Take a look at what the accountant and the accounting firm of the future will look like as AICPA president and CEO Mark Koziel shares details of the new Rise2040 report.
Transcription (prepared by AI; for discrepancies, refer to the audio version):
Dan Hood (00:03):
Welcome to On the Air with Accounting Today. I'm Editor-in-Chief Dan Hood. You probably have a pretty good idea of what you're going to do at work tomorrow and the next week and maybe through the rest of the year, but what about five years from now? We're 10 or 15. Over periods of time like that, changes large and small can accumulate to such a degree that your job becomes completely unrecognizable and maybe your profession is well. And yet somehow you have to get from here today to there. Now, bridging that distance is one of the goals of the new Rise2040 initiative from the AICPA and CIMA that looks ahead 15 years to see how the accounting profession is going to change and what accountants need to do to prepare for it.
Here to talk about the report and the future of the profession more broadly is Mark Koziel.
(00:38):
He's the president and CEO of the AICPA. Mark, thanks for joining us.
Mark Koziel (00:41):
Thanks for having me, Dan.
Dan Hood (00:43):
One of the things that fascinates me about Rise2040 is that it's not the first of these sort of long-term visioning projects that the AICPA has done. There's been two each similar sort of 15-year increments. Maybe you could take us a litlle bit through some of those and how they came about and how they led to RISE 2040.
Mark Koziel (00:59):
Sure. Yeah. AICPA started in the late '90s with the Vision Project. And with the Vision Project, they actually went state by state by state by state by state to get feedback and bring that into the report and then finalize the report. And it was pretty manual at the time. And so fast forward 15 years and in 2011,
(01:23):
Realizing that the vision project and the vision report was expiring was time to look out another 15 years and CPA Horizons 2025 was created. And so 2025 again does the same thing. Rather than state by state by state, there were more regional meetings and the web was brought in the internet a little bit to do some surveying in a different way, but it was definitely a different time then than what it was in the late '90s. And then fast forward to 2025, I was appointed CEO January of 25. Paul Stahlin, who was the 2011 chair of AICPA, said, "Hey, by the way, CPA Horizons is expiring. What are you going to do about it? " I'm like, "Okay, well, I guess we're going to take a look at that along with everything else." It actually was a good timing as coming in new and knowing that I'm going to have a strategic plan that's going to sunset.
(02:15):
One of the things I did in my prior role before coming back at a firm association is we utilized hard trends, soft trends, feedback from the members to gather that and help that help us shape our strategic planning. And I think it's the same thing here, but now we have the benefit of the profession being able to set the strategic plan for themselves and help us set strategic direction for the organization and the profession.
(02:44):
And that said, now with CIMA and bringing CIMA and AICPA together 10, 12 years ago, that gives us the opportunity to broaden scope beyond just us in the US but globally. And one of the things that we found overwhelmingly is as different as we think we should be between public accounting and business and industry, we are incredibly alike and there's a lot of commonality between that.
Dan Hood (03:11):
Right, right. And internationally as well, right? You said we've got a lot of people from business industry more than in the previous ones and then internationally because CIMA and AICPA weren't together at the time of the previous- That's right. So it's a huge scope to really talk about the whole profession. And as you say, one of the fascinating things about it is that all of the trends, they may have slightly different ramifications in different parts of the profession. Now there's really an overarching set of trends about where the profession is going, what's impacting accountants and then specifically what are accountants going to be doing in the future. And maybe we can talk a little bit about that. What does the accountants, I don't want to say that what does their day-to-day work look like, but what does the broad sort of work life of an accountant look like?
Mark Koziel (03:48):
We realized, and first of all, we took the CPA Horizons and 2025 and we put that into AI and we said, how much of this has come true? So we kind of battle tested the old one. We were probably at about 80, 85% accuracy rate of what was there that has come to fruition. And so we carried some of that forward as we developed the new. So the hard trends that have been talked about since before I was here, demographics, regulatory and technology, those are the big three. And everybody wants to say, well, AI is a hard trend. AI is not a hard trend. Technology is a hard trend. And what the technology is is going to be the flavor of the day right now it's AI. It could be quantum computing down the road. And so talking to our members about this and gaining insight from regulators, a variety of those that influence the profession with even technology companies and the like,
(04:42):
One of the things that we're learning, and this is where talking about trust as the moniker of who we are, that came through loud and clear globally that accountancy is trusted. We are the trusted profession and because of that, that what are we going to put trust in? What is it that we need to do for the future that people are going to trust us to do? And one of the things we see in AI, and it's actually happening pretty quickly and there's a variety of groups we're working on this and resources behind it, much like you had internal controls and SOC and SOCs to audit internal controls, technology controls and SOC reporting over that, cyber controls and cyber assurance over that. Now we're looking at AI and governance over AI. So the finance function we believe is going to own the governance over AI, like they own internal controls.
