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.
The profession continues to be at a pivotal point of its evolution. Professionals and firms are faced with responding to new and increasing client demands at the same time that they try to figure out who they are, how to be more relevant and what to become. All of this is the face of ever increasing and complex regulation.
Tax and accounting professionals are overwhelmingly influenced by an unprecedented increase in regulation, a workforce shift the implications of which are not fully understood and technology, and fee pressures that are forcing them to find new and more efficient ways of working.
To be successful, professionals will need to anticipate future client needs and leverage technology to add value for their clients.
Karen Abramson, CEO, Wolters Kluwer Tax & Accounting
Attracting and retaining high-performing talent who bring insights and understanding to help clients and users of financial statements make confident decisions continues to be a challenge in the accounting industry. At RSM US LLP, we’re tackling this challenge on several fronts.
First, we are working collaboratively with other firms through the Center for Audit Quality to raise awareness of our profession and to help build interest in accounting among youth. The premise behind the combined effort is that we will all win by getting more people to choose accounting as their profession.
Second, RSM has enhanced our outreach on campus and among diverse professional organizations like NABA, ALPFA and Ascend. We’re also building a unique scholarship program through our RSM US Foundation that will roll out this year.
Finally, we continue our focus on making RSM a great place to work. This year we are focusing on enhancing our talent development culture through new performance management, feedback and coaching processes, additional training on advisory skills and a new bonus program. We continue to give back to our communities through Birdies Fore Love, RSM Volunteer Day and our RSM US Foundation. This year, we also launched a unique program for our 90th anniversary that gave nine employees $10,000 and nine additional days of paid time-off to pursue a personal passion. It was so popular that we are looking to run the program again this year.
Attracting, developing and retaining the people we need to serve our clients today and in the future is critical to the ongoing success of our firm and the profession as a whole.
Joe Adams, Managing partner and CEO, RSM US
Baby Boomer retirements and the resulting succession crisis in many firms. It is fueling much of the merger mania right now. My practice has evolved to helping medium-sized firms develop their internal succession plans or, if that is not possible or it is too late, assist them with merging their practice into a larger firm.
Gary Adamson, President, Adamson Advisory
The lack of innovation and change needed to thrive. We are retiring (in record numbers) the most loyal members of our profession and hiring the least loyal. Fewer people enter the profession each year that want to be owners. Leaders of our client organizations are retiring in record numbers and younger individuals (who are often less loyal) are assuming leadership seats. Too many individuals and firms in our profession have buried their heads in the sand and are living the strategy of hope.
Sam Allred, Director, Upstream Academy
There are new key performance indicators for a company’s success that often cause a business to grow in the long run but, at the same time, hurt short-term earnings. Accountants need to pay more attention to value-creating and intangible investments and not look at them as merely expenses. Traditional audit reports often fail to identify the true drivers of a business. If auditors spend more time looking at the elements that drive value creation, our services and the profession will become more relevant and important.
August Aquila, President and CEO, Aquila Global Advisors LLC
There are a number of issues facing the accounting profession, but the two main ones in my opinion is adapting to constant technological changes, and the talent pool.
It is difficult to keep up with the pace of innovation today. More firms are moving towards cloud computing, which raises more cybersecurity issues than we have had to account for before. Also, staying up-to-date with the changes in technology and innovation in the audit field will be challenging, especially for smaller firms where upgrading can be cost prohibitive.
Hiring and retaining high-performing employees is also concerning, with increased competition driving high turnover. This extends into succession planning, as many firms led by Baby Boomers will be deciding who will take over within the next five years. Having the right talent that can move into these leadership positions is crucial for the continued growth and success of the industry.
Antonio Argiz, Chairman and CEO, MBAF
The three major challenges accountants face are relevance, the age battle, and the transition to the freelance economy.
1. Relevance. With technology continuously improving, accountants, bookkeepers, EAs, and CPAs must continue providing relevant information to their clients. The amount of time and technical knowledge required are going to become less relevant as the information age expands and technology improves. Accountants are being compelled to providing value on an entirely new level. Primary responsibilities are transitioning from account reconciliations and compiling reports, to working with clients in an entirely new and deeper way. Many of the accountants I’ve worked with at The Argue Company have actually transitioned away from providing services completely. They now focus 100 percent on financial coaching for small-business owners, assisting them overcome their true problems and challenges, existing limiting beliefs, and fears around accounting, money, and finance.
2. The age battle. We live in a time where 14-year-olds can create $30 million companies (RECMED), and a 30-year-old runs one of the most influential companies of our time (Facebook), but nobody can imagine someone in their twenties being promoted to partner, or have something better to say about sales and marketing, or have a better understanding of technology than the status quo in the firm. The biggest reason I had to quit PwC after being promoted early is because I felt that I was being held back massively relative to my potential. I couldn’t wait around because, “That’s just how it works.” So I quit.
3. Transition to the freelance economy. Back in the day, an accountant could just be an accountant. As the market continuously changes, accountants are increasingly becoming self-employed, whether at their own firm or as freelancers. This brings about an entirely new skill that most accountants desperately need but lack: sales and entrepreneurship. Companies such as New Clients Inc. used to tell accountants, “No worries, you don’t need to learn how to sell, just hire a telemarketer and have them do it for you.” That day and age is over. In this new economy, small-business owners desire work with an authentic and genuine personality, and a niche provider, not just the next CPA that happened to set up shop on the local street corner who cold-called them on a Tuesday.
Andrew Argue, CEO and Founder, The Argue Co.
For CPA firms, I think the most important issues are adapting to change and increasing the relevancy of services they provide to clients. Advisory services are becoming much more important as we move forward, and CPAs need to have strategic plans in place to make that transition.
Erik Asgeirsson, CEO, CPA.com
As I’ve lived in the large accounting firm world these past five years, I’ve seen first-hand a steady uptick in M&A activity. I think now more than ever it has become more and more of a game-changer in today’s accounting landscape. I’ve watched firms gobble up sizable competitors -- often in order to acquire a specific area of focus, like client accounting services. I cannot meet with a firm in California without the topic of Armanino’s next strategic acquisition coming up, especially after their recent merger with RBZ.
It’s exciting and also challenging to see firms who realize they won’t be able to build a practice fast enough to compete, so buying one becomes the best possible option. BDO is a perfect example of this, as they recently acquired the client accounting-focused firm, SS&G, in order to fast-track their move to cloud-based outsourced accounting for clients.
I’ve personally had conversations with firms about my thoughts on other practices as they start to investigate possible mergers. It’s a huge compliment to think that they’re interested in my insight based on the partnering I’ve done with accountants in my role.
Kim Austin, Business development manager, Intuit
In the fast-pace world of technology, and technology’s crossroads with professional services, it’s becoming more important than ever for accountants to compete against software, like TurboTax, that is automating many of the jobs accountants have performed historically.
Kurt Averell, Founder and CEO, Canopy Tax
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
I believe change management is the most important issue facing accounting firms today. The accounting profession is experiencing impacts on a number of fronts, driven in large part by technological disruption and greater regulatory complexity.
The speed at which changes are occurring is nothing short of breathtaking. A quick look at some of the key drivers of change conveys a daunting landscape rife with challenges -- and the list is growing with each passing year:
- General regulatory environment turbulence at the federal, state and international level. FATCA compliance may be at the top of the heap for most firms, but there are many other areas particularly affecting firms that have business clients operating outside of the U.S.
- Globalization in general, with many clients wanting to operate beyond country borders. The global supply chain and trade agreement landscape has created a whole new dimension of complexity that accountants with global clients must contend with.
- Slow growth of new business start-ups. With approximately 60 percent of U.S. counties seeing more businesses close than open between 2010 and 2014, and only 20 counties generating half of the country’s new business establishments, we must consider the impact this will have on ability to attract new clients. Those 20 counties are now home to nearly one-third of the U.S. population, as the U.S. seems to be feeling the impact of urbanization, much like the rest of the world. A full 50 percent of job growth in this recovery accrued to only 2 percent of U.S. counties.
- Constant tax changes and reform. Consider this: With this being an election year, there are over 100 different tax plans being proposed!
- The IRS and the role of enforcement: With things like the Affordable Care Act of the last two years, and now the focus on refundable credits, you know that if the IRS has to own it and manage it, than we accountants do as well.
- Merger & acquisition activity. It’s at its highest level ever, with local firms becoming regional, regionals becoming national, and national firms thinking global. Large firms are getting much larger these days. To make it on the 2015 list of the largest U.S. 100 firms required revenues six times that required in the year 2000. That would require a CAGR of 12.7 percent to reach that level. And remember that we had a major recession during this time. Deep, broad expertise is becoming a requirement, and M&A is one way to acquire it.
- Cybersecurity is another issue facing the profession. Our clients’ data are now under attack, and we must be diligent in protecting it. Firms are being targeted and hacked, sometimes with data stolen and used for identity theft purposes and sometimes the data are held for ransom. This was not an issue just a few years ago.
- The Talent War. Turnover is running high (at 17 percent on average) at a time when firms are striving to gain more diversity and simultaneously experiencing a graying of the profession. 64 percent of partners are over 50 today, versus 52 percent in 2005. General succession planning is now a big issue in most firms, and of course we have the “Millennial effect,” where we must learn to successfully interact with them as clients and employees.
- General technology convergence and acceleration is causing the work environment to change, along with client and staff expectations. How we serve clients can’t be handled the way we’ve done it in the past. With the cloud, our work needs to be performed in a far different manner, and we need to be constantly connected to our clients to serve them best. Our business clients have either moved to the cloud already, or they are planning it. And access or bandwidth issues of the past are rapidly going away, further accelerating the movement to the cloud.
The list above is long, and yet it’s not complete. The point is that the pace and the sheer number of issues impacting the profession can seem overwhelming. Managing the resultant changes -- and doing it well -- is the biggest issue facing the profession today. Firms of all sizes must tackle this head on. Inertia, or complacency, is a real danger. Yet on the positive side, progressive firms can and are thriving and growing in this period of rapid change.
