Executive Summary
- Accounting Talent Shortage – The Financial Times recently reported that “about three-quarters of CPAs are at or near retirement age, and the pipeline looks threadbare,” and a white paper from the Pennsylvania Institute of CPAs stated, “the pipeline of qualified candidates entering the CPA profession is running dangerously low.”
- AI Integration in Accounting Software – AI is being integrated into a variety of accounting software. According to UpLink, “You need to start getting experience with using tools like ChatGPT because they will quickly become an everyday skill like Excel is currently. Find projects you can use it for in your personal life to get that experience.”
- Offer Advisory Services to Escape the Accountant’s Trap – Here are five strategies to avoid “working long hours for low fees” while allowing demanding clients to burn you out with transactional and compliance work:
- Upsell advisory services to your clients and your existing services to new advisory clients
- Charge higher fees for advisory services
- Focus more on high-value advisory-type services than on commoditized services
- Help business owners succeed with your advisory work, including advising them on how to consistently generate positive cash flow
- Leverage your existing client relationships, including their trust in your expertise, as a platform to begin offering them advisory services
- Remote Work Contribution to Firm Profitability – Stanford economist Nicholas Bloom noted that because “millions of firms in a capitalist economy” are sticking with remote work, he “can only conclude it’s profitable” relative to the alternative of not allowing it.
- Midsized Firms Reducing Public Company Audits – Several midsize U.S. accounting firms have withdrawn from auditing public companies in 2023, citing increased PCAOB regulatory scrutiny and a shortage of new talent.
- FTC Safeguards for CPA Firms – Key measures for CPA firms to comply with the FTC Safeguards Act include the following:
- Identifying the types of data your firm collects
- Reviewing and enhancing your firm’s data security policies
- Adequately training your firm’s staff to handle data appropriately
- Ensuring your firm has adequate data access controls, including encryption
- Conducting regular assessments of your firm’s data security measures
- Marketing Your Firm – Ryan Lazanis at Future Firm recommends traditional face-to-face networking to generate leads and grow a client base. He advises:
- Developing a concise 60-second elevator pitch on what you do,
- Learning about the people you speak with,
- Connecting with them on LinkedIn, and
- Occasionally following up with them without pushing sales
- Firm Process Improvement – The five-step process Ryan Lazanis at Future Firm recommends includes the following:
- List all of your firm’s processes and prioritize them
- Set a recurring reminder to improve your processes (e.g., monthly)
- Thoroughly document each of your processes
- Assess and integrate technology to automate and streamline processes
- Review and reprioritize the list of your firm’s processes quarterly
- Rationality of “No Clients Left Behind” – A commenter at Going Concern suggested letting clients go without accountants if fees are too high for them, while indicating CPA firms could afford to pay staff more if they drop some clients and begin charging more.
- Questions to Ask When Onboarding New Tax Clients – Jetpack recently shared 20 onboarding questions for tax clients, including the following:
- “Have you encountered any past issues with the IRS or state tax agencies?
- “Are there any industry-specific tax issues we should be aware of?”
- “How do you prefer to communicate and receive information (e.g., email, in-person meetings)?”
Accounting Today – The 2023 Top 100 People: Fixing the Pipeline Problem
- Many of Accounting Today’s 2023 Top 100 Most Influential People noted the talent shortage as a significant challenge for the accounting industry.
- The key suggested strategies to address the pipeline problem include:
- Improved messaging and branding of the profession,
- Better use of technology, and
- Revising CPA licensure requirements
- “Change the messaging from the negative (hours worked) to the positives about the opportunity for life-long learning, being a part of a unique ability team, adding value, growing financially, and having multiple career opportunities within your firm and the profession.” – L. Gary Boomer
- “I am extremely supportive of competitive salaries for those entering and staying [in] the profession, but I don’t believe that along will fix it either.” – Calvin Harris Jr.
- “We must first change the educational focus from technical, rules-based topics to more practical hands-on experience with real business problems, applied technology, and analytics.” – Geni Whitehouse
- “We could start by being more active at the high school level educating the youth about what CPAs really do. Eliminate the 150-hour rule, since there is no evidence that it produces more quality accountants.” – Ron Baker
Accounting Today – Software Developers Implore Accountants to Learn AI
- Software developers in the accounting solutions industry are heavily investing in Al integration for their upcoming products
- Al is poised to revolutionize accountants’ work, enhancing areas such as planning, forecasting, content creation, document management, and research with its innovative capabilities.
