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Ensuring Success: Strategies to Improve PCR Engagements

Working on preparation, compilation and review (PCR) engagements can be challenging and time-intensive, pushing firms to overwork engagements and leaving them with limited time for higher-value advisory services for their clients. Back in December at Ensuring Success 2018, we discussed strategies to address these challenges and how technology can improve the quality of engagements.

Here are the highlights from that discussion:

  • Traditional Approach to PCR Services: Today many firms rely on manual processes for doing their PCR engagements. They use analog methods to collect and organize information, spend extra time determining the right checklists or procedures to apply and use dated communication practices with clients while facing the added stress of peer reviews.
  • Challenges Experienced in PCR Services: The manual approach to PCR engagements can cause complex challenges for firms and their clients. The top challenges include:
    • A disconnected process
    • Inefficient and confusing communication practices that leave parties without an effective way to collaborate
    • Overworked engagements or the “more is better” approach driven out of fear of not complying with standards and failing peer review

    Ultimately this all takes up too much time and leaves firms with limited time for value added services.

  • Technology as the Solution: Emerging technologies like cloud technology, artificial intelligence and digitized data are transforming the accounting profession, the audit and assurances practices included. OnPoint PCR is a prime example of this convergence. OnPoint PCR uses cloud technology that integrates AICPA content and methodology to keep engagements up-to-date and offers intelligent guidance that eliminate unnecessary steps, enabling firms to enhance engagement quality and efficiency.

Watch our entire Ensuring Success 2018 discussions, Leveraging Technology to Improve PCR Engagements and Overcoming the Stress of Peer Review in PCR Engagements, to hear the discussion about the challenges firms face with the traditional approach to PCR services and how technology can help automate and simplify the process.

Matt Towers
Product Marketing Manager, CPA.com
Matt has over 18 years of experience working in the tax & accounting technology industry with a specific focus in accounting & auditing technology and process. Having worked with thousands of accounting firms over the years to help them understand how to interweave relevant technology and business process, Matt has a keen understanding of the challenges and opportunities facing the profession today. Matt has been a featured speaker at thought leadership events and has been published in A&A publications writing on trends in the profession and the impact of technology and is responsible for managing the CPA.com assurance product line.

Top Five Challenges Facing Firms Performing Prep, Comp and Review Services

Ensuring accuracy and compliance of your preparation, compilation and review services can often be demanding and time-intensive, especially when you consider the added stress of peer review. Many firms are manually building out engagements and determining which procedures apply in order to meet compliance standards pushing them to overwork the process to ensure a positive peer review— which ultimately results in lower realization rates and limited time for higher-value advisory services.

What are the challenges your firm experiences in PCR services? In our infographic, we uncover top challenges we see firms face in PCR services.

#1 Threat of pass with deficiency or failed peer review grade causes firms to overwork engagements.

The fear of not complying with standards and getting dinged on peer review as a result often drives firms to go with a "more is better" approach leaving them exposed to additional risks.

#2 Difficulty keeping up with technology changes to stay competitive.

The rate at which accounting technology is changing can be daunting. Being behind the technology curve and using manual methodology puts firms at a disadvantage and limits their ability to become a full-service firm and gives them little time for higher-value advisory services for clients.

#3 Constant threat of data breaches requires vigilant attention to protect client data.

Often accounting software and financial statement guidance tools are not connected in a secured platform. This forces firms to use low-level security or manual processes to deliver and store financial statements, putting their clients' sensitive information at risk.

#4 Manual, back-and-forth client communications create bottlenecks and downtime on engagements.

It is time-consuming and tedious chasing clients down to get all the information firms need to complete their work, and the firms' clients may feel confused and frustrated by this as well.

#5 Diversity of challenges leads to firm inefficiency, creating a hidden opportunity cost.

Overworking engagements can be costly for assurance engagements. Exposing firms to risk if the work performed exceeds the agreement outlined in your engagement.

Watch our webinar, Balancing Compliance and Efficiency in Prep, Comp and Review Engagements, to learn more about these challenges and gain strategies your firm can take advantage of to feel more confidence and peace of mind around compliance.

Matt Towers
Product Marketing Manager, CPA.com
Matt is responsible for managing the CPA.com assurance product line. Matt has over 18 years of experience working in the tax & accounting technology industry with a specific focus in accounting & auditing technology and process. Having worked with thousands of accounting firms over the years to help them understand how to interweave relevant technology and business process, Matt has a keen understanding of the challenges and opportunities facing the profession today. Matt has been a featured speaker at thought leadership events and has been published in A&A publications writing on trends in the profession and the impact of technology.