Jon Baron, Managing director, Professional Segment, Thomson Reuters Tax & Accounting
Historical financial reporting has lost its relevancy. CPAs hold on tight to it, though, because they find it hard to view their profession through a different lens. Current financial reporting reflects a very small piece of a company’s actual worth that fails to measure and report on corporate assets associated with brand value, intellectual property, environmental impact and human capital. CPAs can either catch up or get left in the dust. It won’t be up to them for much longer.
Joanne Barry, Executive director and CEO, NYSSCPA
The rapid pace of change due to technology and globalization that is creating new business models that will require the profession to also change to be effective in our roles. These changes affecting the organizations we serve are presenting new risks, and the profession needs to be ready to address these new risks as business models evolve.
Brian Becker, Partner, technology, and managing consulting national leader, RSM US
Attracting and retaining top talent. High performers have more options than ever and they're actively managing their own careers. They have access to a global job market, and virtually unlimited knowledge/training opportunities. Firms are going to have to come up with novel ways to inspire and challenge their best employees, or risk losing them.
Bob Berchtold, Founder, CPA Talent
The most important issue is actually the same as last year as it continues to amplify itself: change and the ability to adapt to it, as well as willingness to embrace disruption and not hide from it.
As part of this change, the Baby Boomers must start passing the decision-making and leadership reins to the Millennials. Boomers born in 1946 are turning 70 this year and need to realize that the time has come to have trust in the younger professionals that they have mentored and trained. Firms that have not created new partners from the younger ranks will cease to exist as they and their clients age out. If there are no rainmakers amongst the younger team members, there will not be new clients. The Millennials possess different skill sets and professional contacts that will only enhance their ability to garner new clients and grow their practices in a digital world
The tasks that accounting professionals performed in the past are being phased out due to automation and artificial intelligence. “The Future of Employment,” by Frey & Osborne published by Oxford University, is a great eye opener to what is going away. They state that tax preparers have a 98.7 percent chance of being replaced by automation, while accountants and auditors have a 93.5 percent chance of being replaced. These numbers will continue to rise as the Internet of Things expands and digitalization increases.
This is amplified by another book entitled, “The Future of Professions,” which discusses the decline of what we do today and how it will change.
David Bergstein, Evangelist, Accountant Segment, Intuit
Here are two indisputable facts: Migration to the cloud is inevitable for accountants, and the cloud presents greater opportunities for them to revamp their practices and better serve their clients than PC technology did. And yet many accounting firms will go through all the migration pain without much gain.
Why? Because many accountants will drag their feet until they’re forced into migrating to the cloud. If you genuinely care for your practice, you owe it to yourself to invest time now to understand what the cloud can do for your practice and how you can make the most of the migration.
Chandra Bhansali, CEO, AccountantsWorld
The long-term globalization of accounting practices.
Just as globalization has moved manufacturing jobs abroad, accountants face the risk of a shrinking pie for their core services.
To remain competitive in the global environment, we must greatly increase productivity in our client engagements and reduce operational costs. One way to accomplish this is workflow automation using integrated solutions. This can greatly improve operational efficiencies and reduce IT costs.
Another important step is to have some sort of specialization. One example: specializing in industries that have specific local, state or federal government reporting requirements.
Finally, offering a fuller range of services is another way to minimize the impact of globalization.
Sharada Bhansali, Executive vice president and co-founder, AccountantsWorld
The continued ramping up of the expectations and reliance of audits remains the most important issue facing the accounting profession. As the world sees significant stresses on financial stability, such as the recent “Brexit” vote in the United Kingdom, the role of auditors in creating assurance for investors and creditors is enhanced. In the U.S., the sharp criticism being articulated by not only investors, but even public entities such as the PCAOB and SEC as to the quality and credibility of audits, only amplifies the importance of improving and maintaining the highest quality of attest engagements and the importance of regulation and oversight.
Ken Bishop, President and CEO, NASBA
There are three wars that the accounting profession currently faces.
World War 1 is the increasing commoditising of compliance work through cloud computing, while increasing efficiency and reducing cost base is also removing the historical need for human interaction, which was the basis of much of our billing in times gone by.
World War 2 is the product of World War 1, which is that in a market of productised compliance work, client loyalty is found in both the advisory services provided and the strength of relationships that are built upon that foundation. This will predicate …
World War 3, which will be the battle for talented professionals who can build relationships with clients, potential clients, introducers and influencers alike.
Martin Bissett, Founder, The Upward Spiral Partnership
How we will effectively transition firms from the current Baby Boomer owners to the next generation of firm owners. Technology, Millennials, and new ideas play a big part in how new owners will take over older firms.
Jason Blumer, Founder and CEO, Thriveal Network
There really is no single issue.
Relevance is an issue that all should be focused on. Whether in public accounting or business and industry, the profession must focus on the real needs of clients and employers. The issue that might challenge relevance the most is the notion of assurance on non-financial information. The profession really needs to lead in this area.
Diversity continues to be a challenge. The profession really needs to stop paying lip service to addressing diversity in the profession. It is time that a serious commitment be made, including a significant financial and human resource commitment to create environments that will make the profession more attractive to ethnic and cultural minorities. This commitment is one other aspect of relevance for the future of the profession.
The future of competency. We really have to stop talking about CPE. The real issue is what should be expected or required in terms of learning and competency for a CPA to renew a license in the U.S. The CPE model that has been around for decades is increasingly irrelevant in terms of learning methodology and preferences. We can’t wait to figure out a perfect system. Leaders in the profession must innovate and experiment in order to begin making marginal gains in the area of competency development.
Gary Bolinger, President and CEO, Indiana CPA Society
Relevance -- the profession is faced with the need to transform. Change is not enough. Mindsets, skillsets and toolsets must all change to meet the client’s wants and needs. The profession sets in an enviable position of most trusted advisor, but to retain this status members must become more strategic and innovative. The compliance services have been commoditized. Packaging and pricing compliance, performance and strategic based services is the key to continued success and being future ready.
Gary Boomer, Founder, visionary and strategist, Boomer Consulting
Maintaining relevance in a rapidly changing business environment. And the change is coming on multiple fronts:
- 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.
- Process – process improvement will be critical to effectively compete in an increasingly demanding market. Eliminating waste and improving consistency/quality will be key.
- Technology – Cloud and mobile technologies are not only changing what is possible in the workplace but also expectations of employees, clients and partners.
- 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, CEO and shareholder, Boomer Consulting Inc.
The impact of technological changes in the profession, fueled many years ago by the beginning of the migration to the cloud. Those changes, along with the impact of big data, are changing the game and how financial information will be viewed in the future. Firms that are stuck in the traditional compliance reporting role will be forced to change or will be left behind.
Jim Bourke, Partner, WithumSmith+Brown
The need for CPAs to be true advisors. Compliance is not the future of the profession. Clients want and need more than an audit or tax return. They want more advisory, value-added services. They want help to grow their businesses and make strategic decisions. It’s important for CPAs who are experienced, successful client advisors to mentor younger staff and provide them with the education and mentoring necessary to build this skill.
Jean Marie Caragher, President of Capstone Marketing
The industry's biggest challenge is the shortage of enough strong talent to support the growth that the market is demanding. This will make it difficult for many firms to remain independent, either because they can't recruit competitively, can't retain and rapidly develop existing talent, can't provide effective leadership succession or can't attract talent in new service areas where their clients need expertise. We see this challenge every day, and very few firms are exempt from it.
Closely related is the need for CPAs to develop the soft skills that will enable them to be practice builders. Except for large firms that do a lot of public company audits, gone are the days where accountants spend the bulk of their time at the client site where time together with clients facilitated building personal relationships and the flow of new work. Today's professionals need the interpersonal skills to connect with clients and initiate encounters to sell projects in much briefer interaction.
Carolyn Carlson, President, StangerCarlson
Paul Caron, Publisher and editor-in-chief, TaxProf Blog
Addressing this question from the public accounting perspective, I believe the most important issue is managing change to maintain relevancy. Firms need to evolve as the marketplace evolves. The challenge is that the partnership model makes this inherently difficult to do. I believe firms need to move to a more centralized structure for decision-making, strategy and process/workflow.
Change by itself is difficult, but the construct of the partnership model makes it even more challenging as many firms remain decentralized as a collection of talented independent agents. The good news is I do see strides being made in this area.
Michael Cerami, Vice president of business development and corporate strategy, CPA.com
Accountants face an enduring challenge to keep pace with the accelerating rate of change in the business environment. To continue to add value to their organizations and clients, accounting professionals must stay abreast of complex issues stemming from rapidly changing accounting rules, the high velocity and severity of risk, and evolving innovation and technologies. By aligning their efforts with the needs of the business, accounting professionals will be well-positioned to provide the highest level of support to their organizations and clients, to both meet the challenges and seize the opportunities that come from an environment where the speed of change seems to keep getting faster.
Richard Chambers, President and CEO, IIA
Trust and credibility is the foundation on which our profession exists. Exceeding expectations of what it means to act “in the public interest” has to always be at the top of the profession’s ‘to do’ list.
Fayezul Choudhury, CEO, IFAC
Making earnings presentations relevant again. The FASB needs to re-examine the performance reporting comprehensively and make their presentation preferable for investors compared to the plethora of non-GAAP presentations.
Jack Ciesielski, Publisher, The Analyst’s Accounting Observer
In a word, “relevance.” Technology advances and cloud computing are causing significant disintermediation. CPAs are increasingly challenged to keep up with change and identify areas to add real value for clients. Those who are willing to adapt will continue to play a strategic role with their customers; those who are afraid to change and content to offer low-value services will soon find themselves replaced by technology or outsourced services.
David Cieslak, Principal, Arxis Technology
Succession planning is a tremendous issue for firms today. Many firms have not planned adequately for it and, as we are all aware, there are an unprecedented number of Baby Boomers retiring. This dynamic has laid the groundwork for many mergers and acquisitions. I see it in my own market. The acquisition of SS&G by BDO and most recently BCG joining forces with Sikich, although both are considered to be market based. The number of mergers and acquisitions in a year is astounding. Not everyone is suited to lead an accounting firm nor do they want to. To exacerbate the problem, leaders have often not prepared those coming up in the ranks to take over running the firm.