(05:42):
And so the finance team has to establish the guardrails around AI internally. They need to understand regulatory if it ever happens. Hopefully we can get consistency around that as it happens. And so they're going to put the guardrails in. And then I also believe that they're going to partner with the business leads to help them with appropriate prompting, appropriate data that they're using to be able to come up with the right answer. If a sales leader comes and says, "I want to figure out if this product is profitable enough for me to keep it, I should put more marketing behind it or I should sunset it finance team working with them to assure that the prompts that they were using and the information they're getting makes sense, that sensibility, we bring sensibility to it. And then from there, also bringing the firms in to then provide assurance over those AI controls much like we do everything else.
(06:39):
So the whole ecosystem around this we continue to own. So we're not going to do what we used to do, but we're going to continue to be an important part of the overall business ecosystem around it.
Dan Hood (06:51):
Right, right. Because a lot of what we're doing now anyways is going to be automated and it'll be AI delay and certainly that compliance work is going to get less and less a little time consuming at the very least. But people are still going to be looking for assurance around what's going on with AI. It makes a ton of sense. I want to dive a litle bit more into the technology role and how technology is playing this. But for a second, we talk a lot about and all the discussions around RISE 2040, there's a lot of talk around hard trends and soft trends. And maybe for those who aren't super familiar with Dan Burse's anticipatory organization framework, which is where the whole language of hard trends and soft trends and the really, I mean, you've talked about 85% accuracy and some of the previous things.
(07:31):
The ability of the profession to look forward accurately is in many ways driven by that. And just briefly, what's a hard trend? What's a soft trend? What's that methodology about?
Mark Koziel (07:42):
Hard trends are a 95% or greater probability of being permanent fact. So the hard trend is something that is always going to be. And that's why maybe they're a little more generalized way that we said it, demographics, regulatory and technology. If I look at demographics, the demographics hard trend is demographics are a big impact of our profession.
Dan Hood (08:10):
X percent of the profession is baby boomers. They're going to retire at some point in the next X number of years. That's a hard trend. It's going to happen, right? Well,
Mark Koziel (08:17):
Yes. So the reduction in team, but what are demographics going to look like and how is it going to be different? So some of that starts to come into some of the softer trends around it. We're going to supplement it with either offshoring or technology in a different way, but then AI is going to make that different even as we do it. And so now the demographics have to have a skillset that are different than what they have today. And so the skillsets that we had in the demographics before, they were fairly consistent. Now they're changing, but the skillset in the demographic may not be our concern five years from now. It may be something else in demographics that we have to focus on. So yeah, in the soft trends, they could become a hard trend or they could become a fad and kind of fade away, or they just indefinitely live, but we never know what the end game of that's going to be.
Dan Hood (09:14):
Gotcha. Thanks for that. I think that framework is so fascinating, right? And the ability really gives you a handle on able to say, yeah, actually, you know what? And this is an example he used to use, right? The sun's going to rise tomorrow. We know the sun is going right. You can predict that. That's the thing. And once you start thinking about things that way, you start to think about, yeah, we can start predicting serious trends that have a ... And then bring them back to very detailed aspects. So that's sort of the background of a lot of the RISE 24 is you can trust it because it's based on this- Framework. ... these trends that we know are going to happen. That's right. Sorry. So I just wanted to get into that because, well, I like that, but also I think it's helpful for people to understand why this is reliable and why it's worth ... It's not just sort of, "Hey, we're just blue sky what the future might look like.
(09:49):
"
(09:50):
But let's talk about, I mentioned technology, you talked about AI. AI was used a lot in putting the report together. I didn't realize you'd used for looking at the previous reports as well, but looking at the iterations as you went through talking to, I think it was over 6,000 people that you all talked to and their inputs and then putting those into AI to get some sense of the commonalities and so on, and then taking it back to people, human in the lead and all that sort of stuff. Let's talk a little bit about the role accountants play around technology in 2040. And I think I gave a little bit of a way with that human in the lead phrase. That's a huge part of it. Can you talk a little bit about that?
Mark Koziel (10:25):
Yes. Thanks for stealing my thunder.
Dan Hood (10:27):
There you go. That's why I'm here.
