2017 Top 100 People extra: Accounting’s biggest issues
As part of our Top 100 Most Influential People report, we asked all the candidates: “What is the most important issue currently facing the accounting profession?”
The candidates' full responses follow.
Firms continue to face a myriad of issues that affect the way they work, including increased regulation and global complexity, a shift in the workforce, and new client demands for value-added services.
More recently, though, new issues have emerged that have actually put into question the role and value of accountants in general, such as artificial intelligence and robotic process automation, which has really shined a spotlight on the profession. The Boston Consulting Group predicts that by 2025, up to one quarter of jobs will be replaced by either smart software or robots. A separate study from Oxford University suggests that 35 percent of existing jobs in the United Kingdom are at risk of automation in the next 20 years. Among the top 10 percent of jobs most likely to be automated: insurance underwriters, tax preparers, loan officers, credit analysts, and accounting professionals.
These statistics can certainly be alarming. But at Wolters Kluwer, we consider robotic process automation as a factor that empowers accountants to forge deeper connections with their clients. The human element to what we do does not go away, and if accountants can leverage technology to assist them with automating menial tasks, there is great opportunity for them to provide critical, value-added services to their clients that did not necessarily exist before.
— Karen Abramson, CEO Wolters Kluwer Tax & Accounting
The issues impacting the accounting industry closely mirror those impacting our clients and prospects. Attracting and retaining high-performing talent continues to be one of the biggest challenges for businesses across the country and around the globe. At RSM US LLP, we’re continuing our proactive approach to addressing this challenge.
To begin, we have an unwavering focus on making RSM a great place to work. Last year, we enhanced our talent development culture through new performance management, feedback and coaching processes, additional training on advisory skills through our first-choice advisor journey and new First-Choice Advisor Center and a new bonus program. We’re receiving positive feedback on these changes, particularly those related to our feedback and coaching process.
And we know that giving back to the community is something that’s important to today’s workforce, so we continue to give back to our communities through Birdies Fore Love, RSM Volunteer Day and the RSM US Foundation. Last year, in celebration of our firm’s 90th anniversary, we launched a unique program that gave nine employees $90,000 ($10,000 each) and nine additional days of paid time off to pursue a personal passion. It was so popular that we’re continuing the program again this year.
We’re also continuing to work with other firms through the Center for Audit Quality to raise awareness of our profession and to build interest in accounting as a career among today’s youth. The premise behind the combined effort is that we will all win collectively by getting more people to choose accounting as their profession.
RSM has also enhanced our outreach on campus and among diverse professional organizations such as NABA, ALPFA and Ascend. Eleven employee-led Employee Network Groups across the firm engage employees in a unique way, based on their personal interests. Leaders and members of these groups provide regular feedback validating the skills and experiences gained through involvement in these groups, so we know they’re impacting our people in a meaningful way.
Finally, we rolled out a unique scholarship program, Power Your Education, through the RSM US Foundation earlier this year. The program, designed to build tomorrow’s business leaders, awarded $100,000 to 10 students ($10,000 each). They were also invited to join our firm’s externship program, Pathways. We know that by investing in today’s youth, we’re investing in the future.
To help amplify all of these great activities, we introduced a new talent branding program The Power of Being You that showcases the RSM culture and the value we put on our employees’ unique skills, knowledge and insights. People want to work at a place where they can bring their whole selves to work and feel included and celebrated for who they are, and we believe RSM is that place.
Attracting, developing and retaining the people we need to serve our clients today and in the future is critical to the ongoing success of our firm and the profession as a whole. At RSM, we’re doing our part to help make the accounting industry and our own firm a place that’s attractive and rewarding for future generations.
— Joe Adams, Managing partner and CEO, RSM US
I struggle with the words “accounting profession” because I do feel one of the largest issues always facing our world is defining what each of the terms that are thrown around mean – bookkeeper, accountant, CFO, controller, project manager … it is all very subjective. My world is the accounting department of a business. So regardless of what your role is, debits are going to equal credits and assets will equal liabilities plus equity. My job is to show you how to get the data into your system in a format that will help you make good management decisions. I do not focus on tax nor banking or investment reporting because if we have the financials and sub-ledger reporting in a format that allows management to make their decisions, then we have the details for your taxes and investors.
So in my accounting world, the biggest issue currently is the flooding of apps. Our customers are drowning in options for apps. At some point the field has to be narrowed to have fewer choices if any of them want to survive. As certain apps start to take more market share, the developers will be able to support the customers more easily, the product improvements will be more consistent, and the apps can cover broader areas of the business. The confusion of the marketplace paired with the uptick in access to developers has many customers turning toward custom applications. Going custom is a slowly becoming a more reasonable solution, but of course comes with its own drawbacks – one of which is usually the lack of connection to the heart of the accounting department – the accounting software.
— Marjorie Adams, CEO, Fourlane
The need to embrace, rather than fight, technology. The underlying business economy — our clients — is changing. Entrepreneurs are no longer just middle-aged men. They are organically tech-savvy Millennials and professional parents looking for life shifts, and we have to understand technology to understand them.
There also seems to be this presumption that automation and machine learning will eliminate our jobs, but I believe the truth is that it will free us to spend more time on the advisory work that helps our clients reach their dreams.
— Amanda Aguillard, Co-founder, Elefant
We need to address the impact of the increasing complexity of international accounting rules on the small-business accountant, who is expected to know all of the rules even though his clients may only be other small businesses who do not engage in operations unaffected by the new rules. Failure to address the issue risks having only large firms attending to the accounting needs of even the smallest businesses.
— John Ams, Executive vice president, NSA
Although the breadth of knowledge and services a CPA provides continues to develop and expand, the essential service of the CPA profession is the audit.
Recent conversation has turned towards what the future of auditing will look like; yet many firms do not realize their audits are still living in the past. Many are under the false pretense that since their audits are paperless, they are modernized and future-ready.
However, most of these firms don’t take into account that while the medium may have changed, nothing about the audit process itself has changed along with it — thus, the same systematic inefficiencies are still present. Furthermore, auditors continuously fail to use technology to better understand a client and their business, the industry, and as a tool to enhance curiosity.
As the clock runs down, auditors robotically manufacture “same as last year (SALY)” results from the crumbs under the table, while leaving a banquet of information on the top that curious auditors could use to draw conclusions and provide insight. Even worse, audits presently fail to embrace a healthy client relationship — one which involves the client in the planning and outcome. Commoditization and time pressures further prevent auditors from offering insight for systems and process improvements for the organizations they serve. As a result, technology is not used to transform challenges into opportunities; technology is a replication of the pen and paper world, void of curiosity and thoughtful conclusions. Present auditors are impeded from making recommendations that truly enhance decision-making. Firms must better understand the current challenges and shortcomings facing the profession to recognize the needs that must be met by the audit of the future.
— Alan Anderson, President, Accountability Plus
The main concern, from sole practitioners, two-partner and multi-partner firms, that I meet with is succession planning. The transition of the Baby Boomers (those born between 1946 and 1964) will be the greatest transition of wealth and people ever. I am not just talking about succession at the very top but in all levels from leaders, management to client relationship partners.
— August Aquila, President and CEO, Aquila Global Advisors
Adapting to the rapidly changing world we live in, which has several components: technology, people and planning. Automation is fundamentally reshaping transactional services, and it’s no secret the profession’s future lies in the expansion of advisory services. Getting there requires some new skill sets for CPAs. On the firm level, that requires changes in recruitment, training and, most importantly, the way a firm shapes its strategic goals to incorporate technology and staff development. It requires a great deal of focus on what your firm’s strengths are, and it requires a big commitment to client collaboration.
— Erik Asgeirsson, CEO, CPA.com
The trend of firms moving from compliance work to advisory services. Technology innovations are forcing this shift in the profession which is leading to compliance work becoming a commodity. Firms are now forced to differentiate by providing proactive advisory services to clients, versus simply reactionary once-a-year tax advice.
Successful firms are finding ways to take those tax-only clients and provide them with quarterly or even monthly services, enabling the clients to grow and succeed, while staying focused on their core business.
I’m constantly working with my firms on messaging to this effect, that small businesses are typically extremely good at what they do, so leave the accounting to the accountant (who is very good at accounting).
— Kim Austin, Business development manager, Intuit
It continues to be relevancy. Excessive regulation is a close second, since over-regulated industries are not hotbeds of innovation, dynamism, and risk-taking. A case in point: The Federal Aviation Administration does not use GPS to track airline traffic, and still relies on outdated radar stations along with little slips of paper, which imposes enormous costs in dollars and lost time on the economy. In that spirit, the profession should relinquish (or lose) the audit monopoly, which would allow competition to bring innovations to market, similar to why we should privatize the FAA, as have other countries.
Without innovation we will continue to do nothing more than compliance while losing our influence as a value-added service to society. As Baruch Lev and Feng Gu point out in their book, “The End of Accounting and the Path Forward for Investors and Managers” — “Our analysis indicates that today's financial reports provide a trifling 5-6 percent of the information relevant to, and used by, investors.”
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 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.
— Ron Baker, Founder, VeraSage Institute
The accounting profession is being impacted in a number of fronts, driven in large part by accelerating technological disruption and greater regulatory complexity and uncertainty. I believe managing the changes required to prepare ourselves for what the profession will look like in five years in an increasingly digital world is the most important issue facing the profession.
The list of areas to monitor for the profession is daunting. To name just a few, there is FATCA compliance; the PATH Act and new diligence requirements; regulatory environment turbulence given the new U.S. administration, Brexit and other factors; the aging of the profession; expectations driven by the “consumerism” of everything; the movement to DIY (“do it yourself”); a global drive toward automating tax collections; and the potential – very high potential – of tax reform.
And cybersecurity is a major concern with client data now under attack. We must be diligent in protecting it as firms are being targeted and hacked, sometimes with data stolen and used for identity theft purposes and sometimes the data is held for ransom. This was not an issue just a few years ago.
But probably most importantly is the global transition to cloud software and the explosive pace of technology change.
The pace of change today is very different than what we have seen in the last 20 years, which I think we all can agree was collectively dramatic. We can see that the profession has changed a great deal as we evolved with a number of technology advances. Twenty years ago, the Internet was beginning to explode with the introduction of the browser and HTML in the early 1990s. Apple was a struggling company, facing extinction. Google didn’t even have a Web site in 1997. Yahoo was the king of search, and AOL was king of e-mail, among other things. Paper was still dominant. We read newspapers back then, and Amazon was just three years old.
In the early 2000s, Blackberry was king of the smartphone, only to be crushed shortly after Apple’s release of the iPhone in 2007 and the accompanying App store. We entered a world where everything was re-imagined.
We’ve gone from the desktop Web of the late 1990s through mobile with the smartphone, then the tablet, and now we’re into wearables. And we have a plethora of cloud storage options – Google Drive, Apple iCloud, Dropbox, and Amazon’s cloud drive, among others.
It’s hard to believe the impact that technology has had on all of us, including the accounting profession.
For us in accounting, the last 20 years of technology has brought many advances in service capabilities and efficiencies. We work very differently now. As an example, the late 1990s saw the introduction of document management systems designed specifically for the accounting profession.