Lauren Clemmer, Executive director, AAM
The transition that firms are facing from being transaction and reactive, to proactive and strategic among the growing competition across technology and other service providers. Technology is driving to cheaper service alternatives, so firms that relied on this as a source of revenue are quickly seeing their profit margin shrink. Pair this transition with workplace difference in staff (tech-savvy, trigger-happy new hires versus established, although more cautious staff) make it challenging for the firm to both handle the transition from a process perspective, but also a huge communication hurdle in regards to getting the team and clients on board with their goals.
David Cristello, CEO and founder, Jetpack Workflow
The profession is facing an encroachment on its markets by non-CPAs performing services that CPAs could perform. Although we are protected with certain core services, these are in a mature state and growing slowly. Many of the fast-growth areas are those that don’t require a CPA. Enterprising business people know this and are eating away at our potential. If we don’t grab the markets for ancillary services, we’ll become increasingly less relevant as a profession.
Gale Crosley, President, Crosley+Co.
The most important issue is, in my opinion, the accountant’s responsibility for fraud and the continuing gap between what the public, often including the court system, believes our responsibilities to be and what we in the profession believe we are capable of doing.
Our profession relies much too heavily on commercially prepared checklists for performing their financial statement engagements and, as a result, the engagements become too routine and clerical. Accountants and auditors need to develop a better understanding of the requirements of professional standards and develop internal processes for making certain that they are properly complied with.
Mark Dauberman, Owner and president, Mark Dauberman Seminars
From my perspective, the most important thing facing our industry is the need for more accounting and bookkeeping professionals to understand what it looks like when the service we provide is less transactional and more strategic. This has been discussed for a few years already in concept, but I rarely see concrete applications demonstrated for how people will do this. People can and already should be doing this.
Seth David, President, Nerd Enterprises
Technology, talent, completion, regulation and other areas are more dynamic than ever before and the pace is becoming faster each year. It is critical for our industry leaders to work together to envision the impact of these changes and prepare all members for the betterment and sustainability of the profession.
Rick Davis, Managing shareholder, Elliott Davis Decosimo
Consumer and client expectations and the ability and willingness of the profession to meet these expectations, which go beyond attestation. It is no mystery why consulting and other services are essential to a CPA firm’s practice. Consumers and clients are expecting and demanding more assurance on business matters beyond historical financial statements.
Loretta Doon, CEO, California Society of CPAs
Auditors must adapt to a new way of thinking about their role in our capital markets. The audit is as important a function to vibrant capital markets today as it has ever been. By providing a basis for confidence in reporting of financial – and increasingly non-financial – information to investors, the audit can give businesses and entrepreneurs a lower cost of capital to spur economic growth. But to achieve this opportunity, auditors must move from measuring and promoting their services to audit clients to, instead, measuring and promoting their services to investors through more consistent investor protection, more meaningful audit reports, and more engagement with investors.
James Doty, Chairman, PCAOB
The ever-changing geopolitical landscape continues to give rise to a proliferation of new regulations and accounting standards worldwide. It’s imperative that the profession, regulators and lawmakers alike maintain an open dialogue globally to continue to strengthen standards that enhance quality and drive transparency.
Lynne Doughtie, Chairman and CEO, KPMG
In today's dynamic, complex world, there are a number of initiatives at the forefront of the profession. One of those important initiatives is related to people and how we ensure the continued vitality and relevance of the profession. Attracting, retaining, and growing talent across the entire profession -- public, business/industry, not-for-profit, government, consulting and education -- is a shared responsibility.
Kimberly Ellison-Taylor, Incoming chair, AICPA
Retaining qualified staff interested in and capable of leading the profession tomorrow and beyond. As a profession, we have moved away from a transactional services business model. Firms that are growing today are moving toward a relationship-based service model that serves clients more holistically. So, instead of hiring a CPA a few hours a year to do your tax return as an isolated service, firms now offer an increasingly diverse mix of interrelated services throughout the year to help the client with compliance, strategic planning, business process improvement, technology solutions and more.
Many CPAs don’t feel comfortable in that space because it requires soft skills such as communication, relationship management, managing boundaries, flexibility and adaptability. As a result of these changes, soft skills will quickly become the new talent differentiator. I believe that companies and firms that provide training and development opportunities on these skills and competencies to staff at all levels, not just “premium” talent or senior staff tapped for leadership roles, will improve overall staff retention.
Jina Etienne, President and CEO, NABA
Human capital -- bringing the firm's visions together with those challenges faced with human capital and executing success.
Kim Fantaci, President, CPAFMA
The accounting profession is being challenged by FASB’s move toward more principles-based accounting rules and a growing need for more transparency with regard to corporate governance, financial disclosure, and international reporting. The accounting profession is being called on to employ more judgment in applying accounting rules and will become even more integral to the business community and investors striving to make more informed decisions among a variety of industries.
George Farrah, Editorial director, Tax and Accounting, Bloomberg BNA
As audit evolves with new technologies and methods of providing assurance on a wider range of information, a major challenge facing the audit profession will be how to attract, compensate and retain highly qualified professionals with the skills required for these new tools.
Lewis Ferguson, Board member, PCAOB
The Audit of the Future: From cybersecurity to non-GAAP information to sustainability, society's needs for assurance are expanding and evolving. While maintaining its strong focus on current responsibilities, the accounting and auditing profession must also continue to envision how the audit of the future can meet stakeholder needs for the benefit of investors and the capital markets. The profession must think proactively, investing resources and talent in areas where auditors can and should play a greater role. New technology, such as greater use of data analytics and artificial intelligence techniques, can continue to strengthen and deepen the auditor's analytical role and work—not simply add bells and whistles.
Cindy Fornelli, Executive director, Center for Audit Quality
The most important issue facing the accounting profession today is the change that needs to take place in order for our CPAs to be effective in the future – specifically I’m referring to the need for CPAs to have a much higher level of education when it comes to technology. The large financial frauds of today and tomorrow do not and will not use the rudimentary tools of yesterday, but are instead leading adopters of the new technologies themselves. Auditors will be challenged by creative crooks who will manipulate technology and the systems we use to mask their frauds and fool the auditors. It is imperative that our accounting professionals prepare, educate and train themselves in technology in order to ask the right questions and look in the right places if they are going to be effective in their job of uncovering financial fraud and protecting the public from the fraudsters who seek steal from those who trust them.
Brian Fox, Founder and president, Confirmation.com
The most important issue facing the accounting profession involves its ability to maintain trust and confidence and follow fundamental core principles in light of a quickly changing environment of complex risks. When faced with new problems and dilemmas, it will be critical for practitioners to uphold the profession’s core values while being mindful of the profession’s role in the effective functioning of our economy and the well-being of individuals.
The accounting profession is entrusted with reliable financial reporting and auditing, which is critical to the effective functioning of our economy, financial markets, capital markets, charitable and humanitarian organizations, and governments at all levels. The profession must be guided by the fundamental principles of having the right incentives to encourage key parties to do the right thing and providing adequate transparency to help ensure that the right things will happen, accompanied by full accountability. And the regulatory system must proactively assess and address risks within the system that threaten those fundamental principles.
Jeanette Franzel, Board member, PCAOB
The most pertinent issue currently facing the accounting sector is how to integrate technology, workflows and service offerings. The introduction of technology only on the surface takes traditional accounting workflows into the digital realm. At its most understood, integration allows for efficiencies and changing offerings and hence changing people requirements. Managing change within teams is a challenge the sector is currently grappling with.
Russell Fujioka, President, Xero US
Being able to effectively complement cloud technologies and zero-data-entry automating technologies, instead of trying to complete with them.
Hector Garcia, Principal, Quick Bookkeeping
The proliferation of fraud and cyberattacks, including the risk to organizational reputation as a result of the loss of customer data, is the most important issue currently facing the accounting profession, especially in the area of tax administration.
Cybersecurity threats against the federal government continue to grow. Federal agencies reported 77,183 cyberattacks in FY 2015, an increase of more than 10 percent from FY 2014. Data breaches reported in recent years and the availability of information on the Internet has compromised the effectiveness of controls used to authenticate individuals when they access their account information. Providing individuals more avenues to obtain answers to their account questions or assess their own records online creates more opportunities for exploitation by hackers and other fraudsters. The risk of unauthorized access to accounts will continue to grow as more corporations and governmental entities focus their efforts on delivering individuals self-assisted interactive online tools.
In May 2015, the IRS announced that criminals had used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to tax account information through the IRS’s “Get Transcript” application. In August 2015, the IRS indicated that unauthorized users had been successful in obtaining tax information on the Get Transcript application for an estimated 334,000 taxpayer accounts. Based on TIGTA’s analysis of Get Transcript access logs, potentially unauthorized users had been successful in obtaining access to an additional 390,000 taxpayer accounts. The IRS also reported that an additional 295,000 taxpayer transcripts had been targeted but the access attempts had not been successful.
J. Russell George, Treasury Inspector General for Tax Administration
The proliferation of technology -- and how investors use technology to consume financial information. Over the next few years, the profession will be focused on figuring out how financial reporting can keep pace with the changes to come so that investors get more relevant information, more quickly.
Russell Golden, Chairman, FASB
The need for firms to offer more advisory services is growing, and clients are expecting more support from their accountants. Many firms are increasing the amount of consulting offerings and billings. A number of firms, however, are continuing to struggle with how to play more of an advisory role with clients, which requires a paradigm shift in many ways. This is necessary because firms are struggling with how to differentiate themselves from their competitors with respect to traditional services, and are competing on price. Those firms that are investing in learning why they’re winning and losing work are the ones that are increasing their win rates. The reasons vary from the way the teams work together on pursuits, to innovation in the sales process. The latter generally leads to more advisory work because it uncovers needs that may be unique and are typically not limited to compliance work.