A San Francisco Treat: DCPA 2017 Takeaways

After I gave my keynote on the final day of the Digital CPA Conference last week, I had a chance to take a moment and look out at the crowd in the San Francisco Marriott Marquis conference center. And what hit home to me was just how far we’ve come as a community in the past five years.

The first Digital CPA was scheduled to be held Oct. 28-30, 2012, in a hotel with an impressive all-glass lobby just outside of Washington, D.C. Some of you may remember those dates as the East Coast landfall for Hurricane Sandy. We postponed the conference until December, and were grateful most people tore up their busy schedules and showed up. We had a tight-knit group from the beginning.

Now it’s 2017, and many of the practitioners at this year’s event have played a key role in the fast growth of virtual CFO services and the reinvention of client accounting services. And many of these same lessons learned are now being applied to new opportunities emerging in audit and tax. We’re poised for big things in the profession, and Digital CPA – with its energy, enthusiasm and vibrant setting – was a great reflection of that potential.

Here’s some of my takeaways from the conference:

We have a big tent, and it’s getting bigger all the time. We had 430 people at Digital CPA this year, and another 40 connecting remotely. We had more than two dozen people flying in from five different countries outside of the United States, so the strength of the programming, like the challenges and opportunities it addresses, extends across many borders. That’s a lot of momentum, and I want to thank all of you who have helped build this community from the ground up.

The pace of change offers great opportunity. Technology is rapidly transforming the practice of accounting, and all of the discussions at the event made me feel even stronger that there has never been a better opportunity for CPA firms to grow and thrive.

Complementary skills are going to be more important than ever going forward. AICPA Chairman Kimberly Ellison-Taylor talked about this during my Digital CPA keynote, and it was underscored in conference sessions. Technical skills and good judgment are never going to go out of style, but CPAs are going to need expertise in communications, technology and marketing, among other areas, if they’re going to successfully establish high-value advisory practices.

Mistakes and failure aren’t fatal – they’re prerequisites to growth and innovation. This was one of the lessons from Netflix co-founder Marc Randolph’s fantastic presentation. Not everything works out. As a profession, we’re devoted to service quality, and that’s always the goal. But we can’t be afraid to move fast to try something, and move on if it’s clear an approach isn’t working.

Education will move us forward. Blockchain will bring huge changes to the audit, in ways that aren’t fully clear yet. Digital CPA attendees have a high curiosity about this area. This is why we teamed up with the Wall Street Blockchain Alliance this past fall, and why we’re committed to providing context and insight to CPAs on this topic. There’s a whole new world forming in finance and accounting, thanks to blockchain, artificial intelligence, machine learning and data analytics. At CPA.com, it’s our mission to provide thought leadership and guidance for firms navigating these changes. We’ll be here for you.

And if you missed this year’s conference but are curious about next year, check back at digitalcpa.com for updates. We’ll be in Washington, D.C. again from Dec. 3-5, 2018.

Taking the Lead Through Anticipation

“When rapid change happens you have to anticipate more.” – Joey Havens, CPA

Wise words and so true, but easier said than done if you haven’t practiced the skill of anticipation.

In a recent Digital CPA Webcast, we discussed the importance of developing the competency of anticipation. Not the feeling, we learn that at a very young age, but the action of preparing for the future; we have to filter through all the data and changes happening daily to get to the future facts. Future facts are what Daniel Burrus, futurist, calls hard trends; we know these things will happen, such as increased bandwidth, further automation, faster processing, etc. Instead of getting bogged down with soft trends, which Burrus describes as assumptions, we need to zero in on the hard trends that will impact our future.

Questions Burrus encourages you to consider:

  1. Are you considering relevancy?
  2. Are you thinking big enough?
  3. Are you sharing information or actually communicating? (There is a difference.)
  4. If it can be done it will be done, but if you don’t do it who will?
  5. What if you could tell your clients what will happen? (How much value will that bring?)

As you start anticipating the future and ask yourself these questions, be aware of your mindset. Are you aiming to keep up or leap ahead? Daniel Burrus points out with the powerful skill of anticipation you have the ability to jump head and take the lead.

What future facts do you see?

Fear and Succession Planning

I have been doing some deeper exploration of the hidden ways in which fear affects functioning.

This is an important topic for firm partners because fear-based decisions are not always obvious yet frequently produce negative personal and organizational outcomes.

The challenge of succession planning illustrates the subtle and powerful ways in which fear influences important decisions.

Family business succession

Most experienced CPAs have observed their share of succession planning nightmares among family business clients.