Over the years, accounting firms got on board with Web sites, which allowed them to market differently and far more effectively. Personal client portals were introduced in 2001, effectively eliminating geographic constraints for firms. With portals we can now serve clients 24x7, regardless of location, and communicate and collaborate far better than we could previously.
The Web, mobile and social have had an enormous impact on how firms can operate today. Social marketing has proven to be very effective in many firms. Audits have changed radically. Now they can be done online, with content also accessed online. We can research anywhere, anytime as well.
But it’s a different situation today. The changes we’ve seen as a profession noted above occurred over a long period of time during which we could choose our pace of adoption. I don’t believe that is the case anymore as we have moved to what many describe as the era of the Smart Internet. I believe that we will see changes occurring at a much more rapid pace and we need to prepare for how we will operate in the new world. In the next five years we will see new and emerging technologies that will dwarf what we saw in the last 20 years. As a profession we need to be ready, as we no longer have the option to adopt new technology slowly.
Artificial intelligence, cognitive computing/machine learning, natural language processing, and Blockchain are the hot topics today, and of course there is big data. Now the Web is allowing us to collect and analyze massive amounts of unstructured data. And the amount of data we are able to collect is rising exponentially, driven by the Internet of Things. Looking out just three years from now, the number of connected devices will be three times the number of people in the world, according to Cisco. More people will be connected, as various projects are working on connecting the “other 4 billion” not connected to the Web today.
The next few years are critical for the profession. We’ll either change to take advantage of new and converging technologies, or we’ll simply fall by the wayside. In short, it will be a very different profession from what we see today, and very soon. Everything that we do will be different. The time to plan for this and begin to execute is now. Firms of all sizes must tackle this head on and manage the changes required to thrive in the future. Inertia, or complacency, is a real danger. On the positive side, progressive firms can and are thriving and growing in this period of rapid change.
These are exciting times. By managing the technology changes and embracing new tools quickly, firms should be able to elevate their practices to where they truly want to go – beyond mostly compliance work to being true trusted business partners for their clients and really assisting them in growing their businesses. We’ll be able to do this as we’ll be “machine assisted” in performing tasks that we routinely do today, allowing us to focus not on what’s occurred in the past, but rather determining through analytics how to shape our clients future.
Disruption provides opportunity for those who see it and adjust.
— Jon Baron, Managing director, Professional Segment, Thomson Reuters Tax & Accounting
Disruption. With firms embracing digital and smart technologies in the form of blockchain and artificial intelligence, we are seeing the automation of some of accounting’s most basic yet complex processes, allowing larger firms to reallocate resources to data analysis and IT, transforming the profession along the way. But the rewards of disruption aren’t limited to large firms. Digitally savvy sole proprietors are launching virtual firms, and are taking advantage of the cloud to expand lines of business, such as client accounting services. Technology is also driving global and regulatory disruption, with the explosion of measurable data allowing companies to tie non-financial assets to a company’s bottom line. It’s now up to educational institutions to make sure they’re integrating data analysis and it into the accounting curriculum.
— Joanne Barry, Executive director and CEO, NYSSCPA
Accounting has stereotypically been a field with lots of room for someone who just wants to "get their two years" and find a nice quiet 9-5 job for the rest of their career. But that's all changing.
In the past 30 years we've seen spreadsheets replace pencils, SAP replace paper ledgers, and powerful business intelligence tools replace hours of analysis.
Technology won't replace accountants. It will just make the people who know how to use it 10x more efficient than those who can't. Learning how to use new technologies before anyone else will be a huge competitive advantage in the profession. Anyone who isn't willing to learn and grow over their entire career will be left behind.
— Bob Berchtold, Podcast host, “The Abacus Show”
There are the retiring Baby Boomers. Then, there is the search for talent who can take on leadership roles and replace them.
In my opinion, the most important issue is understanding and adapting to the technology shift (disruption) before these accountants are replaced by new ones. Technology is changing what the accountant does and how they are perceived. Artificial Intelligence, Blockchain (not bitcoin), machine learning, automation, and digitalization are some of the things that are changing workflows and processes. While accounting assistance is still what businesses want and need, it has to become the loss leader; firms need to sell other services such as wealth management, consulting, and BPO services of all types. Accountants and firms need to become consultants or trusted advisors to their client moving forward.
The issue of technology is also changing how firms market themselves. If you take audit out of the mix you do not need to be a CPA firm to gain the business. Technology has expanded the marketplace for non-CPAs to compete, using technology to automate what the businesses need and still provide the advisory services to provide strategic plans to help the businesses grow.
— David Bergstein, Evangelist, Accountant Segment, Intuit
People. People were the most important issue last year, they are the most important issue right now and they will be the most important issue a year from now. Accounting, like all professional services, is a people business. Any firm is only as good as the professionals it recruits, trains and retains. As the U.S. economy is improving, the battle for talent will continue to intensify as we seek the best and brightest professionals to help us achieve our growth goals.
BDO has garnered a great deal of recognition for working with employees to develop flexible working arrangements that maximize work-life balance and, more recently, we rolled out the “Exceptional Workplace” strategy in new offices — open, flexible, collaborative designs that maximize the benefits of office time by connecting teams and individuals to drive knowledge sharing, learning and mentoring. This builds the institutional knowledge of all professionals, who are empowered to provide superior service.
— Wayne Berson, CEO, BDO USA
The most important challenge facing the accounting profession is the unprecedented level of uncertainty. It’s not that accountants did not have challenges in the past — they did, but the impact of these current challenges has never been so unpredictable. Technological advancements are occurring at an unprecedented pace. While many of the impacts of cloud, mobile technology, and AI are predictable, the broad implications of these technologies and Blockchain are anyone’s guess. This uncertainly about the future of the profession is the biggest challenge accountants are facing today.
— Chandra Bhansali, CEO, AccountantsWorld
Juggling multiple demands is the key challenge for accountants. These demands include keeping up with technology trends, staying competitive, boosting profitability, and maintaining relevance as a professional.
Recent surveys have indicated that many firms are falling behind when it comes to strategic implementation and maintenance of technology.
— Sharada Bhansali, President and Co-founder, AccountantsWorld
The rapid changes in the use of technology for financial transactions and in accounting and auditing is the most important issue facing the accounting profession, as is the need for the profession, standard setters and regulators to keep pace. Bitcoin, Blockchain and other distributed ledger technologies are rapidly changing the way financial transactions occur and present entirely new challenges as to transparency and accountability. Currency and financial transactions through “cryptocurrencies” are, in part, designed to be difficult to trace and monitor, yet are being used as a primary source of funding and monetization. Similarly, the use of data analytics will continue to be more prevalent in reliance in audits of the future. It is imperative that CPAs have the necessary skillsets to remain relevant.
— Ken Bishop, President and CEO, NASBA
How younger generations will perceive the profession, choose this profession for their career, and what it will look like for them in 20 years. I believe there needs to be an increase in entrepreneurial education for younger generations that choose to run firms.
— Jason Blumer, Founder and CEO, Thriveal Network
There is certainly not a single issue that I would consider the most important. In many ways, I consider it a tie for issues facing the profession. Globalization is not an insignificant issue. The myriad of technology issues that will affect not only how the profession does its job (creates value) but what the profession does to add value (simple compliance is not the answer), things like artificial intelligence and blockchain in all aspects of the profession. HR issues including succession planning, recruiting and development along with getting serious about diversity and inclusion. Finally — innovation … when today’s CPA professional (from managing partners and CFOs to staff) thinks about these topics they need to be serious about innovation.
— Gary Bolinger, President and CEO, Indiana CPA Society
Mindsets, skillsets, toolsets: The profession has been extremely successful, yet must transform in order to sustain success and remain relevant. It is difficult to convince people they must change when they are dealing with success. The disruption of technology competition for talent and the erosion of margins due to the commoditization of traditional services are causing accountants to adjust their mindsets, skillsets and toolsets.
— Gary Boomer, Visionary and strategist, Boomer Consulting Inc.
To maintain relevance in a rapidly changing business environment, we must decide to become initiators rather than victims of change. This will require focus in five critical areas.
1. Talent. Organizations must evolve their business models to attract top-level talent and increase the level of engagement and investment to retain them.
2. Leadership. Developing a sustainable organization that inspires clients and employees alike requires strong collaborative leadership.
3. Process. Process improvement will be critical to effectively compete in an increasingly demanding market. Eliminating waste and improving consistency/quality will be key.
4. Technology. Automation, integration and the cloud are changing what is possible in the workplace as well as expectations of employees, clients and partners.
5. Growth. We must take advantage of the opportunity to move up the value chain with clients to help them transform their businesses.
— Jim Boomer, CEO and shareholder, Boomer Consulting Inc.
The most important issue facing the profession is that the traditional attest/tax practice needs to understand the continuing shift towards offering advisory services. In addition, those in attest need to start understanding the importance of data analytics in that world. The shift towards understanding the impact of that data on the audit and how Blockchain will change the attest world forever, will be critical to their ability to continue to competitively complete in this space. It is not a matter of “if” Blockchain will impact the audit, but simply a matter of “when.”
— Jim Bourke, Partner, WithumSmith+Brown
I could say technology (Blockchain, etc.) or globalization which fairly encompasses many issues, but I truly believe the profession can and will continue to face these kinds of challenges/opportunities adeptly. Because that’s the thing — CPAs do what needs to be done. They just don’t always talk about it. That’s why I think the most important issue continues to be communication. Communicating the CPA’s value, communicating changes in the world of business and how CPAs make that easier, communicating the authenticity of the profession and the way CPAs work every day to make companies and families better. Communicating what CPAs contribute and improving the language used to talk about the work they do and the needs of the profession (related to HR, succession, women and minorities in the profession) – that’s what needs the most improvement. Maybe that is why I am so passionate about my work at a state CPA society – we try to help share the important stories.
— Jennifer Briggs, CEO-designate, Indiana CPA Society
I believe one of the most important issues currently facing the accounting profession is establishing yourself as an expert in a specific niche market. The process of write-up work and “reconciliation” are gone. That was five years ago. What in the world is a niche? That is what the accounting profession needs to decipher for the industry. Education, interpretation, and systemization are key for the thousands of practitioners. Our Millennials want to use technology, they understand it. And I believe those accounting professionals who still have file cabinets are in the most trouble because they haven’t even advanced to Step 1.
— Dawn Brolin, CEO, Powerful Accounting
The changing regulatory environment is the most challenging issue facing the accounting profession today. It is responsible for more sleepless nights than any other issue, because it is impossible for an accountant to keep up with constantly changing regulations.
One does not have to look far for examples. The Tax Code, for one, has grown exponentially since the last round of reforms in 1986. The magnitude and number of changes over the years have created more complexity, forcing accountants to become specialized experts in certain areas and generalists in other areas.
To combat this challenge, accountants need to complement their own expertise by building strong networks of peer experts and consultants. In general, large firms develop national tax centers, midsized firms form alliances with experts, and small firms stay in their specialty areas or rely on relationships with other accountants to supplement their expertise. Firms of all sizes may also continue to consider merging with other firms to offer a broader range of services to meet their clients’ needs.