Young professionals want to have a voice in their firms early on, and they are requesting more interesting and challenging work sooner in their careers than traditional compliance partners have been able to offer. Firms that are putting future leaders in charge of something or are investing in programs or initiatives that give up-and-coming leaders a voice and responsibility are seeing the fruits of their efforts in the form of more innovation than they have realized in the past. This success comes in the form of recruiting, retention initiatives, client-service offerings, and virtual work arrangements. Firms need team members who can lead, manage, sell, develop people, and do the work. This is not a new idea, but firms’ leadership continues to struggle with how to recruit, retain, and develop these individuals so they reach their full potential. What makes this concept even more complicated is the rapid retirement of the current Baby Boomer generation, which creates gaps in many key areas. The challenge lies in getting ahead and staying ahead of these gaps and laying a foundation of strength in a firm for years to come.
Angie Grissom, President, The Rainmaker Companies
The accounting profession has heretofore been the principal and principled steward of precisely the proven reliable tool which our fellow citizens and stakeholders urgently need to check and reverse our recently emerging national decline -- professionally designed and applied, meaningfully public interest ambitious, assertively inclusive and purposely intrusive, fund-based integrated institutional budgeting, actuarial, accounting, auditing, and financial reporting legal and contractual requirements and compliant practices. Scarcely anyone outside of the accounting profession remembers or understands this, and the accounting profession appears de facto determined not to remind or enlighten them.
Influential thought leaders in the accounting profession prefer forsaking this stewardship role, and its accompanying greater public interest independence responsibilities, in favor of broader discretion in providing lucrative management information system, tax avoidance, and other client advocacy products and services.
Because the accounting profession and the general public have yet to accomplish a meaningfully clear and inclusive dialogue and resultant shared understandings of public interest critical consequences, nuances, and implications of any such forsaking, present practices are increasingly inadequate.
Dick Haas, Civic advocate
The most important issue facing the accounting profession is how we will respond to automation. Recent research estimates that almost half of all U.S. jobs are at high risk of becoming automated over the next two decades, and accountants and auditors landed in the top one-sixth of the most “automatable” professions. Making the industry-wide transition in public accounting to firms spending more time on helping clients make better business decisions and less on compliance-related services is a critical means to responding to the changing landscape of the accounting industry. The industry has to find the balance between leveraging automation to meet clients’ compliance needs and growing a more advisory-focused book of business.
As I mentioned in my foreword for the book “Next-Level Accountants: Your guide to growing a firm of trusted advisors,” there are two primary reasons we finance professionals perform accounting and prepare financial statements. The first is that we have to. Businesses are required to submit accurate financial information as part of calculating and preparing taxes. However, the second reason is to help us and our clients make better business decisions. Figuring out a means to focus on the latter across the industry is how we’ll be able to effectively respond to the challenges of automation.
Brian Hamilton, Co-founder and chairman, Sageworks
Significant changes on the horizon in the areas of revenue, leases and impairment will present a major challenge to all accountants and auditors. In addition to implementing new requirements in their own work, public accountants and auditors will have to help educate investors, preparers, audit committees and others on the impact of the new requirements. Companies will have to implement new systems and controls, make critical accounting policy decisions and assess the business impact of the changes, presenting challenges both to financial management and external auditors. Through all this, auditors will have to be mindful of maintaining their independence and skepticism and demonstrate to investors the value of their work.
Jay Hanson, Board member, PCAOB
As an industry we have always reported on the past, last month, last quarter, or last year. However, in today’s world of instant information we must adjust. While the need to report on the past will always be needed for compliance, we must couple that need with the desire for real-time information if we want to remain relevant. While today’s technology will help us meet these new needs, we must resist the temptation to become completely dependent on technology. Our clients want us to help them look forward and that requires that we maintain a personal relationship with them. For those of us that adjust to this new environment the future is bright. For those who choose to ignore this new world, they may keep some of the clients they have but will find it difficult to acquire new ones.
Roger Harris, President and COO, Padgett Business Services
The most important issue facing the accounting profession is the same issue facing small businesses in general -- government over-regulation. Until that reverses, our economy will drag because small businesses are the engine that keeps our economy pumping.
A recent analysis of U.S Census Bureau data by the Wall Street Journal found that the U.S. productivity growth rate is nearly half of its historical rate, dropping from an annual average rate of 2.5 percent since 1948 to 1.1 percent since 2011.
While the productivity growth rate is shrinking, the Federal Register is growing. In 1960, there were 22,877 pages in the Federal Register. By in 2012, there were 174,545 pages, according to the Competitive Enterprise Institute. Perhaps that’s why 72 percent of small businesses reported in a Wells Fargo/Gallup News survey that regulations were hurting their “operating environment.”
Unless our representatives wake up and make serious changes, the American government will kill American growth. That will hurt the accounting profession and the entire U.S. economy.
John Hewitt, Founder, chairman and CEO, Liberty Tax
Not adapting to the fast pace of change fast enough. Many CPAs are stuck in the current state and not taking time to be aware, predictive and adaptive to the changes facing our profession. This is causing them to delay making changes necessary to leverage technology, develop succession plans and next-generation leaders. I am now seeing where those firms and organizations who “get it” are outpacing those who are stuck in growth, profitability, retention and other success measures. As W. Edwards Demming once said, “It is not necessary to change, survival is not mandatory.”
Tom Hood, CEO and executive director, MACPA
I don’t know if everyone sees this yet, but I strongly believe the key issue facing accounting firms today is the struggle inside firms to fully adopt and leverage technology in a way that continues to automate the compliance process. This closely ties to the future-ready firm strategy of transitioning from a compliance focus to an advisory focus with clients. There’s no doubt the future of the accounting profession is moving toward a completely (almost) automated compliance process -- whether that’s 10 or 20 years out we can debate -- but the basic tax and A&A work will continue to become automated, which will continue to put downward pressure on fees. So it’s going to become imperative, even if it’s not today, that firms find unique and innovative ways to add value to their client relationships.
If firm leaders aren’t proactive and building the strategic vision of their firm to properly align with this new model, they are going to be falling behind at a greater pace than ever. Technology is advancing so rapidly, and firms need their processes and technology utilization to keep pace. They also need to recognize the skill sets that will be required in the future and start onboarding new employees with these skill sets in mind.
Unfortunately, there are still many firms (even in the Top 100) that have a big technology “gap” inside their firms between those individuals who want to embrace and adopt more automated work processes and those who are comfortable with the status quo. If this issue continues to be brushed aside or ignored, some of the other pressing issues in our profession like succession planning, leadership development, etc., will be even harder to solve because the firm will be playing behind.
Dustin Hostetler, Shareholder and chief innovation officer, Boomer Consulting Inc.
Rapid change in issuers’ business models. We live in an increasingly complex and interconnected world. The environment in which companies are operating is rapidly changing, there is a whole new series of risks. Many companies are now competing globally as “cross-sector” entities, combining their traditional sector presence with technology, new supply chains, customer service platforms, and expanding into global markets.
To realize increased quality, audits must be enabled through deep sector focus utilizing an integrated team of specialists. The audit of the future must provide prospective, real-time risk assessment, and deep data analysis. The audit of the future must also be a continuous effort, engaging company leaders and governance to provide transparency, perspective and analysis of risks. Technology and analytics and specialists are all important elements that contribute to enhanced audit quality.
Critical importance of independence. Our commitment to quality starts at the top of our organization. We are keenly aware that we need to execute high-quality audits independently, objectively and with professional skepticism to serve the public interest, promote transparency and support investor confidence.
We also know that our role as auditors is to serve the public interest and provide confidence to the capital market through high-quality audits. Our shared values guide our people to do the right thing. The EY Code of Conduct provides a clear set of standards that guide our actions and our business conduct. Our people understand that performing high-quality audits means upholding these standards ethically and with integrity.
The “tone from the top” and continuous discussion on the themes of integrity, quality, and personal/professional responsibility are absolutely critical to setting an enterprise-wide focus. What I have also found is that our people want to hear about this. I communicate regularly with our teams -- over the past two years my messages on personal integrity and the importance of quality have been among the most highly subscribed and talked about among our people, including team-based dialogues on these themes.
Stephen Howe, Managing partner, EY
The most important issue facing the accounting profession today is the talent void we face in the next five to 10 years. We are an aging profession. A large majority of the practicing CPAs will be eligible to retire in the next decade. It is becoming increasingly more difficult to replace this talent pool as fewer and fewer young people sit for the CPA Exam and many who get licensed are leaving the profession.
The cause of this migration away from public accounting is multi-pronged. We have done a poor job changing with the times. The image of the CPA is stale and outdated. Millennials clearly do not want the life of the public accountant, and who can blame them?
College students are opting for other majors since CPA requirements moved to 150 college credits. The cost of an additional 30 college credits, as well as the cost of studying and taking the CPA exam can be daunting.
Additionally, I believe the recent trend in credentialing has caused a devaluation of the CPA license. Credentials such as CGMA, CFE, CIA, CMA, CGA and many more, are diluting the prestige and value of the CPA license, not to mention confusing the public.
Sandy Johnson, President, NCCPAP
The obvious answer is succession planning. However, I think the root of that issue is managing, training and development. We have a profession that complains about not having a bench because they have not taken time to develop the bench. Managing, training and developing people takes a lot of time. We are so concerned with the billable hour that partners, managers and other staff are not rewarded for doing what they should be doing to develop those below them.
Sarah Johnson Dobek, President and founder, Inovautus Consulting
Clients are requesting new services that CPAs are not trained to fulfill. The existing as well as up-and-coming accountants won’t be able to sufficiently meet the client needs within four years unless major changes in strategy are chosen. This skill and talent gap has to be filled. The lack of available talent needed to provide essential services is back with a vengeance and the graduating talent won’t have the business maturity or skills to fulfill the need. The leverage of technology plus the postponement of retirements during the economic downturn has delayed the impact of this labor shortage. Some firms have found the need to return to outsourcing whether on-shore or off-shore.
