Rapid change creates unique attest opportunities
CPAs and accountants are in a great position to benefit from a heightened need for certainty in the future, according to Barry Melancon, the president and CEO of the American Institute of CPAs.
“When you think about our society, we’re a mess — we don’t trust politicians or businesses or the media or the Internet,” Melancon told attendees at this week’s Digital CPA conference in Seattle. “But we trust accountants.”
With businesses and society at large trying to navigate a period of massive technological and economic upheaval, they will be looking for assurance and certainty around an ever-growing range of data.
“If we think about systems broadly and the information that businesses produce, that information footprint is very big, and financial statements are just a piece of that,” explained Melancon, who is also president and CEO of the Association of International Certified Professional Accountants. “If we can think about the totality of that system environment, and all the assurance needs in there, we can move into a position where we can serve the needs of more and more users of that information.”
“We can be the profession that helps deliver trust through this period of rapid change,” he added.
As examples, he cited the growing numbers of companies that are engaged in integrated reporting around a broad range of information sets beyond just the financial — from environmental impacts and social issues to intellectual property and human capital — as well as the exploding threats around cybersecurity.
“Cybercrimes are predicted to cost the world $6 trillion by 2021,” he explained. “You only have to look at the news to see that, in terms of cybersecurity issues, we’re in a period of low trust and insecurity. It’s ours to lose to be the provider of cyber assurance services.”
Some work required
“Our profession is so well-positioned around trust — but we’ll only keep that if we continue to evolve around the question of what value is, and what is valued,” Melancon warned.
What’s more, the profession will need to make some changes itself.
“How do we redefine ourselves so that the footprint of our profession is aligned with a society being rapidly changed by technology?” Melancon asked.
Embracing technology will be a big part of that, he suggested: “Digitally mature companies are three times more likely to report significant higher profit margins and revenue growth. Who are we to imagine that doesn’t apply to CPA firms?”
He noted the ongoing CPA Evolution project that the AICPA is working on with the National Association of State Boards of Accountancy to get state regulators to agree on a redefinition of what a CPA is, and what they need to know.
“The profession has traditionally had two disciplines — audit/accounting, and tax. But we really need to have technology be a third discipline,” Melancon explained. “Rather than just layering technology on top of audit/accounting and tax, we need to rethink everything we need to know. What really is necessary for accountants, and how do we make room for everything? We all need a baseline in audit/accounting and tax, and now we need to add a baseline in tech.”
The body of knowledge that CPAs are required to master has grown fourfold since 1980, he noted, and that will require the profession to be more flexible in what it expects accountants to learn, while also requiring the accountants themselves to be ready to upgrade their core knowledge more frequently.
“We have to unlearn what we know, and be able to relearn,” he said. “We have to be willing to unlearn our biases, so we can learn anew — all 400,000 of us in the profession. And we have to do this quickly, because the world is moving so quickly.”
While there are those within the profession who are resistant to change, Melancon is confident that their numbers are dwindling, and that the rest are up to the necessary challenges.
“We’re a lot more agile than we give ourselves credit for,” he said. “We fall into the trap of saying, ‘Yeah, we’re conservative.’ There has been a change in attitude in the past 12 to 18 months among the 44,000 firms in the profession, from ‘Are you sure we really need to change?’ to ‘How do we change?’
“The profession is about to change immensely,” he predicted, “and that’s a good thing.”