- A basic understanding of Al is becoming essential not just for direct use but also for interacting with Al-literate colleagues and clients.
- “We as a profession need to be careful about using Al with clients, especially if there is no approved tooling within the firms we are working for. That being said,
you need to start getting experience with using tools like ChatGPT because they will quickly become an everyday skill like Excel is currently. Find projects you can use it for in your personal life to get that experience.” – UpLink
AICPA & CIMA – AICPA Shares Plan to Strengthen Accounting Pipeline
- The accounting profession faces challenges in attracting and retaining talent including:
- Fewer people graduating with accounting degrees
- Baby boomer retirements
- Changing work culture expectations
- Compensation competitiveness
- The AICPA’s Pipeline Acceleration Plan aims to increase interest in the accounting profession through:
- AICPA-NASBA’s Experience, Learn & Earn program, which allows students to work in accounting positions as “first-year staff with a flexible workload and time to complete the credit hours they need to reach the 150-hour requirement.”
- Efforts to recognize accounting as a STEM field including:
- Securing federal funding for K-12 accounting education
- Advocating for six accounting-related degrees to be added to the U.S. DHS’s STEM Designated Degree Program List
- Outreach to help colleges and universities obtain and expand technology-focused accounting curricula
CPA Practice Advisor – Five Ways Offering Advisory Services Can Help You Escape the Accountant’s Trap
- The “Accountant’s Trap” involves “working long hours for low fees” and being “forced to deal with high-demanding clients while being burnt out on compliance and transactional work.”
- Five ways to avoid the “Accountant’s Trap” include the following:
- Offer Advisory Services – Upsell advisory services to your existing clients, and upsell your existing services to new advisory clients (e.g., tax, accounting, etc.).
- Charge Higher Fees for Advisory Services – Justify higher fees by emphasizing the high value and unique benefits of advisory services compared to standard tax and bookkeeping services.
- Escape the Low-Fee Competition – Avoid competing on price in commoditized services like tax and bookkeeping by focusing on the unique, high-value nature of advisory services.
- Focus on Helping Business Owners Succeed – Position advisory services as essential for guiding business owners towards financial success and business growth.
- Leverage Your Client’s Exisitng Trust in Your Expertise – Use your existing relationship and trust with clients to provide them with critical business guidance, thereby increasing your value and indispensability.
- Many business owners lack the ability to generate positive cash flow on a consistent basis, which jeopardizes their ability to stay in business. Therefore, “Imagine if someone like you…they already trust, is willing to…advise them – on not only staying in business but having a thriving business – they will pay you whatever you command. Why? Because their business is not a hobby for them. It must work.Their pride depends on it working. Their families’ livelihood depends on it working.”
- You can charge more for advisory services because your clients see it as a higher-value service.
- “The range we usually see is between $1,500 and $5,000 per month. It only takes a handful of clients to make six figures.”
CPA Practice Advisor – Will Businesses Decrease Remote Workers in 2024?
- Studies indicate that companies offering flexibility may achieve better financial results, suggesting that remote work could persist due to its profitability.
- The Stanford economist Nicholas Bloom stated,
- “Firms shouldn’t care about productivity, they should care about profitability.”
- Given that “millions of firms in a capitalist economy” are sticking with remote work, “I can only conclude it’s profitable.”
Financial Times – Dire Shortage of Accountants Prompts Calls for Shake-Up
- “About three-quarters of CPAs are now at or near retirement age, and the pipeline looks threadbare.”
- CPA firms are considering the following to overcome a severe shortage of accountants in the U.S.:
- Redefining Educational Requirements – Reducing minimum college credit hours from 150 to 120 to obtain a CPA license
- Salary and Career Advancement Incentives – Increasing starting salaries, faster pay progression, and earlier promotion to partnership
- Offshoring – Shifting more work to offshore personnel, especially for routine tasks
- Workload Redistribution – Transitioning the profession from being CPA-dominated to CPA-led by shifting more work from licensed CPAs to other professionals
- Following the Big Four’s “extensive use of people based offshore,” the chief executive at RSM US “is aiming to increase the amount of work done overseas from less than 10 per cent now to around 40 per cent.”
- Given that “as much work as possible will have to be shifted from licensed professionals to other staff,” accounting may need to transition “from being a CPA profession to a CPA-led profession.”
Financial Times – Midsized US Accounting Firms Retreat from Public Company Audits
- Several midsize U.S. accounting firms have withdrawn from auditing public companies in 2023, citing increased PCAOB regulatory scrutiny and a shortage of new talent.