Randy Johnston, Executive vice president and partner, K2 Enterprises; CEO, NMGI
Several years ago, I wrote about the unprecedented levels of tax-related identity theft and its profound impact on my sphere of the accounting world; the impact of ID theft and the importance of cyber-security continue to be immense. These issues obviously impact taxpayers, but also impact practitioners in their ability to represent their clients, as well as the tax administration system itself.
Despite the IRS’s successes in combating identity theft, I cannot over-emphasize the staggering dimensions of the tax identity theft problem. According to the latest data available from the IRS, 4.9 million fraudulent returns were filed in 2015, with the service stopping close to 75 percent of them. However, that means that 1.3 million fraudulent returns were able to breach IRS systems, representing billions of dollars of losses. Phishing, spoofs and scams are on the increase and more and more are targeting employers and tax professionals. The IRS’s inventory of ID theft cases is up 150 percent. AICPA members have indicated that the verification process for legitimate taxpayers whose identities were stolen is lengthy and those taxpayers’ refunds are sometimes held up for years. Finally, the AICPA’s Tax Identity Theft Information & Tools Web page has experienced a tenfold growth in traffic over the last year.
ID theft also has the potential to transform the tax system as we know it. On a shorter-term basis, Congress is considering needed additional legislative solutions to mitigate the problems and has even started funneling additional funds targeted to ID theft mitigation. The IRS has engaged a “security summit” of impacted stakeholders -- including state tax administrators -- to expand the battle. More dramatically, however, is the IRS’s consideration of a “Real Time Tax System,” which would re-shape the processes of matching information returns with tax return information -- a process that has already begun.
Ed Karl, Vice president of taxation, AICPA
This year, with all the on-going conversations about how to attract and retain top talent, I feel that the issue of attracting and retaining women has become even a greater concern.
In recent years, females outnumbered males in university accounting programs. As reported during a current trends and issues session at AICPA PCPS PS/Tech, males now outnumber females. Not only is the profession losing experienced females in great numbers, but now even fewer are deciding to enter the accounting profession.
Some successful firms have addressed this, but it is my observation that the vast majority of accounting firms continue to lose talented females because of they believe they cannot have a career in public accounting and have a family.
Practitioners and other profession leaders need to address how to make public accounting more attractive to female students and more rewarding and manageable for talented, experienced female CPAs.
Rita Keller, President, Keller Advisors
Unfortunately, succession planning is still casting a painful shadow on a lot of firms with too many senior partners in denial about the market value of their practice and the younger generation being excited and capable of taking over that practice long enough to pay out their retirement. While merger deals for the stronger practices will continue to close, the lesser firms will see their “star” successors stepping away and braving the waters on their own as technology has made it simple for firms to ”turn-key” a start-up practice, especially for a technology-focused CPA!
Roman Kepczyk, Director of consulting, Xcentric LLC
How the profession embraces leadership and diversity is critical to its future success. We already know that we must compete, in a fierce marketplace, for the best and brightest to join our ranks and infuse our profession with new talent. Ensuring we not only attract and retain diverse talent, but that we continue to encourage women and minorities into senior leadership, will send a strong message to young people that ours is a profession that lives its values.
Olivia Kirtley, President, IFAC
As Barry Melancon said during a dinner I attended at the AICPA PS/Tech conference, it is the “relevancy of our core products.” Deep learning, big data, and the blockchain are all going to have a significant impact on the accounting profession, and I fear too many folks are unprepared for this change.
Ed Kless, Senior director, Sage
The growth imperative for firms is so critical today. Competition is fierce, specialization is vital, and if our firms are not growing and creating opportunities for the next generation, the overall sustainability of firms and the industry is in peril. There are some very progressive firms who are poised for long-term success, but the small to midsized firms that are not in position for successful transition will end up being acquired for parts by larger firms.
Jack Kolmansberger, Chief marketing officer, Herbein + Co.
Talent, talent, talent. It used to be growth, growth, growth, but in today’s ongoing war for talent it has become quite apparent that those who can win the war, both in recruiting top talent and retaining top talent, have a major competitive edge over all other firms. All other issues are a distant second.
Allan Koltin, CEO, Koltin Consulting Group
I think it’s too hard to lump one issue for the entire profession. I’ll focus on firms and not those in business and industry and say for any firm with two-plus professionals, people, once again, tops the list. I’m talking about finding and retaining the right people. There are firms who are doing it well by creating a firm culture that becomes a lightning rod for talent.
For sole practitioners, it seems to be keeping up with change in regulations, standards and the overload of it all. We see more sole practitioners specializing in particular niches or industry segments, as it is too hard today to be a generalist. And that’s quite OK. These sole practitioners manage their clients by creating alliances with other small firms to make sure they fully serve their clients.
Mark Koziel, Vice president of firm services and global alliances, AICPA
The role and acceptance of reason and sound judgment in implementing major new standards, including revenue recognition, leases and credit losses (CECL). Sound judgment is important in successfully implementing standards and giving financial statement users the information that’s truly relevant -- it is a necessary component of a true professional.
Jim Kroeker, Vice chairman, FASB
Balancing the needs of clients with the needs of the staff that serves these clients. Firms are actively retooling their processes, investing in technology, and rethinking their approach to client service -- all in the name of making sure the work environment is enjoyable, flexible and responsive to the needs of today’s workforce. It’s my experience that it’s absolutely possible to meet and exceed the client needs in today’s environment, albeit a bit differently than in the past.
Art Kuesel, President and owner, Kuesel Consulting
The pace of M&A, and the corresponding readiness of firms to be acquired or merge. We’re living in a unique moment in the profession, where we’re seeing the confluence of non-stop M&A activity along with heightened understanding on the part of firms regarding what it takes to be an attractive acquisition or merger target. Differentiation, marketing muscle, technology optimization, specialization, the right mix of services targeting the right vertical segments, and a focus on succession planning are a few key elements. The big roll-up will continue over the next few years, with some big regional, national and international winners.
Marshal Kushniruk, Executive vice president of global business development, Avalara
There’s no question the cloud is instrumental in introducing efficiency and saving time and money for today’s accounting and bookkeeping firms. It supports virtual operations, streamlines critical processes and adds audit trails and automation. However, the question is no longer: “Will you use the cloud?” The question now is: “How will you use the cloud?”
In a recent Bill.com industry survey, we found that 50 percent of the accounting professional respondents said they use multiple cloud solutions in their firms and an additional 21 percent indicated that they use at least one cloud solution. Clearly, we’re past the tipping point of cloud adoption.
The conversation now -- and I think it has accelerated massively in this past year -- is about creating an entire cloud technology ecosystem and maximizing its usage throughout the firm. This includes the next level of performance -- smartly integrating cloud technologies to bring a higher standard of efficiency and creating more power users that can maximize the value of the solutions and their positive impact on the firm and their clients.
Likewise, the cloud can provide a new level of “standardization” for workflows. In the survey I mentioned earlier, 85 percent of the respondents said that they change their workflows depending on each client. This means that the firm’s workflow for an everyday task could have numerous iterations across a client base. What a waste of time for everyone -- the firm and the client. With the hyper-acceleration of cloud adoption, accounting professionals will now have the ability to onboard ideal clients and dictate processes. With every client following the same steps for services and cloud technologies to support that, firms will pave the way to greater efficiency, higher client satisfaction and higher earning potential.
Rene Lacerte, Founder and CEO, Bill.com
I see two huge driving forces converging at the forefront of the profession. They are ultra-specialization and a rapidly accelerating movement from yesterday’s reporting and compliance to tomorrow’s trusted advisor business models. We are squarely in the middle of a seismic shift that’s intensified by technology, client expectation, and the professions’ demographics. Each force acts on the others and the result in rapidly accelerating change.
Gregory LaFollette, Strategic advisor, CPA.com
Complexity. This is a complex profession, and getting more so all the time. The tax rules are very complex, with many exceptions. The A&A standards are complex. The technology is complex. The vast number of technology tools and software options are complex. Additionally, the frequent changes to these items create more complexity. To me, complexity is an issue because it can result in confusion, errors, and inefficiencies.
Jeff Lenning, President, Excel University
Managing change in all of its forms. Adopting a more nimble operating framework to better meet the changing needs of clients makes goals like innovation, developing the next generation of talent, bringing diverse voices to the table, and adopting new technology achievable for the profession. It’s the only way to grow and stay relevant.
Kristen Lewis, Director of marketing, EisnerAmper
The transition from current firm leadership to the next generation -- the largest change-over in the profession’s history.
Taylor Macdonald, Senior vice president of channels, Intacct
The acceleration of intelligent technology, the “sharing” economy, and innovations like blockchain are challenging and transforming the audit and accounting disciplines. Traditional services and models are reaching a tipping point where long-accepted models are insufficient for agile decision-making and value production. The profession’s core purpose pivots around the quality and reliability of the assurance and insight provided to businesses and related stakeholders. In a globally connected world where business models evolve rapidly, the profession and the next generation of accountants must be shift rapidly from technical mastery and compliance to ever-more-sophisticated data analytics, risk assessment, protection of data privacy and the ability to communicate the business implications of complex financial and non-financial factors.
Janice Maiman, Senior vice president, communications, media, news & professional pathways, AICPA
The future relevance of their service lines and operating model. For several years firm leaders have been concerned about finding qualified staff and retaining clients. When looking at the evolved expectations of the next generation of business owners and accounting professionals, we see they want more collaboration and use of technology. There is an opportunity for many firms to re-evaluate the way they look at technology’s role in tackling transaction work and giving business clients more advisory services, which also gives up-and-coming accounting professionals a great opportunity to contribute and make an impact on their client relationships. In both circumstances more of a relationship is fostered. Firms need to look at these trends and transform to a future relevant model to reduce some of these concerns.
Samantha Mansfield, Director of corporate communications, CPA.com
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 PATH Act of 2015 was a top concern for tax preparers as it did considerably more than the typical tax extender legislation seen in prior years, making permanent some key tax provisions for both individuals and businesses.
