The biggest stories in accounting for 2020

December 29, 2020 9:11 PM

It goes without saying that the COVID-19 pandemic was the primary story of 2020, and most of the biggest stories in accounting for the year reflect its impact, in everything from the remarkably smooth move to remote work to a new range of services centered on the Paycheck Protection Program and other stimulus measures.

What’s more, most of the impact will continue to play out in the year ahead. The ongoing deployment of vaccines offers hope that we may see the end of the pandemic sooner rather than later, but for the near future it continues to grip the country and the economy.

With that, here are the dozen top stories of 2020, and how they’ll continue to reverberate in 2021.

Going remote, fast

How to collect documents from clients while working remotely blog image

valentinrussanov/Getty Images

Countless firm leaders summed up 2020 by saying, “If you’d told me my firm could start working from home overnight, I’d say you were crazy.” And yet most of them did; over the course of just a couple of weeks in March, they closed offices, sent staff home, and revamped their operations and processes to a degree — and with a level of success — that few would have imagined.

What’s more, over the course of the rest of the year, firms discovered they could be just as productive working remotely, and that many of their staff actually prefer it. Going into 2021, firm leaders are envisioning a hybrid workforce, where they can hire staff from across the country and serve clients just about anywhere there’s an internet connection (and maybe save some money on rent while they’re at it).

Top stories:
— 10 good habits for working from home
— Facing the tech problems of working from home
— 81% of firms expect more remote work post-pandemic
— The craziest work-from-home expenses of 2020

Officially essential

A worker sprays sanitizer into the hands of a shopper at a supermarket in Johannesburg, South Africa in May.

Waldo Swiegers/Bloomberg

Besides being their clients’ “most trusted advisors,” accountants got another badge of honor this spring: They were labeled “essential” by many state governments, allowing them to continue operating throughout lockdowns. And it’s a good thing, too, as many businesses leaned heavily on their most trusted advisors for guidance on surviving the pandemic, and on making the most of stimulus measures like the Paycheck Protection Program (see below).

Clients will continue to need that expert guidance throughout the rest of the pandemic, but the next big challenge for the profession will be leveraging all of those newly deepened relationships to move, as the Maryland Association of CPAs’ Tom Hood puts it, from “essential” to “indispensable.”

Top stories:
—Accountants shift to more advisory services amid coronavirus
—From essential to indispensable: The 5 stages of navigating COVID-19
—5 ways to reinforce value with clients
—7 ways to grow your accounting practice, even in a down economy

The endless tax season

Andrew Harrer/Bloomberg

The pandemic hit just as accountants and tax professionals were entering the home stretch of filing season — and soon enough that home stretch was stretched out a further two months, to mid-July. Practitioners were torn over the delay, as many felt they were so close they should just push on through, while others supported the move to July 15.

A similar argument looms in the new year. The IRS faced enormous logistical hurdles due to the pandemic, and still has over a million tax returns from this year to process, which may explain why it recently asked taxpayers and tax professionals to weigh in on a similar postponement of the filing deadline for 2021.

Top stories:
—Tax pros’ top grumbles about the IRS coronavirus slowdown
—Lessons from tax season: Home run or rain delay?
—A look ahead at the 2021 filing season

The PPP, Part 1: Applications

Dongyu Xu/Tada Images - stock.adobe.com

Rarely has a government program sprung up so quickly and become so all-pervasive: The Paycheck Protection Program was designed to move fast to get money into the hands of small businesses, and in just a few months it distributed close to $700 billion to help businesses stay open and keep workers on the payroll.

Accountants were meant to help smooth the application process (the CARES Act specifically allowed businesses’ advisors to be paid a percentage of the loan amount as a fee), and they did, even as many accounting firms applied for their own loans. This was critical, as guidance on the program was confusing and changed fairly frequently, particularly on two critical issues — tax deductibility and applying for loan forgiveness — that would guarantee that clients would continue to call for their accountants’ help long after the deadline for applications closed in August (see below).

Top stories:
—Building a PPP practice
—Should accountants be charging for PPP services?

A new urgency around diversity and inclusion

Emilie Richardson/Bloomberg

The murder of George Floyd in Minneapolis and the protests that followed it have woken a lot of people up to the major issues surrounding diversity and inclusion in the U.S.; in accounting, they underlined the fact that, despite its efforts, the profession has failed to make significant progress in recruiting and retaining minorities.

A great many leaders in the profession took up the call for renewed effort, with firms, state societies and other organizations promising more concrete, measurable initiatives.