— Jim Buttonow, Director of tax audit & notice services, H&R Block
The utter breakdown of the tax legislative process in Washington, D.C.
— Paul Caron, Publisher and editor-in-chief, TaxProf Blog
I’m mostly focused on the CPA firm space, so in that context the most important issue by far is the shift to advisory services. What we’ve seen in the tremendous growth over the past seven years in client accounting services, or what some call virtual CFO/controller services, is an indicator of what we’ll see in other areas such as tax, audit and new business lines. On the tax side, for example, transactional work will continue to grow less important with more automation, but there will be a premium on tax planning and personal financial services. Those advisory roles are where CPAs, particularly those that harness technology and adopt best practices in firm management, can really provide value to a client. It’s getting practitioners to change, proactively, in light of this shift that I think presents the greatest challenge across the profession.
— Michael Cerami, Vice president of business development and corporate strategy, CPA.com
Clearly, the requirements and, indeed, the very rules of engagement are changing for accountants. Though accountants are well-positioned in this regard, there is much that will require going beyond the preparation or audits of financial statements. Indeed, it’s not just the plethora of new rules and regulations, but the ever-increasing demand for transparency and the attendant risks new technology brings to the table. Blockchain-enabled technology and robotic process automation are just two examples of new technology at work within companies’ processes that present a different set of challenges and complexities, affecting what accountants see and do. While most in the profession may not have had to deal with these sorts of risks yet, they know they’re coming. Facing accountants are also greater expectations for non-financial reporting and diagnosing how culture affects what a company does. For accountants, this all adds up to the absolute necessity of staying abreast of a dynamic, changing environment that will go beyond calculating the bottom line to calculating the risks – cyber, cultural and otherwise – that could profoundly affect the way companies do business. There is no question that the days of the accountant wearing a green eyeshade, crunching numbers, are long gone.
— Richard Chambers, President and CEO, Institute of Internal Auditors
Trying to maintain relevance in the investment world. Too many entrants into the investment business are too eager to abandon anything GAAP-related (think of all the prescriptions for non-GAAP earnings) without thinking deeply about why GAAP pronouncements exist in the first place. Most GAAP happens as a response to some reporting deficiency; constantly neutralizing GAAP doesn’t repair those deficiencies.
— Jack Ciesielski, Publisher, The Analyst’s Accounting Observer
The ability of CPA firms to adapt to evolving client demands and a changing workforce. With multiple generations working in a typical firm, leadership must grapple with how they will adapt their working model to best serve the needs of their clients and employees alike. The ideal firm will “modernize” in several ways:
- Embrace the latest technology and automate and optimize business processes where possible;
- Offer new services to match what clients find most valuable; and,
- Re-imagine the workplace to fully embrace firm and employee priorities.
— David Cieslak, Principal, Arxis Technology
Technology is a big issue for firms. It is one of AAM’s top trends for 2017, and it came up multiple times in many different sessions at Engage. Technology is going to change the profession dramatically as services become automated. This will require that firms serve the client differently; digging deeper into the business to be knowledgeable and provide additional service and counsel. Some firms are leading the way such as CohnReznick with their Innovation Lab, which allows clients to problem solve in real time. Firms will need to be nimble and adjust with the changing landscape.
Technology is also shaking up the marketing side of the equation. Today, responsive Web sites, e-mail marketing and client relationship management software are basics that every firm must have. The discussion is ramping up around marketing automation as more firms are using it. There are over 5,000 different marketing technology solutions on the market today to help with a large variety of tactics. The bottom line is that technology helps firms identify where they should be spending their time and what new services to offer. It helps firms reach potential buyers when they are ready to be engaged with using on-target, personalized messages. The data that stems from this technology is invaluable to those who use it to drive future action.
— Lauren Clemmer, Executive director, AAM
The building and integration of Blockchain solutions that will forever change a profession and industry that hasn’t changed much since its inception. This will require new skills as they relate to more intricate technology by those within the industry as well as collaborations with those from outside the industry who need to learn the industry.
— Mario Costanz, CEO, Happy Tax
The massive tsunami-like technology storm that is coming. The memo is out and most have gotten it – things are going to change. The question now before us is how do we prepare for it?
There are some obvious (but also less obvious) way-stations for firms. On the audit side, get your audit processes buttoned down, invest in data analytics, SOC capabilities, and cyber, evaluate the structure of your audit and consulting departments, identify forward-thinking early adopters as candidates for joint projects, establish your firm in your markets as the go-to resource for “audit of the future” information.
On the tax side, perform financial analysis including tracking the mix of consulting vs. compliance, identify chunks of revenue potentially at-risk over a timeline, and re-visit your wealth management strategy. On both sides, shift your resource planning, deployment and hiring approaches, including career paths and training. Re-evaluate your merger and acquisition strategy. Even your governance structure and decision-making processes need to account for faster, investment oriented choices. The tsunami will touch virtually every area of the firm.
— Gale Crosley, President, Crosley+Co.
The need to understand and have the ability to use technology and artificial intelligence in an effective and appropriate way to support their business. Survival in business is about the ability to adapt to technological tools and processes that have an impact on our business and cultural environment. Human relationships will always be part of a successful business equation but use of technology and analytics will also be a critical component.
— Loretta Doon, CEO, California Society of CPAs
Evolving to become a digital enterprise. Technology disruptors will continue to drive profound change. The proliferation and convergence of emerging technologies including the Internet of Things, robotics, and artificial intelligence are impacting every industry and business model — and society more broadly.
— Lynne Doughtie, Chairman & CEO, KPMG US
The most important issue currently facing the audit profession is maintaining public trust in the value of the audit and its relevance. Auditors have long embodied the ideals of professionalism, trust and respect. That has not changed, but to maintain those ideals, auditors will need to move forward and embrace what has been called the new economy. This means being open to change and evolution without losing their anchor to the importance of investor protection and fairly stated financial statements. It means embracing transparency in all aspects of their work. It means expanding skill sets and evolving education to be prepared for the future. It means holding themselves and their clients to all relevant standards and never allowing business interests to interfere with their independence from their clients. I believe the profession sees the challenges ahead and is working to address them in ways that will enable their continued critical role in our capital market system.
— James Doty, Chairman, PCAOB
In short: data security.
The number of phishing attempts and malware attacks has increased significantly over the past few years, and it’s only going to get worse. Accountants will need to make sure they know the best practices for securing their data and what to do in the event of a breach.
— Phil Drake, Founder and CEO, Drake Software
Artificial intelligence and machine learning will be a huge game-changer for the accounting profession as it will reduce the effort spent on coding transactions and unlock time for accountants to become true business advisors. The transition of advisor from accounting technician to growth consultant is the most important issue we face and one where the industry can lead with education and playbooks.
For example, accountants are spending hours and hours completing various tactical tasks throughout the day. By leveraging AI, accountants can automate those tasks and free up their time to focus on larger business objectives. If accountants do not acknowledge the power and potential of AI, it’s a missed opportunity to advance the profession.
— Rod Drury, Founder and CEO, Xero
Innovation and disruption enabled by technology are happening at an unparalleled pace. Technology is fundamentally changing the way we live, work and think. An understanding of the competitive advantage and differentiation that such technologies as artificial intelligence, big data, cognitive learning, Blockchain and others offers is essential to ensuring the relevance of the accounting profession.
The comfort level and ability to leverage technology varies across the profession and presents a challenge. But it also provides CPAs with an opportunity to work on behalf of public interest with new offerings, strategies and approaches. The accounting profession has earned a reputation as trusted advisors and we are well positioned to provide the guidance and services required by businesses and the public during this time of rapid change. However, to fully capitalize on this opportunity, we must continue to evolve our skills and anticipate greater ways to leverage technology.
— Kimberly Ellison-Taylor, Chair, AICPA
To me the most important issue is a big one: How do we reinvent our profession, evolve with the pace of change, and stay true to the north stars of objectivity, skepticism, and quality?
It’s clear that technology and the work of the future will change the work of the accounting profession — and many organizations will need to evolve rapidly. So, as automation and AI reduce labor-intensive tasks, how do we cultivate talent to adapt to new roles? As the companies we audit innovate and change, so do investors’ needs and expectations. The profession must consider how we can provide richer context for our opinions and focus on issues that are most important. We need a vigorous conversation about – and commitment to – innovation. What are the rewards, what are the risks, what are the trade-offs? To serve the public good, we need to seize the opportunities that come with the digital transformation of the profession.
— Cathy Engelbert, CEO, Deloitte
Coping with the impact that artificial intelligence is having on the profession’s traditional leverage model.
— Domenick Esposito, CEO, Esposito CEO2CEO
Staffing and people management. We recognize that technology is rapidly changing the profession. It is changing how we do what we do, when we can get/use information, and what we can do with that information. Technology will never replace people. It will change the skills needed to be successful in the profession, which will change the way we educate, recruit and retain people. As a profession, we are quick to advise clients of risks and change on the horizon, but often slow to follow our own advice. We need to quickly and effectively adapt our human resource management models to allow for the flexibility, variety and diversity of people needed to support high-functioning teams and CPA firms.
— Jina Etienne, President and CEO, NABA
While the various challenges within the human capital arena continue to be important, the issue of technology is reaching across the profession and having an impact on human capital, marketing, business development, firm management, client service and regulatory. From automation to cybersecurity everyone and every project/initiative are affected. Those within the profession will continue to struggle to remain ahead of the changes and requirements.
— Kim Fantaci, President, CPAFMA
I believe that preparing to be agile in a period of great change and uncertainty is the biggest issue currently facing the accounting profession. The accounting profession must be ready to adapt to whatever changes unfold, which include the move towards more principles-based accounting standards, technological advancement, and potential major tax overhaul.
— George Farrah, Editorial Director, Tax and Accounting, Bloomberg BNA
Keeping up with and adopting new technology and cloud computing to efficiently service their client base and compete with other firms.
— John Farrer, Founder and CEO, Right Networks
The most important issue facing the accounting profession is how to handle the rapid advance of new technologies such as data analytics, artificial intelligence, Blockchain, and a list of others that will revolutionize business, financial accounting, and the practice of accounting.
— Lewis Ferguson, Board member, PCAOB
The rapid acceleration of technology is impacting the profession in dramatic ways, presenting both challenges and opportunities. However, the success of accounting profession will always be directly attributable to the people who comprise it.
The AICPA has been working for years to raise awareness of the profession in students at the high school and college level. As the competition for talent continues to begin earlier in a student’s academic career, we need to keep working to find ways to draw exceptional students into the profession. This is more important than ever, as technology is placing an increased emphasis on performing higher-order skills – even in entry-level accounting jobs.
It’s equally important that we support a robust pipeline of talent by envisioning and implementing innovative ways to instill the skillsets that the accountant of the future will need to thrive. The profession can do this by playing an even stronger role in accounting education, partnering with universities to identify and teach skillsets and enhance accounting curriculum to more closely match marketplace needs.
