Embracing Change as Traditional Firms Recede into the Shadows

Accounting is in a new era of innovation, disruption and boundless opportunity. As traditional firms will gradually fade into obscurity, a “new firm” will emerge, poised to redefine the very fabric of the profession.

These firms are a blend of professional services and cutting-edge technology, fueled by unprecedented investments from venture capitalists and external backers. They are also firms that merged into a PE-backed firm that will eventually go public after PE doesn’t get their money out and an IPO is forced. (These firms exclude audits since that’s a separate beast that doesn’t fit within the new model.) New firms are charting their own course in an ever-evolving landscape where innovation reigns supreme.

But what distinguishes these trailblazers from traditional firms?

They focus on services that don't require a CPA credential.

Tasks like general accounting, tax preparation, controller services and CAS can be executed by individuals without a CPA designation, which is only essential when representing clients before the IRS.

They approach accounting as an industry and not a profession.

The focus is on serving the public from a company perspective and not as a firm of licensed professionals.

This shift may seem daunting to CPAs, but it's manageable if we acknowledge and embrace our standing in the marketplace. The CPA brand holds significant value, but we must pivot our focus from protecting the firm model to safeguarding the integrity of the CPA.

CPAs in Non-Traditional Tech-Enhanced Roles

When I asked a poll question on LinkedIn about the future, one in four respondents doubted the existence of CPA firms by 2030 – that’s only six years away. That timeline may be a bit aggressive, but if it’s the direction we’re headed, then we need to determine how to uphold the integrity of the CPA credential.

The AICPA champions CPAs everywhere, from the halls of professional services to the CFO in the boardroom. This new landscape sees CPAs being employed within companies where they don’t do internal accounting, but rather public-facing work within a corporate structure. That presents a new set of challenges we need to figure out from what standards govern these individuals to how we ensure adherence to professional rigor, to name a few.

Hopefully, the AICPA will lead the way for this new breed of CPAs, too.? We have to start understanding this new role so we can determine what education and training these CPAs need and how to protect them in this new industry.

Navigating the Waters of Change

The new firm model isn't just about innovation – it's about scale and ambition. The goal? To expand reach, amplify impact and solidify the position as an industry leader. But none of this would be possible without the advent of cloud technology.

The cloud led to a paradigm shift in the way accounting services are delivered. No longer bound by the constraints of time, where data from a prior period is prepared by one professional and reviewed by another, CPAs can now provide real-time insights and analysis to their clients. This empowers them to make informed decisions with confidence and clarity. This emphasis on real-time engagement poses a significant hurdle for many firms still today.

Yet, amidst the excitement of this technological revolution, challenges abound.

• How do accounting firms adapt to the demands of real-time engagement?
• How do they leverage automation and AI to enhance productivity and efficiency without compromising on quality or accuracy?
• And perhaps most importantly, how do they maintain the human touch in an increasingly digital world?

These are the questions that should keep industry leaders awake at night – and for good reason.

The answers will shape the future of the profession and determine its relevance in the years to come.

Embracing the Future

As we stand on the cusp of a new era in accounting, one thing is abundantly clear: the only constant is change. The influx of private equity has ushered in a new era of firm dynamics, compelling us to reassess our approach.

While the past two decades have seen struggles with real-time adaptation, CPAs and accounting professionals are now working with clients as things happen, using technology to guide them. This work has to be done according to standards. Focusing on what the bots can’t – the human element and customer experience. This is what we need to figure out, and that starts with asking the right questions. I’m not sure what they are, but we need to figure it out.

Instead of fixating on preserving individual firms, we should redirect our focus toward safeguarding the essence of the CPA. The CPA brand remains a beacon of trust and reliability in an era defined by uncertainty and disruption, and it's incumbent upon every certified professional to safeguard its legacy for future generations.

?Check out this article by Emergence that looks at The Death of the Big 4 for a different perspective on this issue.