Mark Koziel (10:28):
No, that is true. And like you said, so we did utilize AI to first evaluate the prior report, but then also there was constant validation to that because that's what we used to go out to the 6,000 plus as we did our forum sessions to gain input into where we're going. And so that was an important piece. Then we gathered all this data from 6,000 plus people and then we used AI to generate the report. Then we put two advisory groups together, one in the US and Dallas, one in the UK and London to basically validate the results of the report and make tweaks to it. One of the things that AI became probably a little aggressive on, and this is where they want to take control of our brains, I think, is the fact that they were saying that compliance the way it was written that we're no longer going to do compliance.
(11:22):
No, we're going to do compliance, but we're not going to do it the way we did it. And so compliance is still going to be an important aspect of who we are, but we're going to leverage how we do compliance with the other things that we're going to do. And so that was some of the change that came out of the fact of putting the human in the lead to the actual AI report to say that is a change that the humans are saying, yep, we need to make that change along with others that were in there. But that was probably one of the biggest highlights. And I do think that's why we constantly have to keep thinking about human in the lead, why the finance function to me. I think I'm so bullish about the fact that they will be a big part of this and that the profession will be a big part of this if you go forward.
Dan Hood (12:01):
We're going to take a quick break, but I want to talk about, we've talked about a lot of things are changing, but I want to talk about what's staying the same and also what accountants can do to get ready for this. But like I said, we'll take a quick break. All right. And we're back. We're talking with Mark Koziel of the AICPA about the Rise2040 project and the broader future of accounting. We've talked a lot about how things are going to change compliance remaining an important part of accountant's work, but maybe not as big a part of their day is one way to think about it and more they're going to take an elevated role with that, the human and the lead we talked about. And is it true? Someone told me that you've trademarked that. Is that true?
Mark Koziel (12:38):
I believe Tom Hood has gone after the trademark on that. And that actually came out of one of those advisory sessions I had mentioned because a lot of people keep talking about human in the loop, but it is really human in the lead.
Dan Hood (12:48):
Well, and that's going to change the right. That's a much better role than just being the-
Mark Koziel (12:53):
The looper.
Dan Hood (12:53):
Yeah. I'd rather be in the lead than in the loop. But we talked about a lot of things that are changing. What's staying the same? What remains of the professions that we recognize? Oh yeah, those are still accountants.
Mark Koziel (13:04):
It's funny. And my communications team always yells at me in this. I did an interview one day and I said one of the things, because I've been asked what surprised me out of the report? And it was the moniker of trust and it wasn't that I was surprised that everybody actually believes that they're still trusted. It was more so that it still bubbles up to the top the way it does. And it's such a high priority on the mindset of our people. And it's not that it surprised me. It gave me incredible comfort and joy about the profession to say we are still the trusted profession. Those that have entered into it feel it, they believe it and we need to continue to promote that. That is who we are and so that hasn't changed at all and it's what are we being trusted in or for?
(13:51):
That is what maybe is changing, but the fact that we are trusted in who we are and what we do, absolutely top of mind.
Dan Hood (13:59):
And so in many ways, the future becomes figuring out how to leverage that in a good way, in a responsible way, but in a way it says, "Hey, we got permission to do a lot of things." I mean, that's one thing I know the ASUA has talked a lot about is the permission that that position of trust gives to accountants.
Mark Koziel (14:12):
I've said it time and again and I get awkward now. I've done, I don't know how many presentations in the last week. And in my own presentation, I'm quoting myself in my second slide, thanks to my communications team putting the slide together. And the first time I saw it, I'm like, no, I'm going to leave it in there and make a joke out of it. But I have said for years, I said this when I was in practice, audit equals trust. Audit is the one thing we are licensed to do all of us, even if we're not doing it, that is the one license consistency we have in every state. And that audit gives us permission for all the other things that we do. Now I get it. Tax was the first real service that we provided in like 1913, might've been 1917. I can't remember the exact date.
(14:56):
And then it was the 1930s with the Securities and Exchange Act where we became the trusted auditor and that we started to audit so many other things. But the profession as a whole, that audit is really what provides that level of trust still and one that I really think carries us forward. But the ecosystem for us is still strong in all these many things and we need to continue to promote the fact that we can do more than just tax, more than just audit and moving into a new direction.
Dan Hood (15:25):
Or not just audit, on financial statements. Auditing AI is the thing. It's going to become ESG, we can go on a lot of those. So what is the accountant on the street? Hopefully the accountant's not actually on the street, he's working in an office somewhere, but what does the average accountant do to get ready for Rise2040? I mean, I think there's a little bit of sense of, well, if this is going to happen, it'll just happen and I'll let it happen. But obviously a proactive accountant wants to get out and make themselves ready for 2040. What does that mean? For
Mark Koziel (15:49):
Sure. And what's interesting is as we've been through this process, I've had a lot of conversations around this. First and foremost, I said we are never going to break the adoption curve. We have innovators, we have early adopters, we have early majority, we have late majority laggards, super laggers, or never do adopt.
