T100 Extra: The Most Important Issues Facing the Profession
As part of our Top 100 Most Influential People in Accounting report, we asked all the candidates: "What is the most important issue currently facing the accounting profession?" All of their answers -- thought-provoking, insightful, sometimes controversial -- are given in full below.
Across the globe, firms of all sizes are at a crossroad. Every firm is trying to figure out who they are, how to be more relevant, how to respond to the constant new client demands, and what to become all while dealing with ever increasing regulation.
We see three overwhelming forces that are influencing the decisions tax and accounting professionals are making:
1. An unprecedented increase in regulation;
2. A workforce shift the likes of which we have never been seen; and,
3. New client demands around technology pressure, fee pressure.
These all mean finding new ways of working.
Those who will thrive amidst these changing forces will make a concerted effort to think ahead, anticipate future needs and use technology to add value for their clients.
--Karen Abramson, CEO, Wolters Kluwer Tax & Accounting
As the economy continues to improve and clients require more of our services, firms are challenged to attract, develop and retain more qualified professionals than ever before. We face competition not only within our own industry, but also from other businesses that require professionals with strong analytical and financial capabilities. For firms to be successful in the future, they must focus on creating an outstanding environment for people to grow and develop their careers while also providing programs and flexibility to support their pursuits outside of the office.
At McGladrey, our brand promise is the power of being understood. We believe the promise holds true for both our clients and our talent, and we have an entire strategic work plan that looks holistically at how to enhance the McGladrey Talent Experience. While we already have a high level of employee engagement and strong satisfaction with many of our programs, we know we need to continually evolve to stay competitive. From performance management to training and development to benefits and work-life programs, we are getting comprehensive input from our professionals to understand what changes we can make today to enhance our ability to attract, develop and retain the best talent to serve our clients now and in the future.
One of the recent enhancements that stemmed from our talent experience work is our Career Development Framework, which outlines the technical, professional and interpersonal skills required to be successful at each level within our organization. In addition to increasing transparency about what it takes to advance, the framework serves as a coaching tool for career advisors to have quality discussions with their advisees and provides one-click access via our intranet to resources and training for individuals who need to develop their skills in a specific area. And this is just one example of the many programs we have in the works to enhance the experience people have working at McGladrey. In fact, our focus on talent experience and the opportunities we have for professionals to learn and grow are one of the reasons so many firms have chosen to join us through mergers and acquisitions in the last 24 months.
In addition to firms taking individual action to enhance their work experiences, I think it is also important for us to continue to work together as a profession to promote public accounting as an exciting career opportunity for students and young professionals to ensure we have a strong pipeline of talent in the future.
--Joe Adams, Managing Partner & CEO, McGladrey
No question it is the Baby Boomer succession crisis that is affecting just about every firm out there. Most firms do not have the bench in place that is needed to succeed the retiring partners. It is driving the merger and acquisition frenzy which I believe will continue for the next several years. I spend a lot of my time working with firms to help them figure out if they can accomplish an internal succession plan or whether they are better served to look at an upward merger.
--Gary Adamson, President, Adamson Advisory
Succession transition. A significant number of partners will leave the profession as the Baby Boomers head into retirement. Most firms will see a significant change in leadership in the next five to seven years. This will include the retirement of key rainmakers, individuals who’ve been responsible for consistently bringing large, quality clients into their firms for the past two decades and who have their fingerprints all over their firms’ success. The profession will very likely see more new partners in the next ten years than at any other time in the profession's history. Incoming talent seemingly wants different things from their careers than generations past and will find more choices than ever before -- both in the profession and outside. Our clients will also continue to have evolving challenges, experience similar changes in ownership and require different and more diverse services. While many partners have properly prepared for retirement by developing other individuals to successfully take over client and firm responsibilities and by properly preparing themselves for retirement, many other partners haven’t done what’s necessary to ensure a successful retirement and will prove challenging to others in and out of the firm as they struggle to move into retirement.
--Sam Allred, Director, Upstream Academy
It’s not the labor shortage or generational differences or retiring Baby Boomers. Those are certainly examples of important issues that we face today, but the overriding issue is whether we are equipped to deal with them. The profession has changed, continues to change, and the rate of change will accelerate. Being able to transition ourselves and our firms from the “practitioner” mindset to an innovative, entrepreneurial mindset in order to stay relevant, ahead of change, and on the upside of the growth bell curve is the biggest issue the profession faces.
--Brian Amann, CEO, TaxOps
Most accountants perform tax services for clients, which means that the most important current issue is how best to interact with or communicate with the IRS in light of the significant decline in IRS service levels.
--John Ams, Executive vice president, NSA
Firm consolidation: The most important issue facing the accounting profession today is the ongoing national trend towards firm consolidation. Is it a solution to the succession problems many firm face?
From a purely financial perspective it makes sense to reduce overheads and expenses, share resources and expand offerings to clients. No one would argue with the logic here.
However, I believe that there is much more to look at than just the financial synergies. Combining and consolidating two average large firms does not in itself create a better firm. Yes, it is larger, but is it providing the services its clients need and want?
The idea of the one-stop shop has been tried for 35 years and has never been successful. Clients want and are now demanding value more than just convenience.
Firms need to focus on value creation for their business and personal clients. If they do that there will have a secured future and won’t have to worry about merging.
--August Aquila, President and CEO, Aquila Global Advisors
Technology and change management -- they’re two parts of a very significant transformation that’s underway within the profession. Technology can make CPAs more productive, open up new lines of business and offer professionals more time to deliver as trusted business advisers. But those results can’t really materialize without the change management piece, which is when firms look at what they do best, set the right goals and put the right people in place to create success.
--Erik Asgeirsson, CEO, CPA.com
Clarity of accounting standards in the U.S.
--Billy Atkinson, Chairman, Private Company Council
While the “most important” issue often seems to be a moving target, I’m going to land on the scramble to optimize both the firm and clients to cloud computing, especially given the logical tie-ins to firm differentiation and growth, and to succession planning.
The race to convert to cloud technology is a two-fold issue, and I see it in just about every large firm I work with. First, the transition to cloud-based/subscription software for their clients (how to approach the transition, what additional software should be incorporated into the general ledger software, the logistics behind actually migrating the desktop/Excel/manual process over to the new automated solution). And second, how to price/charge for the new offering.
A great example of this is a firm with hundreds of clients on QB Desktop, which clients pay for themselves, and the firm is looking to automate many of the processes that their clients currently pay them for. I talk to the firm about how to charge a flat-rate for a migration service that could actually take less than an hour, and how to take a monthly fee that the firm might now pay and bundle that into an overall fixed-fee or value-based fee for a client so the firm maintains the same (or higher) profitability while using technology to help them do more in less time.
--Kim Austin, Business development manager, national accounts, Intuit
It continues to be relevancy. Unless our profession continuously innovates and adds value, we deserve irrelevancy. What was the last innovation from the profession? We continue to avoid the tough issues, such as auditor independence. Rather than debating picayune issues like auditor rotation and the difference between a "gift" and "entertainment," if we really believe in serving the public interest we should relinquish the audit monopoly. Competition spurs innovation, and nowhere is that more needed than in the ossified audit industry.
Furthermore, CPAs need to help their customers make history, not just report on it. To use financial statements to run a business is the equivalent of timing your cookies with your smoke alarm. Relevancy also is inhibiting the best and brightest from joining the profession. You can’t attract Millennials who use Uber and Airbnb to a profession that is stuck in an industrial-era business model and makes you account for every six minutes of your day.
--Ron Baker, Founder, VeraSage Institute
There’s an incredible acceleration of factors affecting today’s accounting profession -- advances in technology, the pace and scope of new regulatory activity, globalization, the aging of the profession and related imminent leadership changes, and the fact that new and very different generations are both entering and being served by the profession.
I see managing this plethora of changes as the biggest issue facing the profession today.
Building change management capabilities isn’t a simple task, but it’s one that must be embraced now, by firms of all sizes. Trying to address in a sequential fashion all the issues simultaneously facing the profession won’t work.
The “Same As Last Year” or SALY mindset that tends to plague conservative businesses and professions must not be allowed to live on in accounting firms. A firm that subscribes to that way of thinking will, at best, slowly lose relevance. But to be honest, those firms are most likely already dead -- or dying rapidly -- because they refuse to become part of a world where we must adapt or face the specter of becoming irrelevant.
Just as important as the inevitable changes in leadership caused by the aging of the profession are the changes in client and staff demographics. Today’s clients and staff are far more demanding and sophisticated than prior generations. Clients expect professionals who serve them to be equally sophisticated, with tools that can enhance their businesses and not simply report after-the-fact information -- which is something they can easily do on their own since they grew up in the digital age and know how to use technology to research issues and analyze their businesses on a continuous basis.
Today, financial reporting and after-the-fact analytics are merely a starting point -- table stakes, if you will. What younger clients look for are professionals who can provide them with up-to-the-minute information and data analytics on what impacts their business, as well as guidance and advice that steers them in the right direction to enhance their position and accelerate their growth. And they expect this information to be available whenever and wherever they need it.
If a firm doesn’t connect with these clients through a collaborative portal that’s accessible 24/7, if the firm relies on paper instead of digital tools, or if the firm doesn’t provide the proactive guidance and analytics to drive their business growth, the message the clients hear is that the firm doesn’t want their business.
The same can be said for new staff at firms. While Generation X and Millennials are different from each other in many ways, they do share some important similarities. They expect workflow tools that truly drive efficiency and allow them to serve clients in a cutting-edge fashion. They expect automated research and content that can easily be communicated to their clients. They expect to be able to advise clients both large and small on international expansion within their own firm. They expect sophisticated marketing tools and techniques with which to drive new client growth. Most of all, they expect a diverse environment where their voices are heard. And those voices are calling for far more balance than is evident in many firms today.
These factors aren’t something firms can put off dealing with until another day; they need to be dealt with today. The pace of technology and regulatory changes will not slow. Globalization won’t abate any time soon. Demographic changes are creating an intense battle for talent among firms. The retirement of Baby Boomers and the influx of new generations of staff and clients with higher expectations and more sophistication is happening now, and will only accelerate.
Firms that have a culture of adapting slowly to change are in very real danger, with the greatest risk coming from their own inertia. Firms must embrace change management and immerse themselves in the concept.
This may sound harsh, but if partners or staff can’t -- or won’t -- embrace and keep up with the new accounting and client service world of today, dealing with that issue may be the first “change” that needs to occur.
It’s very exciting to be part of the accounting profession today. In spite of the challenges we face, the profession is needed more by its clients than ever before. And that’s a great place to be.
