The Year Ahead: Technology and talent in 2020
When it comes to figuring out what accounting firms are going to do, the best approach is simple: Ask.
That’s the theory behind Accounting Today’s annual “Year Ahead” report: Each year we survey accountants across the country — this year almost 600 responded — to ask them about their plans for the next 12 months in areas ranging from tax season to staffing to marketing to technology. (See "The Year Ahead: 2020 in numbers" for the data.)
To complement that, we reached out to a selection of top firm leaders to get their take on the major issues they’re expecting to face in 2020, and their advice for their fellow practitioners. This year’s panel comprises Tom Barry, managing partner of Los Angeles-based Green Hasson Janks; Avani Desai, president of Tampa, Florida-based Schellman & Co.; and Heidi LaMarca, CEO and managing partner of Atlanta-based Windham Brannon.
What are the trends that accountants and firms should keep an eye out for in 2020?
Heidi LaMarca: A key trend that accounting firms need to be aware of is the increasing opportunities available from technology. The increasing popularity of machine learning and artificial intelligence makes it easier to offload the more redundant tasks inherent in the tax and audit departments. Not only can these tools reduce the cost of production, but they can have a positive impact on the time needed to complete the work.
Many of the tools currently available are designed to “bolt on” to existing systems and become more efficient over time. Since learning is always happening, these tools are able to continually add value.
Tom Barry: The challenges around talent will continue to be front and center. Our university system is producing fewer students who are entering the profession, and more and more people are leaving the profession. Whether it is skill set or capacity-related, talent issues will be a continued drag on growth and be an even more critical component of culture. Firms will need to continue to innovate how, where and when they deliver service and leverage resources.
Avani Desai: Automation and artificial intelligence have already established themselves, but the way it’s going, automation is going to continue to decrease the need for manual processes, and further developments in AI are going to pave the way. From an industry standpoint, these changes will likely prompt a cultural shift, especially for financial auditors, although in the grand scheme of things, all auditors will be able to work smarter and not harder. In fact, synergy between financial and IT auditors will increase as we all work closer to get, not just reasonable assurance, but a level of “absolute” assurance for certain audit procedures. Gone are the days of sample testing — soon, we will all be heavily reliant on client data to give us true continuous auditing and monitoring. Overall, automation and AI will streamline both internal and external audit processes and allow more time to be spent on higher-risk areas while reducing time spent on transactional processes.
LaMarca: Firms also need to consider how they are leveraging technology to serve clients from a digital standpoint. There are a multitude of tools and applications available that make interaction seamless and easy for the client. It’s important to assess how the firm is using technology to communicate with clients before, during and after the engagement. The cornerstone of success in our business is a high level of service. Technology can help us reach that goal much faster.
What do you think will be the most surprising thing for firms in the coming year?
Barry: Firms will continue to be surprised at how quickly the profession is changing. Rapid disruption is no longer in front of us, it is with us, and if we do not change we will be left behind. Disintermediation will bring new competitors who are smarter and more agile than most firms in the profession.
Desai: We already know that technology is changing the industry, as more and more firms are investing in automation, AI and blockchain. Despite that, it may surprise some to hear that the “human” accountant and auditor will always be important and maybe even more important even through this digital transformation. The regular implementation of new and advanced technology is constantly changing our profession, but if auditors change with it, the trusted advisor relationship with the client will only strengthen.
LaMarca: The most surprising thing for firms in the coming year will also be around technology. They are improving and changing the technologies faster than we can implement them.
What one piece of advice would you give firms going into next year?
Desai: Prepare for the fourth industrial revolution. Audits are changing due to emerging technologies such as the cloud, AI, automation, blockchain, and the expansion of the Internet of Things. With such constant innovation happening before our eyes, being at the forefront of these technologies is going to be important. Every auditor should work to keep themselves relevant and not become obsolete in the face of these present and upcoming changes, and in that way, future-proof their career.
LaMarca: Develop an advisory mindset and identify new ways to drive value to clients. The traditional accounting firm business model is changing to include advisory services. While audit and tax may be the foundation of our work, there needs to be an additional layer of value that can be added. Many of these advisory services have broad appeal and, more importantly, position the firm as more than just an “accounting firm.” In addition, it opens the doors to new relationships with companies that otherwise may not have had the opportunity.
Barry: Firms need to concentrate on the client experience. Nearly every service/product people buy has evolved dramatically over the past decade, except if sold by a public accounting firm. Consumers are more accustomed to self-service, real-time project status, pricing alternatives, tailored options, and anywhere/anytime access to value.
Do you expect the profession’s staffing crunch will get better or worse in 2020?
Barry: Worse, as I noted earlier. However, throwing human resources at the problem will not provide a long-term solution. Firms need to innovate systems, processes, service delivery, and the overall client experience to solve the talent issue.
LaMarca: We are anticipating a tougher staffing crunch in 2020. Many accountants are making the switch to industry quicker and it is a difficult market in which to compete. We also have several niche practices that make recruiting even more difficult. I don’t think the war for talent will get better for a long time and we are going to have to figure out ways to be more creative with our hiring efforts.
Desai: I believe it is going to get worse before it gets better. Certainly, the industry seems to have painted itself into a corner more recently with no clear way forward in the short term just yet, but there are still steps that can be taken to improve the situation over time. Over the last two years, we at Schellman have begun to take a proactive approach to the talent pipeline issue. We understand that no one can hire what isn’t out there, and for us to get to the numbers we need to provide quality service to our clients, we need to also increase diversity. The only way to do that is to start increasing awareness of the accounting profession before college. Though it remains a long-term solution, as an industry, we need to make a concerted effort to promote the profession and its opportunities to school-age children.