Accountants are justly proud of their status as their clients' most trusted advisor — but trust is no longer enough to thrive in a hyper-complex environment, according to Sue Coffey, the CEO of public accounting at the Association of International Certified Professional Accountants.
"The world is a very complex place right now, and needs us more than ever. We simplify that complexity — we sort through all the rules and regulations so that businesses can be supported and the public can be protected," she told attendees as the AICPA's Engage Conference, held this week in Las Vegas. "We are in a unique position — we have the trust and confidence in a world that's devoid of trust, and we have skills that make sense of this evolving landscape."
However, the speed at which that landscape is evolving, the impact of powerful new technologies, the demographic changes that are creating severe staffing shortages, and a host of other factors are all calling for accountants to be more than just trusted.
"This all requires us to be nimble, to have a certain level of agility," she explained, citing the profession's response to the COVID pandemic as an example. "We've shown that we can do that; in fact, we're excellent at it."
More important, the profession needs to build its future success on more than just its current strong position of trust.
"Trust, without a culture of innovation and investment, and without highly skilled people, will only take us so far," she said.
With that in mind, she laid out four pillars that the accounting profession will rely on going forward.
1. Trust
First off, Coffey clarified that trust — both broadly, and specifically in terms of the attest services that are one of the core offerings of the profession — is no less important than it has been in the past.
"People are still asking, 'Is assurance on a downslide?' Absolutely not," she said. "Attestation services are the No. 1 growing service. I'm big-time bullish on attestation services."
And the profession continues to invest in those services in a variety of ways.
"Audit quality remains of vital importance — but we've seen improvement year over year over the past 10 years, and the AICPA's Enhancing Audit Quality Initiative has been a huge part of that improvement over the past nine years," she noted.
One element of that involves improving peer review, including removing firms that weren't performing reviews adequately, and offering more training and guidance to those that are.
"Peer reviewers are now detecting the issues they should," Coffey said. "Is that more painful for some firms? Yes, but they're 90% better the next time they're reviewed, thanks to remediation efforts."
"We continue to have challenges with firms that only perform a small number of audits in a particular area," she added. "Deficiency rates are absolutely higher where there are only one or two audits being performed by these firms, no matter what size they are. We're trying to communicate the importance of investing in specialties."
Beyond that, she highlighted two statements for auditors to pay particular attention to.
The first is Statement on Auditing Standards No. 145, "Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement," which was released in October 2021.
"Risk assessment is a perennial challenge. This is the heart of any audit," said Coffey, and SAS 145 includes some important changes. "Expect a very deep focus on this in peer review in the next few years."
The other statement she recommended accountants look at is the AIPCA's Statement on Quality Management Standards 1, "A Firm's System of Quality Management"
"It may require you to do things you haven't done before," she said.
2. Digital acceleration
The second pillar is technology, and Coffey rattled off a list of technologies that are already transforming the profession, from RPA and predictive analytics to artificial intelligence.
"Advanced technologies like these are tools, not replacements," she said. They help make us better. We need to embrace them. And if we don't embrace them, they will replace us."
They are also creating new opportunities at every level, she said, whether by handling more and more of the grunt work that firms can't find staff to do, or creating the need for assurance services around developments like deepfakes or cryptocurrencies.
"Human interaction in terms of human judgement and skepticism is needed more than ever," she explained. "This is not going to displace us — it's just going to make us better."
Trust and technology overlap in the forthcoming Dynamic Audit Solution, a new audit solution pioneered by the AICPA, CPA.com, CaseWare, and a consortium of many of the leading firms in the profession that is due out this summer. DAS is based on "completely reimagining" the audit process based on the newest technologies, Coffey said, rather than simply digitizing previous practices.
3. Services
While demand remains strong for the profession's three core offerings of tax, accounting and audit, accountants need to be alive to the potential of new services — starting with the enormous success of client advisory services.
"CAS is becoming the fourth leg to that stool," Coffey said. "It's so big you can pull it out because it stands on its own."
In addition to technology-driven services in areas like SOC reporting and cybersecurity, the other major area she highlighted was environment, social and governance reporting.
"ESG is an opportunity I don't think we can pass up as a profession," warned Coffey. "It can be a controversial issue, but the profession has to have a front seat on this. The services here are about data aggregation and assurance, and if we don't engage with this and take this, others will step in and take it — in fact, they already are."
4. People
Finally, Coffey highlighted the profession's need to find and keep talent — a struggle that was referred to in almost every single session at Engage.
"Successful firms know they can't afford to lose their people, so they've been reskilling and upskilling them," she said. "Talent is the No. issue I hear about from firms of all sizes. The market is softening, and we're seeing more college enrollments, but still, most firms can't find enough staff to serve current clients and create capacity."
Some of the causes of the staff shortage are baked into accounting, according to Coffey: "These are some of the realities of the profession – long hours, work that is not always interesting, it can take too long to get point where you get to do interesting work, advancement doesn't come quickly, and people don't want to wait for the value of a long-term career in accounting. Starting salaries have not kept pace, and have made us less attractive compared to many of the options that are out there — options that didn't exist when I started in the profession."
That said, however, efforts are under way to help attract more people into accounting.
"We've created the beginning of a national pipeline strategy to quickly address the challenge," said Coffey, including programs to help students earn the last 30 of their 150 college credit hours while working, getting accounting included in the government's STEM program, and potentially creating an image campaign aimed at middle-schoolers. She also said that the new version of the CPA exam that launches next year, based on the CPA Evolution initiative, may help make pursuing licensure more attractive.
Despite the seriousness of the challenge, Coffey was cautiously optimistic.
"This year we're seeing an uptick in CPA exam enrollment, and we're seeing firms start to address the salary issue," she said. "It feels like the tide is turning."
