Disruption Overtakes ‘Change’ for CPAs
Not only are more CPAs talking about ‘how’ rather than ‘why’ when discussing technology adoption for them and their clients, but now the idea of disruption is being brought up again in a big way; replacing discussions solely about ‘change.’
This was the general consensus after a full day of sessions, keynotes and chatting with CPAs at the Digital CPA conference hosted by CPA.com and the AICPA. The conference, now in its sixth year, was full of thought leaders in the profession and, predominantly, members of mid to large-sized firms with some smaller practitioners mixed in.
The idea is to learn more about the impact of various technologies and related trends on CPAs and their clients and again, clearly, this year was all about handling the massive disruption occurring once more in the profession. The term reared its head back several years ago when thought leaders warned of the potential impact cloud would have on the profession.
Those discussions then turned to the massive ‘change’ that CPAs had to contend with, supported by taking more advantage of client accounting, collaboration and ultimately taking steps to be more of an advisor. While this is still prevalent, the profession is now preparing to be disrupted by the likes of blockchain, machine learning and the growing generation of Millennial accountants, coupled with the aging out of the Baby Boomers.
To start with, in order to face the next wave of impending disruption, CPAs are being asked to take a more entrepreneurial approach to their practices. In essence, they are being urged to be the disruptors rather than having it happen to them. Such was the tone from the opening keynote speaker Marc Randolph, co-founder of Netflix.
So what does running a multi-million dollar online streaming movie service have to do with accounting and disruption? According to Randolph, it was how the company started in the first place.
“To generate ideas...look for pain, learn how to ask what's wrong in the things you do every day,” he said. “Good ideas don't always come out of nowhere. Before we came up with the idea for Netflix, it was in a big stack of bad ideas. When it comes to disruption, the rate of success is directly proportionate to the ideas you can afford to try.”
To drive the point home further, Randolph was on a panel with accounting application entrepreneurs Rene Lacerte and David Barrett. For those unaware Lacerte is the founder of Bill.com, while Barrett founded Expensify.
“Good ideas and bad ideas will initially look the same, the only way to tell them apart is the rear view mirror” said Barrett. “When I came up with Expensify I had to think of the most boring thing you could do, which was easier expense reports.”
And to the firms, particularly smaller ones, Barrett advised to be a better leader and not to fear failure.
“One key point of being a good leader is not freaking out if you don't have the answers...have a tolerance of failure.”
With regard to artificial intelligence disrupting the profession, Leon Katsnelson, a director and Chief Technology Officer at IBM, said for the most part CPAs should not fear replacement but definitely be aware of how AI will impact their work.
“When you think about AI, the human element is still absolutely vital, the auditor's job will not be entirely replaced and human thinking will still be critical,” said Katsnelson. “AI will impact every aspect of accounting, not just audit and not just expenses.”
During his opening keynote address, AICPA president Barry Melancon gave attending CPAs more confidence that they can and will weather the impending disruption to the profession, making no mistake that it is already happening.
“You may be wondering, how do you change in a successful and profitable firm and still make the right decisions at the right time,” said Melancon. “We face the challenge of making sure we're successful and finding the right things to do for the future. We do have something to lose but can't be less willing to change.”
He also went so far as to say the profession may not recognize itself in as few as five years, based on numerous factors including the aging out of Boomers, use of technology from cloud to AI and blockchain, and firm structure.
“With technology, the basic structure of CPA firms will change; different pricing and business models will happen,” said Melancon. “The most likely scenario to occur in the CPA space will be a narrower base and small ownership structure at the top.”
The AICPA and CPA.com are, of course, taking an active role in guiding CPAs through this disruptive period, again stressing how virtual CFO-type services will offer them a key advantage.
“If you want to see what lies ahead for tax and audit, look at what we’ve seen in client accounting services over the past decade – with the cloud, virtual CFO services are now an increasingly important driver of CPA firm revenue growth,” said CPA.com CEO Erik Asgeirsson.
Specifically, CPA.com plans to:
- Set up roundtable groups of client accounting practitioners, keyed to firm size, to provide a support network and a means to exchange best practices
- Create advocacy materials for CPAs looking to get internal buy-in for their teams to build or expand client accounting services practices
- Design a comprehensive benchmarking survey, in collaboration with the AICPA’s practice management section, to set metrics for client accounting services pricing and best practices
Asgeirsson also outlined several broad initiatives already underway. These include:
- A collaboration between CPA.com, the AICPA and CaseWare, a global provider of audit and analytic software, to create a broad, automated audit solution. One piece of this collaboration – the creation of a dynamic preparation, compilation and review solution – was announced earlier this week at Digital CPA.
- Expanded uses for the RIVIO Clearinghouse, a secure hub for private company financial information jointly developed by CPA.com and Confirmation.com, such as the managed distribution of reports from System of Organization Control (SOC) engagements. Asgeirsson noted that there is growing interest in RIVIO within the credit union industry, and within the Top 20 accounting firms.
- Taking a leading role in defining the impact of blockchain on the profession through a collaboration with the AICPA and Wall Street Blockchain Alliance.
- Offering insight into emerging technology trends through CPA.com’s sponsorship of 1.) an annual executive roundtable for accounting technology CEOs, and 2.) formation of a startup accelerator with the Association of International Certified Professional Accountants.