firms generally find it more difficult to maintain and generate revenue, and only the growth that a merger can bring enables firms to expand their service offerings, compete for the top industry talent that clients demand, and fund deferred compensation payments to the growing pool of retiring partners. Furthermore, given the growing universe of retiring partners, succession planning is a major impetus for accounting firm mergers, as firms attempt to transition older partners out and identify ways to support future leadership personnel. The firms that are flexible enough to develop innovative solutions to these challenges will thrive, while those who are not will struggle to compete.
Additionally, firms have been forced to develop and adapt new technologies in an ever-more competitive marketplace. Firms that embrace these changes will survive and thrive.
--Russell Shapiro, Partner, Levenfeld Pearlstein
The impact of technology, without a doubt, is the most important issue facing the profession. What makes this the most important issue is the far- and wide-ranging impact that it will have on firms of all sizes and, in fact, the entire ecosystem of the accounting profession. Technologies such as artificial intelligence and robotic process automation are already taking over tasks previously done by people in the largest firms.
The impact of technology will be far-reaching, including the value that accounting (professional service) firms will offer their clients, the competitive environment, the ability for small and midsized firms to survive, and how our educational system prepares future accountants.
Increased focus on providing value-added insights to clients is one of the greatest benefits that technology will enable. As lower-level (and some upper-level) tasks are replaced by technology, time and effort will be refocused on providing the client with valuable insight and information. Hence, firms will provide less compliance work and more value-added insight. This may help to reduce the view of some accounting services as commodities.
Technology’s impact on competition may not be as positive as providing value-added insights to clients. Machines will complete tasks much faster than people and can perform tasks 24/7. This has the potential (and reality) to lower the costs of some services. We are already seeing the Big Four coming in with lower bids than the next tier of firms on clients that, previously, may have been deemed to small for the Big Four. Will this trend continue to flow “downhill?” Technology gives the profession the ability to move away from services as commodities; however, the potential for price-based competition may be higher than ever.
While technology has the potential to lower the operating costs of an accounting firm, it may create a cost and knowledge barrier to entry for existing small and midsized firms. It’s no surprise that we have an aging profession especially among smaller firms. The cost of implementing technology and the competition it may create, combined with aging practitioners, may only speed a dramatic reduction in smaller firms serving main-street America.
Lastly, the accounting profession has largely been one where entry-level staff learn by doing lower-level tasks and then move into reviewer roles. If those entry-level tasks are taken over by computers, how will entry-level staff develop the knowledge necessary to serve in a review/managerial role. Teaching those higher-level skills will, likely, fall to our universities and colleges, which are already overburdened in teaching students what they need to pass the CPA Exam. Something will have to give in the educational process versus piling more on.
--Todd Shapiro, President and CEO, Illinois CPA Society
Technology’s exponential advancement is impacting the profession in profound and unprecedented ways. Artificial intelligence, cognitive computing, blockchain, and even more mainstream technologies like cloud computing and social media are transforming what accounting and finance professionals do — and what they need to know. Our very existence depends on our ability to learn the skills that will let us work side-by-side with the machines and do the things they cannot yet do.
--Bill Sheridan, Chief communications officer, MACPA
The exponential rate of change that blockchain, artificial intelligence, and big data will bring to accounting and auditing. Many accountants think it will be a slow change, but because it’s an exponential change curve, it will suddenly be here and people aren’t going to be ready. We need to start getting ready to use these technologies now by better understanding risk and controls (especially IT risk) and data analytics.
--Donny Shimamoto, Managing director, IntrapriseTechKnowlogies
The introduction of data analytics and innovative technologies, such as artificial intelligence, bots, and drones, provides the opportunity for the greatest change in the accounting profession since the passage of the Securities Act of 1933 and the Securities Exchange Act of 1934. Since that time, the profession has used advances, such as information technology, to primarily improve existing procedures. The current data analytics and technology innovations provide the opportunity to change the very foundation of how the accounting profession completes tasks and adds value to decision-making. No matter the discipline, whether audit, accounting, tax or advisory, all will be affected by these innovations. The challenge for the accounting profession is to seize opportunities to innovate and significantly expand our relevance in decision-making. In doing so, the accounting profession will move from providing information to providing more insights about the information. If we do not seize this opportunity, these innovations will allow other nontraditional providers to become more relevant and erode the historical role of our profession.