— Joanne Fiore, Vice president of professional media, academic and student engagement, AICPA
Talent remains the most important issue facing the accounting and auditing profession. Technological advances and evolving stakeholder needs are opening up exciting possibilities for accountants and auditors to build confidence in business and the capital markets. To seize the opportunities of the future, the profession must continue to attract and retain not only those individuals with the drive and values to become CPAs, but also people with technological agility, entrepreneurial spirit, and diversity of background and thought.
— Cindy Fornelli, Executive director, CAQ
The speed at which our profession adopts new technology and the resulting need to understand the technology and to interpret the results are, in my opinion, the most important issues we face. My seven-year-old daughter may never have to learn how to drive a car because of self-driving technology. There will be a tremendous ripple effect that this will have on our lifestyle, our on certain business sectors, etc. Similarly, in 10 years our profession will look radically different because of the impact of technology. The resulting ripple effect and ability (or inability) to adapt will forever change what being an accountant means. To some this will be scary, and to others, they will look at the changing landscape and see tremendous opportunity.
— Brian Fox, Founder and president, Confirmation.com
Remaining laser-focused on the core values of integrity, public interest, and investor protection will be critical as the profession goes through massive and potentially disruptive change due to advances in technology and changes in the business environment.
Technology, combined with continual demographic and economic shifts, will transform how the profession fulfills its important role in society. It will also require a new mix of skills and competencies for current and future members of the profession. And through it all, we must keep our core values top of mind.
— Jeanette Franzel, Board member, PCAOB
We are in the early stage of a major upheaval of the profession driven by technology changes, demographics and client behavior, regulatory instability and legal changes. The net effect will be an industry remaking itself over the next several years. There will be winners and losers. Some firms will make the transition and others will not.
— Lee Frederiksen, Managing partner, Hinge Strategy
AI, automation, and machine learning.
But the issue is the accountants that are resistant to it and staying away from the opportunities to work with it, because they are afraid it could threaten their livelihood (or are incredulous that computers can take care of a large part of the work we do)
— Hector Garcia, CEO, QuickBookkeeping & Accounting
The complexities of the U.S. Tax Code.
— J. Russell George, Treasury Inspector General for Tax Administration
Technology is driving a tremendous amount of change in the financial services sector. There is a huge need to help small businesses, banks and accountants adapt, leverage and get in front of this change, and it’s crucial for organizations in these sectors that want to deliver the best products and experiences to their customers.
For example, only 15 percent of U.S. businesses take advantage of the cloud, presenting a huge opportunity to provide better efficiencies and financial management. By leveraging technologies like machine learning, accounting can go from being an arduous time-suck to an automated time-saver, making work not only easier and faster but also enabling accounting professionals to grow their capabilities, and potentially market themselves to a different industry.
— Keri Gohman, President, Xero Americas
In a word, change. It is important for accountants to understand upcoming changes in financial reporting related to revenue recognition, credit losses, and leases. It’s also important for accounting professionals to pay attention to public policy changes related to tax reform. And, perhaps most of all, it’s important for the profession to successfully develop, adopt, and implement technology that will make financial reporting more efficient and useful for clients, investors and others.
— Russell Golden, Chairman, FASB
The rapid speed of disruptive innovation is the most important issue facing the accounting profession today. The CPA firm we know today will not be the same CPA firm in the next five years. Artificial intelligence will automate some of the more traditional work that CPAs perform, and that automation will place a lower value on the compliance part of our work. Our clients will be looking to us to provide value differently — they will be looking for firms who take that information and use it to be a business partner and consultant. At Grassi & Co we have been working towards this change for several years. Firms who do not adapt their work will no longer be relevant.
— Louis Grassi, CEO and managing partner, Grassi & Co.
The industry is continuing to change and at a unprecedented pace. Technology is the driving factor and is changing the needs our clients have, the way we communicate with clients and team members, the way we close and serve business and the way we staff firms. Firms who do not pay attention to this will be behind, so in order to remain competitive, firm leaders must commit to doing research, staying on track with technology and training and must recruit and direct team members in a new way. Firms will continue to adapt to meet the needs of clients and serve them in more of an advisory role, which will take change management and innovation on the parts of the CPA firms.
— Angie Grissom, President, The Rainmaker Companies
Without a doubt, it’s technological innovation and the impact that will have on our processes, systems and the higher-value services that we offer.
We are living and operating in a world of radical disruption. Technological advances are uprooting business models seemingly overnight, causing uncertainty and complexity for businesses everywhere. Accountants, who have a unique skillset that includes technical expertise combined with analytical thinking and business acumen are best positioned to help organizations adapt quickly to these changes. They are able to identify potential risks and turn them into opportunities to create value and to provide businesses with the necessary critical insight and advice on strategic decision-making to succeed. As disruption continues to transform our world, the profession has both a duty and opportunity to leverage new technologies to bring even more value to the clients and businesses and clients that we serve.
— Andrew Harding, Chief executive, Association of International Certified Professional Accountants
Business continues to globalize and digitize; even the smallest business now is able to conduct business globally through Amazon, eBay or other marketplaces. As a result, accountants must be able to help their clients deal with global accounting and tax regulations. From an accounting firm perspective, every firm must now be able to support their clients holistically and globally. This will pressure firms to collaborate with peer-firms and require them to develop global talent.
Joe Harpaz, Senior vice president and managing director, corporate segment, Thomson Reuters Tax & Accounting
Staying relevant. Sooner or later, we will see comprehensive tax reform and we will continue to see rapid changes in technology. Will we change or try and stay the same? We must always be looking to find ways to be relevant to our customers no matter how much technology they have available to them. We need to make sure our services are needed by tomorrow’s customer and not just the clients we currently serve.
— Roger Harris, President and COO, Padgett Business Services
The most important issue currently facing the accounting profession is remaining relevant in an era of transformative technological innovation and competition from the likes of Google, Apple and Facebook. Auditors today must strive to meet the needs of the investing public – the primary users of their services – to remain relevant.
The profession is taking steps to address this challenge by incorporating advanced technological tools, such as data analytics and artificial intelligence, in the audit. If the use of such technologies in the audit, however, does not translate into informative, accurate and independent audit reports which investors can use in making their investment decisions, questions about the relevancy of the audit will persist.
One also must ask: To what degree is the relevance of the audit a function of the relevance of the information being audited? After all, investors today examine a great amount of company information beyond the financial statements such as non-GAAP financial measures, sustainability reports, and environmental, social and corporate governance matters when making investment decisions. This raises the question as to whether auditor assurance should be expanded to include information beyond the financial statements if the profession wishes to remain relevant in the future.
— Steven Harris, Board member, PCAOB
The most important issue currently facing the profession is being innovative enough to put today’s historical CPA firm out of business.
It takes a bold and compelling vision, like this one above, to help our profession’s leadership anticipate what a complete transformation of our existing business model really means. Moving from a chargeable hour revenue model to one driven on value and outcomes. Moving from technical compliance advisors to strategic partners delivering anticipatory insights. Moving from historians of transactions to data analysts. Developing the skills to function as coaches and advisors beyond compliance. Demonstrating ownership and unrivaled expertise for cybersecurity, appropriate protocols and control systems.
Our greatest competition in the future will come from competitors outside of our profession. They will bring innovation that answers a client’s need for cheap automated compliance combined with analytical insights. However, we are best-positioned and skilled for this opportunity.
— Joey Havens, Executive partner, Horne
There is a systemic gap in succession planning for both the accountant as well as their small business clients – only 40 percent and 23 percent, respectively, have a robust plan in place. We are in an the graying of America era and need to be prepared to empower the younger generation to lift our economy to the next phase of growth. But without proper planning in place, the accounting industry runs the risk of a rocky transition.
— Ryan Himmel, Financial partnerships lead, Xero Americas
Attracting and retaining top talent continues to be the most important issue facing accounting firms. In speaking with professionals across the country, this issue has been and remains one of the most critical and frustrating issues, particularly for small to midsized firms. Competition is fierce for talent. Large firms have bought market presence at the universities with the most premiere accounting programs and have the resources to attract the top-tier graduates to their firms. Small to midsized firms simply cannot compete head-to-head and many are finding themselves with more business opportunities than they can service. The greatest need is for accountants with three to seven years of experience. The biggest challenge is how small to midsized firms can reach those with the needed experience level when name recognition is almost non-existent at the college level. The answer is to treat the retention and attraction of talent as seriously as we treat the attraction and retention of clients. This issue comes down to market positioning, messaging, tactics, and, the driving force, culture.
— Christine Hollinden, Principal and founder, Hollinden
The most important issue is remaining relevant in this Fourth Industrial Revolution. Radical shifts in the accounting landscape driven by the hard trends of exponential technologies (artificial intelligence, big data, cloud, and Blockchain) and demographics as Baby Boomers retire and handoff leadership to the next generation of leaders. This is manifesting into what I call the 4 T’s - technology, talent shortage; time (or lack thereof), and transformation, the urgency to make major changes.
The key idea is what got us here won’t get us there. The strategies and techniques that made us successful are no longer working and new tools and techniques are needed to position us for a the future.
The challenge is taking the time to see these “weak signals of disruptive change” and begin to make the necessary changes before we experience disruption that can lead to irrelevance.
The opportunity is to use our expertise and position as the most trusted advisor to lead our organizations and help businesses thrive in this age of exponential change.
— Tom Hood, CEO and executive director, MACPA
We are at a crucial intersection of time where over the next five to 10 years what a CPA firm looks like and the services/work performed will not be what it is today. Technology advancements and AI will drive a different type of compliance process. Margins will shrink for firms who solely focus on compliance. Even today, I am noticing a wider gap between firms who have implemented a change management program like Lean Six Sigma and those who haven’t. Some major Top 100 Firms just don’t have the foundation of basics developed in process and technology to properly adapt to the next technology evolution, and will become further and further behind than they are today. The lack of buy-in to change and insufficient leadership around change management at a firm-wide level will not translate well into growing the successful firm of the future.
Change is happening. Firms better have a plan and direction to properly manage the change and stay ahead of the pack. Leadership must be aligned and on board with change. The future-ready firm already understands the need to make their compliance processes as crisp and effective as can be to free up time to operate at a higher, value-add level for clients. If not, future profitability and sustainability are at stake.
— Dustin Hostetler, Shareholder and chief innovation officer, Boomer Consulting
Technology is developing rapidly and having a profound impact on the accounting profession, disrupting businesses, transforming how EY and our clients work, and providing opportunities to enhance quality and efficiency in the accounting and auditing functions. It is driving us to gain an even deeper understanding of our clients’ needs and issues. As a result we are evolving and hiring talent across a wider array of skillsets and backgrounds – professionals who can quickly adapt to the changing requirements of their work. For example, emerging opportunities to enhance the quality of the audit through an expanded use of technology are having a significant impact on the role and required skills of the auditor.
Collaboration technologies are improving communication, workflow management and information exchange between global teams, auditors and clients. Data analytics is impacting the formulation of estimates, business and process evaluations, risk assessments and the allocation of effort in accounting and auditing functions. Robotic process automation and artificial intelligence are performing mundane tasks in routine processes with speed and precision, freeing audit professionals to challenge and ask better questions. Blockchain has the potential to replace our current environment of closed ledger systems. These technologies are creating an unprecedented level of excitement in the accounting profession.
