Trends from the CPA Profession’s Premier Think Tank

The New Horizons Group mission is to share our experiences and knowledge while exploring leading edge trends shaping the future of CPA firms.

Our members are national consultants Gale Crosley, Chris Frederiksen, Angie Grissom, Rita Keller, Roman Kepczyk, Allan Koltin, Jim Metzler, Jennifer Wilson and myself, as well as consultant Carl George, former long-time MP of Clifton Gunderson, Jim Bourke, partner and technology practice leader of Top 50 Withum and Sue Coffey, Senior VP of the AICPA.

The theme of our Spring 2016 meeting was industry innovations and the CPA profession’s continued relevancy.

Trends

As I look back over the last few decades, the commitment to management and leadership at firms has been rising significantly.  (Koltin)

Up until now, for most firms, technology has been seen as a tool to do accounting, sort of an upgrade of the calculator. Today, technology is driving accounting.(Rosenberg)

Many new MPs are reluctant, unsure leaders who had back room duties and were pushed into the MP slot. (Wilson)

A big problem at firms today is the younger partners waiting for the Boomers to retire.  (George)

With the movement to unlimited PTO, people worry about staff abusing it by taking too much time off.  The real problem is too many people not taking enough time off.”  (Wilson)

AICPA update from Sue Coffey of the AICPA

• 87% of key decision makers say CPAs are valuable to their organizations.
• One of the AICPA’s top priorities with the IRS is to address the exponential rise in identity theft.
• An AICPA survey has shown a decline in audit quality, especially in the government/single audit area.  We now have an initiative to enhance audit quality in the profession.   Since 2011, 1,200 firms have stopped doing employee benefit plans audits. The biggest problem: firms doing four or fewer of these audits, are, in the words of Chris Frederiksen, “committing malpractice in so doing.”

Exciting new perk

This has to be the most amazing, win-win perk I’ve seen in years.  According to Jim Bourke, Withum (#32 of the Top 100 Firms) gives their young staff an option of working abroad at an accounting firm for 6 months. Host firms come from Withum’s world-wide association.  The hosting firm pays the comp and Withum pays living expenses.  Visiting staff live with personnel of the hosting firm.  Wow!

Merger session led by Koltin

• The excessive focus on mergers is detracting from efforts to grow internally.
• Mergers work, though with varying degrees of success.  The downside of a “bad merger” is fairly low because even if the merger has questionable “success,” they almost never lose money for the buyer.

Technology Trends led by Bourke

Many firms are missing the ball by failing to adopt cloud-based technology.  Why are firms hesitating?  (1) Reluctance to change, (2) Fatal attraction to legacy products, and (3) Unfounded concerns about security.  THERE ARE NO VALID REASONS NOT TO GO TO THE CLOUD.

Millennials expect technology to work, so you better make sure it does.

Bourke gave a breathtaking summary of a new product, Validis.  Jim may shoot me for the way I describe it, but…we all know that audits begin with a request for documents to be prepared by the clients.  Validis enables an auditor to extract these PBCs themselves in minutes.  This makes it easier for firms to hire people out-of- state to assist with audits.  This could be a real game-changer!

Relevancy

The extent to which CPA firms and CPAs will remain relevant to clients and staff is a major topic of discussion in our profession. CPA firms have been married to an old- school model of operation that needs to change.  Click here for CPA Firms Operating With Outdated Model.  Carl George put it best:  “Most partners aren’t relevant because they don’t get paid to be relevant.  The only way things will change is with the young people.”

George continued:  “The market will drive relevance.  Example: $30 trillion dollars of wealth will be changing hands from Boomers to their heirs.  So, newer generations will drive change.  Not Boomers.”

Millennial session led by Wilson

• Gen Xers are now between 35 and 51 years of age.
• 78 million Boomers will retire in next 15 years.  There are only 50 million Gen Xers to succeed them.  “Millennials are the lynchpin,” says Wilson  They are currently 36% of the workforce.  By 2025, this will be 75%
• Millennials are being fawned over by Boomers, causing Gen Xers to have a chip on their shoulder against Millennials.  This is narrow-minded thinking.  If Gen Xers treat Millennials like little sisters and brothers, they will leave and Gen Xers won’t have anyone to succeed them.

Millennials value:

• Change- they want to change everything.
• Efficiency
• Technology – #1
• Meaningful work; they don’t want busy work.
• Nurturing, safe environment
• Mentoring and feedback.
• Transparency – open everything up except confidential payroll data. They are skeptical of leaders; if they don’t share, they must be hiding something.
• Flexibility

There’s a continual increase in firms trashing annual performance reviews and delivering continuous feedback, which has always been more effective than annual reviews.

Firms can recruit across the country today and have employees work remotely. In the past, this was limited to tax people, but with new audit software being developed, firms can do audits remotely as well.

As the baton passes to the industry’s next generation of owners, firms need to insure they’re taking appropriate steps to bring them aboard. Our monograph How to Bring in New Partners addresses this ever-important process.