What's Ahead for the CPA Profession?
Predictions and pearls of wisdom from an elite CPA industry think tank.
For the past 15 years, The New Horizon Group, an industry think tank composed of leaders in the CPA profession, has met annually to brainstorm, debate, and analyze the top trends and challenges impacting our profession.
This year’s think tank, hosted by the AICPA in New York, included distinguished members Jim Bourke, Gale Crosley, Chris Frederiksen, Carl George, Angie Grissom, Rita Keller, Roman Kepczyk, Allan Koltin, Mark Koziel, Rob Nixon, Darren Root, Jennifer Wilson, and myself. We also had the honor of hearing from AICPA President and CEO Barry Melancon.
The pearls of wisdom and predictions that came out of this gathering were intriguing and inspiring.
For years now, the growth curve of the CPA industry has been straight up. What other industry can say this? But past successes don’t guarantee future successes, either. We’re witnessing rapid change in many areas of the profession, from audit and artificial intelligence, to the future of tax and technology, which means we all need to be more nimble if we want to not only sustain our practices, but succeed as well.
For instance, Melancon pointed out that huge, rapid audit change is going to happen sooner than later thanks to new technologies, enabling 100-percent testing of transactions in a fraction of the time it takes us mere mortals. As a result, traditional audit revenue will dramatically drop in the coming years. However, a tremendous investment in technology will be required.
The trend towards increased technology isn’t isolated to audit, however. This is a trend that’s going to impact every service area of every firm. What’s to happen to smaller firms that can’t afford the investment burden? And what’s to happen to the staff firms employ for the roles threatened by tech? These are just some of the things we need to be preparing for.
It’s likely that firms will continue to develop and seek more experienced and knowledgeable personnel and fewer entry-level staffers to fill their ranks, transitioning the traditional triangle-shaped CPA organizational structure into more of a diamond (fewer entry-level staff, more experienced staff, fewer top-level partners and executives).
What’s adding fuel to this transition is the fact that advisory and consulting services have grown by 16 percent over the last six years in the Top 100 firms compared to a mere 4 percent for accounting and tax services. Technology isn’t only transforming CPA service delivery—it’s transforming our services and driving revenue.
Clients are increasingly turning to CPAs to help them navigate trends in tech and data. The AICPA, for the first time, is focusing on training and certification in non-traditional assurance services, such as cybersecurity. Speaking of which, the IRS estimates that five CPA firms are hacked and have their data stolen every day.
What this all boils down to is that we all need to start thinking differently about what this profession means to us, and what we mean to our clients. Those that are prepared for a future full of tech are likely to be the ones that succeed. Those that are unprepared may be left behind and eventually merged out of existence.
Koltin says “the merger frenzy has become the new normal.” While M&A is a simple growth strategy, savvy buyers will reap the most benefits. Some of Koltin’s tips for potential buyers include: Eyeing firms with strong leadership; being prepared to move quickly (but also doing all of the due diligence to truly “know” the seller); and putting the best partner(s) forward to lead negotiations, relationship-building, and planning for the business combination.
On that note, managing partners need to also rethink themselves. Firm culture drives successes and failures in many ways. Are you defining your firm’s culture? Is it in writing? Are you walking the walk, and talking the talk, and setting the goals? In my experience, culture is 100-percent driven by the partners and their abilities to communicate with their teams.
So what traits help make good managing partners today? You have to be a hardened decision-maker with grit and the ability to lead. You have to be accountable. You have to be a great communicator and listener, but also be engaging, articulate, and persuasive. And let’s not forget that managing partners must be visionary, growth-minded, and able to create profitability. Easy enough.
There’s no shortage of change coming to the CPA profession. But, with change comes opportunity. Are you up for the challenge?
Perennially cited by
Inside Public Accounting as one of the 10 most recommended consultants in the country, Marc Rosenberg, CPA is a nationally renowned consultant, author and speaker on CPA firm management, strategy and partner issues. His 14 practice management books are available here, and Marc can be reached at 847-251-7100 or email@example.com.