Rapid change, uncertainty to remain hallmarks of the profession

The key tactic for CPA firms that have moved forward, and led many of them successfully through the pandemic, is strategic prioritization, according to a panel of executives from the American Institute of CPAs and CPA.com who held the keynote session on Wednesday at the AICPA Engage 2021 chaired conference.

The conference will take place July 27-29 in Las Vegas. AICPA Chairman and Panelist Bill Pirolli shared how last year he spoke to a steadfast leader who was overwhelmed with their workload. “It was difficult there at this critical time – everything we did was vital to the customers.”

He advised her to prioritize – focus on paycheck protection loans and other pandemic tax filing advisory work because “if you miss a PPP or RIF opportunity, that money is gone forever.”

The same advice went internally to accounting firms as the pandemic challenged the profession as much as anyone else, but all keynote speakers agreed that accountants not only rose to the challenge, they actually succeeded during the crisis.

“When I say we were ready, that is a statement for the entire profession,” said Barry Melancon, CEO of AICPA, in the opening comments of the meeting. “The job we’ve been through – I want to take a moment to pause and think about the incredible impact men and women have had on our job at the most incredible time of our lives.”

Melancon’s other panellists, including CPA.com’s President and CEO Erik Asgeirsson, confirmed his point of view. “What a defining moment last year was,” said Asgeirsson. “We’re looking at this now, the lessons we’ve learned – a lot of lessons have been learned in the last year.”

The keynote speakers outlined these findings and also offered their own priority list of topics and trends that accountants must address today and in the future.

Regulatory uncertainty

First, Melancon addressed the legal uncertainty of a new government and the ongoing effects of COVID-19.

“You see a lot on the news about infrastructure and tax increases, and customers want answers,” he said. “Anyone who claims to give precise answers is not really paying attention to it.”

Despite the confusion, Melancon made some predictions and stated that three laws will determine the future tax landscape: the Infrastructure Act, which was agreed on at about the same time as Melancon’s remarks, the budget resolution, and the budget reconciliation.

In that regard, “the likelihood of a tax bill being passed is still relatively high, but not high in the short term,” he continued, adding that he expected a tax proposal towards the end of the year, and based on that timeframe, it would Reactions are less likely.

The AICPA is also pushing for the Internal Revenue Service to put in place a system of reprieve, as one of a series of proposals it made in Washington that could solve one of the myriad problems Melancon has outlined that the service is currently facing . AICPA has long advocated a practitioner services division. While the IRS did not oppose this proposal, Melancon noted a lack of funding that contributed to its “backlog of problems”. In his opinion, these issues have “reached a point of crisis”.

He urged the audience to continue reaching out to their representatives in Congress to share their stories in hopes of obtaining the necessary resources to address these technical issues.

In addition, Melancon stated that integrated reporting will grow in importance in the US, with financial reports being part of a broader environmental, social and governance analysis. He advised the audience to follow the results of the talks at the United Nations COP26 climate change summit in Glasgow in November to learn some of the guidelines the US is likely to follow in the near future.

“We will finally see a completely different regulatory environment,” he predicted. “The PCAOB is much more aggressive in enforcing regulations. The attitude, the criticism of the profession will be very different in Washington in the next four years than in the last four years. “

The reputation of the profession is affected overseas, explained Sue Coffey, CEO of Public Accounting at the Association of International Certified Professional Accountants Environment, and that adds complexity – everything is interconnected. I remember one surveillance we are doing in the UK and EU with some Enron-like business failures. The effects of the examination reform in Europe extend to this point. We have a few challenging years ahead of us. The good news is that customers expect us to handle all of this complexity, and we’re really good at that. “

A new talent search

Pirolli referred to the AICPA’s CPA Horizons 2025 report, released in 2010, for an outlook on what the profession would be like in 2025, despite his assessment, “I think we arrived two years ago.” In it, “the main purpose listed was to give meaning to a changing and complex world. I don’t think anyone can do that better than a CPA. We did that [and during the pandemic] we have deepened our customer relationships. “

While the panelists repeatedly applauded the work of accountants in the past year, one hurdle remains to communicate this good work with the rest of the world – and especially future prospective accountants.