--Scott Showalter, Chair, FASAC
Managing change. Going through the process of unlearning and relearning can be a taunting task. Understanding the short- and long-term impact technology will have and how to turn it into a growth opportunity as opposed to a loss will be key. Now more than ever you must be the “most trusted business advisors.”
--Joel Sinkin, President, Transition Advisors
Robots and artificial intelligence. Both will replace a significant portion of tax, audit and accounting. The key to survive this change will be to provide value-added services that cannot be replicated by robots.
--Pauline Sullinger, Director of TASC, Miller Grossbard Advisors
The risk to loss in innovation due to people holding onto the traditionalist mindset that accounting is only historical-looking.
--Danielle Supkis Cheek, Director, PKF Texas
A succession planning crisis is occurring at public accounting firms across the country, driven by the vast numbers of baby boomer partners who have been and will be retiring in droves over the next 10 years. Many CPA firms wish to remain independent, but few firms have developed and implemented formal plans to ensure their legacy. This crisis is the main reason the public accounting marketplace has become extremely competitive for quality professional talent at the partner level and the volume of mergers taking place each year. Survival as an independent firm depends primarily on a firm’s ability to build a first-class team of talented partners who will make a positive and sustained contribution to retain a retiring partner’s clients and increase growth and profitability more effectively and more quickly than in the past.
In addition, a succession-driven talent war is taking place for high-level staff positions (senior managers, managers, and directors). The time to react to this marketplace crisis has become significantly shorter, especially for firms with predominantly baby boomer partners. Talented, creative and innovative professionals are in high demand for pivotal positions, not only to replace the “old guard,” but also to deliver new and innovative services as traditional compliance services become more fee-sensitive while professional staff compensation and benefits costs continue to rise.
--Joseph Tarasco, CEO, Accountants Advisory Group
The most important issue facing the accounting profession is, of course, the digital transformation. But not in the way that you may think.
Everyone now agrees that technology is the primary factor driving change in the business. But it is coming at the expense of, not in the service of, progress in fundamentally more important areas. Too many firms are looking for solutions from new technology, software and apps, to the detriment of skills-building and process improvements that would better serve clients with broader and deeper services.
In short, firms are primarily using technology to reduce costs and increase productivity, instead of leveraging technology to get better at doing what clients want most — providing pro-active insight, analysis and guidance. Technology can replace people, and it is; you can see it it in hiring trends and in per-partner incomes.
But technology cannot replace the judgment and wisdom that clients really want from their accountants. This techno-centric behavior is pushing aside the client-centric habits that have made accounting the great profession it remains today. The profession does so at it it’s peril.
--Rick Telberg, Founder and CEO, CPA Trendlines
I think that recruiting, developing and retaining talented finance professionals is one the biggest challenges for our profession.
Management accountants have an integrated overview of their organization’s business and finance operations, meaning that they can often deliver key business insights to capitalise on opportunities and navigate risks to deliver sustainable business growth. They are at the heart of the business.
However, as we rapidly move towards a global digital economy, every organisation will need to ensure that they have the right teams and skills in place to continue to create value and drive innovation. Management accountants and their organizations need to prioritize and support professional learning and development to drive both individual and organisational success stories.
--Irene Teng, Executive vice president of global markets, Association of International Certified Professional Accountants
Large finance teams have done a great job of leveraging technology to transform their businesses and finance team processes and procedures. They are focused on adding value — growth and cost transformation. These transformational changes are not always led by the accounting profession. The issues is are we committed to up-skilling ourselves, to invest in our personal skills so that we stay relevant. Are we ready to embrace change, to tell a different story and to work differently?