As technology continues to advance, however, we must be mindful of the balance between human intelligence and automation. No technology can fully replace the professional scepticism and judgment brought to audits by the people behind them. As technology evolves, the industry will continue to evaluate which functions can be enhanced by automation and which ones must remain in the capable hands of the people serving our clients each and every day.
— Stephen Howe, Managing partner, EY
I believe the most important issue currently facing our profession is the changing role an accountant will play within a client relationship. Technology is transforming the way an accountant delivers core services such as audits and tax returns. Blockchain technology, cloud computing, AI, etc., are all contributing to this shift in how we will deliver services, the role a CPA plays and the changing fee structure.
— Charles Hylan, Partner, The Growth Partnership
Even if a firm serves a succession transition, it won’t guarantee longevity. By far the most important issues facing the profession is the shifting model and role of CPAs. Technology changes are going to have a huge impact on the role of CPAs. Firms need to be expanding beyond compliance services to sustain the shift. The development and training of staff and the firms expansion into non-compliance areas is critical.
— Sarah Johnson Dobek, President and founder, Inovautus Consulting
The most important issue for the profession is gaining expertise in high-value services that will not be displaced by technology such as artificial intelligence, big data and Blockchain transactions. While the public practice professionals will continue to see declines in employee numbers, automation will help offset some of these losses. For industry CPAs, the expertise needed is likely to become increasingly broad, and will go well beyond compliance. These same broad skills will be needed by public accountants who are trying to provide collaborative accounting, controller and outsourced CFO services.
— Randy Johnston, Executive vice president and partner, K2 Enterprises; CEO, NMGI
Technology has clearly impacted and pervaded just about every aspect of our lives over the past few decades and the accounting profession has not escaped these changes. The way accountants and finance professionals utilize technology will only continue to grow as new innovations hit the market.
Typical accounting activities like bookkeeping are not being handled by people, but by computers. And with the rise of new technology and the amount of data being stored, cybersecurity continues to be a major concern and important issue facing the profession. Businesses and organizations need to adapt to ensure the safety of their customers.
But just as important as the technology is the talent that will have to use and adapt to the working environment. Accountants are required to learn new skills and continuously adapt to the rapid changes in technology. ACCA conducted a survey that showed young talent sees job automation and technology as an opportunity, allowing for more strategic activities than routine work. Fifty-seven percent of young professionals surveyed see technology replacing entry-level roles, but 84 percent see technology providing the opportunity for them to focus on much higher-value-added activity.
— Warner Johnston, Interim head of North America, ACCA USA
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. I do, however, want to pivot and mention an issue that will be conspicuously displayed in the news for the remainder of the year – tax reform.
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. It is time for fundamental change. I do believe there is a window of opportunity between October and early 2018 before the election cycle gets too distracting for Congress and the administration to act, although it’s possible that tax reform may look more like rate cuts.
— Edward Karl, Vice president of taxation, AICPA
For the first year in a while, I am not as worried about hiring and retaining people. Of course, it is still a very serious issue. I am more concerned about CPAs actually, enthusiastically and finally embracing change. Too many CPA firms and their leaders are still mired down in complacency. For many years, they have [said] “Let’s avoid change or accept it in small increments because we are doing well and we are comfortable.” The rapid changes in technology, just in the last year or so, are going to have a huge impact on the profession, and yet many firms are still not even digital (paperless). As the AICPA encourages, CPAs need to be moving more into the consulting role and away from the compliance role. CPAs are just on the fringe of really understanding this transition.
— Rita Keller, President, Keller Advisors
I work primarily with CPA firms and find that an uncomfortably high percentage of firm owners are focused on retirement or are happy with the status quo, which is causing their firms to stagnate at a time when innovation in their consultative services is more important than ever. If CPAs do not embrace the digital tools that allow for predictive guidance and remediation of business issues for our corporate clients, other professions (data scientists, financial advisors) could swoop into our space and replace accountants as the trusted business advisor.
— Roman Kepczyk, Director of consulting, Xcentric
It continues to be the use of the timesheet, not only for pricing, but for evaluating people. Sadly, the timesheet is not only substandard as a pricing model, but is immoral and unethical. Every professional (not just accountant) I have ever asked, has admitted to providing false information on their timesheets (up and/or down BTW). It has cause psychological harm to many.
— Ed Kless, Senior director, Sage
There are actually two major issues facing the accounting profession today.
The first is a repeat of prior years’ issue, which is the continual challenge to recruit, retain and grow existing talent to its full potential. The ability to execute on this issue is proving to be a game-changer for many CPA firms nationally. We are seeing investments in human capital doubling or tripling when compared to prior years’ investments. I expect to see this trend continuing into the future.
The second biggest issue facing the accounting profession is the transformation that’s taking place through technology, specifically artificial intelligence, robotics and the ability of technology to essentially replace human beings in many of the areas involving audit and assurance services. It is predicted that within the next five years, audit fees could reduce by 50 percent, with a similar reduction in terms of entry-level talent entering the profession due to technology performing many of the entry-level tasks. Clearly, this will have a major impact on the profession for many years to come.
— Allan Koltin, CEO, Koltin Consulting Group
For the first time, I’m going to stray from the PCPS top issues survey and talk about a topic we see in the field. Technology seems to be on everyone’s mind. The profession is at a crossroads of staying on top of technology while providing services in a traditional environment. The next two years will be exciting times for firms making changes for the future.
— Mark Koziel, Executive vice president – public accounting, Association of International Certified Professional Accountants
Technology. A recent, highly credible study shows our entire profession on par with waiters and cashiers for the risk of being replaced by technology. With millions of high-paying jobs in public accounting and private industry at risk, as well as the reputation and value of what an accountant can bring to the table, leaders in the profession have begun to take action and get the word out on automation, artificial intelligence, and robotics. What’s missing, still through 2018, will be the answers. Limited answers and theories will emerge and blueprints be drafted, but will not yet be actionable for many firms beyond the top 25 or so firms. A simple and logical defense will hit most firms squarely between the eyes and that will be to aggressively work toward elevating their roles beyond accountant to that of trusted advisors, which are nearly impervious to automation advances. An interesting dichotomy will continue to develop and that is more firms investing more heavily in technology and automation, while at the same time pushing their leaders to build stronger and more meaningful relationships with clients.
— Art Kuesel, President and owner, Kuesel Consulting
Evolution. With the convergence of digital payments, mobile apps, cloud-based technology, automation and more, practitioners have all the tools they need to provide client-centric accounting experiences. By this I mean responsive, online, paper-free, mobile, timely and collaborative operations. Many firms struggle, however, with what technology they will adopt, how they will deploy it and the strategy that informs the entire initiative. That struggle can result in firms sticking with the status quo and missing valuable opportunities to add clients and increase profits.
Take, for example, Millennials. This generation is quickly transforming into one led by business owners and leaders. They are already clients, and as the generation ages, more and more millennial-led businesses will emerge. According to our recent Millennial Business Owner-Accounting Firm Relationship Survey, Millennials want their firms to provide more strategic insight and offer more services. They specifically do not want paper involved in accounting, inaccurate data or long waits for important reports. Technology can help accomplish all of these objectives and future-proof firms if they take the time now to evaluate and adopt it.
— Rene Lacerte, Founder and CEO, Bill.com
Agility. Adaptation. Adoption. As a profession, we must be increasingly agile in our adaptation to change. Especially as the rate of change accelerates more rapidly day by day. We must consistently adopt new and emerging technologies and business models.
— Gregory LaFollette, Strategic advisor, CPA.com
The most important issue currently facing the accounting profession right now is technology and the rapid pace technology has added to the transformation of the industry. The enhanced focus on Blockchain and artificial intelligence by major accounting firms and the industry has created an atmosphere of chaos for the future of the industry.
Auditors are wondering if there is now a better way to audit in real time. Tax preparers are wondering if consumer technology and AI will end the way they prepare tax returns. General ledger accounting is almost automated by software such as Receipt Bank and better optical character recognition technology. It will and has changed the accounting landscape as we know it. This will transform accountants from historical research gatherers to foresight advisors.
On the education front, which is related, but more in my wheel house; talent and meeting the demands of the profession. The need of the profession is becoming so great that accounting programs are not turning out enough qualified accountants with the skillset necessary to become effective in a disruptive profession. (The key word is qualified). This is also not helped by the lack of accounting faculty as it is one of the top five business faculty departments showing shortages right now (right under information technology). This is due to the need for more Ph.D faculty members and the restrictiveness of the specialized accrediting agencies who want terminally degreed researchers instead of practitioners.
— Patrick Lee, Assistant professor of accounting, Southwestern College
Talent — finding them, retaining them, and making sure they have the right skillsets to adjust to the changes that tech and automation will bring to their role.
— Kristen Lewis, Director of marketing, EisnerAmper
The coming leadership transition in firms.
— Taylor MacDonald, Senior vice president of channels, Intacct
The accounting profession is facing its most pivotal and transformative era. Remember when the Jetsons seemed futuristic? Today, young adults see such a depiction as a quaint view of future possibilities that will far exceed yesterday’s imagination. The same is true for the profession. Artificial intelligence, Blockchain, alternate currencies, and virtual reality are all fundamentally challenging how financial transactions are conducted, recorded, verified and protected. The very concept of “property ownership” is morphing, in many cases, into payment for use. This shift will likely accelerate as new generations struggle with what defines prosperity in this new world. How fast the profession evolves will dictate its ongoing relevance in the new digital, gig economy.
— Janice Maiman, Executive vice president of communications, public relations and brand, Association of International Certified Professional Accountants
Unfortunately, I feel the most important issue currently facing the accounting profession is cybersecurity. Hackers have realized that CPAs and the accounting profession in general don’t necessarily have the best security on their systems, and often rely on third-party professionals. Within our practices, we maintain a great deal of client personal identifiable information, which makes us extremely attractive to hackers. There were over 170 confirmed breaches in CPA offices this past year, along with countless others that either were not reported or have yet to be identified.
— Stephen Mankowski, President, NCCPAP
The accounting profession is in a bit of an identity crisis. There are a number of pressure points, which include: staffing, firm transition, marketing-branding, culture and even advancing regulation that have started to demand attention. The identity crisis is a result of migrating from mostly a technical-technician mindset to one of business manager and organizational leader. Clients are demanding more attention beyond accounting, tax, and payroll services, to now include consulting and business advisor. Accounting firms and practitioners that have vision and the ability to lead and communicate well with their teams will be able to protect and build very dynamic and advancing people and organizations. These are also the firms that will attract top talent as they work together, leverage technology and meet both the professional goals of the firm and the personal goals of their professionals.
— Sean Manning, CEO and co-founder, Payroll Vault Franchising
Emerging technology is a disruptive agent for the profession. Acknowledged and embraced, it can create tremendous advantage, but ignored it will contribute to further commodization of many accounting services. Challenges for practitioners are: staying aware of the vast amount of technology available; choosing the best solution; training staff and clients; addressing security concerns; and reimagining the services possible through a full implementation of technology. Emerging technology is more than a tool, it is an opportunity to provide higher-value service.
