Weekly Update - April 6, 2024

Accounting Today – Accounting’s Pipeline Problem: An Opportunity in Disguise?

The accounting profession’s staffing crisis presents both challenges and opportunities.
Leading firms are recognizing the potential to use this crisis to attract and retain young talent by differentiating themselves in areas such as culture, work-life balance, and compensation.
The crisis also offers a chance to rebrand the accounting industry and highlight its evolving, strategic role in facilitating the success of clients’ businesses.

Artificial intelligence (AI) can help firms alleviate the burdens of regulatory changes and data processing, which allows professionals to focus more on providing client service.
AI can also help automate mundane tasks and draft responses to IRS notices.
AI-powered tools can help upskill associates through improved training.

AI is revolutionizing tax compliance services, expanding opportunities, and improving firm operations, while also improving the client experience and enhancing job satisfaction.
“The growth and capabilities of AI are exponential, rather than incremental, and will transform the accounting profession in many ways.”
“AI improves job satisfaction by automating tasks and enhancing accuracy.

Podcasting has evolved into a valuable tool for networking, content creation, and establishing expertise within a niche market.
It offers an intimate platform to engage with industry leaders and audiences, which can position the host as a thought leader.
Podcasting is not about generating quick financial gains but about:
- Sharing in-depth knowledge,
- Enhancing visibility,
- Building meaningful connections, and
- Facilitating easier and more effective sales conversations.
“The challenge is coming out of obscurity so that others know about you, your mission, your value.”
“People who listen to podcasts expect a long-format piece of content, and they’re more likely to give you their attention for half an hour or longer just by virtue of what a podcast is.”
“Focus on a niche. Become more specific on who you work with. It makes your delivery easier. It makes your marketing effective.”

“A major factor in the merger and acquisition sector is the private equity element.”
“What’s PE’s plan? They acquire an initial firm and then several others to create a larger firm of $100 million or more.”
“What firms are in demand? Every call we get starts with, ‘We are looking for targets of $10 million on up.’”

As the end of tax season approaches, businesses are increasingly seeking the expertise of accounting staffing firms.
These firms provide access to experienced professionals, such as tax accountants and CPAs, which can minimize the risk of costly errors.
The benefits of partnering with accounting staffing firms include enhanced compliance, flexibility and scalability, access to on-demand expertise, and potential cost savings compared to hiring full-time staff.
“Businesses can tailor their staffing needs to match the demands of tax season, whether it’s a short-term project requiring additional manpower or a long-term engagement to address ongoing tax-related challenges.”

Generative AI is increasingly being used by accountants for tasks ranging from writing Excel formulas to analyzing data for unusual transactions.
There tends to be a greater focus on how generative AI can streamline processes and facilitate innovation, and there tends to be less of a focus on related audit risks.
The Center for Audit Quality (CAQ) has identified 12 audit risks associated with the use of generative AI.

A Minnesota bill offers an alternative route to CPA licensure, which may undermine the national CPA mobility system that allows Certified Public Accountants to practice across states without additional requirements, provided they remain in good standing.
This system, based on decades of coordinated efforts within the accounting profession, hinges on a common understanding of licensure equivalency across states, typically requiring 150 credit hours of education, CPA Exam passage, and a year of professional experience.
By reducing the education requirement to 120 hours plus two years of experience, the proposed Minnesota legislation threatens to disrupt this mobility, potentially imposing additional burdens on Minnesota CPAs and affecting their ability to serve out-of-state clients.

A recent Deloitte survey revealed smaller firms are less likely to invest in AI to boost their productivity.
Instead, these companies prioritize reskilling and upskilling their staff.

In a recent Future Firm podcast, Ryan Lazanis shared five mistakes he made as a firm owner:

Underestimating business challenges – Ryan didn’t realize how difficult running a business would be, especially as a first-time owner. This helped him see the importance of surrounding oneself with experienced individuals.
Over-automating sales – Ryan attempted to automate the sales process too much, which attracted low-quality clients. Instead, he could have adopted a longer, less efficient process to land better clients at better prices.
Assuming hiring is easy – Ryan thought that simply posting a job ad would attract high-quality candidates. However, he found that in reality, attracting talent is a sales process that requires effort and convincing.
Expecting instant freedom – Ryan believed that becoming a business owner would automatically grant freedom. In contrast, it takes time and the right structure to achieve the desired level of freedom.
Trying to do everything alone – Ryan attempted to figure everything out independently and did not properly delegate work, which slowed down progress. Instead, he could have benefited from seeking guidance from experienced individuals.

To ensure your firm provides quality service to its clients, it is important to create specific, consistent workflows for different workflows (e.g., marketing, sales, client onboarding, etc.).
It can be helpful to use project management software to manage tasks effectively.
“A workflow is therefore the sequence of steps required to move a task from beginning to end in order to complete it.”