PICPA President Joe Seibert and I recently completed our swing around the state to present the Professional Issues Update to members. It is always a great way to discuss trends and opportunities in the profession with members. While we titled our update Disruptions, Innovation, and Opportunity, it was words that began with the letter “T” that became the focus of many of our conversations: transformation, technology, and talent.
Much has been written and discussed regarding these transformational times for the accounting profession. It has been said that CPAs will experience more change in the next five years than they have experienced over the previous 30. Just think of the transformation of the core service of the profession – attestation. The Public Company Accounting Oversight Board is implementing changes to audit reports for public companies that will require the disclosure of critical audit matters, information on tenure of auditors and independence, and a statement regarding reasonable assurance about whether the financial statements are free of material misstatements, whether due to error or fraud. The demands for transparency and sustainability will be the new normal, and will eventually trickle down to audits of nonprofits and privately owned entities. The relevance of the current financial audit model and its focus on a historical cost perspective is being challenged by the users’ need for business intelligence and predictive analytics. The profession’s efforts to enhance audit quality will complement this audit transformation.
The explosion of technology is driving much of the transformation the profession is experiencing. Artificial intelligence, augmented reality, virtual reality, blockchain, and robotics are no longer viewed as science fiction. Surveys report that almost 75 percent of middle-market leaders expect to experience disruption in the next three years – but nearly all view that disruption as an opportunity. Think about the frequency with which you hear the term cybersecurity compared to just a few years ago. A recent AICPA Global Cybersecurity Survey reported that 90 percent of AICPA members believe their organizations prioritize cybersecurity, and 88 percent say finance has been asked to take responsibility for mitigating cybersecurity risks. The AICPA has created an audit guide to assist members in providing new attest services to organizations around cybersecurity practices. Technology is an opportunity for the profession to elevate its game as some traditional services are automated or outsourced. The availability of data resulting from technological advances, combined with resulting efficiencies, will enable CPAs to provide higher-level thought leadership and critical thinking to help clients and employers grow during these transformational times.
Talent was again identified as the No. 1 issue for the accounting profession in the 2017 AICPA Private Companies Practice Section CPA Firm Top Issues survey. New to the survey this year was an opportunity to identify top concerns for the next five years; talent and technology ranked first and second across firms of all sizes. The issue of talent is the most frequent topic of discussion I hear when visiting with PICPA members. Recruitment has been strong, as record numbers of students continue to major in accounting, but retention is challenging members in both public accounting and industry. Firms and corporations continue to alter their businesses to adjust for technological advances and different generations in the workforce. New skill sets are being taught in schools, tested on the CPA Exam, and learned in the workplace. According to a 2017 KPMG and Forbes Insights study, the top three skills finance executives look for in auditors are technology, communication, and critical thinking/judgment, and the demand for these is up significantly from the 2014 survey. “Technical skills” is not in the top three. Perhaps we are already seeing the impact of technology.
As I put the finishing touches on this column, another “T” word is dominating the profession’s public discourse: tax reform. Both the U.S. House and Senate bills have been released, and there appears to be an urgency in Washington to get reform through the legislative process. The PICPA will keep our members on top of the latest proposals through our social media outlets and website, and will have CPE available as soon as the outcome of the proposals becomes evident.
Feeling a little overwhelmed by all of the “T” words? You are not alone. Information and data will continue to come at you in an accelerated manner, and I encourage PICPA members to continue the conversation as issues evolve. The PICPA is a resource to help you navigate these opportunities because we remain focused on two more “T” words: thinking and training.
Michael D. Colgan, CAE, is CEO and executive director of the PICPA. He can be reached at email@example.com.