--Jon Baron, Managing director, Professional Segment, Thomson Reuters Tax & Accounting
The profession is changing; and is faced with disruption on multiple fronts, but instead of engaging the opportunities that come with them, it’s almost as if the profession is waiting for directions. News flash: We’re not going to get any. This year we are expected to see more firm mergers than ever before. College students still see value in an accounting education, but there has been a significant drop off in the number of candidates sitting for the CPA Exam. While some of them may still not realize it, firm managing partners are in the midst of generational disruption, with college grads entering the profession on their own terms. Members of this entrepreneurial generation are hungry for opportunities and experience. If they don’t like a firm’s culture, they’re not going to adapt to it, and wait in line to become partner (if being partner is even important to them), they’re going to leave and create a culture of their own -- most likely one that is more collaborative, innovative and dynamic. In fact, it is more than likely that when the Uber of accounting takes off, it will be a member of the next generation who strikes it big. This group won’t wait for directions, they’ll just write their own, and the best the profession can do is engage these young minds that are not afraid of disruption, but actually court it. New and cheap technologies are out there that won’t eliminate the need for accountants; they will just make irrelevant and redundant the ones who get left behind.
--Joanne Barry, Executive director and CEO, NYSSCPA
As specialization continues to grow in the accounting profession, we need to provide resources, career paths and opportunities to the next generation of CPA firm/practice leadership in these areas. Personal financial planning is a perfect example of this. CPAs are the thought leaders in the financial planning profession, and we need to continue to raise the visibility and bring the next generation into this area.
--Lyle Benson, President and founder, L.K. Benson & Co.
Accountants need to start looking forward as opposed to being historical in nature. Accounting has come a long way since Luca Pacioli. Today’s reality is not debit and credit but digital transactions instantaneously completing the accounting process. We hear about the "Internet of Things," which in reality is technology in our daily lives, and in that of our clients.
I recently read an article, “The Uberization of Accounting,” by Hitendra Patil, where he talks about cloud tech and hosted software, and how the client is no longer willing to wait for paper documents. To quote Dan Burrus, you can either be "the disruptor or the disrupted." Today’s accountants have to be proactive in moving from historical keepers of information to advisors to succeed. Accountants need to focus on understanding what their clients' goals are so that we can offer them advice on how to be more profitable, liquid and solvent. This is why we are seeing more firms focus on wealth management, financial planning, and business planning as technology automates the capture, sorting and summarizing of data.
Bottom line is that the accounting profession is being Uberized and we can either embrace and change our processes or follow the old model of SALY (“Same as last year”).
It is interesting to note that many accounting firms are rebranding themselves and no longer have CPA as part of the firm name, such as Deloitte, Armanino, LBMC and others. They are positioning the firm as advisory and business consultants, as well as technology, in addition to the standard accounting services. I believe that this trend will continue to grow.
--David Bergstein, Strategic account manager, Accountant & Advisory Group, Intuit
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.
--Wayne Berson, CEO, BDO USA
Complacency has always been and still remains the biggest challenge for accountants. Accountants help their clients make sound decisions based on facts and figures, but I wonder what happens to them when it comes to making important decisions for their own practice? The facts clearly point to the fact that the migration to the cloud is not only inevitable but highly beneficial to accountants; payroll can be a highly profitable service and complete accounting services present tremendous growth potential for accounting firms. And yet what are most accountants doing with these facts? They are simply not as proactive as they should be.
--Chandra Bhansali, President, AccountantsWorld
Timely migration to the cloud and capitalizing on the opportunities it presents to accountants is a major challenge for accountants.
While the cloud adds a whole new dimension to the accounting technology, it also poses some challenges to accountants. In the next five to seven years, virtually all accounting firms will have to migrate to the cloud. While some firms have embraced this new technology to their advantage, others are still lagging behind. It’s not too late for accountants to harness the cloud to revitalize their firms.
--Sharada Bhansali, Executive vice president and co-founder, AccountantsWorld
The overarching concern about audit quality is not new, but has now reached a crescendo. International attention to the issue, in part because of the earlier release of the European Union “Green Paper,” has now become a focal point in the U.S. Recent criticism from the Public Company Accounting Oversight Board and, most recently, the U.S. Department of Labor, is being taken seriously by state boards of accountancy, NASBA and, I believe, the profession. All aspects of audits, from transparency, quality review, licensure requirements for audit practice and relevant standards are being considered and discussed. While the quality of audits in the U.S. may well be the highest in the world, the perceptions and acceptance by end-users and regulators is critically important.
--Ken Bishop, President and CEO, NASBA
Succession, in the sense of the next generation being both retained and trained to lead a firm in the 21st century. Drilling down further, the elements of technology, commercial awareness for senior managers and the ability for technicians to become competent, pro-active fee earners are the top issues.
--Martin Bissett, Founder, Upward Spiral Partnership
Adapting: The profession is an old one still widely run by patriarchs who were around when fax machines were the newest and greatest technological innovation. I know this because I am one of them. We have seen unbelievable and transformative changes in technology since that first innovation, so much in fact that many of us have been in the middle of a learning curve throughout our entire careers. This may be slowing from a technological standpoint, as evidenced with Apple, Microsoft and Google, who all seem to be grasping at straws for innovations that will match those from the past. What is not slowing, but rather is heating up, is the way the new generation communicates, networks and obtains its information. They are all over the Internet —using Facebook, Twitter and a host of other forms of social media for connecting and finding sources of news and information. For me to understand and master this new world would require a substantial amount of time, time that I do not have. Yes, I can and do hire employees who understand the new generation of communication tools, but as the leader of my organization, I need to know how to integrate these tools into our business model. Therefore, I must adapt. I simply have no choice, and many of my peers, I assume, are in the same boat.
--Parnell Black, CEO, NACVA
Currently, the biggest issues facing the accounting industry is the shift from compliance director to business partner. CPAs historically have been focused on historical information and providing behind-the-scenes efforts to ensure compliance work is completed by the appropriate due dates.
The shift is here whereby CPAs are required to automate compliance solutions. As such, CPAs are now business developers who are looking to scale their business and processes. The future success of CPAs is not dependent on creating tax solutions – it’s focused on increasing efficiency of processes and developing simple systems for businesses/ individuals to efficiently plan for a better future.
--Adam Blitz, Business development manager, Reckon
Technology disruption, and the ability for smaller firms to change faster than legacy firms, is demanding that professional accounting firms change more rapidly in this environment. Thus, the most important issue facing the accounting profession is the need for firms to change fast.
Our profession is too committed to archaic ways and is fearful to disrupt their own firms. But disrupting your own firm is the most important move firms can make today.
--Jason Blumer, Chief innovation officer, Blumer & Associates; Founder and CEO, Thriveal Network
In this highly complex environment for the profession, I find it difficult to say that there is a single issue. However, there are three that stand out.
First, is complexity and relevance. The increasing complexity of business is coupled with the need for the CPA profession to maintain relevance. This implies a broader role for CPAs, and also means that there are significant implications for increased specialization (hyperspecialization) and continuous learning / competency development.
Second, is recruiting talent into the CPA profession. And the most important piece of this issue is the need for the profession to make a serious, focused commitment to improving diversity among CPAs and aligning the profession with the population’s demographics. In addition, the profession must develop pathways or what we would call bridges to the profession for people changing careers. All the data points to Millennials having multiple careers during their working life. We have to find a way to guide talented professionals who are considering such a transition to the CPA profession.
Third, is the movement toward a competency-based approach for professional development and license renewal. The traditional hours-based approach must be abandoned. It is increasingly irrelevant. A system that measures and evaluates competency is needed for the future so we focus on the learner rather than compliance with a system.
--Gary Bolinger, President and CEO, Indiana CPA Society
Relevance: The profession is being disrupted on many fronts: talent, technology, and increased regulation. Those who are successful will accept change and learn more rapidly than the competition. The opportunities are great, but CPAs must re-invent themselves and their services to meet the wants of the market.
--Gary Boomer, CEO, Boomer Consulting
Remaining relevant in a rapidly changing business environment. And the change is coming on multiple fronts:
1. People – the war for talent will only intensify as more and more Baby Boomers retire. This will require us to change business models to attract qualified employees and increase the level of engagement and investment to retain them.
2. Process – process improvement will be critical to effectively compete in an increasingly demanding market. Eliminating waste and improving consistency/quality will be key.
3. Technology – Cloud and mobile technologies are not only changing what is possible in the workplace but also expectations of employees, clients and partners.
4. Clients/services – We must take advantage of the opportunity to move up the value chain with clients and truly become trusted business advisors.
--Jim Boomer, CIO and shareholder, Boomer Consulting
I believe the most important issue currently facing the profession relates to the CPA’s ability to “adapt to a changing world.” The Internet has brought our world closer together. Today, most of our clients are doing business globally, our staff is dealing with international issues and we are being asked to provide services outside of our traditional audit and tax wheelhouse. For those in our profession that embrace change, they will be able to take their practices to the next level and continue to meet the ever-changing needs and demands of their clients. For those that refuse to embrace change, their practices will have a difficult time remaining relevant and competitive in today’s marketplace.
For CPAs, they will need to change how they view a CPA firm of the future. A CPA firm of the future (and it is happening today) will need to be in a position to provide not just the traditional tax and attest services, but a greater level of consulting services brought on by a changing world. This means the CPA firm will be challenged with retaining qualified professionals who may not necessarily be traveling down the traditional CPA “track.” Those professionals will desire the same firm ownership opportunities that are today, in many states, only reserved for CPAs.
The firm and the profession will need to adapt to this change and create pathways to embrace this next generation professional within our profession.
--Jim Bourke, Partner, WithumSmith+Brown
I think it’s two issues: Succession planning and generational communication, as well as firm growth and how to do so in a consistent way.
--Bonnie Buol Ruszczyk, President, BBR Marketing
The accounting profession is increasingly challenged to evolve. On the tax side, the profession is influenced by the same large-scale emerging issues that have affected federal and state taxing authorities, and individual taxpayers and their families. The tax and accounting landscape has been shaped in recent years by changing tax law, regulations, accounting rules, technology, health care, and other emerging issues. The CPA-client relationship has expanded along with complexity. Clients expect us to be experts or to have a network of experts to help.
This is a good problem to have. Because of the high degree of trust between clients and their CPA, clients look for their CPA to help them with any issue that directly or indirectly involves their finances. The expanding role of the CPA as a trusted advisor also means that CPAs must be prepared for these comprehensive client expectations and be ready to expertly serve a range of client needs.
--Jim Buttonow, Director of tax practice and procedure services and software, H&R Block
Contentment. I’m not opposed to happiness. However, many Baby Boomer partners are setting a bad example for the next generation of accountants by being satisfied enough with what they’ve accomplished. This means not continuing to enhance their own skills, not delegating work down, getting stuck, which affects firm growth, career opportunities for managers and staff, and attracting and retaining the best people. These are the same partners who are at the center of the succession crisis. Rather than developing future leaders, they will need to determine which other firm will acquire them.
