[previously published on LinkedIn]
One of the rewarding experiences associated with being a Past President of the NJCPA, is having the opportunity to represent NJ as a member of AICPA Council. The AICPA provides members with many resources to utilize in our daily practice. I attended the recent fall Council meeting and want to provide my top three takeaways from this meeting are the following:
- Continued consolidation of the CPA industry
- Update on the pipeline of new CPAs
- Small firm issues, highlighted by the Private Companies Practice Section (PCPS).
This is an issue that is not going to go away. There are three key factors that are driving this: the retirement of baby boomers who are seeking exit strategies, lack of qualified staff/management resources to sustain a firm, & required investments in technology. . In addition, our clients know we are their trusted advisors and are demanding more from us as CPAs. We have many historical biases about the compliance work we have provided for a generation which has limited our capacity to adapt to a changing services model.
Technology is not just a freight train carrying us into the future – but a bullet train that is going to come at us in the next two to three years, and I feel that we can better prepare members for the changes that we must get used to. I want to encourageall CPAs to stay current with what is occurring on the technology forefront, otherwise you are going to be obsolete!
This is interesting because for the first time in 10 years, we have seen a 4 percent decline in both accounting enrollments since 2016 and graduates in the 2017-2018 academic year. The number of candidates taking and passing the CPA exam between 2017 and 2018 has decreased almost the identical percent, both of which were first outlined in the 2019 Accounting Graduates Supply and Demand Report. This means there will be even a more limited supply of the next generation of CPAs.
Small Firm Issues
The challenges small firms are facing are ones we have seen for the past 10 years, but there’s been a change in the rankings of the most challenging ones.
Finding talent is the biggest challenge. The second one, which is most interesting to me, is keeping up to date with current tax laws. It’s most likely due to President Trump’s Tax Cuts and Jobs Act of 2017, passed in 2017. . The survey revealed that many firms have struggled with the complexibility of the new tax laws and have been challenged due to limited internal resources to obtain clear answers. Much like TRA of 1986, and it will most likely take another 24 months to have clear guidance on the complex areas.
Managing today’s workforce, work life and work balance alongside changing client needs is the third challenge. Many clients expect more from their CPAs today and being able to provide those services in a small firm environment continues to be a challenge. In addition, clients want access 24/7 and require advisory offerings well beyond basic accounting, financial reporting and tax compliance. The emerging technologies like becoming a “digital CPA firm” i the wave or the very near future.