Dan Hood (16:09):
People who retire before the change hit.
Mark Koziel (16:10):
That's right. That's right. And I said that we're never going to change that curve, but what we need to do is shrink the timeline from the innovation to the late adopter because we don't have enough time to wait for that. And I do think we're starting to see that already, which is just amazing. And so I consider that partly to be our job, the association, the AI CPA to be able to pull that off and really kind of help pull our members through to that for us to identify the innovators, take what the innovators are doing, get it to the early adopters and so on. That said, I also think that this whole idea of embracing the technology, the technology companies that are out there, that helping with getting ready for us to provide competencies around it. We have an AI accelerator program to help people get ready with this.
(17:03):
It's an exciting time. It gives us the ability to do all the things. And then as a profession in general, I have a number of small practitioners. I'm in a bunch of groups with them and in this last year because of how advanced AI has become, they do a tax return, they send it to their client, client takes a tax return, they put it into Claude and then they call the firm back and say, "Here are all the things that I found wrong with your return." And yet they're not wrong and Claude is in an unstable environment because they're gaining access from anywhere and you don't know how current it is versus the environment that the firm is in is very real-time accurate information. And so managing that, managing client expectations, all of those things are changing in a different way and why we keep saying moving to advisory.
(17:57):
I was following some emails with some folks and small firms and we have this, we're propping up our CPA trust campaign and we put an example of advisory and it was a really small firm in Louisiana was the example that was there, but he's in tax, but he considers himself an advisor, which is why the advisory moniker more so than tax. We're not necessarily in the tax business anymore. We're in the advisory or the planning business. Tax is just one of the many tools that we have to put in place to do it. And so I think all of these things, the change in how we see ourselves, it's going to be a big aspect.
Dan Hood (18:33):
Sure, sure. You mentioned a couple of things the AICPA is doing to help accountants get ready. Let's dive into some of that. I know you mentioned the trust campaign. I mean, let's start with that because it's kind of exciting. There's a television involved.
Mark Koziel (18:48):
It is. Yeah. I mean, I worked with the team on this and we've debated for years whether or not we could afford TV. I had the unique opportunity to work in political media for three years, so I fell back on some of my contacts there to try and figure it out. I said who we're trying to reach. We're trying to reach business leaders. We're trying to reach legislators and regulators in DC, which we could do very effectively because as they're starting to talk about AI regulation, we want them to remember who the trusted profession is. So being on air there, doing it on Fox News, CNN and the like and the early morning news programs, that's where all the eyeballs in Washington VCR and a lot of the states. So doing something around that to be able to do it. I made the mistake at our conference recently to say our interest isn't the NCIS grandmother that we're trying to reach.
(19:50):
And man, did I get feedback on that? Grandmothers still make great clients too. Yes, they do. However, as far as our overall demographic-
Dan Hood (20:00):
Not a lot of high-level audit work coming out of grandma.
Mark Koziel (20:02):
That's right. And so in NCIS, you're just paying for a lot of other skews in a retail primetime environment that is you're just kind of being wasteful with the dollar when you're doing that versus being laser focused and targeted around financial news and political news where a lot of your business leaders and regulators are living.
Dan Hood (20:26):
Right. It's bang for the buck. I mean, it's just to reach the right people. You debuted the commercial that we're talking at Engage, you viewed it here and it looks great. I mean, it looks like everything you would want it to be in terms of a clear message to a clear audience and it's clearly aimed. It's not aimed at grandmother. It's aimed at, as you say, business decision makers, regulators, that sort of thing. So look forward to seeing how that plays out. When is it? Does it start airing this week? Sorry, I should say this is early- June 9th.
Mark Koziel (20:53):
June 9th.
Dan Hood (20:54):
June
Mark Koziel (20:54):
9th was the day that first aired. Nice. We're running, I think, a two or three week campaign. Can I evaluate it, look at it. There's a lot of social media pickup in today's environment of media, so you need that. And then we need our members. We need members to help get that message out. We have this dedicated website. As far as I can see, our members are able to connect to that. If they want to have a version of the commercial trying to make that, we are all here to promote how great CPAs are.