--Jean Marie Caragher, President, Capstone Marketing
The erosion of public confidence in the fair administration of our tax laws caused by the IRS scandal. If we do not restore that confidence, I fear we are on the road to Greece and its 90 percent non-compliance rate.
--Paul Caron, Publisher and editor-in-chief, TaxProf Blog
I believe the most important issue facing the accounting profession today is involving and preparing the next generation of CPAs to carry on and further the significant contributions that the Baby Boomers have invested their lives into developing. As we all know, accounting and business is one of the primary drivers of our world economy, and thus greatly affects our entire lives and futures. In order for accounting to continue to change the world through creating confidence in investors, mitigating risks in businesses, producing efficiency and effectiveness with technology, encouraging innovators to create, protecting and informing the end user, supporting a global uniformity, and challenging our world to grow in plenty of other ways, we need great accountants. The demand for all of these things will only grow, and in turn, the demand for intelligent, creative, personal and resourceful accountants will grow as well.
However, the involvement of the next generation in accounting has, at best, remained stagnant, if not decreased. The new contributors to the profession are far outweighed by the number of those leaving it for retirement. Attracting and equipping tomorrow’s leaders, by showing them what an accounting career really has to offer, then creating a comfortable, yet challenging environment where they can advance their own personal career as well as the world around them, is a vital responsibility for today’s leaders.
As a young, Cuban/Mexican, female accountant, I have a great desire that this involvement be offered to everyone and anyone. I know that these future leaders aspire to and are concerned about carrying on and expanding the legacy we are being trusted with. I know that and I hope the professionals today recognize that and take advantage of it.
--Belicia Cespedes, Treasurer, AWSCPA (and one of the youngest CPAs ever)
Though its practice, especially in the United States, is still relatively in early stages, the call for integrated thinking and integrated reporting is among what I believe to be the chief priorities for the accounting profession. By building competence in this process, accounting and internal audit practitioners have the opportunity to add value to how their organizations plan for and communicate holistically about their resources, decisions, and risk management practices toward improving future performance.
As president and CEO of the Institute of Internal Auditors, I am privileged to serve on the International Integrated Reporting Council, the thought and practice leader of the global movement toward integrated reporting. This organization has made important headway by creating the International Integrated Reporting Framework, as well as a community of interest, for organizations that want to incorporate integrated reporting.
Organizations face challenges to adopting integrated thinking and reporting, though I believe that the benefits can far outweigh the costs. Historically, accountants have relied on using financial data and reporting to communicate with both internal and external stakeholders about an organization’s financial position and the adequacy of its financial controls, but that approach does not fully describe the business’ sustainability or its ability to create future value. Accountants and organizations must broaden their thinking about what information will be most useful for investors and other decision-makers. Integrated thinking transforms much about how organizations operate, and accountants have a role to play in advocating and supporting that transformation. Furthermore, accountants can work toward providing appropriate assurance about the information that underpins integrated reporting.
According to the IIRC, its framework for reporting offers investors a comprehensive understanding of how an organization’s strategy, governance, performance and prospects lead to the creation of value. I am confident that, as businesses begin to adopt a more integrated approach to thinking and reporting — including both financial and non-financial reporting – they and their stakeholders will reap the benefits that come from a fuller and more accurate portrayal of the organization.
--Richard Chambers, President and CEO, Institute of Internal Auditors
In the wake of sporadic corporate failures over the past decade or so, the mostimportant issue has been demonstrating the value of accountants to society. There has been a crisis of confidence in the profession itself, and that’s something that IFAC is committed to helping to restore. To begin with, the public should be aware that, from governing bodies to investors, there are many parties involved in the financial reporting supply chain. Ultimately, the responsibility to serve stakeholders, ensure quality, and manage risks to prevent financial fraud is a shared one. At the same time, accountants have an essential role to play in promoting good corporate governance, safeguarding the integrity of private and public entities, and supporting economic growth and development. IFAC aims to not only improve the accountancy profession and quality of audit and other services, but also broadly show that professional accountants are committed to upholding very high standards of professional conduct and serving the public interest.
--Fayezul Choudhury, CEO, International Federation of Accountants
The relevance of our services. The constituencies we serve are evolving quickly and technology is moving rapidly. The profession is in a position of strength regarding public trust and confidence. We must capitalize on our current position and evolve with those we serve to remain the default provider of emerging assurance services.
--Tim Christen, Incoming chair, AICPA; chairman and CEO, Baker Tilly Virchow Krause
I believe the most important issue currently facing the accounting profession is the confluence of a rapidly changing workforce and an equally dynamic technology landscape.
On the one hand, many firms now have multiple generations of workers (i.e. Boomers, Gen X, Gen Y, and Millenials) laboring alongside each other. All with different priorities for work/life balance, preferences for communication styles, and perspectives on the way a business should be run. As a result, finding the best ways to work together in a collaborative and constructive fashion may not be an obvious and straightforward as it once was.
In addition to the internal challenge of incorporating and adapting to the changing workforce, traditional firms are faced with external pressures – namely new types of clients that expect new types of services delivered via new methodologies supported by the latest technologies. The result is that firms are faced with choices much more significant than making small changes to standard operating procedures. Rather, they are forced to consider a complete re-imagining and reconstruction of the practice.
Some will choose to leave the profession rather than make the shift. Others will hustle to find customers that fit their ideal profile, adopt new technologies to enhance service quality and communication, and deliver the types of services that provide real value.
Changes in the workplace and changes in the marketplace are making for a very interesting chemistry experiment! Those who look to the future but refuse to change, will not survive. They’ll slowly fade into irrelevance or be forced into combining with another firm. For those willing to adapt, the opportunities to re-imagine the business, make more money, and provide tremendous value for quality clients is dramatic. The future couldn’t be more exciting!
--David Cieslak, Principal, Arxis Technology
Accounting Today’s Top 100 Most Influential People give a big ol’ mix of answers to this daunting question. We are, after all, experts in a wide array of subjects. They range from the most technical topics to my 2013 answer, finding and retaining top talent. There’s a common thread that can be woven in and out of each answer, and I believe it’s the thread that builds my entire body. The most important issue currently facing the accounting profession remains … innovation, invention, passion, development and collaboration. In an industry not necessarily associated with passion, it’s more important than ever to prove it to people. How do you get an audience to follow you? How do you get a client to trust you? How do you get anyone to do ANYTHING? You must prove your passion.
Learned from attending the first-ever Forbes Under 30 Summit this year, I have seen how this will make or break any interaction. Hiring, retaining talent, generating leads, client dealings, service and more. Simple, yet powerful. Accounting professionals must find a way to prove their passion day in and day out, in every introduction and conversation, in every pitch and employee interaction. When those surrounding you see the passion you have for your business, your goals and your grandest visions, their confidence in your success (and their potential success in dealing with you) will soar. Relationships strengthen and trust grows. Passion is addicting, and every time you talk about your business, you should try and pass this addiction on, thereby turning everyone into ambassadors … brand evangelists … investors … users … and clients.
How? By embracing innovative social forms of marketing and digital interactions. Our industry no longer has a choice. And – it has become increasingly difficult in today’s crowded social environment. Breaking through the noise has never been harder. Making anyone care has never been harder.
Being a marketing professional and speaking within the industry around the country, I’ve seen the smart firms understand the difference between a marketing department and marketing. Consumer behaviors are changing drastically. As a result of social and digital media, consumers have become empowered, demanding and they don’t trust you right away. Those firms who are able to evolve, present solutions, answers, knowledge and data conveniently, quickly and accurately will be on top. Younger generations will soon rule the world – and they’re going to make you work for the relationship.
The issue and solution? Attracting, developing and retaining young leaders will make or break a firm in the coming years. They know how to do this. They know the necessary innovation. They’re not afraid to “push it.” The way we track and keep talent is – and will continue to be – changing drastically. This is a different generation on our tails. Hey – I know, because I am one of them. The motivators for this generation to want to work hard are very non-traditional. Breaking away from the non-traditional in the accounting profession has always been a struggle. Take it from the lady who encourages her professionals to dance in slow motion for current social marketing trends.
Firms need to have the right leadership to be able to adapt to these attitudes and communicate these needs to the rest of management. There needs to be a consistent firm-wide culture to reflect the same.
The “carrot” in the accounting profession used to be simple – to make partner. That’s no longer enough. Are they getting enough recognition? Are you rewarding them intelligently? Are you facilitating their lives outside of work? Are you teaching them? Are you flexible? Are you giving them feedback?
This motivated generation doesn’t understand why they need to work 60 hours in busy season when they can get the work done in 40. What is your firm going to do to make them want to stay the other 20 hours? Are you prepared to deal with this?
Whatever kind of business – CPA firm or not – 100-million strong Generation Y is going to be at the heart of your firm’s growth or failure so you have no choice but to figure out what makes them tick. One word – innovation.
--Sarah Cirelli, Marketing manager, Interactive Marketing, WithumSmith+Brown
The most important issue is an outdated business model. We grew our practices one client at a time by hanging out our shingle for all comers, through referral sources using a boots-on-the-ground approach. We delivered work to local clients through the limited technology options we had at the time.
Technology today holds the promise of changing our growth and client service delivery model. We can communicate to anyone, anywhere in the world. We can efficiently develop entire markets, versus slogging through acquiring one client at a time.
The combination of the cloud, Skype, portals, mobility, and social media enable us to deliver work to far-flung clients efficiently, and with the personal touch of video conferencing. The geographic borders in our minds need to come off.
In summary the business model is quickly shifting from an individual book of business, tactical, generalist, boots-on-the-ground approach to a leader-driven, strategic, specialist and digital future.
--Gale Crosley, President, Crosley+Co.
From my perspective, balancing the demands of work, family and personal commitments are among the most pressing challenges that accounting professionals are facing today. Across gender and generations, the need for increased balance is cited as a necessity. Gen Y, which is expected to make up 75 percent of the workforce by 2025, and already makes up over 50 percent in certain firms today, says job flexibility and predictability is a top priority. Once seen as mainly a women’s issue, fusing careers and personal lives is now everyone’s concern. Men report increasing levels of work-life conflict. And according to the Bureau of Labor Statistics, both parents work in nearly 60 percent of married families with children.
At Deloitte, we are recognized within the industry for our innovative approach to inclusion, including work life, but we know we haven’t fully cracked the code. We are constantly looking at ways we can help our people build predictability into their schedules and improve their overall well-being. We’re moving beyond programs and policies to a new mindset, behaviors and processes that suggest the integration of work and life, well-being and peace of mind.