- “Jen Leary, CLA chief executive, said that the substantial investment required to serve public company clients, including building appropriate risk management infrastructure, was better spent serving small and midsize private companies and non-profits. ‘That’s our A-game,’ she told the Financial Times.”
- “The number of people becoming licensed CPAs has fallen to the lowest level in at least 17 years, exacerbating a talent shortage fuelled by the retirement of baby boomer accountants.”
Forbes – A Guide To FTC Safeguards For CPA Firms
- In a recent article, the CEO of Verito.com emphasize the importance of compliance with the FTC Safeguards Act for small accounting firms.
- He provides a checklist to gauge a firm’s adherence including:
- Identifying the types of data your firm collects
- Reviewing and enhancing your firm’s data security policies
- Adequately training your firm’s staff to handle data appropriately
- Ensuring your firm has adequate data access controls, including encryption
- Conducting regular assessments of your firm’s data security measures
Future Firm – Do This When Your Marketing Isn’t Working
- Ryan Lazanis’s Future Firm Accounting Podcast emphasizes the effectiveness of traditional face-to-face networking for marketing to generate leads and grow a client base, especially when digital strategies aren’t yielding results.
- Both Lazanis and his wife obtained a new client from the very first networking event they each attended.
- Specific Tips
- “First, make sure you have practiced your 60-second elevator speech to describe what you do concisely.”
- “Second, avoid making conversations all about yourself. Take the time to learn about the others you’re speaking with too.”
- “Next, connect with event contacts via email or LinkedIn.”
- “Lastly, follow up occasionally with your connections to check in on their updates but avoid pushing sales.”
Future Firm – Your 5-Step Process for Process Improvement
Improving your accounting firm’s processes can make it more efficient, scalable, and capable of operating with minimal owner involvement, which can include the following:
- List and Prioritize Processes – Compile a comprehensive list of all tasks in your firm, and rank them based on time spent, current pain points, and the importance to prioritizing each for process improvement.
- Set a Recurring Reminder for Process Improvement – Establish a regular schedule (e.g., monthly) to select and update a few key processes.
- Document Your Processes – Thoroughly document each process, either using digital tools like Tango or Loomvto ensure clear and efficient knowledge transfer.
- Evaluate Technology for Automation – After establishing solid processes, assess and integrate appropriate technology solutions to automate and streamline these processes.
- Review and Reprioritize Processes Quarterly – Regularly reassess and adjust the priority list of processes every quarter to stay aligned with the firm’s evolving needs.
Going Concern – “Why Does This Profession Think There Ought to Be No Client Left Behind?”
- “Why do we care so much if there are fewer accountants; just let some of these clients go without an accountant when they complain about the fees.”
- “We should have waiting lists for new clients. We should dump about half our clients and charge 150% more than we are charging now. Then we could afford to pay staff more.”
Jetpack – 20 Questions to Ask New Tax Clients for Easier Onboarding
- Some questions to make onboarding tax clients easier include the following:
- “Have you encountered any past issues with the IRS or state tax agencies?
- “Are there any industry-specific tax issues we should be aware of?”
- “How do you prefer to communicate and receive information (e.g., email, in-person meetings)?”
Pennsylvania Institute of CPAs – The CPA Pipeline: Crisis and Opportunity (opt-in required to download their report)
- A white paper from the Pennsylvania Institute of Certified Public Accountants (PICPA) outlines practical solutions to address how “The pipeline of qualified candidates entering the CPA profession is running dangerously low.”
- Six socioeconomic factors contributing to the talent pipeline challenge include:
- Falling birth rates
- Young adults’ changing values
- Fewer people enrolling in college
- Fewer accounting degrees being earned relative to other majors
- Increasing cost of education
- Decline in the number of people taking the CPA exam
- “Three evidence-backed actions that the profession can take to improve the pipeline” include:
- Realizing there are two pipelines for new professionals to join the field
- Building awareness and interest in the field among high-school students
- Changing firms’ business models and expediting paths to CPA licensure
- There are two pipelines for new talent into the profession:
- “The first pipeline is comprised of high school students who become accounting majors,” and “the best time to influence students to choose accounting as their major is before college enrollment (high school) when many make their choice of major.”
- “The second pipeline is composed of accounting majors who become CPA candidates by preparing for the CPA Exam and completing the education and experience requirements,” and the support they value the most is “scholarships and financial support.”