All These Change Agents in the Accounting Profession. So What Will Be the Response?
By Steven E. Sacks, CPA, CGMA, ABC
The accounting profession is at a crossroads: increasing pressure on keeping up with technology to serve more varied and complex clients, while a quick peek at the landscape indicates the ongoing struggle to attract and retain talent.
But what is meant by this, actually?
What will be the type of necessary talent? Will it be a mixture of technical GAAP and GAAS know-how and technology-driven knowledge like data analytics, or will the necessary technical expertise be superseded by deep understanding of artificial intelligence and data analytics? If the latter, how will firms draw the right people to deliver the value-added services that leverages technology? Salary and work-life balance will still be major concerns. If firms see they are behind the curve, will this mean rather than making major investments in new and existing personnel they will acquire (or be acquired) by non-CPA consulting firms that specialize in the new and exotic areas? Succession planning is a big concern these days; will technology force the unavoidable to move at a faster clip? I suspect it would. I cannot imagine partners with 25 years or more of experience going back to school to learn the new stuff. And if there is no desire, then the existing client service mix won’t be sufficient; it will be diminished in value.
At the beginning of this millennium there was talk about government takeover of the audit function in the aftermath of Enron, Worldcom and other major financial frauds. This caused a big hullabaloo. But what if this were to be revisited today? Would it make sense for firms to transition from a compliance-orientation mindset to become true business consultants ala McKinsey, Bain & Company and Boston Consulting Group — they of the far end of the business consulting spectrum? Will the CPA designation, the exam and the education that supports it evolve into a more Masters level education at the undergraduate level?
The public accounting profession owns the audit franchise. But will this be the case five or 10 years from now, especially in light of alternatives to banks for loans, such as asset-based lenders like Crestmark and Commercial Capital LLC? Many asset-based lenders will not require a financial audit, though they will exercise a comprehensive due diligence study of a business’s operations. With NetSuite, Xero and QuickBooks entering the CPA space and driving down fees for producing financial reports, where will this leave the CPA? The doctrine of “bill, bill and bill some more” can’t be maintained if new trends and the accompanying tools will make work more efficient, resulting in a reduction of hours to be billed.
There are other challenges for the CPA, to be sure, and technology is just one of them. So many changes and trends: Growth and profitability demands, retirement, broader and more diverse skill sets needed, increased competition to battle to gain a foothold in serving small and middle-market clients, and on and on. Let’s not forget that the next generation(s) of business owners will have no history or preconceived notions about working with a CPA or non-CPA consultant. The formula for success 20 years ago or even 10 years ago is different from today, and will be even more unrecognizable in the next several years; what is tomorrow’s new thing will be yesterday’s old hat in the blink of an eye.
How will the profession respond?
Steven Sacks is the CEO of Solutions to Results, LLC, a consultancy that specializes in helping individuals, firms and organizations meet the challenges of communicating with clarity and purpose. Visit his website at www.solutions2results.com.