--Arleen Thomas, Managing director, Americas, and CGMA global offerings, AICPA
One of the most important issues facing the accounting profession today is how to maintain the CPA pipeline for the next generation of accountants and CPAs, educate young professionals about what job opportunities are available and be an effective ambassador and role model to students and young professionals alike. What goes hand in hand with these efforts is to retain current employees, make sure staff is growing towards their full potential individually and assist them in growing the firm or business area. Keeping staff and clients in focus while adapting to new technology and better data analytics will be crucial going forward.
--Ralph Albert Thomas, CEO and executive director, NJCPA
The recent changes and evolution of technology are having a profound impact on accounting. Advancements in artificial intelligence, robotics and machine learning are automating much of our profession and those on the front lines are concerned technology will eliminate their jobs. To avoid becoming obsolete, accountants must learn and develop new skills that will allow them to stay competitive and relevant in the field. To remain competitive, professionals should upskill with competencies that are not easily automated like decision support, data analytics and management and strategy.
--Jeffrey Thomson, President and CEO, IMA
If the issue of innovation and artificial intelligence were a horse, it has certainly been beaten to death at this point. Hopefully, that means that we’re paying attention.
The profession should implement a wide range of automation, as much as possible, because from my associate level, I see and am part of a method of operation that is simply unsustainable.
From my level, inefficiency is the most important issue facing our profession.
--Darryl Ucheya, founder, Shrewd CPA; tax associate, KPMG
Inertia. The profession is changing rapidly, and those that can’t comprehend, realize and adjust to that change will be left behind.
--Ian Vacin, Co-founder, vice president of education & partnerships, Karbon
Technology – while technology brings with it many advantages, today’s rapid pace of change also brings challenges. Change is difficult for most people to adapt to and accept – the accounting profession included. The relevancy of the accounting profession in the next decade will be largely impacted by how capable we are at visualizing and harnessing the potential benefits of new technology, and how willing we are to make the changes necessary to take advantage of the enhanced technology of tomorrow.
--David Vaudt, Chairman, GASB
I believe that it’s critical for everyone in the profession to evaluate their workflow -- how it can be improved now and into the future -- no matter if you’re in an accounting firm or a corporate accounting department. Twenty years ago, processes could be put in place and last for a decade or more. In the world we live in today, new and improved technology such as AI, machine learning, blockchain, etc., are regularly introduced into the market. We therefore need to ensure that we build our workflow processes to be agile so that we can easily innovate when improved technology is launched. Creating new processes is not doing the same thing with different technology, but instead, re-inventing the workflow in a way that can be improved upon year after year. In doing so, it’s vital to completely step back from how your workflow processes have been done in the past, wipe the slate clean, and create a new way to execute the operating model. Not only does this create a new mindset with your team, when you implement new technology and transform workflow, you improve collaboration among your team and clients in ways that are new and inspiring to all generations.
--Amy Vetter, CEO, B3 Method Institute
How do accountants and CPAs become comfortable with the changing technological landscape and learn the new skills they need to survive in the rapidly changing profession.
--Garrett Wagner, CEO and Founder, C3 Evolution Group
All accountants have heard that they are “the most trusted advisor.” I think very few understand what this means. As the clients’ key advisor, they will need to be more prepared than any profession to answer the growing needs of their clients. In five to 10 years, much of what accounting firms do will be automated away.
--Kyle Walters, Founder, L&H CPAs and The Personal CFO
Artificial intelligence and automation has already had (and will continue to have) a significant effect on the accounting profession. The widespread adoption of emerging technology within accounting has greatly impacted – and opened up growth opportunities for -- accounting professionals. Additionally, emerging technology has impacted the day-to-day work of practitioners and businesses as a whole. How our community adapts and evolves with this emerging technology will set the tone for the future of the profession.