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 operational efficiencies and invest in the solutions that drive growth 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, CEO, Wolters Kluwer Tax & Accounting, North America
My two companies focus on individual and small business income tax preparation and income tax education. I think the most important issue facing independent tax business owners is to find ways to retain existing clients and attract new clients to ensure continuing growth and profitability of their businesses. A key challenge is to determine how to provide value to taxpayers who are capable of preparing their own tax returns using TurboTax and similar tax preparation software applications.
Chuck McCabe, Founder, president and CEO, The Income Tax School
We’re seeing changes on the global and national front -- politically, socially, economically -- like never before, and it’s creating great uncertainty. Concurrently, businesses are dealing with an explosion of data. Accountants should be on the front lines in dealing with their clients’ uncertainty and data overload. There’s an unprecedented opportunity to step up and help clients analyze data, then derive fact-based insights to make strategic and operational decisions.
Businesses of all sizes are facing challenges and opportunities in areas that are absolutely ripe for analysis and insights by accounting and tax professionals, including: strategic planning, international growth advisory, disaster planning scenarios, succession planning, and new market evaluations. CPAs can help clients better understand strategic cost analysis, how to set KPIs, and use industry benchmarks to measure their performance.
My personal challenge to accounting professionals is to look at me as a business owner and consider both my daily frustrations and forward-looking goals and ask, “How can I better assist with advising you on matters affecting your business?”
Scott McFarlane, Co-founder and CEO, Avalara
We’re witnessing an evolution in the accounting profession from manual computation to consultation and it is all made possible by the cloud. In the past, accountants focused on paperwork and manual data entry. Today, accountants are tech-savvy advisors with an arsenal of apps to automate manual tasks and offer valuable counsel to inform key business decisions.
As the advent of cloud technology and use of mobile devices improves productivity and increases the integration of data across various platforms and products, accountants are increasingly moving away from simply managing the books to becoming strategic advisors that help unlock their clients’ success. The cloud is fueling the next wave of innovation in the industry and the next step is the transition from mobile phones and tablets to wearables like smartwatches and automobiles. Saying “e-mail invoice” through your car’s Bluetooth while cruising down the highway is just around the corner.
Jim McGinnis, Vice president, Accountant Segment, Intuit
There are two, and they’re related – talent and technology.
Accounting firm leaders are all focused on our pipeline of talent, and there’s great competition for the best graduates coming into the profession. At the same time, technology is changing our industry. More and more of our traditional work is automated, and that trend will increase exponentially.
With every technological advancement, our work becomes less about rote accounting tasks, and more about solving business problems, mitigating risks and creating solutions in a complex and changing world. These trends change the talent profile that will drive recruiting in the future, even as the competition for talent continues to increase.
J. Michael McGuire, CEO, Grant Thornton
The CPA profession is doing well in all areas. But to me, the most pressing issue is to stay focused on the future: What are we doing now to make sure that five, 10 and 20 years down the line, we can still say we’re doing well? The fast evolution of everything in business and society, driven by technology and changing expectations, means we will likely not recognize many of the things we will be doing in the future, just like what we do today is unrecognizable in many ways when compared to 20 years ago. Like many professions, we also have to make sure our ranks reflect the changing demographics in society. We must be open to identifying new services where our skills and knowledge can solve problems for our clients and employers. And it is vital that CPAs stay in sync with the unprecedented breadth of innovation that is transforming business.
Barry Melancon, President and CEO, AICPA
Relevance and identity. The most important challenge is to understand how to continue to be essential to clients in a rapidly changing environment. We have to continually reassess the most essential contribution, the highest value we can contribute to our clients or our employers.
Increasing automation along with artificial intelligence provide a landscape where more impressive results will appear faster. The issue for accounting professionals is to face these changes and to invest in understanding the tools -- what they can do and what they cannot. The tools will continue to evolve more quickly than any of us will find comfortable. So those who can embrace the new technology and use it to deliver a new level of service will thrive. This represents a rethinking of the skills we have to bring to our work, and a reassessment of our essential contribution.
Steve Mendelsohn, Managing director, Knowledge Solutions, Thomson Reuters
Many of our industry and firm leaders do not seem to grasp the reality of the super-rapid changes that are and will be occurring. The primary changes we are making are in terms of what we do and the processes and technology we need and are adopting. However, I am referring to the much greater societal changes. Buying patterns have changed and are continuing to change, as are the way we communicate, emulate or disregard role models, respect for venerable institutions, and acquire and transfer knowledge and information. For accountants to remain relevant we need to not just keep current but to anticipate what these changes might be and then go there. We need a new type of brain power -- more creative, more of an anticipatory vein and with deliberate and concerted efforts to think and do things outside the box which will reach beyond the comfort zone of our well-established profession.
Ed Mendlowitz, Partner, WithumSmith+Brown
I believe that attracting college students into the accounting industry is a key issue. There is a staffing shortage in many accounting firms and we need to come up with ways to make accounting more interesting and exciting to new graduates.
Stan Mork, President, ITA
Robots! Thur tekkin urrr jerrbs!
Caleb Newquist, Founding editor, Going Concern
The most important issue facing the profession today is human capital. This issue stems from several derivatives. First, we have the issue of finding and acquiring quality talent. The issue isn't that the talent is not available but that the competitive environment for that talent is fierce. The Big Four and the large regionals seem to get the first bite of the apple and then the rest of the profession fights for what's left. While there are plenty of A players out, there the cost of recruiting is also a major issue. Headhunters are placing and stealing A/B players wherever they find them. In some cases, they steal from those firms where they also place people -- strange but true.
Secondly we have the issue of retiring Boomers, who often do a poor job at transitioning clients or don't want to leave because they can't afford to retire. Well, they must relieve themselves of their equity in firms even if they stick around as per diem employees. If they hang around as equity owners too long, younger quality people get frustrated and shop around even if the firm makes new partners -- young people don't want to inherit a "retirement home."
Another human capital issue is retaining and motivating good people at all levels. Firms that have created learning environments seem to do better at this. Executive coaches also help in this difficult scenario. While there are many other priority issues, this is the big one for me. I spend a great deal of time talking with MPs about how to tackle this dilemma of finding, motivating and keeping the A players. You also have to remember to get rid of the low-hanging fruit. Don't let the poor performers stick around. Hire slow and fire fast.
Jay Nisberg, President, Jay Nisberg & Associates
Convincing Millennials that the accounting industry is a more dynamic, creative industry than the stereotypes portray. Recent college graduates aren’t wooed by competitive salaries when it means being stuck at a desk, preparing returns or auditing cash for 80 hours per week during “busy season.” They want to travel, to interact with clients, to problem-solve. And they can do all of these things in the current accounting landscape; however, it is up to the current leaders of the industry to adapt to and accommodate this new mindset by letting go of some of the traditional staples of the profession -- narrow career paths, mandatory busy season hours, etc… -- and moving towards job rotations and flexible schedules that will attract the next generation of accountants.
Tony Nitti, Partner, WithumSmith+Brown
Relevance. The increasing use of non-GAAP measures by companies presents challenges to financial reporting. GAAP is developed based on a thoughtful, well-understood process that considers a wide range of views in order to provide investors with information they need to make good decisions. Non-GAAP measures are not subject to that process, and consequently lack the consistency and comparability that is the hallmark of high-quality financial reporting. While non-GAAP measures can provide relevant information to investors, they should supplement -- not replace -- GAAP standards that are set through an inclusive, robust process.
Charles Noski, Chairman, Board of Trustees, FAF
The ability to change quickly. It seems the profession knows it has to change now but is stuck in the “how.” Does it acquire the “New Firm” business model owner, does it pay for consulting to learn how to do it, or does it just struggle to figure it out itself? After years of talk of change, now firms want to have changed yesterday. The question is how?
Jody Padar, CEO and principal, New Vision CPA Group
I see technological disruption as the most important issue facing the accounting industry. This disruption will manifest in four major trends which will influence the way that accounting professionals work in the years ahead.
- We are in the midst of a global transition to cloud software, driven by the need for interconnectivity and mobility. This move to the cloud, along with increasing regulatory requirements, will drive the technology adoption/replacement cycle -- requiring intelligent investment, training and resource allocation.
- A technology evolution that automates knowledge tasks like bookkeeping and tax preparation will drive market disruption. This will create urgency -- and an opportunity -- for accountants and tax managers to deliver advice, counsel and other high-value services.
- Governments worldwide will implement stricter compliance and reporting requirements to fight ambiguity and aggressive tax planning by multinational corporations. This will create the need for software and services that provide global oversight, workflow and seamless interfacing with global accounting firms. The industry also will see more mid-market companies adopting technology to enable tax compliance (sales and use tax administration, e-invoicing, e-reporting, property tax administration, etc.).
- Information will become increasingly commoditized; there will be an increased demand for data analytics to generate insights from vast amounts of data, as well as more scalable advisory practices. Tax professionals will be increasingly faced with budget pressure to raise revenue more efficiently through the increased use of technology and data analytics to access actionable insights, rather than unrefined data.
Brian Peccarelli, President, The Tax & Accounting business of Thomson Reuters
For smaller firms in particular, the biggest issue is the growing competition performing tax preparation, accounting services and consulting by non-CPA firms. Firms that do not have to adhere or follow the high standards and code of professional conduct are increasing in number and competing directly with CPA firms while CPAs are driven by standards that address engagements in financial reporting, tax and consulting along with a strong code of professional ethics.
Carl Peterson, Vice president of small firm interests, AICPA
The biggest issue currently impacting the accounting profession is ensuring the CPA Exam is reflective of the current business environment and authentically tests future CPAs on skills that are relevant today.
This is much easier said than done. Consider the length, for example. By expanding on sections, like the Business Environments Concepts, the exam has grown from 14 hours to 16 hours. Any longer and the industry risks alienating CPA candidates. With the current accounting talent gap, this is something the industry cannot afford.
The new test must also strike a balance between compliance-related skills, including identifying issues and errors, and advisory skills. As more accounting firms begin to offer advisory services in order to stay relevant and compete in the marketplace, recruiting candidates with both skill sets will be increasingly important. However, testing real-world business scenarios via a standardized test is not easy.