Dan Hood (21:23):
Right. Excellent. Very cool. So you should keep an eye out for that. There's some other things though. There's the profession ready initiative. There's some other things you're doing to help accountants get skilled up for the future, but also things about how to train new levels of accountants as they come in. They're not doing a lot of the rote work that they used to do that sort of formed the foundation. I think for a lot of accountants of their understanding of the world was based on doing 10,000 tax returns for two or three years. People aren't doing that as much. Maybe you can talk about all those, I know that's a lot.
Mark Koziel (21:51):
They're all interconnected actually and it's fortuitous that we were already starting the profession ready initiative and yet in the rise 2040 feedback that we're getting. And actually on my listening tour, in my first 18 months with this organization going back, going out to our members, listening in firms, listening in business and industry, upskilling came up constantly and upskilling came up in Rise2040 and upskilling is kind of what profession readiness initiative is. So we're already getting ready to answer that question and what firms are asking for. Or I had CFOs I met with, they said, "We hire a new associate. We used to put them into the bullpen and we had them doing the debits and credits." They would do that for two years. Then we started to ask them to start to think about how they would evaluate those debits and credits into various accounts, that critical thinking they would have because now they have the real base of the debits and credits.
(22:49):
They learned about debits and credits theoretically, then they did it, then they analyzed it. And so now they're being asked to analyze it without the piece of doing it. And so how do we get doing it into the learning environment in a simulated way so that they have that or an auditor or to tax preparation as you mentioned? How do I give a small firm a simulator tool that they could take a tax return and we could say, okay, put that in the simulator to make that person now do that tax return all of it without AI so that they can understand it and then compare that to how AI would've prepared it so now they could see it. And the AI tool and the simulator could tell where they went right with all the review comments are being done by the AI simulator now, not by somebody sitting there and reviewing it.
Dan Hood (23:41):
And
Mark Koziel (23:41):
We're going to need more time of that upfront to make it happen. So all of these initiatives have converged on each other right now in critical thinking and data analytics, data analysis, those are the big two we're hearing about, but there's others in there too.
Dan Hood (23:57):
Right. And you talk about everything sort of coming together really nicely. One of the things that's fantastic because it means young accounts are doing much more interesting work much more quickly and they're learning in a smarter way that is going to feel smarter to them than just, yeah, I keep saying 10,000 tax returns, but that's kind of what it is where you just do a bunch of taking the time and count and inventory two or three years of that before you even get a chance to do anything really interesting. Now they can pull that forward.
Mark Koziel (24:21):
The big part of that, everyone says like we have the pyramid model. We hire a lot of people at the staff level and we hope that they stick around for a couple years and we mode them in the senior, that we hope that they stay for a couple more years, we promote them into manager and we hope they stay longer and longer and longer. And then the ones that are left over, we name partner. But as part of that, they're saying, well, the bottom part of the pyramid has been eliminated. And we're saying, no, the bottom part hasn't been eliminated. The bottom part is rose up. So what you're asking of the bottom part of the pyramid is at what used to be at a manager level. So we have to get them very quickly from school to manager in a fraction of the time of what we expected before.
(25:04):
And maybe we don't call it manager or maybe it's not manager level work anymore that the work has actually moved down. And I think we have gone over that over time because literally a new associate well before I started, they were footing schedules. That's all they did and that doesn't happen anymore. So then they were doing other things that were a senior responsibility for years and years and years, but that level of transition up to the manager level and how we're seeing the profession is evolving at a faster rate than it ever did in the prior 30 years.
Dan Hood (25:35):
Right. It's going to be fascinating to see and watch it over the next 15 years, see what happens. We can talk a lot more about this, but if we talked all we needed to talk about it, we would end up finishing around 2040. So we'll cut it off now. But any final thoughts on how as accountants go move into the future, anything they should be thinking about? Any final advice for them as they head towards 2040?
Mark Koziel (25:56):
Future is bright. Keep thinking about how are we going to keep these young professionals engaged. We need to focus on the pipeline. All size firms I think today now have an opportunity to hire at the entry level. Many say, "Well, I don't want to hire at the entry level. I want to hire at the experience level." Well, we all need to pitch in to give them that experience. And so whether it's interns in small firms, large firms, bringing all that together, I think we are all stewards of the profession. We need to make sure that we have that profession and we bring that pipeline through so that they're going to be able to replace us.
Dan Hood (26:31):
Fantastic. All right, Mark Koziel of the AICPA. Thank you so much.
Mark Koziel (26:33):
Thank you, Dan.
Dan Hood (26:34):
And thank you all for listening. This episode of On the Air was produced by Accounting today with audio production by Adnan Khan. Rate to review us on your favorite podcast platform and see the rest of our content on accountingtoday.com. Thanks again to our guest and thank you for listening.