In that setting, succession offers an intense mix of emotional factors that can easily freeze the thinking capacity of its members. Questions pop up everywhere: Are my kids qualified to lead the business? If I favor one of my children for leadership, how will the others feel? What if there’s tension or philosophical differences between the generations or between the successor siblings?

When such uncomfortable questions arise, the path of least resistance is avoidance.

I often get calls from firm partners who complain that their family business clients won’t plan for leadership succession.

“Even when we agree on a process for a path forward, the important conversations with the next generation just don’t happen,” partners say. “If they do, it typically doesn’t go well.”

Accounting firm succession

It’s easy to, pick on family businesses, yet the same lack of traction occurs in accounting firms. Even though it’s in the financial interest of soon-to-be-retiring partners to plan for succession, they tend to move slowly and uncomfortably – or not at all – in developing younger partners.

For example, opportunities routinely get overlooked to introduce and transition younger partners to long-time clients. Instead of encouraging emerging leaders to make their mark, established leaders often leave them out.

The commonly-cited excuses are time problems (“I’ve been so busy…”) and perceived skill limitations (“I’m not quite sure how to go about this.”). Those might be legitimate impediments to succession planning, but the big one rarely gets mentioned: “legacy jitters.”

Deeper fears

The succession procrastination of firm partners likely reveals an unconscious fear of losing their standing as key influencers. Deeper fears lurk under the surface:

Fear of losing status.

Fear of losing satisfaction and meaning.

Fear of moving on, into an “unknown” lifestyle.

Fear of death.

It would be good if these fears could be named, accepted and managed. An unfortunate irony is that most of us are afraid of fear itself. We don’t want to feel it, we don’t want to think about it, and we don’t want to address it.

Our reactive fear of fear makes it difficult to find our way out of this emotional maze.

One starting point might be to deepen our understanding of fear.

Understanding fear

The fear-driving mechanisms of humans have a purpose: to protect us from real threats. If we couldn’t feel fear, we would routinely take stupid risks. Healthy fear stops us from speeding past a railroad crossing or jumping off a cliff. Less dramatically, fear helps us keep doctor appointments and motivates us to research an investment before we commit.

That makes fear a vital asset.

But there’s a problem.

When humans fail to regulate their fear, it gets out of control. Unregulated anxiety, worry and fear disables our ability to distinguish real threat from fake threat. Now, we over-estimate a threat, or imagine threat where it doesn’t exist.

For example, we see a terrorist beheading on the internet and unthinkingly become more protective of our kids. In response, their anxiety ratchets up. They grow more wary than trusting, and become more concerned with safety than adventure. We want our kids to possess confidence and courage, yet our fear-driven parenting can have the opposite effect.

A fearful response to imagined threat generally produces low-maturity outcomes.

“No lion in the bushes”

Few of us can think straight when we get scared. Instead, we react instinctively, as if a lion was lunging at us from the bushes.

In the case of succession planning, “there’s no lion in the bushes.” Although we can slip into imagining succession as a threat, it’s actually developmentally appropriate. A time arrives when a founder or partner moves on because it makes sense to do so. Though it comes with understandable trepidation, letting go and moving on is not “unfortunate” or “a problem.” It’s healthy and necessary.

What gets us in trouble is the fear-driven resistance to the false threat of succession.

Is there a way to discover that there is no lion in the bushes?

Self-observing and reflecting

The trick is to cultivate the discipline of self-observing and reflecting.

The challenge to grow a succession mindset depends on our ability to observe ourselves in a reactive mode: “I’m feeling worried and fearful right now, and I need to check out the accuracy of my threat-perception. What’s really going on here?”

Sober thinking informs us that succession is more a mindset than a strategy.

Reflection enables us to recognize a fact of human history: Preparing the next generation to function at a high level has always defined parenting and leadership. It’s simply what we do.

Taking time to recognize what we are feeling and experiencing, and to assess the reality of our perceived threats, helps us become better observers of ourselves. Reflection becomes our path to reducing fear.

Smart leaders tune in to what’s really going on so they can act more out of intention and less out of fear.

John Engels founded Leadership Coaching, Inc. in 1996, based on the integration of three cutting-edge research disciplines: neuroscience, Bowen Family Systems Theory, and the evolution of leadership in non-human species. Under John’s guidance, his consulting team continues to draw on decades of learning with family researchers and with accomplished scientists who study the leadership behavior of wolves, elephants, chimpanzees, and other animals. Currently, John spends much of his professional life as a mentor to executive coaches and family business consultants. He recently developed the “Leadership Skills That Change Firms” program for accounting professionals.