The benefits can have broad business and talent implications. Professionals who have more control over the management of their own work-life integration report lower levels of stress and better health. This translates directly to measurable benefits for employers in terms of reduced absenteeism, turnover, and sick leave usage, as well as increased engagement and productivity during the workday. It’s a challenge that will need the collective brainpower of our business and government leaders to solve. The accounting industry certainly has an important opportunity to play as a model for leading practices and innovation.
--Deborah DeHaas, Vice chair, chief inclusion officer, national managing partner of the Center for Corporate Governance, Deloitte LLP
Development of your people. While leaders and successors are needed. I see a great deal of need to develop people at all levels -- specifically in the area of management. Many firms aren’t training their seniors and managers how to manage and if these people make it to principle or partner, they aren’t necessarily any better off. It’s one of many issues I think is affecting leadership development and succession within the profession.
--Sarah Johnson Dobek, President and founder, Inovautus Consulting
Availability of qualified human capital. The profession is once again experiencing a limitation on the availability of qualified staff. The pipeline for new hires is more competitive, and the retention of staff continues to be a challenge. Awareness initiatives about the profession are critical, as are programs to encourage students to enter the profession. I am a proponent of being on campuses at the college and high school levels to expound the virtues of being a CPA. CalCPA sponsors student ambassadors at 37 campuses statewide to serve as advocates for the accounting profession. We also host pathway-to-licensure sessions for students and candidates and have a highly trafficked licensure landing page, where we answer questions and demystify the road to being a CPA in California. In my vision of the future, accounting is the No. 1 choice of careers for young people. I imagine a scenario where the accounting profession goes viral.
--Loretta Doon, CEO, California Society of CPAs
How do the accounting firms address the challenges facing the business model and the audit market while building stakeholder confidence that they are looking after investors.
--James Doty, Chairman, PCAOB
One of the most important issues facing our profession is the proliferation of data and its impact on the skillsets required of tomorrow’s auditors. We’re working hard to find and hire well-rounded individuals who are strong critical thinkers and well-versed in technology and data in order to analyze the explosion of information that is produced both inside an organization and in the competitive marketplace. Professional services firms will need to remain at the vanguard of this evolution to continue to enhance audit quality and provide companies with better insights on their position in the marketplace in order to serve and protect the capital markets.
--Lynne Doughtie, Chairman and CEO, KPMG
I think the most important issue facing the accounting profession is staffing, specifically recruiting, training and succession planning. In a service profession, it comes down to having the right people -- people who are technically proficient (who know the subject or how to access reliable information), understand technology, have good interpersonal skills and employ sound business judgment.
From a technical point of view, the most important issue is the expansion of auditing firms’ consultancy work and how that might impinge on the independence of the external audit. This has been a perennial issue for both the SEC and the PCAOB over the years.
--George Farrah, Editorial director, tax and accounting, Bloomberg BNA
The increasing globalization of finance and commerce poses the greatest challenge to the accounting industry today in my view. The ever-increasing number of enterprises, both public and private, that either have international operations themselves or work closely with non-U.S. customers and suppliers poses increasingly complex challenges for the auditors of such enterprises. For audit firms that operate internationally, assuring uniformly high audit quality in the face of widely different cultures, and differing applicable auditing and accounting standards, is a very difficult task.
--Lewis Ferguson, Board member, PCAOB
Talent is arguably the most important issue for the profession today. Attracting, developing and retaining the best and brightest will be essential to enhancing the state of accounting and auditing for the benefit of markets and investors.
Addressing this multifaceted issue requires foresight and imagination. Who will be the accountants and auditors of the future, and how will their teams be structured? Firms of all sizes must focus intently on how to attract not only CPAs but also talent in data analysis, computer science, statistics, and other areas of expertise that are already changing the face of the profession and that will continue to do so.
Tackling talent will also require innovation and investment, particularly in human resources. Take work-life balance, for example. Accounting and auditing firms are leaders when it comes to flexibility and family-friendliness, but firms should continue to explore nontraditional career models and ways to provide employees with freedom to move between career paths.
Finally, it is critical that firms reinforce talent efforts not just with younger people, but also with those who supervise or work with the younger generation. Senior professionals need tools and guidance to help them adapt to — and benefit from — the changing workforce.
--Cindy Fornelli, Executive director, Center for Audit Quality
Financial fraud and dishonesty in all of its forms. From financial statement fraud, to continued takes on the Ponzi scheme, to massive identity theft used to get IRS tax refunds, fraud and our profession’s response to it will be what drives us and directs our energies in the future. The old adage about robbing a bank because that’s where the money is no longer applies. White collar crime, Ponzi schemes and identity theft have better risk/reward profiles for would-be fraudsters and the accounting profession can and should be a leader in helping to combat these activities with a mission to protect the investors and public from these threats to our financial system.
--Brian Fox, Founder and president, Confirmation.com
For the profession to continue to fulfill its significant role in our capital markets as technologies and business practices rapidly evolve, it must attract and retain a sufficiently large and diverse pipeline of highly qualified entrants and then provide them with mentoring and continuous learning for success.
--Jeanette Franzel, Board member, PCAOB
The most important issue is staying relevant! Technology is moving so fast that all the bean-counting that has been the heart and soul of the industry is disappearing fast. Just think of the staples of accounting:
- Recording purchases – no need, using Receipt Bank.
- Writing checks – no need, using Bill.com.
- Invoicing – no need, using Bill.com.
- Collecting money – easy – credit cards or ACH.
- Depositing checks – no need – just photograph and shred.
- Financial statements – don’t care – just show me the dashboard.
Some firms have moved swiftly to give clients what they want: accurate, timely information and meaningful advice; others are sadly stuck in old schools ways that truly hamper profitability. The future belongs to accountants who recast themselves as CCFOs (controller chief financial officers).
--Chris Frederiksen, Chairman, The 2020 Group
How do you embrace change? The world of the financial web is precipitating a rapid change in the accounting and bookkeeping world. The immediacy and access to information is changed forever. As with everything in the digital world, time has compressed. But that time now allows for the profession to utilize their financial acumen to deliver customer insights to their business that are more valuable than ever. Those who try to deliver and work the same way as before the latest advancements in technology will find it difficult to make the same living in this profession.
--Russell Fujioka, President, U.S. at Xero
Ethics in business sector. The credibility and reliance of financial information and statement relies on the CPA’s ethics and integrity.
Tim Gearty, National lead instructor and national editor-in-chief, Becker Professional Education
I think the most important issue in accounting is the challenge of embracing professional judgment over the “check the box” mentality that puts pressure on standard-setters to create highly detailed and increasingly complex guidance.
Achieving a culture that encourages the use of judgment requires leaders who prioritize the good of the capital markets above the needs of their clients. We need to cultivate and retain skilled professionals who continually update their education, understand economics and — above all — are committed to sound capital markets.
As a profession, we need to do more to recognize and encourage the use of professional judgment in conveying the information that is most relevant to investors and other financial statement users.
--Russell Golden, Chairman, FASB
Keeping up with the pace of change. With technology changes and opportunities continuing to accelerate, ongoing regulatory requirements, new management styles/models, staying relevant and in touch with clients, CPAs are having to move significantly faster than ever. The speed of business and amount of information can be overwhelming. CPAs need solutions that provide instant answers to their client’s questions.
--Jeff Gramlich, President, AccountantsWorld
People development is the most important issue. This includes but is not limited to the following:
- Grooming new leaders to take over practices as a record number of owners retire. This includes leadership development and mentoring. What has worked in the past will not continue to work in the future. We need intelligent, agile leaders in the profession.
- Developing professionals so they are equipped to serve as high-level consultants to their clients. This should begin early as it takes time to mature in this area. This will be required of accountants that want to have thriving, growing, profitable practices.
--Angie Grissom, President, The Rainmaker Companies
Our company will celebrate its 50th anniversary this year. During our history we have seen many changes to our profession. One consistent theme throughout those 50 years has been the increasing complexity of the Tax Code. That in and of itself would be a challenge to our industry, but when combined with other recent developments I believe the accounting and tax profession could be facing a troubling future.
With tax preparers still under-regulated and more individual taxpayers relying on off-the-shelf tax software, we have more people preparing tax returns without sufficient knowledge of the complex Tax Code. In addition, the increase in available refundable credits in our Tax Code provides an incentive for taxpayers to manipulate the system.
If a more complex Tax Code combined with more people without proper knowledge of preparing tax returns is not enough, we also face an IRS burdened with budget cuts, a brain drain, and technology that is not up to current standards. While much of the public are not proponents of the IRS, they are the only people that can enforce the rules. Ask yourself how fast would people drive if there were no police enforcing the speed limit? Why do we think filing accurate tax returns would be any different?
My concern is that the convergence of these three problems presents a real risk to the tax system and our accounting and tax profession. Where will we be if filing an accurate tax return no longer matters? If shopping for a tax preparer that gets the taxpayers the results they want continues, without consequences to either the taxpayer or tax preparer, the knowledgeable and diligent professionals may find themselves selves at a competitive disadvantage.
Let’s hope these issues can be addressed before it’s too late.
--Roger Harris, President and COO, Padgett Business Services
The need to get out of our box(es), start looking forward and learning how to be proactive. All of the major issues facing the profession like succession planning, generations, adding value, and adopting technology we should have seen coming based on the “hard trends” of demographics, technology, and government regulations. The good news is that being proactive and anticipating future trends is a skill accountants and CPAs can learn and it will benefit their firms, clients, and organizations they work for.
--Tom Hood, CEO and executive director, MACPA & BLI
Rightly or wrongly, the accounting profession is struggling with a perceived lack of independence vis-à-vis the companies they audit. The accounting firms should invest in a culture of professional skepticism and look at their work through the eyes of the investor. For accounting standard-setters, the most important question is how to balance the advent of current measurement with more traditional historical cost measurement and to manage accounting mismatches that result from this combination.
--Hans Hoogervorst, Chairman of IFRS
Transitioning to the next generation of leadership is the core issue facing our profession, in my opinion. Some call it succession planning, others call it future leadership development. Any way you slice it, transitioning firms over the next five to 10 years from the Baby Boomers to the next generation serves as both our greatest challenge as well as our greatest opportunity.
I look at solving this issue in several different ways. First, how do firms better create a more long-term, sustainable CPA firm for generations to come? A common challenge is to overcome the focus on the short-term at the expense of the long-term. Who will want to take it over if it’s not a sustainable model? How many clients of firms will be “at play” when these transitions take place because the successful transferring of relationships hasn’t taken place?
Next, do we have enough qualified and talented people to take over? Our leadership development and talent development programs need to be more geared toward running the sustainable CPA firm of the future – which requires some new and innovative thinking. Technology is driving automation in our profession – and the successful and profitable CPA firm in the future will look different than today. Firms that grow and develop leaders who can inspire vision in a more abstract market landscape will be winners.
