CPA Firms of the Future
A look at the tech and trends changing the industry
Technology continues to add efficiency and convenience to the daily business of a CPA, allowing firms to have a more flexible workforce and serve clients far from their location. Remote access to clients’ systems, along with video and teleconferencing, has allowed some firms to conduct virtual audits.
While this instant-access environment enables CPAs to be more responsive to their clients’ needs, accountants need to carefully balance boundaries to ensure professionals have proper work/life integration. Innovation in the industry is making this possible.
For example, over the last several years, cloud technologies have become mainstream in most CPA practices — opening up markets and allowing firms to provide more timely service to clients by being able to access information from anywhere in the world at any time.
“From our perspective, new technology has given us a lot more flexibility,” says William T. Mason III, president and CEO of LaPorte CPAs & Business Advisors in Metairie. “We are in the cloud with our entire information system and have the ability for our people to work remotely, as long as they have an internet connection. It’s really made it flexible for people to work when they can’t get into the office for whatever reason.”
CPA firms are also changing who they hire.
Dan Gardiner, CPA, CGMA, managing director and CEO of Postlethwaite & Netterville in Metairie says firms positioning themselves for the future are already becoming much more diverse in their experiences and educational backgrounds.
“CPA firms are hiring more non-accountants than ever before,” he says. “This trend will continue as firms develop talent in areas such as data science, math and engineering to complement the CPA professional staff.”
Gardiner believes this diversity, combined with a greater focus on non-technical “soft” skills such as communication and leadership — along with further automation of mundane tasks, such as data entry, review and verification — will allow professional service teams to dive deeper into clients’ most pressing business problems.
“Firms will provide more robust solutions, focused not only on accounting and compliance, but on all aspects of their business, including human resources, technology, strategic consulting, advanced analytics, and other operational and financial aspects,” he says.
Jeremy Thibodeaux, senior manager with Ericksen Krentel in New Orleans, says there’s an abundance of new technologies and software to choose from and each firm needs to decide what suits its needs and capabilities.
“The big four (Ernst & Young, Deloitte, KPMG, and PwC) are investing heavily in research and development and developing proprietary software that they can use and modify, and a couple of them are partnering with IBM and Watson to develop solutions tailored to their needs and clients,” he says. “For example, KPMG is partnering with IBM to apply the Watson Artificial Intelligence technologies with KPMG’s advisory and tax services. These AIs like Watson are able to read through several-hundred-page contracts, such as leases, and extract all relevant data in a matter of minutes, if not seconds.”
These technologies are able to analyze the contracts and detect trends, patterns or anomalies that might otherwise escape the human eye.
In 2017, Validis partnered with WolterKluwers on Audit Accelerator, which connects to an accounting database or application and downloads full transaction histories. It then reads the data and transforms it into a standardized set of reports for analysis. In minutes, an individual can have a set of working papers (accounting terminology) to perform an efficient audit.
The Buzz on Blockchain
In the financial world, automation can be an enemy or a friend, depending on how quickly it is adopted.
Blockchain is a public ledger where transactions are recorded and confirmed anonymously. It’s a record of events that is shared among many parties.
More importantly, once information is entered, it cannot be altered.
Tony Qadir, director of business development for Bourgeois Bennett, LLC in Metairie, says an emphasis on security and data protection is high on the firm’s list of priorities and believes accountants are the second-most targeted (after healthcare companies) entity by cyber criminals because accountants carry intimate information on individuals, such as financial records and Social Security numbers.
“Automation, specifically Blockchain, is something that inspires equal parts fear and excitement among accounting professionals, but it does not have to be something that remains unknown,” he says. “Blockchain technology, once fully accepted and integrated, will increase the efficiency of audit, attest and tax reporting. Some feel it may remove the need for audits altogether at some point. This will allow accounting firms to focus on higher-level advisory services.”
On the individual side, firms are still evaluating how some of the IRS changes are going to impact clients going forward. With the changes in rates with the new tax laws, some entities are evaluating whether they will continue to be partnerships for S-corporations or go back to being a regular corporation.
Mason says technology has changed some of what his firm does with tax preparation, as software packages have made a lot of the previous need for data entry unnecessary.
“A lot of times the data gets loaded electronically either through a scanning situation or a download of a client’s financial information into software packages and that information populates tax returns and financial statements,” he says. “There is also a lot more data analytics that allow us to analyze and interpret a lot more data when we’re working with clients than we could 15 or 20 years ago because of the speed it can be analyzed.”
Rise of AI
CPA firms are already buzzing about the applications of artificial intelligence in the profession.
Gardiner says the Big 4 already have working applications and many firms in the next tier are working with partners to develop solutions.
“In addition, the use of bots and machine learning are taking root and starting to have an impact,” he says. “Several of our services will be impacted by these developments, which provide both challenges and opportunities. We see this evolution as an opportunity to spend more time with our clients focusing on services that provide greater value to their business.”
Thibodeaux cites MindBridge AI as an analytics company that has recently been a game changer.
“It’s an extremely powerful tool. They have all these algorithms built in their system and you can upload a client’s information and it can spit out what transactions look risky and the reasons,” he says. “It uses artificial intelligence to uncover material irregularities in data.”
“The firms that don’t make that shift [toward new technology] will be the ones that die off,” says Thibodeaux, who adds that new technologies will require newly rewritten standards to incorporate them.
Will human CPAs be replaced by software? Unlikely, says Mason, who predicts industry professionals of the future will play an even larger role as advisors in the future, using their skill sets to analyze and interpret data.
“The traditional CPA firm has been more of a pyramid type of business structure (partners at the top, followed by senior managers below, down to the senior level, and staff at the bottom),” Mason says. “But as we move forward 10 to 15 years, I think we will see more of a vertical integration with CPA firms due to cloud computing, AI and Blockchain — changing the structure to more of an upright rectangle as more people develop different skill sets.”
Dealing with Challenges
New technology can bring with it new sets of challenges, as hackers often find it enticing to go after upgrades and secured data. For that reason, cybersecurity issues continue to wreak havoc on business.
“We still see too many businesses that are not doing enough to protect their client and business information, even as cyber threats increase and evolve,” says Dan Gardiner, CPA, CGMA, managing director and CEO of Postlethwaite & Netterville. “We have invested greatly in our cybersecurity practice in order to help our clients better prepare, address, train and monitor for these threats.”
He offers this advice to any business leader: If you do not have a good understanding of how, or if, your business is addressing these risks, now is the time to take action.