Roger Philipp, CEO and owner, Roger CPA Review
The complexity of the Tax Code. Despite calls for meaningful tax reform, tax compliance is becoming more, not less, difficult. New laws and regulations mean extra forms and more due diligence for taxpayers. It unnecessarily burdens taxpayers and puts them at risk for falling into accidental noncompliance. This frustrates taxpayers and puts accounting professionals increasingly in the line of fire. It also underscores the need to communicate to taxpayers the value of having a competent tax professional.
Kelly Phillips Erb, TaxGirl
I think the issue continues to be losing some of our best talent to corporate jobs. The question every firm must ask is, “How can we make our workplace better so that we compete with industry?”
Jeff Phillips, CEO, Accountingfly
One of the most important issues currently facing the accounting profession is staying relevant. Relevancy means that we need to continue to innovate our services to be able to provide value to our businesses, customers, and communities. For us to stay relevant, we need to continue to learn, anticipate change, improve diversity and inclusion in our profession, inspire our talent pipeline, embrace technology, and uphold our profession’s reputation of integrity.
We are distinctively qualified as accountants to provide insights and actionable steps to help achieve results. As an accountant in industry, I look for ways to contribute to the strategy and future of our business. I also work with a consultant to small businesses who believes accounting firms have a big opportunity to help their clients understand how to prepare financial data for decision-making instead of just for reporting and compliance.
Elizabeth Pittelkow, Director of accounting and compliance, ArrowStream
Changes in technology will continue to affect how financial information is delivered and used, which has implications for all stakeholders of financial reporting. While quarterly and annual financial reports likely will continue to be the mainstay of reporting, we need to be sure that the profession as a whole is proactively looking ahead and adapting.
Terri Polley, President and CEO, FAF
Attracting and retaining talent is the most important issue facing accounting firms of all sizes. Once again, just like during the period that started in the mid-1990s up until the economic meltdown in 2008, the profession finds itself competing with other career choices available to the best candidates for leadership positions.
One of the consequences of this lack of talent, and the difficulty especially small and midsized firms have developing the talent they have, is the succession crisis so many firms are facing. Far too many firms lack the necessary bench strength to remain viable as their senior partners retire. Even larger firms that fail to sustain growth will face succession issues if they are not willing to invest in building a strong long-term career opportunity for the next generation even if that comes at the cost of short-term profitability for their existing partners.
Terry Putney, CEO, Transition Advisors
The role of the cloud and automated technology.
The radical accountant of today is more CFO than number cruncher, and more tax planner than tax preparer. The accounting professionals that are embracing these shifts are thriving. Technology has automated many daily tasks, but has not replaced the need for their expertise and experience running businesses or minimizing taxes.
Technology advances let the accounting professional concentrate on higher-level consulting versus repetitive tasks, providing the business owner with more value. This comes at a fraction of the cost of hiring a full-time CFO or accountant.
The Internet has also fundamentally changed the No. 1 source for new accounting clients, referrals and word-of-mouth. The first thing a new prospect or referral will do is Google the accountant’s name. If the prospect does not see glowing reviews or a professional Web presence, they are much more likely to search again.
Lee Reams, CEO, ClientWhys Inc.
The ability to scale. It’s an issue that’s been ever-present for the past several years and has increasingly grown to be an inescapable challenge faced by accounting firms today. In a profession that is rapidly changing and evolving due to new technology, firms that are resistant or slow to adopt technology are struggling to remain relevant, and now, more than ever, it’s impacting their ability to scale. In order for those in the profession to survive, there needs to be a convergence of traditional accounting with in-depth and up-to-the-minute knowledge of technology solutions.
Matt Rissell, CEO, TSheets
The need to evolve. Just as financial reporting has evolved, so too has the world around it. Today, such contemporary macroeconomic factors as resource scarcity, climate change, population growth, globalization, and technological innovation can, and do, profoundly impact business outcomes. Although corporations have made considerable efforts to create transparency around their management of these issues -- by publishing corporate social responsibility reports, responding to questionnaires, and engaging with investors -- the market still struggles to effectively incorporate environmental, social, and governance issues into its decision-making. Just like we have standards for material financial information, we now need standards for material sustainability information. This is the need SASB was created to fill.
The passage of the Securities Exchange Act of 1934 and the creation of the Financial Accounting Standards Board in 1973 marked two major milestones in the evolution of capital markets. It’s time for the markets to evolve again. Auditors took a leading role in the development of GAAP, and they are uniquely positioned to play a similar part in shaping the future of accounting by establishing a market standard for sustainability information.
Jean Rogers, CEO and Founder, SASB
I believe the biggest issue is that, more and more, non-licensed and non-degreed businesses are being loosely tied to the profession. It’s time for “the profession” to clearly articulate our value and draw a clear distinction. If we lose this distinction, we run the risk of further commoditization.
Darren Root, President and CEO, RootWorks
I know it gets boring to say the same things every year. But these issues are so significant they cannot be ignored. They keep MPs up at night from coast to coast and receive daily attention. First, the aging of the Baby Boomers continues its relentless and unavoidable march towards destiny. Second, at a time when the CPA profession needs thousands of young people to replace retiring Boomers, the profession is suffering mightily from a shortage of labor, exacerbated by a shortage of accounting professors.
Eighty percent of first generation CPA firms never make it to the second due to the perfect storm these two issues have created. The result: Partners retire, have no one to replace them and are forced to merge up, fueling a merger frenzy that every year is more frenetic than the year before.
Marc Rosenberg, President, The Rosenberg Associates
A lack of serious succession planning which goes hand-in-hand with a need for training and mentoring for the profession’s next generation of leaders. There is also a lot of misunderstanding of the role marketing can play in firms and how it can contribute to their growth and longevity.
Bonnie Buol Ruszczyk, President, bbr marketing
Complexity and capacity are at the center of almost all challenges in accounting today. With globalization of businesses large and small, specialized areas that impact anything from tax liabilities to revenue recognition to board room scrutiny, the accounting profession is at a heightened level of accountability, whether the professional is part of a CPA firm or in business and industry. Deadlines always loom, handoffs and interdependencies complicate attaining results, point solutions don’t address the holistic business requirements, competing priorities are always at war, and visibility into these complexities remains one of the biggest challenges.
As work compression continues in our immediate gratification/digital age, workers are stressed to meet higher expectations, greater demands for technical knowledge and vision, and decreased timelines to get work done. All this while budgets are tight, skilled workforce availability is stretched, and our up-and-coming workforce demanding more control of their time and insisting at practicing at the highest level of the professional certification.
That puts productivity at the center of attention if we expect to deliver on the new world business expectations.
Michael Sabbatis, COO and Board member, XCM Solutions
Accounting professionals must transition from only providing traditional compliance services (tax, audit and accounting) to giving more holistic, strategic advice to help clients grow their businesses.
As firms look to the future and want to be able to both attract top talent and differentiate themselves from the competition, they have to look beyond these traditional services. How can they make sure they are the go-to source to help clients progress from start-up, to scale-up, on to an enterprise business?
As accounting becomes more and more automated, a big opportunity is to reinvent that trusted one-on-one relationship that clients had with their accountant in the past.
Marc Schiepe, President, Sage North America
Our profession has not required rapid change, however there are major disruptors now affecting our profession and industry which will require rapid change. These disruptors include:
- The use of smart intelligence and technologies which will dramatically change our audit process and potentially who performs audits.
- New competitors like Google performing business operation accounting services through the use of technology.
- Firms attracting and hiring accounting graduates with no need for the CPA exam or credentials.
Our profession will need to respond much faster in order to keep a competitive advantage in the marketplace we serve.
Dennis Schleper, CEO, CliftonLarsonAllen
The accounting profession today has a “grow or die” mentality which has led to the unprecedented consolidation of accounting firms through M&A activity. Small accounting firms, by and large, are finding it more difficult to maintain and generate revenue, and only the growth that a merger can bring will enable firms to expand their service offerings, compete for the top talent that clients demand, and fund deferred compensation payments to the growing universe of retiring partners. And given the growing universe of retiring partners, succession planning is correspondingly a major impetus for accounting firm mergers, as firms attempt to transition older partners out and figure out ways to let the future of the firm’s leadership in.
Russell Shapiro, Partner, Levenfeld Pearlstein
Preparing for the future of the accounting profession -- in the face of rapidly evolving technology and a challenging staffing pipeline -- is the most significant issue we face.
Big data and data analytics, cloud-based software solutions and artificial intelligence are only a few examples of significant technology developments that will forever change the profession -- at a faster pace than we think. This tech revolution is happening at the same time firms and companies are challenged to recruit and retain talented staff members. With 75 percent of CPAs projected to retire in the next 15 years and the number of new CPAs remaining flat, businesses of all sizes will feel the impact.
The sooner we recognize and prepare for the future, the greater the chances are for the profession to maintain its relevance.
Todd Shapiro, President and CEO, ICPAS
Our profession’s most important issue is multi-faceted, and it starts with unprecedented advances in technology. Moore’s Law -- the 51-year-old theory, accurate to this day, that processing speeds of computers will double every two years or so -- is automating many of the core services that have defined this profession for generations. As machines take over functions like accounting, auditing, and tax, CPAs are left to wonder, “How will I continue to add value to my clients’ lives going forward?”
The answer lies in our ability to do the things machines can’t do -- building relationships, collaborating on future strategy, and innovating business models among them. In short, the value of tomorrow’s CPAs lies not in merely crunching the numbers, but in telling the uniquely personal stories that lie behind those numbers.
To do so, CPAs must incorporate a new set of skills. These include communication, strategic thinking, collaboration, and perhaps most important, anticipation -- the ability to spot trends before they happen and position our organizations to take advantage of those trends before the competition does.
Technology is changing the game. We have to change with it. We have come to a point where the most important skill is the ability to learn new skills. We have to be wise enough to identify those new skills and nimble enough to learn them on the fly.
