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Top 3 Practice Management Concerns for CPA Firms to Tackle

Aug 26th 2016
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Much of the discussion in the accounting industry today pivots around how global markets impact practice management and client service. But when asked about the top concerns among accounting firm leaders, BKR International, a global public accounting association, cited an overwhelming focus on the following three:

1. Security awareness. Financial advisory firms of all sizes are actively targeted by hackers in search of client data, according to a top cybersecurity threats report by BKR International last year, in tandem with the Identity Theft Council in California. Public accounting firms – at least in the United States – may be required in the future to comply with minimum federal data security standards.

Currently, the federal security regulations that exist apply to specific industries, such as health care (Health Insurance Portability and Accountability Act), financial institutions (Gramm-Leach-Bliley Act), and federal agencies (Homeland Security Act), said BKR Executive Director Maureen Schwartz. Congress has tried to pass several bills in recent years that expand on cybersecurity regulation, but there is debate about whether the solution is more government regulation or more private-sector innovation, she added.

In the meantime, firms should have a few standards of their own in place to mitigate risks against hackers, as well as to minimize legal liability risks. Document-retention policies, reviewed written communications protocols, technology upgrades, and, most importantly, staff training top BKR’s list.

Employees pose the single-biggest cybersecurity risk, according to BKR.

“Because many employees now use mobile devices or may access a system from home, risk management has expanded beyond the office,” Schwartz said. “Firms need to be aware of how employees are using hardware and software, how they are accessing sensitive data and communicating sensitive data, and even how they are saving data.”

Training and behavioral change, she added, are often the best defense against cyberthreats.

2. Multigenerational engagement. Most companies have experienced the challenge of managing up to four generations of employees: the founding and part-time traditionalists, the executive and immersed baby boomers, the results-oriented Generation Xers, and the agile millennials, according to BKR. Understanding the perceptions and expectations of each generation isn’t easy, but it’s important to recognize that all of them contribute something significant to your firm, Schwartz said.

Every firm should understand the generational composition of its staff and educate leaders on how to adapt policies, processes, and opportunities to support full engagement, BKR advises. There’s a wealth of information out there to learn about each generation of employee. It’s also critical, according to BKR, to communicate regularly about generational attributes and differences to enhance team communication and collaboration, and consider including multiple generations on teams for richer solutions.

“My philosophy is that everyone is inherently different, and as long as we understand that and listen to the preferences of each person, we manage expectations,” said Jason Tonjes, CPA, managing partner at Bland & Associates PC in Omaha, Nebraska.

Tonjes, a former chairman of the BKR International Americas Region, said the biggest generational difference he sees on a daily basis is the preferred form of communication. Younger generations are more tied to technology and provide quick responses to texts, instant messages, and emails, but they are less likely to reach out by phone or in person.

One often-overlooked quality of this communication style? “They are rarely unplugged. Whether that is good or not is up to them,” Tonjes said. “But they typically work just as hard as the older generations who like to grind it out in the office.”

Bland & Associates takes a simple and direct approach to melding its multigenerational staff, according to Tonjes. The firm engages a behavioral psychologist for yearly training (which includes profile testing and education on generational preferences) and additional consultation when needed.

“This individual has helped everyone learn to understand each other; not just Gen X understanding millennials, but vice versa as well,” he said.

Never underestimate the impact generational staffing can have on your firm, BKR officials say. If your firm’s demographics trend a little older or a little younger, for example, this can impact your ability to grow, retain staff, or relate to clients. Firms can look for ways to balance out the age range in their recruitment and retention efforts.

Make sure younger employees understand the opportunities for skill building and professional advancement, while midcareer employees can anticipate new and challenging engagements. All staff should be actively engaged in the firm’s vision and growth strategy.

3. Anticipating what’s next. Anticipation will also play a key role in client services going forward, as clients increasingly look to their CPAs to get beyond reactive or transactional relationships and help them prepare for the future.

The challenge with this shift is that partners and managers are often just as bogged down with daily compliance service deadlines as the teams they oversee. Lack of capacity makes it difficult to see the forest for the trees and focus on the future inside the firm, let alone consult about it with clients, Schwartz said.

But anticipating the future is a critical core competency that forward-thinking firm leaders must integrate with their service offerings, their staff development, and their approach to client relationships. Clients expect regular delivery of value, translated as new ideas, risk mitigation, assessment, strategizing, and foresight.

Accounting has traditionally been about recording the past, but internationally minded accounting firms understand the importance of using that historic data to make effective business decisions now while also projecting what’s next, BKR officials say.

“CPAs are now expected to be their clients’ business partners, advisors, and counselors for both corporate and personal financial decisions,” said David Goldner, CPA, chairman of the BKR International Americas Region and managing partner at Baltimore-based Gross Mendelsohn. “Clients want their CPA to understand their business and help them anticipate change.”

Moving forward in the era of “big data,” CPAs are being called upon to mine that data to offer value-added services, like strategic planning and succession planning, as well as wealth management advisory services. They can help business owners make decisions at every stage of business – and many personal financial decisions, too.

CPAs can, for example, help clients strategize on a real-estate transaction from both an estate planning and business tax perspective. They may advise on risk mitigation involving cybersecurity or internal-controls issues through their firm’s IT consulting or outsourced CFO services.

“Accounting firms are among the best at collecting and analyzing all of this data,” Schwartz said. “It will be their job to help clients protect it and anticipate how businesses can best leverage it.”

Related article:

Top 3 Issues Keeping Firm Leaders Up at Night

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