Lastly, what do firms need to do to continue to enhance public accounting as a viable and profitable long-term career choice? It’s no secret there’s lots of turnover in our industry. In recent years, the top of the profession at lower levels have left for greener pastures. The bottom has been weeded out. What many firms are left with is a middle that doesn’t have the appropriate leadership skills to match the outgoing leadership. This trend has to be reversed and we have to once again keep the top performers in the industry.
--Dustin Hostetler, Shareholder & Lean Six Sigma Consultant at Boomer Consulting Inc.
Cybersecurity: We need to evolve our risk assessment procedures to better understand and evaluate the actions being taken by our clients to address cybersecurity risk in the context of the audit. This means ensuring our audit strategy is responsive to the risk environment. We won’t be addressing the adequacy of an entity’s cybersecurity preparedness.
Of course, we will need to gain an understanding of the risks that cybersecurity poses to the entity and of the processes and systems that management has put into place to respond to these risks. This will better position us to evaluate the potential of financial statement risks. If we see cybersecurity risks that we believe also represent risks of material misstatement to the financial statements, we will then need to tailor our audit procedures to respond to those risks.
Emerging technologies: These can have a significant impact on the audit profession in a number of areas, including overall audit effectiveness and the skills required of audit professionals. Regulators and industry observers have rightly noted that data analytics is expected to provide deeper insights and increase the audit’s effectiveness, including the ability to greatly enhance auditors’ ability to target and focus on high-risk areas of the audit.
As these technologies integrate into the profession, we will [need] to broaden our skillset, drawing not only from traditional accounting programs but also courses on information technology, computer science, statistics and other fields. These coming changes will present great opportunities and frankly some challenges as the audit profession evolves.
Global audit quality and investor confidence: Investors look to global markets for investment opportunities and expect high-quality audits wherever they go. Taking an international approach to audit quality allows regulators and firms to better assess and take steps to promote audit quality on a sustained global basis. This will benefit investors around the world.
To move toward this goal, the audit profession is currently working with the Independent Forum of Independent Audit Regulators to promote consistency in audit quality across borders. IFIAR’s members are national audit oversight bodies that have come together to share knowledge and promote consistency in regulatory activity among its members.
--Stephen Howe, Managing Partner, EY
Accountability! I know this is probably different than what you typically hear … aging partners, partner succession, quickly changing regulatory environment, etc. We actively work with about 60 firms on a monthly basis, another 400 firms via The Rosenberg Survey, and I speak at several association/industry conferences throughout the year. This deep exposure to the accounting profession has allowed me to observe firms, talk with partners, talk with staff and review the financial results of hundreds of firms. There is no doubt that firms are struggling with partner retirement, attracting new partners, client retention, employee recruitment/retention and the highly competitive landscape. As I help firms tackle these (and other) issues via partner retreats, partner compensation system reviews and partner succession planning engagements I typically trace their problems back to one core issue … the lack of accountability. I’ve had the good fortune of working with many high-performing firms and while they do many things differently, the one common theme is a culture of accountability. Accounting firm partners understand the need to develop a strong mission, vision and value statement; they often conduct retreats where they discuss long-term goals, short-term goals and even detailed action plans. They even tie this “strategic plan” to the partner compensation system. However, more times than not, they fail on the execution side and nobody is held accountable. This lack of accountability is seen by the managers, staff and administrative personnel and a culture develops over time. This culture makes it very difficult for firms to attain their growth goals, attract the right kind of people, develop the right kind of leaders and even deal with succession related issues. Unfortunately, this low accountability culture is the norm and not the exception. From my experience, when firms have a culture of high accountability, everything else seems to fall into place nicely.
--Charles Hylan, Partner, The Growth Partnership
The most important issues facing the accounting profession is how are we going to stay relevant during the current technology advancements and movement to cloud computing. While I’m a huge supporter of QuickBooks Online, I think it is still important for accountants to be able to communicate that technology can’t replace the knowledge and expertise that accountants have. We can utilize technology to make our jobs easier, but accountants in all specialties still have a place in our economy.
--Cathy Iconis, CEO, Iconis Group
I believe the most important issue facing the accounting profession today is our inability or unwillingness to accept and embrace change.
Our profession must embrace new technology and realize that many of the services we provide will become obsolete as a result of technology. Millennials are do-it-yourselfers. They keep their own books and records on QuickBooks. They prepare their own tax returns on TurboTax. If we are to bring in younger clients, we must offer services they cannot perform themselves. Young entrepreneurs need business advisory services. They need to understand the financial statements they prepare. They need help to interpret their key performance indicators and they need to know how to use that information to grow a successful business.
We must also embrace and value the younger generation if we are to bring quality staff into our firms. Gone is the day of the pencil-pusher working late into the night. Millennials expect work/life balance. They expect state-of-the-art technology and they want to have fun at work. Perhaps they are smarter than we were.
Change is inevitable. In the 21st century, things seem to be changing faster than ever. Unless we, as a profession, are willing to accept this change, we will fail to attract young talent and will jeopardize the future of this noble profession.
--Sandy Johnson, President, NCCPAP
Recruiting talent to replace those who are retiring and leaving the profession. The complexities, legal requirements and regulations, integration of international business, and technology to support the work that needs done are more complex than ever. Having the skills to understand issues, look past the noise, distractions and clutter, and be visionary enough to direct an organization are critical.
--Randy Johnston, Executive vice president and partner, K2 Enterprises; CEO, Network Management Group
IRS service levels! The IRS says it has insufficient funds to assist taxpayers and practitioners and IRS Commissioner John Koskinen says that its service levels are “abysmal.” Congress believes the IRS acts inefficiently, and in some cases, inappropriately, and has significantly slashed IRS’s budget to pre-2009 levels. And the news is not getting any better for the IRS as the House Appropriations Committee recently approved a FY ’16 IRS budget that would fund the agency at 7.7 percent below its FY ’15 level. There is no question regarding the “disease” – abysmal service – but there is a huge divide regarding the cure! An objective and transparent solution that results in the service levels that the taxpaying public, practitioners, and, indeed Congress and IRS would expect, must be found.
--Edward Karl, Vice president of taxation, AICPA
Staffing! While opportunities abound in the accounting profession, and we seem to be in a period of growth where many clients are willing to invest in an expanding range of services, finding and retaining qualified staff seems harder than ever. Add to that the overwhelming number of practitioners who are scheduled to retire in the next five to eight years, and it seems certain that the profession is headed in to very uncertain waters.
Increasingly I have heard more and more stories of top firms taking unprecedented steps to incentivize staff to stay with the firm for the long-term, because they are finding that their top talent is being actively perused by competing firms. This also increases not only recruiting costs when firms need to hire new staff to replace those who leave (or continue to add staff during periods of growth), but also salaries/wages, benefits, and the need for firms to provide a wide range of perks, in order to continue to be a more desirable place to work than their competitors. The total increase in costs forces firms to choose between increasing fees to clients, and feeling the cut in their profit margins. In many cases firms are also finding that they need to turn down potentially exceptional client work, because they simply do not have the capacity to take it on.
--Jennifer Katrulya, Accounting operations director, H&R Block Small Business
It seems basic, but to me, the most important issue facing our profession is how we continue to provide value and service to our clients as their worlds change. We're seeing regulatory changes, consolidation, a technology revolution -- and we as professionals have to understand and adapt to those changes. We're seeing a lot of firms talk less about themselves as accounting firms and more so as advisory firms. It's not a coincidence. That's where the value is – in being trusted business advisors, not number crunchers. I have tried to build our firm and our team to reflect that new reality and we push to provide tangible value to our clients at every turn with a service mindset to match. Change is hard, but hopefully our teams and the best people in our profession can make it a little easier for our clients.
--Kevin Keane, Managing partner, O’Connor Davies
Currently, I am becoming more and more concerned about the negative impression that many young people, and others, have about a career in accounting. For example, I was recently watching a TV show where the star developed amnesia. He is actually a detective. Seeking to remember, he demonstrates an expertise with math and another person says, “Maybe you are an accountant.” The star immediately says, “I hope not!”
I find a lot of negative things posted about the long hours and lack of appreciation. I often get feedback directly (via my blog and speaking engagements) voicing the same concerns.
I believe that we need to focus more on clearly defining the benefits of a career in public accounting. Most beginners have no clue how much money their partners are taking home each year.
Representatives of the profession and consultants to the CPA profession need to focus on painting a picture of success in the business world via the choice of an accounting career.
We need to communicate the fact that the odds of getting rich quick are slim, as it is in any career choice, but there is an excellent chance of building a career that is highly respected, continually challenging and extremely rewarding, monetarily, in the accounting profession.
As for current partners, I urge them to take note of, and work on, the significant disconnect between most of them and younger people working at their accounting firm.
--Rita Keller, President of Keller Advisors
Succession as firms have not done a great job of building the next generation of partners to succeed them, particularly in building rainmakers and pushing work down to the future leaders in the firms, which has created a talent gap. This is forcing many firm owners to scramble to fill the gap or consider merging if they are overwhelmed by the prospect of having to hire/build talent.
--Roman Kepczyk, Director of consulting, Xcentric LLC
I think it’s keeping pace with technology. Being up to date with the latest apps that integrate with the accounting solutions your firm supports or the majority of your clients are using.
--Stacy Kildal, Creator, StacyKAcademy.com; owner, Kildal Services LLC
Possible irrelevance and disintermediation. It will not be long before automation will be able to handle most of the role of current CPAs. What computers can’t handle, offshoring will. It will not be long before there are more people in India more knowledgeable about the U.S. Tax Code than there are CPAs in the US.
--Ed Kless, Senior director, Sage
Talent and growth. Call it the circle of life, but firms with great talent are providing great services to great clients who pay great fees, which allow great firms to pay top compensation and also make the critical investments today for a greater firm tomorrow.
--Allan Koltin, CEO, Koltin Consulting Group
The PCPS Top Issues Survey result said:
People, people, people would be the issue for any firm with 2+ CPAs. Finding and retaining staff is back as a significant issue. But firms have to focus on how they will react to this by managing client loads differently. Focusing on getting more profitable clients. Culling the ones that don’t make the cut.
Sole practitioners continue to struggle with tax complexity and keeping up with tax laws.
One common issue over all size firms is workload compression. So many issues facing that like IRS service, late K-1s, several versions of 1099s. September and October could prove to be really bad this year.
Succession continues to be a concern that not as many firms have focused on which is a real risk to themselves and their families.
--Mark Koziel, Vice president of firm services & global alliances, AICPA
One of the most important issues facing the profession continues to be complexity in accounting standards — specifically, making standards understandable for the average accountant trying to apply them in the real world. The FASB continues to address this issue through its simplification initiative.