— Samantha Mansfield, Director of professional development and community, CPA.com
Demands on accounting professionals who play a critical role in helping their customers navigate increasingly complex tax laws and compliance requirements have only intensified. Not only must they stay abreast of the ever-changing regulatory environment, but their clients expect 24/7 access to information and near-instantaneous response time to their questions.
The good news is that businesses are looking for accountants to be trusted advisors, but because of this, the need for accountants to maximize operational efficiencies and invest in the solutions that drive growth has never been higher. Fortunately, there are new, emerging technologies available to change the way work gets done with technology automation, eliminating much of the labor-intensive manual work that adds little value.
Accounting professionals can now implement highly efficient technologies and software that provide on-demand research capabilities, advanced practice management solutions and intelligent data organization. We see many of our customers moving in this direction as a way to elevate their value to their customers and remain competitive.
— Jason Marx, CEO, Wolters Kluwer Tax & Accounting, North America
For the income tax preparation industry in which I been an executive for 40 years, proposed tax reform legislation that would simplify the IRS code is my greatest current concern.
— Chuck McCabe, Founder, president and CEO, The Income Tax School
The most important issue is tax reform, but, of course, we have no idea at this writing whether we’ll see any significant progress before the end of 2017. As in previous years when there was major reform, just about every sector of the profession had to invest time and resources into ensuring there was a smooth transition for their firm, employers, clients and customers. Regardless of how you slice it, any kind of reform will be a game-changer.
— Scott McFarlane, Co-founder and CEO, Avalara
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.
— Mike McGuire, CEO, Grant Thornton
It all comes down to one thing: mastering the pace of change. Every day, we hear the latest examples of the enormous disruption in business and finance from technology, globalization and the changing expectations of employers and clients. And yet within that shifting landscape, we see a huge opportunity for the profession. In an era of data overload, businesses need trusted information and insight. It’s clear to me that no one is better prepared to deliver those critical guideposts and creative solutions than the trusted advisors in public and management accounting.
— Barry Melancon, President and CEO, AICPA
For small firms, I think succession planning is and will continue to be an issue. Baby Boomers just aren’t thinking about retirement the way they need to be, and partners need to start handing off clients to their staff.
There still is a lack of focus on internal controls to prevent embezzlement, fraud, and to ensure accuracy of their financials- particularly among small businesses. That is the area I work in, and it’s an uphill battle to get them to focus on controls, but small businesses propel our economy, and they need to be stable.
— Trisha Ann Melikian, @parva_x
Growing faster as advisors able to provide relevant information to clients than our clients’ ability to access information on their own. Real-time data access is becoming ubiquitous and with growth of artificial intelligence, interpretative analytical data will be provided as fast as clients wish to look at them. The issue we will face as a profession is to be able to generate useful interpretations, analysis, and insights that will provide enough actionable courses that the clients would still continue to look to their independent accountants for the counsel, guidance and trusted role they have always filled.
— Edward Mendlowitz, Partner, WithumSmith+Brown
I think finding talent to enter the profession is still a big issue. Accounting is a great career that pays well and provides real professional opportunities but it’s not viewed by young students as an exciting career choice. We need to figure out how to market accounting careers as more interesting to students by emphasizing technology opportunities, client interaction, learning business, etc.
— Stan Mork, President, ITA
There are two important issues facing the accounting profession: One is security, and making sure we are handling customer data in the right ways. The second is helping tax and accounting professionals stay relevant in the face of technology and trends. We believe technology will automate parts of the job, and will allow accountants to focus on being a trusted advisor, which is what we know they want to be.
— CeCe Morken, Executive vice president and general manager, Intuit ProConnect Group, Intuit Inc.
Avoiding an existential crisis? It seems that what the accounting profession was and is, and what it will become are vastly different things. At least that what everyone who’s on the Top 100 list seems to say. What happens in between the present and the future has the potential to be very messy; what results might be a small number of firms that do a lot of different things using a lot of fancy technology and a large number of firms that closely resemble something at a Renaissance Festival.
— Caleb Newquist, Founding editor, Going Concern
While it is most difficult to identify the most important issue when there are so many, let me do my best. In my opinion the most important issue confronting the industry is the human capital dilemma at several levels. First, my biggest concern is turnover at all professional levels and in particular the continuity of partners at local, regional and national firms. I'm not terribly concerned about the entry-level pipeline as I see many young people finding the CPA profession attractive and financially rewarding. However I am seeing complacency at the top levels when it comes to business development and the entrepreneurial spirit. Partners do not appear hungry and tend to be more focused on client service than client growth. While recently attending a partner retreat with approximately 175 partners in attendance, the managing partner focused extensively on business development and practice profitability. These may seem like old-news issues, but there is a difference. Older partners are hanging around longer but are not as active in the marketing process or in teaching younger partners how to do what they use to do. As a result I'm finding myself more involved in coaching young partners on practice development and profitability. Firms must keep senior partners focused on new business development and those that become too complacent must be encouraged by financial recourse to stay focused and bring the younger partners along.
— Jay Nisberg, President, Jay Nisberg & Associates
Advances in automation, to make life “easier,” were welcome over the past couple of centuries. At this point in the new millennium, however, advances in automation using “artificial intelligence” and “machine learning” threaten to displace accountants from jobs or a significant part of their jobs, which could result in a net loss of job opportunity.
— Edith Orenstein, Associate editor, MACPA
Business transformation. The ability to transform fast enough. As New Firm owners are growing by leaps and bounds, old-schools firms have finally realized they need to change. But is it too late? Business transformation is hard and takes time. Firms finally feel the urgency but the question is, will their legacy thoughts and systems allow for the change that needs to happen in the time frame that it needs to happen?
— Jody Padar, CEO and principal, New Vision CPA Group
Perception is reality. The accounting profession’s perception – and hence its identity itself - is the most important issue that needs to be recognized and addressed immediately.
Like the self-driving cars threatening to put taxi and other commercial drivers into obsolescence, Artificial intelligence, automation and Blockchain are capable of moving to technology a significant part of the revenue-generating work of a majority of accountants. It is like the seismic shift deep under the ocean that no one can see and feel but suddenly a gigantic tsunami of colossal destructive power appears at a high velocity and destroys whatever comes in it’s way. That seismic shift is happening in the profession, especially for those accountants who mostly enter data, turn it into packaged information and do it mainly for compliance purposes.
But the real cause is not technology. The main cause is the underlying perception amongst accountants’ clients.
Accountants equal financial statements and tax returns, verifications, audits and attests — compliance agents — a perception that is driving people to believe that technology is a replacement for accountants. This perception converts into a question that has and will haunt accountants: “Where will the future revenue come from?”
While efforts are on to make accountants move more towards advisory and consulting services, there is hardly any impactful effort to help accountants transform the perception amongst clients’ minds. Unless, from right now, the whole profession undertakes a sustained, massive, comprehensive and highly visible “brand-expanding” exercise to change the current perception, technology can make the profession highly insignificant in future. At the same time, the accounting firms themselves will need to overhaul their internal branding – to laser-focus their people on impacts of the outcomes on clients’ lives, rather than on hierarchical positions.
— Hitendra Patil, Director of practice development, AccountantsWorld
I think technological disruption, particularly around the advent of Blockchain, is the most pressing issue facing the profession. With the promise of delivering a distributed and immutable ledger that disintermediates the need for third-party verification, Blockchain is being actively looked at by multiple governments, corporations and other entities. I think what compounds its potential impact is that Blockchain still seems to be largely ignored by many in the accounting profession. We’re seeing increased activity at the government level across the globe to embrace Blockchain, and I suspect it is going to become a major disruptor to our profession sooner than many people may think. Couple that with the need to recruit and retain staff who understand new technologies like Blockchain (and cognitive computing, artificial intelligence, etc.), as well as the potential regulatory disruptors new technologies can produce, and I believe there are seismic shifts coming to all levels of the profession that need to be planned for.
— Brian Peccarelli, President, The Tax & Accounting business of Thomson Reuters
Speed of change. Technology is fueling a rapid change for firms and their clients. For sole practitioners and smaller firms, this phenomenon has a negative impact on firms unable to stay up with technology.
— Carl Peterson, Vice president of small firm interests, AICPA
Today’s most important issue in the accounting profession points to the evolving role of the accountant. This year, there were significant changes made to the CPA Exam due to the changing expectations set by accounting firms across the country. There is a desire and need for highly skilled professionals now – as early as entry-level – and the demand will only continue. As Baby Boomers move closer to retirement and Gen Xers take over firm leadership roles and become the industry decision-makers – the next-generation accountant will be expected to start their career in a high-demand, client-facing role.
In the end, the overarching theme and “biggest issue” facing accounting is the acceptance of technology and how it will impact everyone’s role in the profession. The issue isn’t so much that technology is a burden but should be viewed as a rallying cry for industry leaders and accounting educators to embrace and ultimately adopt into the day-to-day lifestyle of an accounting professional.
— Roger Philipp, CEO and owner, Roger CPA Review
I hear this on a daily basis from partners: It’s easier to get new clients than it is to hire the staff to carry out the work.
— Jeff Phillips, CEO, Accountingfly
Working well with technology is the most important issue facing the profession. McKinsey & Company’s “Where Machines Could Replace Humans—and Where They Can’t (Yet)” estimates 86 percent of the work done by bookkeepers, accountants, and auditing clerks could become automated tasks.
We currently use technology to process data, and advancements will give decision-making capabilities to the artificial intelligence components of the technology we will use in our profession.
We need to learn how best to interact with technology, test the inputs, ethically interpret and communicate analytics, emphasize cybersecurity, and realize efficiencies from automation. Accountants can then innovate value-adding services for our companies and customers, including recommending actionable ideas for strategic direction and technological vision.
— Elizabeth Pittelkow, Director of accounting and compliance, ArrowStream Inc.
Having people with the right skills to ensure that the profession can thrive in an environment of rapid change is the top issue for CPAs in both public and private accounting. Increasing diversity across all sectors is a big piece of the puzzle, and that means reaching out to non-traditional students as early as middle school to tell them that our professional narrative is changing. Accounting is at the center of the technology changes that will soon drive the economy and shift our culture. By joining the accounting profession, young people from diverse backgrounds will be part of a historical change in the way businesses operate, and our daily interactions. We want them not only to understand that, but to get excited about it and join us on the journey. There are many opportunities for these students to become accounting’s future leaders, and the time to act is now.
— Amy Pitter, President and CEO, Massachusetts Society of CPAs
Technology is changing how — and what — information is delivered to and consumed by users of financial information, with implications for how financial reports are prepared and audited, and how accounting standards are set. As a profession, our biggest challenge lies in how to ensure that all participants in the financial reporting system keep pace with rapidly evolving and innovative technologies that improve how we deliver information to investors and other financial statement users.
— Terri Polley, President and CEO, FAF
While attracting and retaining team members is certainly an important issue facing our profession, I believe the most critical issue we face is the fact that our profession is changing, and the continued pace will be extremely rapid. CPAs that survive in the future will no longer merely provide commoditized, compliance-based services. Therefore, the rapid changes to our industry, and what our profession and our firm need to do to stay well ahead of the curve, is the most important issue we face.