Bill Sheridan, Chief communications officer, MACPA
The accounting profession is facing the issue of maintaining relevance in a data-driven marketplace that demands real-time information dissemination and analysis. Accounting professionals are increasingly being tasked to perform services (i.e., data analysis, valuation consultation) that extend well beyond the skills taught in most undergraduate and graduate school accounting curriculums. With more diverse, technology-based companies flooding the corporate landscape, market participants are demanding more from financial statements than the accounting profession currently offers.
James Sinclair, Visiting assistant professor of accounting, Georgetown University
Staffing and succession, which are very much related to each other, since if we had a plethora of young talent we would have less of a succession issue. We are seeing clients asking for more sophisticated niches and firms are trying to differentiate themselves. Firms are experiencing ongoing competition in terms of pricing from firms tiers above and below, and lastly, there are firms still struggling to fully embrace technology. We speak about culture a lot. IT has become a culture!
Joel Sinkin, President, Transition Advisors
We’re in the midst of a paradigm shift that’s changing the nature of the accounting profession. As a new generation of accountants enters the workforce, we’re seeing more professionals who have grown up using mobile devices and are accustomed to being connected 24/7. While the benefits of automation can’t be denied, the challenge here is to find the balance between productivity and maintaining an interpersonal connection -- that face-to-face interaction with the client that can never be replaced by a computer. It is vital that no technology or apps overshadow this connection.
Brad Smith, Chairman and CEO, Intuit
The industry's biggest challenge is the shortage of enough strong talent to support the growth that the market is demanding. This will make it difficult for many firms to remain independent, either because they can't recruit competitively, can't retain and rapidly develop existing talent, can't provide effective leadership succession or can't attract talent in new service areas where their clients need expertise. We see this challenge every day, and very few firms are exempt from it.
Closely related is the need for CPAs to develop the soft skills that will enable them to be practice builders. Except for large firms that do a lot of public company audits, gone are the days where accountants spend the bulk of their time at the client site where time together with clients facilitated building personal relationships and the flow of new work. Today's professionals need the interpersonal skills to connect with clients and initiate encounters to sell projects in much briefer interaction.
Richard Stanger, CEO, StangerCarlson
With the retirement of the Baby Boomers, younger employees are now filling roles that more experienced, seasoned managers have been in for years. Preserving the perspective and transferring the knowledge about the risk environment will be key in making the next generation successful as they apply their technology skills and question old business practices.
Jan Sylvis, Vice chair, GASB
Time is running out. The window of opportunity is closing. Firms need to act fast if they want to achieve more than mere survival, and instead grow, thrive and reach new levels of income and success. The status quo is not sustainable. Let me explain.
Today’s business environment for CPA firms is dominated by three factors: technology, talent, and consolidation.
With technology, firms have less than three years to embrace the cloud, social media, streamlined production processes, and real-time client service. After that, they will be obsolete, unable to compete for talent, and of no value to a potential acquirer, let alone the firm’s own partners.
The best talent is already shunning jobs at firms that can’t be found on social media or Google, that can’t provide remote and mobile working arrangements, that won’t support staffers’ personal and career goals, or that are falling behind others than can, do, and are.
The merger frenzy will be winding down. Already, most of the best firms have been gobbled up. And most of those that haven’t merged out are either worth little to a buyer or are enjoying outsized profits and incomes that a buyer can’t match.
Rick Telberg, Founder and CEO, CPA Trendlines
The most important issue facing the accounting profession is overregulation. It gives little wiggle room for firms to manage changing demographics in the accounting profession. When a hiccup occurs in the economy, regulators feel they need to make changes without using a wider lens to understand what’s actually going on. It’s very costly for businesses. This strain forces firms to increase prices to their customers. Too many U.S. firms end up using stop-gap measures to address regulatory issues. Meanwhile, other parts of the world have economies unsaturated with regulations, and they do just fine. Overregulation then impacts firms recruiting talent. Many people get turned off from the profession because of the capacious rules. While firms are focusing on keeping up with too many regulations, they’re missing out on bringing along and cultivating a new generation of accountants.
Ralph Thomas, CEO and executive director, NJCPA
Accounting is a storied profession that enriches careers, organizations and the public interest. But it is suffering from a dire talent gap, and we must do better to attract the best and brightest and demonstrate multiple inspiring career paths to success, especially in the face of STEM programs.
Jeffrey Thomson, President and CEO, IMA
The most important issue facing the accounting profession today is the need to get off of the treadmill of manual, rote processing and return to a place of strategic partnership with the business. Only by doing so can the accounting profession receive the respect and value that it deserves.
Pressure on accountants has never been greater. Executives expect accurate, real-time information to be delivered on demand. There is little tolerance for errors or delays. Yet for many years much of the work performed within accounting departments has been done manually, usually with the assistance of many spreadsheets. This leaves little time to actually analyze data and provide insightful research that adds value.
Leveraging technology to automate repetitive jobs is absolutely the answer, but it becomes a chicken/egg dilemma. Viewed as a cost center, accounting departments typically are not given budget and time for tools and implementations. Without leveraging technology, they are unable to demonstrate the business value that they might add if they only had the time.
Therese Tucker, CEO and founder, BlackLine
The most important issue as I see it is the silo in which many CPAs and accountants work that inhibits them from providing services beyond core accounting and tax. And it is these additional services, among other new areas of focus, which can provide the groundwork for real succession planning.
Getting the numbers correct is a primary function of professionals, but there’s so much in terms of advisory and analytic services being left on the table, to the detriment of clients. I do think this is primarily a problem for more seasoned Baby Boomers who have worked 40-plus years. Younger staff in a firm or company look up to senior management for inspiration and guidance, so it’s never too late to try to expand a practice’s scope for the greater good and benefit of the profession, and certainly the firm.
Pascal Van Dooren, Chief revenue officer and GM, Avalara
From my perspective, working to make sure governmental financial statements provide the information users need to make well-informed decisions is paramount. For that information to remain relevant, however, finding opportunities to improve timeliness and promote simplification will be increasingly important.
David Vaudt, Chairman, GASB
Over the past few decades, the accounting industry has become more complex. The 1040 form instructions, for example, have grown from one page to include more than 174 pages of instructions. Further, there are now more than 9,000 sections in the U.S. Tax Code.
Technology, particularly the cloud, has changed the game for accountants. It has streamlined the manual data entry and reconciliation processes, providing accountants with more time to spend on interpreting the data and, as a result, the ability to offer additional services including advisory.
The challenge is, while technology is empowering accounting professionals to provide advisory services, they don’t necessarily have the business operations experience they need in order to offer these insights. Technology will never replace humans, and the expertise that trained accounting professionals have is sorely needed by business owners. While technology can provide the numbers, it is up to the accounting professionals to interpret and make recommendations accordingly in order to help their clients’ businesses thrive.
Over the next few years, the quality of a firm’s advisory services will increasingly serve as a competitive differentiator. Innovative firms will begin to create learning journeys for their accounting professionals today in order to provide the education required to move the advisory needle. I believe those that choose not to provide their staff with the necessary CFO, advisory and business insight training will soon lag behind their competitors and miss out on a unique opportunity to capitalize on technology’s many benefits for their clients.
Amy Vetter, Global vice president of education and head of accounting, USA, Xero
The retirement of the Baby Boom generation is the most important issue our industry faces. Some estimates have one-third of CPAs retiring within the next 10 years. Replacing them with the talent to maintain client relationships, build new ones and cultivate a healthy pipeline of new business will continue to be a major hurdle for many firms.
Jeffrey Weiner, Managing partner, Marcum LLP
Succession and transition due to the demographic cliff.
Philip Whitman, President and CEO, Whitman Business Advisors
I believe there are two issues: the inability of many current leaders to recognize and confront complacency and false urgency. The two statements might seem contradictory, but in reality great leaders know when to put their foot on the gas and when to brake. Some leaders today are stuck in complacency, the inability to see the future and move forward, while others are so concerned about what is coming, that they are changing everything all the time and the important changes do not “stick.” A great leader in our profession is one that will accelerate when they see a great idea and give it time to become reality, but they will also have the intelligence to slow down –- or stop -- when they are going down the wrong path.
Sandra Wiley, President and shareholder, Boomer Consulting Inc.
Relevance. Established leaders must morph their thinking and change their behavior to remain relevant to their younger team members and younger clients, too. Our profession must let go of old “shoulds and musts” and prepare to compete with non-CPA firm providers for traditional CPA services. We must adopt technology at a much-faster rate to deliver higher-quality work, more efficiently. True relationship-based consultancy has to become the norm instead of the over-reliance on the recurring compliance engine, which is likely to be less recurrent. Letting go of old standards of dress code, what it means to “be at work” (which can now mean working from anywhere, anytime), and eliminating old traditional hierarchical promotions based on “years in” versus competence and potential are just some examples of management change needed now. I cannot remember a time when profession leaders faced the demand for so much change at once –- and we must step up and lead our firms through the change or risk going the way of the yellow cab.
Jennifer Wilson, Co-founder and owner, ConvergenceCoaching
Technology disruption that is displacing much of the traditional work performed by accounting professionals is the most important issue currently facing the accounting profession. There is much talk about accountants embracing the cloud and leveraging technology innovations, but that is just one step in the process. Accountants need to move beyond bookkeeping and tax preparation into more forward-looking, proactive and consultative relationships with their clients. Doing so will not only insulate them from technology disruptions, it will also position them to positively impact the financial well-being of their clients.
Joe Woodard, CEO, Woodard Companies
There are many important issues that accountants must address in the near term: succession, staffing, rapid pace of change, technology, etc. The “rapid pace of change” occurring in the accounting profession is the issue that I would put at the top of the list. The changes in regulations that impact businesses as well as create audit and accounting issues are numerous. There are numerous standards that have been issued to improve financial reporting that will become effective in the near future that must be addressed today in order to be ready to implement. Additionally, changes in cybersecurity are multifaceted and require specialized knowledge and skills to ensure that all areas are being properly addressed. Finally, I believe that it is critical for our profession to continue focusing on the simplification of accounting for private companies as well as public companies, where appropriate.
Candace Wright, Chair, PCC
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access