Another issue is ensuring that accountants are spending time on the things that matter — not on items that may be conceptually interesting but don’t add value to investors and other financial statement users.
--Jim Kroeker, Vice chairman, FASB
The biggest question facing our profession is who will succeed Barry Melancon as CEO of the AICPA? Is Barry Melancon the Highlander? And when he and Mark Koziel battle, will they live-stream it on Periscope?
--Greg Kyte, Founder, Comedy CPE
The cloud is inevitable. Generally, accountants and bookkeepers know this and recognize the benefits. They are adopting it. And many of those adopters are flourishing with it.
But the new challenge is education. Clients must be coached on the importance and benefits of the cloud. Accountants must lead the way through this transition from paper to the cloud.
We conducted a survey of 500+ bookkeepers and accountants that touched upon client bill payment trends and found some very interesting results. First, 41 percent of the respondents intend to adopt a cloud-based client payment solution in the next six months. That’s a substantial number of accounting professionals, which to me signifies that there is acceptance of the cloud.
However, 73 percent of accountants and bookkeepers still use paper-based payment methods when handling client AP. Other forms of payment are being used – such as ACH or credit cards – but physical checks still play a strong role in the process. Yet, 45 percent of the respondents expressed concern over the fraud potential posed by paper-based payments.
Why do firms still rely on paper checks? We asked accountants and bookkeepers why they haven’t adopted the cloud for bill pay and answers ranged from everything from “hard for them [clients] to break habits” and “Don’t know, I always recommend that they [clients] do.” Clearly, there’s a gap between what accountants recommend and what is actually practiced on the client side. And education has to breach that gap.
--Rene Lacerte, Founder and CEO, Bill.com
The biggest issue is the profession’s ability to change as fast as its clients, technology, and incoming staff. As we move to a full cloud-based system, a “sharing economy”, globalization, and emerging digital currencies the profession will have to keep up. There will be winners and, unfortunately, losers.
--Greg LaFollette, Strategic advisor, CPA.com
In today’s world, understanding top trends around client service and the need for integrated solutions to help professionals achieve work-life balance are critical components to a firm’s success. Firm partners and management need to adapt and be open to change to ensure that they are engaging younger business leaders and addressing their evolving needs. This is made even more important with the current state of the profession where a large part of the workforce is aging, making succession planning and talent management key factors for success. It’s a fine balancing act, really, because those same firms must stay ahead of key trends impacting the industry and changing client dynamics, such as the application and adoption of new technologies. It’s a true lesson in agility that many firms are learning.
--Teresa Mackintosh, President and CEO, CCH Software, Wolters Kluwer Tax & Accounting
Accounting has long been known as the language of business. It’s no surprise, then, that as the business world undergoes transformation, so must the profession. How do we preserve the highly valuable core attributes of the profession – integrity, competence, objectivity – as it adapts to a world changing at lightning speed on so many fronts? The business world -- increasingly global and driven by technology -- requires talent that goes beyond technical excellence. To me, how the profession takes the next step in its evolution is the most critical issue of the next decade.
--Janice Maiman, Senior vice president, Communications, Media, News & Professional Pathways, AICPA
Maintaining an extensive understanding of the ever-changing and increasingly complex tax laws and compliance requirements has placed an incredible burden on accounting professionals – often creating barriers as they try to grow their business. For example, the Affordable Care Act was a top concern for tax preparers, as many had a number of questions about the ACA’s effects on their clients’ returns, as well as the process to prepare and file those returns.
Additionally, when you factor in an intensely compressed seasonal workload with the growing expectations of customers desiring 24/7 access to accounting professionals, the need to maximize efficiencies during tax preparation has never been higher.
That’s why it is crucial for accounting professionals to implement highly efficient technologies and software that provide on-demand research capabilities, advanced practice management solutions and intelligent data organization, so they can elevate their value to their customers and remain competitive with the ever-expanding DIY market.
--Jason Marx, President, CCH Small Firm Services, Wolters Kluwer Tax & Accounting
The expertise of my two companies is in income tax preparation and income tax education. I think the greatest challenge facing the tax preparation segment of the accounting profession is adapting to change driven by technology. The introduction of Turbo Tax had a dramatic impact for many tax preparers. I believe technologies that enable offshore outsourcing and remote tax preparation will greatly expand the market for many tax preparers and result in decreased market share for others. Organizations that issue tax documents will be enabled to submit the data electronically to the IRS. This could enable the IRS to calculate tax liabilities for many taxpayers with routine tax situations, thereby reducing the need for tax preparers. Tax professionals need to be thinking about how technology will impact their livelihoods and planning how to adapt.
--Charles McCabe, Founder, president/CEO, The Income Tax School Inc.
The future is online and in order to survive the current economic, technologic and demographic shifts, accounting firms must adopt the cloud. In fact, by 2020, Intuit predicts that about 80 percent of American small businesses will be fully adapted to the cloud. This is right around the time 75 percent of accounting pros will be retiring. The firm accountants built over the last 20 years won’t survive by the next generation unless they transition it into a Firm of the Future.
The QuickBooks Firm of the Future leverages the cloud to promote greater efficiencies, collaboration, time savings and lower costs, which in turn helps firms meet client expectations and stay relevant. Additionally, the QuickBooks Firm of the Future is a trusted advisor, fluent enough in big data and key performance indicators to not only diagnose financials but predict them. Also, to truly meet today’s clients’ needs beyond the sharing of best practices and referrals, the QuickBooks Firm of the Future uses the Web as the new lobby. This connecting marketing pillar allows accounting professionals to connect and collaborate with other industry experts and their clients — especially in social media.
--Jim McGinnis,Vice president, Accountant and Advisor Group, Intuit Inc.
Evolving the profession at the pace of change we see in the business world is by far the most important task before us. At the AICPA, our strategies are focusing on how to best serve the CPAs of today while deepening the sustainability and relevance of the accounting profession far into the future. Think of it as planting the seeds of change that will one day enrich the landscape of our profession. Twenty years ago, for instance, we recognized that the CPA Exam had to migrate to a world in which digital experience was prevalent. Today, we face unprecedented change on multiple fronts. Generational and demographic trends are literally changing the face of our profession, the clients of firms and the talent pool for all employers. And the incoming generation has different expectations of the workplace and different attitudes about learning. At the same time, technology and international economic shifts are transforming the business world itself, resulting in new models and complex systems of interdependency. So we must embrace innovation, find a way to elevate the trusted business adviser relationship with clients and employers, and evolve to meet and anticipate market demands.
--Barry Melancon, President and CEO, AICPA
Most important issue: Staff retention and development.
The work is plentiful. The technology is tops. The clients are understanding and appreciative. None of this will matter if we do not retain, train and develop our staff. Things change and are changing and the generation that is setting the rules is not in touch as much as they should be with the generation that is working for them. Attitudes toward careers, communication methods, access to information, their interest level in what they do, how they want to spend their time, and independent learning have to be treated in the manner the staff approach these issues, and not the way “It’s always been done.” The bosses need to be retrained, and do not recognize this.
--Edward Mendlowitz, Partner emeritus, WithumSmith+Brown
Moving from a compliance, transactional, disruption-prone profession to a knowledge-based profession and thus changing the mindset from the “expected” annuity business model to a true client-based value service delivery model. The changing client is the driving force behind this, along with qualified non-CPA technology-oriented competition that will disrupt the profession.
--James Metzler, Founder, Metzler Advisory Group LLC
Recruiting talented young students to become part of the profession. As the Baby Boomer generation retires from accounting, there is going to be a lack of experienced accountants to take their place. We need to do a better job of promoting accounting as a high-quality career to students considering their future career choices.
--Stan Mork, President, ITA
I feel that we have growing issues relating to a talent gap in our young professionals and those coming out of college into the accounting workforce. As a CFO in charge of our intern program, I constantly see young professionals and students who are just simply not being taught the business and accounting skills needed for them to be effective right out of the gate. The classrooms are focusing more on rules-based accounting, which is important, but are not spending enough time on the advanced business and analytical skills that company’s need. The facts are that more than 75 percent of accounting college graduates will end up working somewhere in industry. Yet less than 25 percent of their accounting coursework really pertains to this. The accounting curriculums need to be more closely correlated to the business skills needed for graduates to be effective in industry. There’s over 20 years of research to support that CFOs are looking for accountants with leadership skills, communication skills, technology capabilities, strategy development, data analytics, change management and overall global business skills to analyze the macro-market environment. This is what our curriculum should be focused on if we are to develop the next generation of leaders in the finance and accounting field. This is what CFOs want and need, and this is what our field needs as more and more Baby Boomers begin to retire. I have a passion for raising awareness on this issue, and I do this by speaking all over the country and the world concerning this and other related topics.
--Benjamin Mulling, Chair, Institute of Management Accountants
The list of most important issues offers me several to choose from -- leadership, retiring Baby Boomers, funding retirement buyouts, the merger mania syndrome, among others. However, after significant reflection I've decided to focus on the never-ending regulatory environment. I am increasingly concerned as I witness the incompetency of our legislators at all levels (local, state and federal) to manage an effective regulatory environment for both CPA firms and their clients to navigate. I believe this will become more cumbersome as regulators look for a scapegoat to blame for all that's wrong with the economic landscape and social norms of entrepreneurship. The ability of regulators to complicate the lives of business and interrupt job flow creation causes me to place "regulation" at the top of my 2015-2016 issues list.
Let's examine one of the concerns that gets talked about as a "rumor" coming from such high levels as the SEC. Could you imagine as the MP of a regional or national CPA firm opening your mail one day and seeing a letter from the SEC. You open it and find a list of public companies that you are being told you are now responsible for auditing. No more proposals, no more bids -- just a simple assignment. No questions about ability to perform, no inquiry about staffing ability, maybe not even a question about your knowledge of the client industry or conflicts that might exist. It gets better. As you glance to the right, you see a column telling you how much you will be allowed to charge for the audit. Oh, and let's not forget the date the audit must be completed by. Far-fetched, I'm not so sure. But these are the types of fears that cause me to make the regulatory environment my most concerning issue. Let's just hope it does not reach the level of absurdity as my example, but then again I never thought I'd be talking to my wristwatch communicating with my wife like Dick Tracy when I was a kid.
--Jay Nisberg, President, Jay Nisberg & Associates
Changing to adapt to the world around them. The world has changed, the way we do business has changed, our customers want to interact differently with their CPAs, and yet most CPAs have not changed to meet today’s consumers’ needs. They feel the change and they know they need to do something, yet they have not started on the journey to remain relevant. Technology has become the core of today’s “New Firm,” yet too many CPAs think only about it terms of efficiencies, instead of a new way to define and serve under new business model. As a result they are losing top talent because the ways people want to work are dramatically changing.