— Charles Postal, Managing partner, Santos, Postal & Co.
The most important issue facing the accounting profession at the moment is the decision to future-proof a practice. Technology is changing rapidly – five years ago, cloud platforms were not mainstream and now they are not only a part of practice, they are part of our client’s lives.
With the introduction of AI and machine learning, the concept of data entry has almost been removed. Which means future-proofing has become about so much more than that: These days, it essentially means that a firm will embrace technology, and implement the workflows and systems that enable the most efficient and effective service provisions.
A future-proofed practice needs to be entirely client focused, and constantly delivering and demonstrating value. To do so, accountants need to address all parts of their business model – pricing, sales and onboarding, digital presence, lead generation pieces and content marketing – with the same forward-thinking mindset to ensure each element of the business is optimised.
Making this shift isn’t always easy, especially for those of us that have been practicing for some time. (I know I have been there.) But you can do it. There are so many resources out there at the moment.
It’s time for those of us in the accounting profession to change our mindset – to think about how we can focus on our sales and marketing ideas and processes as a means to better connect with our customers. Our job is about more than “doing the numbers” – it’s about demonstrating how we can provide solutions to people’s pain points, make life easier, and play a key role in the economy at large.
— Melanie Power, Head of bookkeeping, Xero
For small and midsized firms, succession remains the most pressing issue and that will continue for the foreseeable future. Estimates are that as much as 35 percent of the owners of CPA firms either are now or will be of retirement age within the next five years. Most firms in this size range are not prepared to manage this transition in ownership. The effect of this trend is already evidenced by the unprecedented number of mergers and acquisitions.
The other big issue affecting the profession as a whole is the impact of emerging technologies. Blockchain (which is in use by about 15 percent of all banks this year) and big data capabilities are already in use. Technology is creating entirely new capabilities for mobility and fundamentally changing the make-up of the workforce and relationship between firms and their people.
— Terrence Putney, CEO, Transition Advisors
The most important issue facing the accounting profession today is the commoditization of compliance work through technological advances in cloud computing software. It is easier than ever to start a purely online accounting firm and services like bookkeeping, payroll taxes, invoicing, and even corporate tax returns can be outsourced online. Although some see this as a threat to the accounting industry, it is actually an opportunity. Larger firms can leverage technology to provide services that once required large amounts of time at a low billing rates. Services like bookkeeping and payroll can be automated, saving both time and money. Additionally, this shift away from compliance work can free up firms to seek out more profitable engagements. Business advisory services and a holistic approach to business consulting will drive profits for firms over the next decade.
— Jeremias Ramos, Editor-in-chief, The Daily CPA
Machine learning offers the professional firm’s clients some remarkable benefits and its employees some real challenges. Many consider machine learning and artificial intelligence, overall, technology disruptors with the potential to drastically affect business. The key for firms is to understand where the leverage is and to incorporate it into their day to day. For a firm’s employees, it is a matter of embracing this trend and figuring out how machine learning and AI can ultimately help them to become more productive. For those who fear it or don’t understand it, I worry about the impact it could have on the attractiveness of the profession, because it raises doubts in prospective entrants about the sustainability of a career in accounting.
— Ian Rhind, CEO, Wolters Kluwer Corporate Performance Solutions
Companies today face a dizzying array of risks — financial, physical, and intangible — all of which are growing in scale as markets become increasingly global and interconnected. It’s critical for companies to better understand how all of these factors inhibit and/or enhance their ability to create value for shareholders and society alike. Thus, it’s important for the accounting profession to acknowledge the value of sustainability accounting. Sustainability accounting helps complete the picture that conventional accounting has begun, by extending accounting structure to capture the sustainability factors that are likely to have material impacts on a company.
Accountants took a leading role in the development of GAAP, and they are uniquely positioned to play a similar part in shaping the future of accounting by establishing a market standard for sustainability information. Consistent, true, and fair disclosure of performance on material sustainability topics — equal to the quality that markets have come to expect and rely on for financial information — can best be accomplished via a market standard. Standards provide a common reference point, create consistency with traditional financial data, and make sustainability data an accepted part of the analytical and decision-making process
— Jean Rogers, Chair, SASB Standards Board
I believe the biggest issue is the rate of change happening all around the profession and firms’ ability to stay in front of it. Jack Welch, retired CEO of GE said it best: “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” I would suggest that disruption is near.
There is simply too much change happening for firms to go it alone. The best advice is to get engaged with a professional network of like-minded individuals for the support and guidance required to keep up with the rate of change on the outside.
— Darren Root, CEO, Rootworks
To me, it’s a two-way tie for most important:
1. The ongoing, “broken-record” but nonetheless massive issue that will be with us for many more years: The Perfect Storm of Baby Boomers retiring; most local firms struggling to attract, retain and develop people, leaving them with a shortage of new partners to replace retiring ones; and as a result of the first two items, a merger frenzy that solves the succession planning dilemma. These days, virtually every firm talks about mergers and every year, hundreds actually merge.
2. The changes in technology that appear to be on the horizon, the result of the confluence of Blockchain, artificial intelligence and other innovations. I say “appear” because the CPA industry graveyard of incorrect predictions is densely populated. Everything I’m hearing from Barry Melancon to top CPA technology experts like Roman Kepczyk and Jim Bourke says that these changes are not a matter of “if” but “when.” The implications of these changes on CPA firm management and strategy could be the most profound since perhaps the invention of the Internet. Audit fees cut to one-third, tax prep going the way of the horse and buggy and (finally) an easing of the crippling shortage of staff due to technological advances that will reduce the need for people. All of this could radically change the nature of how CPAs work and what they do.
— Marc Rosenberg, President, The Rosenberg Associates
It seems that many firms are still not doing the necessary succession planning to ensure the longevity of the firm. Going hand in hand with this is a lack of training for the next generation of leaders so they can take the reins when it is time for the current partners to retire.
— Bonnie Buol Ruszczyk, President, bbr marketing
The advancement of technology and the ability for us to adapt and train consultants who are analysts and strategists who will meet the needs clients will have. The days of accountants as the manipulator of data will end. We must train business thinkers- trusted advisors who will stand by a client and assist in the critical decision-making.
— Jane Scaccetti, Co-founder and CEO, Drucker & Scaccetti
Change. Seth Godin, author and agent of change said, “The easiest thing is to react. The second easiest is to respond. But the hardest thing is to initiate.” Every day we have to be thinking: How do we move closer to not just reacting to change, not just responding to change, but actually initiating that change? Take smart intelligence and technologies. The change in that space will dramatically change our audit process. If we only see the change as, “We have to use data in a different way,” that’s nothing more than a reaction. When we come up with a more innovative way of doing audits, I believe that is simply a response to what is happening in the marketplace. Initiation, then, is, ‘We have become more efficient in our audit process; now, how do we repurpose that saved time to bring more value to our clients?” The issues will constantly flux. Our success is dependent on our ability to initiate.
— Denny Schleper, CEO, CliftonLarsonAllen
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. And given the growing universe of retiring partners, succession planning is correspondingly a major impetus for accounting firm mergers, as firms attempt to transition older partners out and determine ways to let the future of the firm’s leadership in. The firms that are flexible enough to develop innovative solutions to these challenges will thrive, while those who are not will struggle to compete.
— Russell Shapiro, Partner, Levenfeld Pearlstein
Technology is, clearly, the most important issue currently facing the profession. When I talk with groups of CPAs, I often ask them if the profession has been through a technological revolution over the past 25 years. Almost to a person, they say yes, given the impact of electronic spreadsheets, ERPs, GL systems and cloud storage. My response is that we really have been through nothing more than a technological evolution. People still use spreadsheets, electronic instead of paper, and those files are still being stored – now in the cloud versus a local server or computer or, even worse, in a file cabinet.
I think that we are, now, looking at an impending, true revolution within the accounting profession. Artificial intelligence, robotic process automation and Blockchain have the potential to create a profession that is unrecognizable to accountants and CPAs of today. Technology will truly begin to replace tasks and activities that have previously been done by humans, whether or not they were aided by current technology.
This explosion of technology also has the potential of creating a dichotomized profession. AI and RPA will take much longer to work their way into small businesses and accounting firms, which opens the door (in the shorter term) for those firms that can capitalize on some use of technology.
While this technology revolution is on the horizon, we have a shorter-term issue of an aging profession dominated by Baby Boomers who will be retiring in ever increasing numbers over the next few years. We are looking at losing an immense amount of institutionalized knowledge over the next five to 10 years. Sustainability in many smaller accounting firms will rest on the ability to train and advance younger staff into partner and leadership roles.
When you combine the impending technology revolution, an aging profession and a possible dichotomizing profession, there may be a tremendous opportunity for some small and midsized firms who embrace technology – yet serve the needs of smaller businesses.
— Todd Shapiro, President and CEO, ICPAS
Plenty of issues are leaving indelible marks on the profession today — the changing demographic face of the workforce, groundbreaking legislation and regulation, and the continued march of globalization among them. But no other issue is impacting accounting and finance professionals as much as technological advancement. Artificial intelligence, cognitive learning machines, Big Data, Blockchain, and other advances are transforming the profession before our very eyes. By some estimates, close to half of all jobs that currently exist — blue collar and white collar alike — could disappear in the next 25 years thanks to automation. And the pace of this transformation is increasing. Moore’s Law — the notion that the processing power of computers doubles every two years or so — remains in effect. That means the technologies that govern our profession will continue to advance at an exponential pace.
These advances are changing what it means to be a CPA. To remain relevant going forward, accounting and finance professionals will have to stop crunching the numbers; machines can do that faster and more accurately than we ever will. Instead, we’ll have to spend much more time interpreting those numbers — telling the stories behind the numbers, thinking strategically, anticipating future trends, and then helping our clients and customers do the same.
The foundation of this profession lies in the past. We’ve traditionally spent most of our time accounting for things that happened yesterday. To remain relevant, we’ll need to spend much more time thinking about what will happen tomorrow, and then helping those we work with do so as well.
— Bill Sheridan, Chief communications officer, MACPA
As a marketing professional who coaches hundreds of CPA firm owners and staff each year, the biggest issue I continue to hear is staffing. Not the sexiest subject, I know, but a real and ongoing pain point for firms. And the challenge is not restricted to recruiting new professionals, but also in retaining qualified staff. Add on the impending exodus of Baby Boomers over the next several years and this issue will only heighten.
Integral to the issue, I believe, is firm culture. Lack of a technology focus, limited ability to work remotely, and maintaining old-school business models are among a few elements that add to a less-than-appealing work culture. The next generation of professionals rely on technology and flexibility to work and live the way they want. Solving for culture will be key in addressing the perpetual problem of staffing.
— Kristy Short, Partner and chief marketing officer, Rootworks
Over the past years, I have seen the accounting profession continually challenged with attracting and developing skilled professional talent. Accountants are being asked to know more about a greater number of subjects beyond traditional tax and accounting. Government compliance and regulation, technology and operational procedures, finance and investment practices are just a few subject areas that require deeper expertise where accountants are being consulted. And with many smaller firm owners and partners looking to retirement, the need for new, talented professionals is compounded.