Accountants can and must embrace new technology to stay relevant in today’s changing business landscape. In fact, I’ve found that automation, AI and machine learning provide practitioners with significant opportunities to be competitive. By automating parts of the business processes, AI grants accountants more time to serve as a strategic partner to clients and provide data-driven insights to inform business decisions. In the long-term, this emerging technology will empower accountants to provide a higher caliber of services to clients.
--Jennifer Warawa, Executive vice president of partners, accountants and alliances, Sage
Without question, the need to change the workforce is the most important issue accounting firms are facing today. Technology has changed the skill set requirements, not only because CPAs need to be computer-fluent, but also because it’s a 24/7 world. The gig economy has evolved out of this changing paradigm, and it is quickly becoming the new reality for accounting firms (as it has for many other industries).
When I consider what accounting firms will look like in the future, I am convinced they will look nothing like the firms of today, including Marcum. The workforce of tomorrow will contain a meaningful concentration of contingent workers, based on fluctuating seasonal demands. It will also embrace “custom careers” designed to accommodate work-life balance and changing lifecycle priorities.
This will open up tremendous potential to recruit new talent into the industry, with opportunities to provide interesting and flexible career paths for talented professionals who are not motivated by a traditional 40-50-hour work week.
--Jeffrey Weiner, Chairman and CEO, Marcum
Continuing relevance and keeping and retaining staff.
We have to change the way we train our accountants and the jobs that we provide them right out of school. We must train them to be excellent communicators and seek candidates with high EQ (emotional intelligence), not just high IQs.
--Geni Whitehouse, Founder, Even a Nerd Can Be Heard
The leadership change from legacy leaders to next-gen leaders. There are multiple issues:
- Legacy leaders are not willing to invest in a firm that they will not be a part of in a few years.
- Legacy leaders are not willing to change their lifetime habits and skills for new habits and skills needed for the future firm model.
- Next-gen leaders are trying to patiently wait for their turn at bat, and in the meantime, they must play the game the way their mentors and coaches tell them they must.
- Next-gen leaders see a new business model that will require change in every part of the current business model, but they feel powerless to really shape their firm for the future.
And … the list could go on and on. This leadership issue is at the heart of all other issues. Firms must fix this and then start chipping away at everything else.
--Sandra Wiley, President and shareholder, Boomer Consulting
The most important issue facing the profession today is the need to drive the dramatic changes to their practices and finance departments desired by next-generation talent and clients while still including and serving traditionalists. Today, the traditionalists have held the majority, but are retiring in record numbers and, by 2019, they will be officially eclipsed in size by millennials.
Moving toward digital everything, reducing process size, considering outsourcing, off-shoring, remote and gig-economy work force options, and many other changes while making traditional partners, leaders, and clients feel welcome and relevant, will be a tremendous effort for profession leaders. Even the AICPA faces this increasing gap in the outlook and motivators of its members and they will be challenged to “serve both masters” in the near-term.
--Jennifer Wilson, Co-founder and owner, ConvergenceCoaching
Massive shifts in technology like data automation, blockchain and artificial intelligence are ushering in what some are calling the “4th Industrial Revolution” and others (perhaps more accurately) are calling “The Transformation Economy.”
--Joe Woodard, CEO, Woodard Events
The accounting profession, and specifically public accounting, is facing the same issues we have been discussing for several years: succession, staffing, technology, increased regulations and standards, etc. The fact that the pace of these changes continues to accelerate only compounds our challenges. And while technology provides the profession with its greatest opportunities to improve efficiencies and quality, technology also provides the profession (and the world in general) with its greatest threats in the form of cyber-threats. Cybersecurity is increasingly complex, requiring highly specialized and technical resources to help mitigate cyberrisks, whether a company is public or private; or large, medium or small accounting firm. The more we rely on systems to support our businesses, the more cyber-criminals will target them.
--Candace Wright, Chair, Private Company Council
Tax reform and particularly how the states are reacting followed by remote-seller nexus provisions. The overruling of Quill and National Bellas Hess could have broad ramifications to not just sales tax but also income tax.
--Diane Yetter, President, Yetter Tax
