It has now been 18 months since the beginning of the business closures and work-from home mandates caused by the COVID-19 pandemic. Most industries were and continue to be significantly affected. Most would agree that the pandemic has had a monumental impact on the accounting and tax profession that in many ways has changed the ways in which people do business. Some of those changes are likely to extend well beyond the end of the pandemic.
All of us have faced many challenges during this period, from the seemingly never-ending tax season to the continual federal COVID-relief legislation and new programs created to help individuals and businesses get through this unprecedented period to the difficulties faced by the Internal Revenue Service. Through most of this, clients often turn to their CPA for explanations and guidance. A recent AICPA survey lays out the top issues CPA firms say they face in 2021 and over the next five years.
The AICPA’s Private Companies Practice Section regularly surveys CPA firms of all sizes and in all regions of the U.S. about the most significant challenges they face.
The most recent survey includes interviews with 727 participants, broken down as follows:
- Single practitioners: 206
- 2-5 CPAs: 232
- 6-10 CPAs: 88
- 11-20 CPAs: 72
- 21+ CPAs: 129
Here are some of the key issues firms face through the rest of 2021 and beyond:
Finding and retaining talent
Three trends that have escalated during the last 18 months have resulted in employers in most industries facing greater difficulty in finding and retaining talent. The substantial increase in staff working from home, the so-called “great resignation,” and the increase in retirement of baby boomers have all contributed mightily to all but the smallest CPA firms. Impacted firms cite finding and retaining qualified staff as their main challenges in 2021 and over the next five years.
Lisa Simpson, vice president of firm services at the AICPA, put it well in her review of the survey results. For the 2021 results she stated, “For all but the smallest practices, it’s all about how to recruit, retain and develop talent. Firms are looking for ways to manage workflow more efficiently so that the right people are doing the right work. And there’s more emphasis on developing the next generation of firm leaders than we’ve seen in past surveys. As firms prepare for the next few years, having younger leaders at the table as strategic decisions are being made will be important.”
Nancy Ekrem, managing shareholder at DME CPA Group PC in Edmonds, Washington, told me, “Once you find the right people, the next challenge is to keep them. We are going to face an unprecedented workforce shortage in the years to come. We must effectively make use of emerging technologies that will create tools and software that allow us to work smarter and more efficiently … getting more done in our workday and still enabling work-life balance, both essential in attracting the talent we need to grow our firm.”
Keeping up with tax law and regulatory changes and COVID relief programs
Staying current on the continual and ever-increasing complexity of tax law and regulatory changes, including COVID relief programs, was among the top three issues faced by firms of all sizes. And these challenges are going to get even more compelling as we face the real possibility of Congress using the budget reconciliation process to pass later this year one of the largest pieces of tax legislation we have seen in decades.
Brian Streig, tax director at Calhoun, Thomson + Matza LLP in Austin, Texas noted that “the biggest challenge for his firm is staying current on the frequent tax law changes and COVID relief programs. The research companies are doing a great job, but it still feels like you could miss something.”
Challenges in working with the IRS
For 2021, all but the largest firms cite working with the IRS as one of their five leading challenges. The IRS has faced enormous challenges from the closures resulting from the pandemic. Most agency employees worked in an office environment and those offices were forced to close. Working from home was an entirely new business model for them. A large number of IRS staff left or took a leave of absence. The Service was tasked with carrying out many new programs and activities, including sending out several rounds of economic stimulus payments and new child tax credit payments to millions of Americans. Difficulties in reaching the IRS by phone and unopened mail in processing centers and other locations exacerbated the difficulties. In recent months, the Service has made strides in replacing and training staff to catch up. In looking at the results over the next five years, there is no group of firms that regard working with the IRS as one of their five top challenges.
Emerging technologies and managing a hybrid workforce
Emerging technologies surfaced as a top five issue for every category of CPA firm over the next five years. Managing a hybrid workforce (remote and in-person), was No. 2 for both the “11 to 20 professionals” and “21+ professionals” firms. Emerging technologies have changed the way firms do business. This trend is expected to increase at an even more rapid pace over the next five years.
“Firms of all sizes recognize that emerging technologies like data analytics and RPA will have an impact,” Simpson observed. “Finding the right people with the right skills who are comfortable with these developing technologies will help firms adapt to changing client needs. Clients want more from their CPA than just the historical data. They want insights into trends and underlying data. Help with forecasting and utilizing technology will position CPAs to provide the insights their clients are looking for.”
The accounting and tax profession clearly has been impacted significantly over the last 18 months. The need for acquiring and retaining talent, keeping up to date with legal and regulatory changes, and adopting emerging technologies will only become more important and more challenging in the years ahead.