Top stories:
— Accounting profession responds to George Floyd killing and anti-racism protests
— 4 tips for organizations looking to build on their culture of inclusion
— Diversity and inclusion is a marathon, not a sprint

Necessity breeds invention

The PPP wasn’t the only thing clients needed help with from accountants, and many firms began developing tools and offerings to serve them better. The level of innovation reflected a relatively recent trend of firms being nimbler when it comes to reacting to new developments and market trends, and led to a host of new services.

One interesting side note: Much of the innovation began as firms solving their own problems, and then pivoting to offer those solutions to their clients.

Top stories:
— How to innovate within a CPA firm
— Practice Profile: Surviving a pandemic with CBIZ & MHM
— s clients struggle, Mazars creates PPP Analysis Tool
— Boomer’s Blueprint: Innovation requires five pillars

New faces at FASB and GASB

In a long-planned succession, the Financial Accounting Standards Board and the Governmental Accounting Standards Board both got new chairs: Richard Jones (pictured) and Joel Black, respectively.

Their first challenge, naturally, was managing in the middle of a pandemic, and both set to work grappling with the need to manage remote staff and continuing their predecessors’ work to find ways to ease the burden of financial reporting in a time of crisis. That led, among many other things, to the postponement of the implementation deadlines for a number of major accounting standards.

Top stories:
— FASB and GASB undergo leadership transitions amid coronavirus
— FASB deals with uncertainties from pandemic and election
— FASB delays rev rec and leases standards in response to coronavirus

The PPP, Part 2: Deductible, or not?

Dongyu Xu/Tada Images - stock.adobe.com

Once the dust had cleared from the application process in August, the next big Paycheck Protection Program hurdle appeared in the form of some IRS guidance that seemed to fly in the face of the intent of the legislators who created the PPP: The service claimed that business expenses paid for with PPP loan money that was later forgiven could not be deducted from a company's taxes.

Small businesses and accountants protested and wrote countless letters, but the Treasury and the IRS were immovable, and legislators were too caught up in the election to address the issue throughout the summer and the fall — until, finally, they laid the issue to rest in the stimulus package they passed just before Christmas.

Top stories:
— Clarity at last: Stimulus package allows PPP deduction
— New coronavirus stimulus package contains some big tax items

The rise and rise of ESG reporting

Terrance Emerson/Terrance Emerson - Fotolia

One major trend of the year that started before the pandemic was the growing importance of environmental, social and governance, or ESG, reporting, and a related focus on sustainability reporting.

With 2020 concentrating minds on the importance of non-financial measures, many of the organizations competing to develop standards in this area began looking for ways to work more closely together, and two even announced that they would merge. What’s more, serious talk began about creating a single standard-setter associated with the International Accounting Standards Board.

Top stories:
— IFAC endorses international sustainability standard-setting board
— Sustainability groups come together on prototypes of disclosure standards
— IIRC and SASB plan merger for next year

The tax consequences of the election

No matter which side you were on, you likely expected the Nov. 3 election to deliver certainty, one way or another. Few imagined a split Congress whose final shape will remain unknown until after a Jan. 5 special election in Georgia.

And no matter how that turns out, President-elect Biden will find himself with less than a resounding mandate for his tax plans, leaving the shape of tax legislation practitioners can expect in 2021 largely indeterminate, subject to the kind of horse-trading that can make tax planning enormously difficult.

Top stories:
— Divided Congress may slow new tax legislation
— Senate runoffs complicate year-end tax planning
— New end-of-year tax planning issues

The PPP, Part 3: Time for forgiveness?

Dongyu Xu/Tada Images - stock.adobe.com

Once the PPP application window closed, there was nothing to do but start waiting to apply for loan forgiveness — something most accountants and businesses are willing to put off as long as they can, in hopes that the process will get clearer, or even go away entirely, if Congress decides to offer blanket forgiveness.

Either way, applying for PPP loan forgiveness looks likely to be a major task on accountants’ 2021 to-do lists — even as the stimulus package passed just before Christmas opens up the possibility of new loans.

Top stories:
— 10 takeaways on the PPP loan forgiveness application
— Preparing for PPP2 is a full-time job
— Accountants rush to wrap up end-of-year issues

Getting ready for 2021

The continuing pandemic guarantees that many of the issues that marked 2020 will continue, including remote work, handling the PPP, and advising clients on surviving the crisis,

But with vaccines being rolled out, 2021 will also bring new challenges, like figuring out how to re-open offices, how to leverage the hiring and prospecting opportunities presented by remote work, and how to build on the deeper relationships forged with both clients and staff in the depths of the pandemic.

Top stories:
— Lessons from the pandemic
— Four ways to reset your firm for 2021
— 12 strategies for having a thriving accounting firm after the coronavirus
— As firm offices reopen, doctor gives 5 tips for COVID-19 safety
— The Year Ahead: 2021 in numbers