--Jody Padar, CEO and principal, New Vision CPA Group
The biggest challenge for large regional and multinational accounting firms, given the combination of accelerated globalization and constant regulatory change, is keeping up with the flow of information and understanding the implications in order to properly advise their clients. An example is what is occurring in the G20 around corporate tax policy related to BEPS (Base Erosion and Profit Shifting). The ramifications are enormous and staying abreast of global developments is daunting. A related issue is the need to keep up with information and workflow tools that enable rapid implementation of new requirements and inform forward-thinking advisory services for their clients. Complicating the issue even further is the profession’s current battle for talent capable of thriving in this rapidly changing environment.
--Brian Peccarelli, President, the Tax & Accounting business of Thomson Reuters
Acceptance and transition to cloud-based technology by small to midsized firms. Firms of this size do not have the luxury of in-house IT and programmers to maintain interoperability of multiple software systems and need to consider a single platform-based solution hosted in the cloud. This technology change provides the basis for the firm of the future. With this kind of platform (to the extent possible) the firm benefits [in the areas of]: process efficiencies; enhanced cybersecurity; staff recruitment and retention; enhanced client interaction; focus on value billing; and work-life integration.
--Carl Peterson, Vice president of small firm interests, AICPA
I feel that there are a couple important issues the accounting industry is currently facing, both of which have to do with adaptation. The first is keeping up with the ever-changing economic environment, which has not only created new parts on the CPA Exam, such as Business Environment Concepts, but also the implementation of new rules and laws. The difficult part is interpreting and learning the new information, and then incorporating it into the profession.
The second is the growing demand for skilled and top accounting professionals to fill the departing Baby Boomer’s roles. Because many people from the Baby Boomer generation are now nearing retirement, there will be a large void to fill. For these accounting veterans who have been in the profession for so long, their knowledge of what they have learned and seen evolve within the profession will be imperative for continued success in modernization and growth. The Millennial generation will be taking on this responsibility and setting new standards within the profession, and must take into account both the history and future of the profession.
--Roger Philipp, CEO and owner, Roger CPA Review
The drain of talent away from local and regional firms is a real problem. We want young CPAs to know about the great opportunities that come with owning a small practice, or working in a local firm, or becoming a partner at a regional powerhouse firm. On the other side of the coin, firms must invest in becoming better places to work, upgrading technology and offering progressive HR policies that will attract high performers.
--Jeff Phillips, CEO, Accountingfly
One of the most important issues in the accounting profession is attracting, engaging and retaining young professionals. Several of my friends left the profession early because they did not feel connected within the first few years of their careers. When moving from public to private accounting, many young professionals disengage from being members of accounting associations and do not maintain licenses and designations because many companies do not prioritize the preservation of them. A way to engage young professionals is to prioritize their learning and development opportunities. When young professionals feel valuable to their companies and feel personally valued, they will help navigate our companies and champion our profession into the future.
--Elizabeth Pittelkow, Director of Accounting and Compliance, ArrowStream Inc.
I think the most important issue is ensuring investors, citizens and other financial statement users worldwide have access to transparent financial information from both public and private sector businesses, organizations, and institutions. The FASB, the GASB, and their international counterparts are working toward that goal.
As we’ve learned from Greece, economic crises are not confined to one corner of the globe — the pain is felt around the world. This makes high-quality financial reporting even more critical to our economy, both here and abroad.
--Terri Polley, President and CEO, FAF
The symptom that most of us are focused on is succession due to the huge number of firm owners who will be retiring over the next 10 years. However, the underlying root issue is poor leader development in most firms. Too many firm partners, while having done extremely well both financially and professionally, have failed to invest the necessary time and effort in developing their next generation of leaders. It can be very frustrating to have built a terrific firm and suddenly realize it has little or no chance of remaining independent due to a lack of bench strength and too little time to find and develop the necessary talent to transition its leadership internally.
--Terry Putney, CEO, Transition Advisors
Public accounting is in the people business. People who have excellent technical knowledge, but, believe it or stereotypically-not, still people. Firms today are having to adapt to get the right mix of people who are not just willing and capable, but talented in serving clients and being a part of the future of the accounting industry.
Technology (also a big issue!) will take away more and more of our routine work. Firms with the best people to integrate these efficiencies and continue to add value to their clients in new, relevant ways will be the firms, and clients, that succeed.
We have our own 3R’s that we need to follow to keep the talent pool from drying up before all of the non-existent succession plans can be implemented.
Reduce: Keep turnover and acquisition costs down.
Reuse: Engage existing talent in a way that is consistent with changing times and circumstances for all involved
Recycle: Find appropriate new homes for talent that would better serve, and be better served by, working in a different environment.
T – Trying to find talent in new places and grow traditional ones.
A – Adapting to get the right mix: people who are not just willing and capable, but talented in serving clients and being a part of the future of the accounting industry.
L – Leveraging strengths of each individual rather than forcing them down the traditional path or up the proverbial ladder. Celebrating people who choose or forge these new paths.
E – Encouraging accountants to stay with the profession and find that right path even if it’s not their first employer.
N – Noticing that you will want some to be a part of your succession plan.
T – Talent.
--Kristen Rampe, Owner, Kristen Rampe Consulting
As businesses become more global in nature, it is necessary that they enter some markets that have different traditions from what they have previously dealt with. Oftentimes these emerging markets operate on different ethical standards and, at times, these standards are contrary to not only the normally accepted business standards of the original organization, but they are in violation of existing criminal laws.
It is essential that today’s accounting professionals conduct themselves in a fashion that will lend themselves to the high ethical standards of their parent organizations, as well as assuring the senior executives that the organizations are operating within the boundaries of the existing legal system.
--James Ratley, CFE, President and CEO, ACFE
Traditionally, accountants have characterized corporate performance with credible, trustworthy financial statements. However, the world has changed. Access to financial capital is no longer the primary constraint on a company’s ability to create value. The ratio of net assets to enterprise value has declined dramatically since the creation of the FASB. Intangible assets — including key sustainability factors — now account for roughly 80 percent of the market capitalization of the S&P 500.
In today’s world, sustainability factors are increasingly material to companies and their investors. They impact the financial condition or operating performance of companies and in some cases the outlook for entire industries. The ability to shape corporate strategy depends on a complete accounting of financial and non-financial drivers of value. For example, beverage companies must consider the sourcing of clean water. Auto companies must meet growing demand for fuel-efficient cars. Software companies must consider the recruitment of skilled talent. While sustainability factors impact business outcomes, conventional accounting is not designed to capture these effects. As a result, investors and companies may lack complete information on all the significant forces creating and sustaining long-term value, as well as potential sources of risk.
This is why we need sustainability accounting.
Sustainability accounting consists of defining metrics — both qualitative and quantitative — that express a fair representation or “account for” company performance on material sustainability topics, and ensure that reasonable investors have access to decision-useful information in their decision making process.
To make informed decisions, investors need relevant, reliable, comparable data on all forms of capital. In short, they need sustainability accounting. The efficiency of our capital markets depends on it.
--Jean Rogers, CEO and founder, SASB
The rate of technology change in the small business marketplace is outpacing the rate of change inside small to midsized accounting firms. Firms are so inwardly focused on their own technology challenges that they are missing the opportunity that has presented itself to better serve this rapidly changing marketplace.
--Darren Root, President & CEO, RootWorks
I get asked this question almost on a weekly basis. My answer is the same – there are two “most important” issues and they heavily overlap. First, there is a severe shortage of good people in the CPA firm business. There are many reasons for this, including an alarming decline in the number of people who want to be university professors. I’m being told by university accounting department heads that they have more student demand for accounting classes than supply. And the reason for the low supply is lack of accounting professors.
Second, we are five to 10 years into a succession planning crisis that should last another 10 years or so. Baby Boomer partners are retiring in huge numbers, year after year, and the vast majority of their firms do not have adequate young people coming up the pipeline to replace the retirees. Virtually every firms’ partners today engage in agonizing, tense debate, year after year: Do we merge now, merge in a few years or die in our chairs?
I guarantee you, 90% of firms under $15 million are having this discussion as I write this.
--Marc Rosenberg, President, The Rosenberg Associates
Positioning our practices to adapt and thrive in an increasingly complicated and demanding global business environment is by far the most important issue facing the accounting profession. We’ve got to move away from business as usual and focus on value-creating services across all service lines. If we don’t, we run the risk of becoming irrelevant.
--G. Brint Ryan, Chairman and CEO, Ryan
I believe the greatest issue facing the profession is the impact of digital technology on the human worker. While digital technology has made it easy for accountants to work from nearly any Internet connection, this has caused an overwhelming demand on their time and psyche. Long gone is the era when one worked hard during busy season and then was able to renew one’s self in a down time. The expectation for accessibility has gone from traditional office hours to being available 24/7.
I feel this issue is quite pervasive. I’ve observed it while coaching individuals and also hear numerous complaints from participants in the soft-skills trainings I lead. Sadly, this unrealistic expectation makes the careers in the profession quite unappealing for younger generations who have different desires in the workplace. Moreover, it reduces employee engagement; increases burnout; and, very likely, decreases the quality and reliability of the services being performed. Accountants are not machines. They are human beings who need rest and renewal after hours spent critically thinking.
--Amber Setter, Chief opportunity officer, Intention Setter
It’s tough to say what the most important issue facing the accounting profession is because that’s so heavily influenced by what you do and where you do it, whether you’re in public accounting and then big, medium, or small firm, or in corporate finance and a big or small company. Still, staffing is a common problem that everyone faces and it is just intensifying. Large firms and companies are ferociously competing for talent, driving up staffing costs, which then impact all businesses both large and small. Accentuating the challenge are increasing turnover at large firms, where staff, in many cases, leave the profession altogether when they leave the firm. What we are seeing is increasing staffing costs and turnover at large firms and companies, and smaller firms and companies unable to afford top quality staff.
Another critical issue facing the profession is audit quality, one of the most visible and recognizable services provided. We continue to see quality challenges with regard to large, medium and small firms. Unfortunately, many of these issues are brought on by the profession itself. Audits are the one service that protects the public good, yet we talk about and price audits as a commodity. It should be no surprise that the public then “price shops” audits. Continued audit quality issues may erode the overall CPA brand as it’s so tightly tied to audit.
Lastly, the role and sheer existence of the small firm and sole practitioner is at risk. Continued consolidation, increasing people cost and lack of talent are threatening the existence of small firms. Yet the small firm practitioner who can build a close relationship with local businesses has been a mainstay of the profession and the business community throughout history. Who will local businesses turn to for support, and will they continue to get the personalized guidance that they’ve counted on for so many years?