— Michael Silver, Microsoft Dynamics 365 partner recruitment and channel enablement, Microsoft
While preparing for the significant and dramatic changes technology will bring the profession, for 2017 and 2018 I see the strongest concern being the combination of two issues directly related to each other; staffing and succession.
According to an AICPA succession survey, 74 percent of owners who participated in the survey stated they expect to have succession issues over the next one to five years. Here we are facing the largest exodus of owners of accounting firms over the next five years, while at the same time finding and retaining high-level talent is one of the greatest challenges firms face today. Had there been bountiful partner-level talent, the succession issue would be mitigated, which is what makes these two issues related.
I fear the firms that continue to put off their succession plan will find issues in continuing their legacy.
— Joel Sinkin, President, Transition Advisors
I feel the most important issue facing the profession has to do with the impact of technology and the ability of firms/practitioners/corporate accountants to invest in and adopt relevant technology to remain competitive. If smaller firms are not given sufficient resources and support, it will be increasingly harder/more expensive for them to compete, and thus detrimental to the entire profession.
— Mark Soticheck, COO, North Carolina Association of CPAs
Cybersecurity is the most important issue, because not only is it constantly changing and evolving, but many CPA firms do not realize that they are at risk and/or do not have anything in place to protect themselves. I strive to educate my clients and make sure they have peace of mind knowing that my team and I are staying on top of the latest cybersecurity tactics and measures to ensure their data, and most importantly their clients’ data, is protected at all times.
— Christopher Stark, President and CEO, Cetrom
The accounting profession is primarily comprised of small businesses that are quickly running out of time for succession planning, and it is now time to shift gears into “crisis planning” and a corresponding expedited action plan, and a farewell to traditional internal succession planning. It’s now time for a call to action for whom succession tolls. The call to action should start with reshaping the culture that was responsible for positioning many firms in their succession crisis mode, such as:
Denial concerning the aging of the equity partners who are the rainmakers and control a majority of the client base and a lack of quality professionals for succession-planning purposes. A culture of denial has been rampant in the CPA profession, especially at firms with 20 or fewer partners. Denial is more endemic in firms with old-Boomer partners because it often results from a stubborn adherence to a once-accurate perception of reality that has become obsolete in a changing and dynamic marketplace. It’s difficult to overcome a culture of denial because it normally means avoiding change.
“Comfort Zoners” in the partner and senior manager ranks who have failed to add value to client services, neglected to enhance their technical and advisory skills over their careers, have not contributed to firm growth over the years, and have resisted change within the firm and its culture. Once the up-or-out philosophy became less prevalent, the “Comfort Zone Culture” became more pervasive, and top-heavy and inverted pyramid-structured firms resulted.
Inability to retain women in the profession and promote them to the partner ranks. Women have represented close to 50 percent or more of the entry-level staff entering public accounting over the last two decades, and they now only represent 20 percent of the partner ranks. This is by far the most underrated obstacle and void leading to succession planning issues.
— Joseph Tarasco, CEO, Accountants Advisory Group
The issue is relevance. What will accountants do when they’re no longer doing accounting? With Blockchain, big data, and artificial intelligence (or, more precisely, machine learning), it’s not hard to see the day when accounting, and all that entails – balance sheets, income statements, payables, receivables, valuations, projections, and forecasts – makes the final leap to full automation.
Those accountants who are already offering the kind of high-value, high-margin services that only they can provide – business judgement, personal coaching, or brilliant insights, for example – are well-positioned to make the next leap.
— Rick Telberg, Founder and CEO, CPA Trendlines
The need for faster innovation in the transformation of the audit process. Businesses are embracing new business models and the finance teams are embracing finance transformation. As business changes, the audit process must go through transformation in order to raise audit quality, reduce risks and leverage technology. I remain concerned that business has catapulted over the accounting procession in its embracing innovation and technology.
— Arleen Thomas, Managing director, Americas, and CGMA global offerings, AICPA
It’s hard to select just one issue since there are two important issues facing the accounting profession today, such as regulation and talent. Regulatory requirements will continue to create increasing demands on the profession. Similarly, obtaining and retaining the right talent is a huge issue for firms and companies — something that can be felt at all staffing levels.
— Ralph Thomas, CEO and executive director, NJCPA
Automation and artificial intelligence present a significant risk and opportunity to accountants in business. The profession must prepare itself for more routine jobs being automated away in auditing and transaction-processing functions. However, the increased productivity from automation opens the door for accountants to take on higher-level strategic tasks.
— Jeffrey Thomson, President and CEO, IMA
Talent. One of all total votes from over 2,000 practitioners we spoke with from our research last year put this issue above and beyond as the top practice barrier. It is hard to find talent, harder to attract good talent and harder still to attract and find great talent.
— Ian Vacin, Co-founder and vice president of education and partnerships, Karbon
Working to make sure financial statements continue to provide the information users need to make well-informed decisions is critical. For financial statements to remain relevant, the accounting profession must embrace technology and reexamine how financial information is accumulated, audited, and disseminated.
— David Vaudt, Chairman, GASB
Technology is moving faster than ever. As a result, the accounting profession has drastically changed in order to keep pace. As small businesses struggle to code their accounting, accountants spend a majority of their time trying to undo mistakes in the system. It is important for accountants to have the time to focus on what their customers need to be successful and less on correcting errors in a system. Cloud accounting platforms are now consolidating on a powerful set of technologies, unlocking the potential of vast connections and unique datasets to drive machine learning. As machine learning becomes more powerful, accountants will spend less time sorting data and more time working with clients. For example, machine learning systems can learn from the coding errors an accountant corrects in the system and the next time a client codes an invoice, a suggestion can be made to prevent them from making the same mistake. As a result, compliance processes are streamlined and new business opportunities are created, which will either be no-touch or limited-touch in the future.
— Amy Vetter, Global vice president of education and head of accounting, USA, Xero
Attracting, retaining, and engaging talent; firms need to learn how to change their culture and strategy to be able to attract a new generation of workers who can help the industry evolve and deal with the other changes coming.
— Garrett Wagner, CEO, C3 Evolution Group
We are in a very transitional time in the world of accounting because technology is massively impacting the way businesses operate. Today’s business landscape has become extremely competitive. Small and midsized businesses and enterprises are realizing that automation, artificial intelligence and machine learning are the key to staying ahead. In fact, they are enablers to a significant competitive advantage. In addition, these solutions are helping them glean actionable insight that will automate the admin tasks of their business, so they are freed up to focus on customers and production.
For the accounting profession, this means accountants need to keep up and ideally take the lead. Instead of thinking automation and artificial intelligence could make them redundant, accountants that embrace technology to help automate admin tasks and deliver greater insights from data will have a competitive advantage. Today, customers expect accountants to be their “advisors” and help them understand where the money is going and how to avoid financial pitfalls or take advantage of opportunities. As accountants leverage machine learning and automation, they can truly become “the CEO’s partner” and an advisor for clients.
As an example, by “partnering with technology” (leveraging artificial intelligence and machine learning) to analyze multiple data sets, accountants can tell a business owner that they need to stock up on inventory and bring in extra staff because the weather forecast, prior sales on this day last year and the upcoming holiday predict that sales will double over the weekend. That’s adding value!
There has never been a better time to be in the accounting profession!
— Jennifer Warawa, Executive vice president of partners, accountants and alliances, Sage
Obsolescence. Traditional accounting services that focus on the past (reporting and recordkeeping) will soon be replaced by technology with very little assistance from accounting professionals. Accounting professionals should use their experience and skills to assist clients with planning, improvement, cost reduction and income enhancement, rather than concentrating on compliance.
— Tom Wheelwright, CEO, Provision
There is a convergence of so many factors that feed into one another. However, the single greatest challenge facing the profession is educating our young professionals and future accounting graduates as to the amazing opportunity available in our profession. Too many people exit well before the carrot of partnership is dangled. While succession and transition remain top of mind for the majority of CPA firms and practices, it is not a question of there being enough money or financing, it is the lack of talent coming up the ranks to fill the client service demands. We must do a better job of sharing with the Millennials and even the Generation Zs of what an amazing career or life one can have as an esteemed and most trusted professional as a CPA.
— Philip Whitman, President and CEO, Whitman Business Advisors
The technological changes occurring in our world will affect every part of the accounting business model. Blockchain, Bitcoin and artificial intelligence are all within our sights, and while many see how these technologies will affect the transactional tax and audit work, I don’t think they are thinking deeply enough about how all of this will affect the talent, training, processes and growth in the firm. These new and exciting technologies have tentacles that are reaching out to touch who we recruit, the work we do, how we train people, the types of clients we work with and the process we follow. This massive change will either be an explosion that will destroy a firm, or create a firm that will provide higher level, more exciting work than was ever imagined.
— Sandra Wiley, President and Shareholder, Boomer Consulting Inc.
The loss of young talent from our profession. We’re not translating the pipeline of Bachelor’s and Master’s candidates into CPAs. The competition for accounting graduates is huge and the value proposition for sitting for the CPA Exam and working in public accounting is not as clear or compelling as it used to be. Being perceived as an “old-school” profession doesn’t help. I think of Daniel Burrus’s assertion that when you go to work in a CPA firm you step into a time machine and go back in time twenty years –- yikes!
We’re all responsible for making this profession attractive, vibrant and growing. And it won’t be, unless we change significantly.
— Jennifer Wilson, Co-founder and owner, ConvergenceCoaching
Disruptive technologies like data automation, Blockchain and artificial intelligence are changing (or will soon change) the nature of the services accountants offer their clients. Automation technologies are a positive disruption, but require accountants to rethink their processes and the way they deploy technologies within their firms. Blockchain and artificial intelligence, though not ubiquitous at this point, have the potential to displace thousands of jobs within the accounting profession, especially for cyclical services like bookkeeping, audit and tax preparation. To adapt, accountants must leverage technologies aggressively while, at the same time, embracing roles with complex processes and/or numerous variables that technologies cannot easily displace.
— Joe Woodard, CEO, Woodard Events
There are many important issues that accountants must address in the near term: the rapid pace of change, technology, recruiting and retaining talent, etc. The “rapid pace of change” occurring in business as well as the accounting profession is the issue that I would put at the top of the list. The changes in regulations that impact businesses as well as create audit and accounting issues are numerous. There are numerous standards that have been issued to improve to financial reporting that will become effective in the near future which must be addressed today in order to be ready to implement. Additionally, changes in cybersecurity are multifaceted and require specialized knowledge and skills to ensure that all areas are being properly addressed. Finally, although we have made and are making significant progress in the area of simplification in accounting standards, I believe that it is critical to continue to focus on simplification for private companies as well as public companies, where appropriate.
— Candace Wright, Chair, PCC
Tax reform — at all levels including nexus determination and collection obligations for sales/use taxes. Another issue is the impact of global business on all these types of issues. It is becoming common in other countries that foreign sellers must collect the VAT. In the U.S. we don’t have tax collection across states, let alone the ability to impose tax collection on foreign sellers. It will be interesting to see how the remote seller legislation and litigation plays out in conjunction with direct taxes imposed at the state level and even the federal provisions.
— Diane Yetter, President, Yetter