Melancon shared data that effectively shows the current US economy at full employment, but “people are leaving their jobs at tremendous rates for many reasons that we’ve never seen before – and not just at your company.”

The main reason for this lack of talent is the fact that starting salaries for accountants have fallen, while starting salaries for other business courses have exceeded them. In the long run, Melancon explained, accountants will make more money, but that lower starting salary offer is putting off good CPA candidates. In the two years leading up to COVID, he said, university attitudes had decreased by 31%. “The total number of hires didn’t go down, but different skills were hired, not accounting graduates.”

To wage this talent war, AICPA is focusing on a younger population.

“There is a shift in attention to high schools,” said Melancon. “The career decisions for this generation are much earlier than for other generations. We work with state companies on effective programs for each state. … We have to be in every high school in the future. “

Additionally, AICPA continued its CPA Evolution initiative, a collaborative effort with the National Association of State Boards of Accountancy, to transform the CPA licensing model to accommodate the new skills required of accountants.

With that in mind, Coffey announced plans to roll out the new CPA exam in early 2024. The new exam will better adapt to the new “T-shaped” model of the accountant, which requires a wide range of skills and in-depth knowledge and technological know-how.

The panelists agreed that the pandemic not only attracted people to the job, but also taught many companies how to better retain their employees by nurturing empathy.

“We were all sent home within a few hours,” said Coffey in March 2020. “We had to look after sick and old parents and children. We had to become teachers and have empathy for colleagues. We are a relationship profession. Managing that remotely is different. “

Quick change

Technology that many companies already had helped in this transition, and the laggards of technology adoption had to implement it.

“COVID has pushed the adoption of the profession by five to ten years,” said Coffey. “Those who started out in the cloud fared better in the pandemic. It enabled them to work with clients quickly. The pandemic has prepared us really very well for the technology of the future with an even bigger impact – artificial intelligence and machine learning. Technology cannot be viewed as a cost factor, but as a strategic investment. “

All panelists agreed that the profession has come a long way in terms of technology, but there is still ground to be gained.

“I cannot imagine an opportunity or a challenge in the future that can do without technology,” commented Pirolli. “But on Sue’s point, you need a plan.”

Many firms’ plan in recent years has been to include accounting services for clients, as Asgeirsson said the average growth rate for CAS practices is 20%, which “creates the conditions for so many opportunities.” Additionally, he predicted that related CFO faction services would become another hot service area for businesses.

Asgeirsson and Coffey also mentioned that the Dynamic Audit Solution, which they worked on in partnership with CaseWare International, is about to be launched. The data-driven, technology-driven audit solution is expected to be offered in beta to a handful of companies this fall, with the expected release of the larger commercial product coming after the busy season next year.

New models

Accountants relied on their business ecosystem during the crisis as they were forced to advise their clients in new avenues and areas, and they should expect to continue using that network, Asgeirsson said.

“The ecosystem is a competitive advantage,” he explained. “There is a lot of give and take and there has been a lot of give and take over the past year.”

Companies should also take inspiration from companies in this ecosystem to better refine their own business models and offer this advice as a service to their customers, Melancon said. “Most small and medium-sized businesses have sat down and said what my business model really is. Businesses do this, and it’s an area where we have the opportunity to intervene. “

AICPA President and CEO Barry Melancon speaks at the 2018 Engage event

Additionally, Melancon reported that more companies are experimenting with new pricing models, including subscription-based pricing popular in other industries.

These trends are just a few of the many featured during the Engage keynote. This made the advice for accounting managers to strategically prioritize their goals even more important – especially given all the changes the board expects to drag itself through the profession.

“We are now in a world re-invented, a world forever different from the pre-COVID profession,” Melancon said. “You heard me say that we will not recognize the profession in five years … The change will be phenomenal in the future.”