The accounting profession needs to change itself before change is thrust upon it, according to American Institute of CPAs’ executive vice president for public accounting Mark Koziel.
Speaking in a session at the AICPA’s 2018 Engage event in Las Vegas this week, Koziel cited a roster of technologies and technology issues that are going to have a major impact on accounting, from cybersecurity, the cloud and big data to blockchain, machine learning and virtual learning.
“Technology is going to take us out of our comfort zone and pull us into new areas,” he explained, and while in the past the profession might have waited for legislation and regulation to point the way to the future, that is no longer possible.
“We as a profession can’t wait for regulation to disrupt us, we need to disrupt ourselves,” he said. “We’re going to take our expertise and interact with our clients in new and different ways.”
Among the most important ways the profession will need to change will be to move up from services and activities that rapidly being automated. “Technology could automate 49 percent of current activities,” he warned. “Data processing and bookkeeping have a higher percentage chance of being automated, versus managing others and applying expertise – and that’s what CPAs do: We apply expertise. That’s less likely to be automated.”
“Analyzing and interpreting data is where it’s at – not the low end of data entry,” he added.
“Automation is going to be constantly affecting the profession. It’s really going to have an impact on our financial model,” he continued. “What happens when inputs are no longer the gauge of revenue? That’s where value pricing comes in.”
Billing practices aren’t the only things that will need to change in the face of automation and new technologies.
“When you look at firms, they’re being run the same way they were 20 or 30 years ago,” Koziel said. “The pyramid model’s going to change. Our model has been to hire as many people as we can up front, and those left standing in a few years we’ll promote to partner.”
Automation and outsourcing are already significantly reducing the need for entry-level people – but that will also mean that there will be fewer trained accountants down the line. Both firms and individual accountants will need to be more open to training and retraining as circumstances change.
“The key to success and change management is learning, then unlearning, and then relearning,” Koziel said.
While the waves of change will require proactive responses from accountants, they also bring many opportunities, and Koziel highlighted a number of them.
1. New reporting tools. Koziel pointed to the ongoing success of the institute’s Financial Reporting Framework for Small and Midsized Entities, and the potential of its Rivio Clearninghouse to help firms boost their attest services. “We have firms that are crushing it using FRF for SMEs as a differentiator with clients and the banking community,” he said. “Firms that have explained this to their local banking community are seeing banks refer work to them.”
He added, “As with FRF for SMEs, banks may not know about the Rivio Clearinghouse,” which allows firms to securely control the distribution of financial statement, “so they’re not going to ask for it – they need to be educated about its value.”
2. Cybersecurity. “New cybersecurity services allow CPAs to help clients assess and mitigate risk, and respond to breaches,” he said. “Cyber is going to a big growth area for accountants, much like SOC audits. We need to be having the cybersecurity conversation with our clients, because if we don’t, who will?” He also noted that the AICPA is opening its Information Management and Technology Assurance Section to all members in August.
3. Tax. Thanks in no small part to the Tax Cuts and Jobs act, “Tax relationships are really on fire right now,” Koziel said. “Clients are asking for more help around life planning – not tax planning, life planning.”
“For 20-plus years, we’ve been struggling with what exactly PFP means, but never before have we been in a better position to move to that trusted advisor position by combining tax and financial planning,” he continued. “Tax reform is going to continue to be baked over the next five years – we need to explain this clients and why this requires a deeper relationship with them where they share more of what they’re doing with us.”
4. Client accounting services. With average growth rates that are much higher than for accountants’ traditional services, “CAS has really been transformed over the past 10 years,” Koziel explained. “This isn’t your mom and dad’s bookkeeping.
The opportunities for building a practice quickly are still strong in CAS, he noted, recalling a meeting he recently had with a Top 25 Firm that was acquiring a CAS practice that had been created by their CFO after he retired. Inspired by an article in “The Journal of Accountancy,” he created a million-dollar-practice in just a few years, and was brought back on board when his old firm acquired it.
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