Evolving Firm Structures – Accounting firms are experimenting with new ownership models and management structures, including offering ESOPs, non-equity partnerships, and splitting the firm into separate entities for attest and non-attest services.
AI’s Role in a Firm’s Success – AI advancements can free accountants from handling routine compliance tasks, which can help firms free up bandwidth to perform more advisory work.
AI Adoption Accelerating – To help manage the large-scale wave of partner retirements, firms are increasingly exploring the use of AI to enhance their productivity and profitability through a variety of use cases including:
Internal chatbots to provide quick answers based on firm-specific materials (e.g., HR procedures),
Document creation (e.g., engagement letters),
Drafting emails,
Content summarization,
Analyzing financial statements, and
Streamlining processes.
Culture of Improvement – Examples of continuous improvement that can improve your firm’s productivity include:
Regular training and workshops,
Open communication with constructive feedback
Encouraging and rewarding innovation,
Using KPIs to measure progress and reward key achievements, and
Adopting an employee recognition program for staff who meet or exceed targets.
EY’s Enforcing its Office Policy – In the UK, EY’s senior leadership is monitoring employee badging data as part of an effort to more strictly enforce its requirement for employees to work about half of their time in the office.
In recent years, accounting firms have begun exploring a wide range of ownership models and management structures beyond the traditional pyramid-shaped partnership model.
This experimentation aims to address challenges such as:
Finding talent and next-gen leadership,
Making necessary investments in technology, and
Ensuring the continuity of the firms as today’s partners retire.
Some examples of these firm structures include:
Splitting the firm into one entity that provides attest services and one that provides all other services
A structure that offers an employee stock ownership plan (ESOP), which was adopted by BDO USA and a firm named Grassi
An “income” or “non-equity” addition to the partnership where new partners receive a share of the profits but do not buy into the partnership
Another key aspect of modern firms is outsourcing or automating “the grunt work traditionally done by…entry-level accountants.”
“There now appears to be a momentous shift underway as a growing number of firms are taking a deeper dive into AI and are eagerly exploring how it can fuel greater productivity and profitability within their practices.”
“Virtually every CPA firm out there is looking for ways to close the talent gap with emerging technologies, such as AI.”
Some examples of AI applications for CPA firms include the following:
An internal chatbot that helps support your firm’s staff with their work. For example, this can include in-house “GPT” your firm creates and connects to your HR policies and procedures to allow staff to quickly answer questions such as, “Is Columbus Day a firm holiday?” and “How do I request time off?”
Assisting staff in their creation of documents, including related background research
Summarizing content (e.g., from meetings, articles, etc.)
However, most accountants still have some concerns regarding the use of AI, including the quality of the work it produces and the accuracy of the data it provides.
Many firms are first using AI internally before implementing it for client-facing work.
“Most firms are using generative AI to help with drafting documents and summarizing information. However, there is a real need and desire to use AI for higher-value tasks, such as creating test plans and evidence requests, automating manual processes, and querying documents — all based on a firm’s methodologies, processes, and specific language models.”
A rapidly growing top 200 Virginia-based CPA firm, YHB CPAs & Consultants (“YHB”), shows that “creating a better work/life balance for employees doesn’t have to involve firing profitable clients or automating work to the point of becoming disconnected from those clients.”
YHB faced challenges with its workflow and document management for its audit processes, which suffered from disorganization and inefficiency.
The firm adopted Suralink in Fall 2021, which automated their request list and document workflow processes, which improved employee efficiency and work-life balance.
“The pandemic forced people who liked paper and didn’t see the need to change to do things a different way,” said Drew Throckmorton, CPA and Audit Principal at YHB.
Suralink describes itself as “the leader in PBC request list management software.”
The biggest wave of CPA firm partner retirements in our lifetime is taking place amidst fast growing demand for firms’ services, which is outpacing the number of new accountants entering the profession.
One way to navigate this challenge is to expand beyond conventional ways of doing things, including embracing artificial intelligence.
“AI opens avenues for scaling your practice efficiently [including:]
“Most accountants are selling the drill (commoditized bookkeeping and tax work) when there’s an entire population of potential clients who are (secretly) begging for their accountant to give them something else altogether: advice.”
Someone tricked a part-time employee at an Austin-based CPA firm into clicking on a malicious link, which resulted in unauthorized access to the firm’s files.
“Setting up two-factor or multi-factor authentication with your email provider can reduce the risk of having your email account compromised.”
In the UK, EY’s senior leadership is monitoring employee badging data as part of an effort to more strictly enforce its requirement for employees to work about half of their time in the office.