--Todd Shapiro, President and CEO, ICPAS
Too much of a focus on Wall Street and not enough on Main Street. The profession continues to be driven by big-firm interests and is losing touch with its roots, relevancy, and ability to really have an impact, which is with small and midsized businesses.
--Donny Shimamoto, Managing director, IntrapriseTechKnowlogies
I would say succession planning and the lack thereof. We are facing the greatest exodus of talent this profession has ever seen as the Baby Boomers reach retirement age. As an example, nearly 60 percent of the equity partners in the country are over the age of 50, and 75 percent of the 400,000 members of the AICPA will be eligible for retirement by 2020. Between the pace of growth in the profession and this widening void in the talent pipeline, too many firms continue to ignore the reality that they lack the talent and capacity on their “benches” to manage their successions internally. Those firms that procrastinate too long with regard to succession planning are usually faced with very limited options, including hastily arranged mergers with unfavorable terms or closing their doors for good.
--Joel Sinkin, President, Transition Advisors
Relevance: The profession is struggling to maintain its relevance in the eyes of clients. As a whole, the focus is still too much on compliance services and not enough on going deeper with client engagements. As the average age of senior partners continues to increase, the struggle is to convince those people to continue investing in new technology, new business models, and new client services.
--Doug Sleeter, Founder, The Sleeter Group
We’re in the midst of one of the biggest platform shifts in a generation. The era of social has changed the expectations of customers. We no longer want to be consumers, we expect to be participants. We choose the newsfeeds, the ringtones, the apps and the music we want on our devices. Companies that win today not only build great products, their products are platforms that enable the end user to configure just for them.
Additionally, we’ve reached a boundary-less world. The era of the cloud has eliminated borders, both geographic borders and borders between platforms and devices. Customers now expect to be able to start something on one app or device and finish it on another. They expect seamless experiences. Add mobile to this new world and you have technology that moved from the desktop to the palm of our hand. Now it’s moving to our wristwatches, our eyeglasses and our automobiles.
Finally, the power of big data to improve the quality of life, and the success of businesses. Data is the fuel for the next wave of innovation, and trust is the currency. The opportunity is to capitalize on data to create customer delight, while protecting the privacy and security of the customers’ information has never been more important.
--Brad Smith, President and CEO, Intuit
Staying current with customers’ needs. The accounting landscape is changing. Clients are becoming more and more sophisticated and their expectations from accounting professionals are rising. They want more advice, more insights, predictable pricing, and more real-time help. Due to the widespread use of an amazing array of consumer-facing apps used in their personal lives, more and more clients expect a similar experience with their business apps. And they expect their accountants to use them as well. The Iinternet has changed almost every single industry on the planet and it is now heavily impacting the accounting profession. The ability to work anytime, anywhere, and on any device is a baseline requirement. What we are seeing is a colossal shift to online technologies, and those who join the party early will be the beneficiaries of this monumental change.
--Jamie Sutherland, General manager, U.S. Products & Solutions, Xero
The critical demand-side issue of advancing obsolescence and irrelevancy of traditional accounting services, so well discussed in last year’s Top 100 People, is fast escalating into a supply-side issue of brain drain. But that brain drain is re-inventing the public accounting profession into something unrecognizable unless you look very closely -- then you see it’s still public accounting, just refreshed, re-booted and upgraded for the new economic and demographic realities.
Put simply, many of the profession’s best and brightest see little or no future in the traditional public accounting industry. The number of newly-minted CPAs entering public accounting is trending to an all-time low. But business and industry isn’t getting all the talent. New CPAs are re-inventing the CPA firm; they may not call it a CPA firm, and they may shun attest, but they are still trading off the CPA brand and leveraging their CPA-only skills. Just don’t call their businesses CPA firms. They are advisors, coaches, facilitators, accelerators for the new economy -- an economy marked by rapid change, technological literacy and the new ways people work, trade and do business. A few examples of many may include: Jason Blumer, Jody Padar, and Derek Davis.
--Rick Telberg, Founder and CEO, CPA Trendlines
Understanding the shift in CPA firms’ strategy, related business models and the impact of those shifts on the CPA pipeline. Many CPA firms are embracing the importance of specialized skills within their firms and at the same time their commitment to creating an environment for eligible individuals to become CPAs is soft. Approximately 60 percent of accounting graduates have their first job in the accounting firms. But not all firms create the environment to ensure those new hires become CPAs—we can do better. That can mean providing free exam prep, requiring the CPA credential for particular positions within the firm, and more support and recognition in general for those who attain the credential. The surest path for the accounting profession to address the opportunities ahead is to embrace specialized skills and the tremendous value of having licensed CPAs.
--Arleen Thomas, Senior vice president of management accounting and global markets, AICPA
I’m concerned that the profession isn’t producing enough CPAs to replace the Baby Boomers who will reach retirement age in the next five to 15 years. We need to motivate and incentivize accounting graduates to sit for the CPA Exam to ensure that our profession doesn’t suffer from a talent shortage in the future. I’m particularly concerned that the profession won’t be able to hold onto minority candidates if these issues aren’t addressed. At each step in the supply chain, the percentage of minority representation drops, from college enrollment to overall CPA firm employees.
--Ralph Thomas, CEO and executive director, New Jersey Society of CPAs
In my view, not much has changed in the past year -- the most important issue is the talent gap in accounting, which is a global issue and especially impacts aspiring young professionals. Simply put, the university accounting curriculum is not keeping pace with the evolving expectation of the CFO team to focus not only on value preservation (i.e., financial accounting like tax, audit, compliance, statutory reporting), but also on value creation (i.e., management accounting like financial planning and analysis, mergers and acquisition activity, predictive analytics, and more). The talent gap has actually widened as CFOs are taking on more responsibility for areas such as operations and technology. In addition to the impact on entry-level accountants, this is a significant issue in developing countries that desperately need a professional infrastructure, built on a foundation of ethics and competency.
--Jeffrey Thomson, President and CEO, IMA
For many years, much of the work within accounting departments has been rote and manual-labor intensive. As a result, there’s been a tidal wave of outsourcing designed to cut costs and increase corporate efficiency. But the result has been “throwing the baby out with the bathwater,” so to speak. By outsourcing accounting jobs to less skilled labor offshore, companies lose the valuable analytical skills and strategic value that accountants should be adding to companies. Corporate accounting leaders should be focused on utilizing technology to automate repetitive job functions so that companies can both run leanly AND provide tremendous business value to a company through various metrics and analytics on how a company’s finance function can be improved.
--Therese Tucker, CEO and founder, BlackLine
It is time to allow those who practice in the profession to be a part of the profession. I observe the increasing demand for specialization coupled with the necessity of attracting college graduates to the profession. One significant means to address those two dynamics is to open the specialized credentials to other qualified professionals who may not be CPAs or to attract the college graduates to the CPA firms and to allow them to practice as part of a specialized segment of the profession even though they may not be CPAs.
--Michael Ueltzen, Partner, Ueltzen & Co.
The most important issue facing the profession is the need for CPAs and accounting professionals to truly live up to being the “trusted advisor” that has been so well-promoted to the public. A lot of accountants may perceive they are trusted advisors, but how many of them still offer hourly billing and commoditized tax prep? Too many. Although it’s a widespread belief that clients want more services and consultation that helps them grow their businesses, there’s a disconnect between what they require to help grow their business and how to communicate this to their accountant. This is a significant opportunity for the profession and circles directly back to being a trusted advisor.
--Pascal Van Dooren, Chief revenue officer, Avalara
In the governmental arena, one of the most important issues facing our profession is the need to provide relevant, useful information in a timely way. Advancements in technology can and do definitely help, but also serve to continually elevate expectations as to what is timely.
--David Vaudt, Chairman, GASB
The globalization of the profession. With the introduction of the latest technology and the cloud, accountants and bookkeepers no longer have borders when it comes to attaining clients. In my role at Xero, meeting accountants and bookkeepers from around the world, I have learned how many of the early adopters are now networking with firms from around the world, and even acquiring practices from other countries to work with clients in any region of the world. With cloud technology it is now possible to serve clients in Hong Kong from Australia, and vice versa. Accountants that have moved their practices to their cloud and have built efficient processes and vertical niches are now able to attract small businesses from anywhere. Small businesses are looking for domain expertise and are willing to work with someone in another geography if they can provide value to their small businesses. Having deep knowledge of an industry and the right cloud platform in place can mobilize a practice to grow beyond its borders.
--Amy Vetter, Global vice president of education and head of accounting, USA, Xero
I am going to “‘steal” this concept from Tom Hood, but I believe the biggest issue facing the profession is the shift for accountants from looking in the rearview mirror to looking out the windshield, looking ahead instead of looking back, and being more proactive, less reactive. All of these shifts are hugely important to businesses. With real-time data, business owners want real-time insights and no one is going to get those by looking in the rearview mirror. I saw a quote last week from Ray Wang which I loved: “Digital disruption is less about technology and more about transforming business models.” I realize any business model transformation is difficult, but I believe innovation is critical in the case of technology, but it’s also critical when it comes to business models in accounting firms. If that changes, I’ll get off my soapbox, but I think we have a long ways to go before that happens.
--Jennifer Warawa, Global vice president of product marketing, Sage
The need for sweeping changes in how firms are managed, and the apparent inability to make changes to move in a new direction. Allowing for more authority, responsibility and decision-making at all levels, letting go of power at the top, along with more transparency and communication are just a few of the initiatives that must be tackled.
--Sandra Wiley, Shareholder, and COO, Boomer Consulting
Relevance. In our increasingly digital, instant-information world, how can a profession comprised of predominantly compliance-oriented, historically minded traditionalists compete? And, why would young, smart, tech-savvy professionals want to work in a profession still so married to “the way it was”?
CPAs must embrace new-school technologies and techniques, employ (and retain) forward-thinking and consultative leaders, and find ways to add real value beyond reporting and filing. Traditionalists must step aside (and soon) to allow the smart and innovative next-generation CPAs to drive the changes needed to ensure the profession’s continued relevance and value.
--Jennifer Wilson, Co-founder and owner, ConvergenceCoaching
The industry is undergoing a massive and positive technical disruption where solutions that automate the accounting, and eventually the tax preparation process, will replace the labor-driven, hourly billed services that have, up to this point, defined the profession. To respond to this disruption, accountants must realize that the professional is bigger and bolder than compliance and record-keeping, and choose to embrace a trusted advisory model through which we can make a radically positive impact on the success of our clients. In doing so, we will leverage the technological disruption -- and the accurate, real-time accounting information it affords us -- to contribute to small-business success. Value-infused services (that are value-billed) are key to embracing the profession’s future.
--Joe Woodard, CEO, Woodard Companies