Not only are more CPAs talking about ‘how’ rather than ‘why’ when discussing technology adoption for them and their clients, but now the idea of disruption is being brought up again in a big way; replacing discussions solely about ‘change.’

This was the general consensus after a full day of sessions, keynotes and chatting with CPAs at the Digital CPA conference hosted by CPA.com and the AICPA. The conference, now in its sixth year, was full of thought leaders in the profession and, predominantly, members of mid to large-sized firms with some smaller practitioners mixed in.

The idea is to learn more about the impact of various technologies and related trends on CPAs and their clients and again, clearly, this year was all about handling the massive disruption occurring once more in the profession. The term reared its head back several years ago when thought leaders warned of the potential impact cloud would have on the profession.

Those discussions then turned to the massive ‘change’ that CPAs had to contend with, supported by taking more advantage of client accounting, collaboration and ultimately taking steps to be more of an advisor. While this is still prevalent, the profession is now preparing to be disrupted by the likes of blockchain, machine learning and the growing generation of Millennial accountants, coupled with the aging out of the Baby Boomers.

To start with, in order to face the next wave of impending disruption, CPAs are being asked to take a more entrepreneurial approach to their practices. In essence, they are being urged to be the disruptors rather than having it happen to them. Such was the tone from the opening keynote speaker Marc Randolph, co-founder of Netflix.

So what does running a multi-million dollar online streaming movie service have to do with accounting and disruption? According to Randolph, it was how the company started in the first place.

“To generate ideas...look for pain, learn how to ask what's wrong in the things you do every day,” he said. “Good ideas don't always come out of nowhere. Before we came up with the idea for Netflix, it was in a big stack of bad ideas. When it comes to disruption, the rate of success is directly proportionate to the ideas you can afford to try.”

To drive the point home further, Randolph was on a panel with accounting application entrepreneurs Rene Lacerte and David Barrett. For those unaware Lacerte is the founder of Bill.com, while Barrett founded Expensify.

“Good ideas and bad ideas will initially look the same, the only way to tell them apart is the rear view mirror” said Barrett. “When I came up with Expensify I had to think of the most boring thing you could do, which was easier expense reports.”

And to the firms, particularly smaller ones, Barrett advised to be a better leader and not to fear failure.

“One key point of being a good leader is not freaking out if you don't have the answers...have a tolerance of failure.”

With regard to artificial intelligence disrupting the profession, Leon Katsnelson, a director and Chief Technology Officer at IBM, said for the most part CPAs should not fear replacement but definitely be aware of how AI will impact their work.

“When you think about AI, the human element is still absolutely vital, the auditor's job will not be entirely replaced and human thinking will still be critical,” said Katsnelson. “AI will impact every aspect of accounting, not just audit and not just expenses.”

During his opening keynote address, AICPA president Barry Melancon gave attending CPAs more confidence that they can and will weather the impending disruption to the profession, making no mistake that it is already happening.

“You may be wondering, how do you change in a successful and profitable firm and still make the right decisions at the right time,” said Melancon. “We face the challenge of making sure we're successful and finding the right things to do for the future. We do have something to lose but can't be less willing to change.”

He also went so far as to say the profession may not recognize itself in as few as five years, based on numerous factors including the aging out of Boomers, use of technology from cloud to AI and blockchain, and firm structure.

“With technology, the basic structure of CPA firms will change; different pricing and business models will happen,” said Melancon. “The most likely scenario to occur in the CPA space will be a narrower base and small ownership structure at the top.”

The AICPA and CPA.com are, of course, taking an active role in guiding CPAs through this disruptive period, again stressing how virtual CFO-type services will offer them a key advantage.

“If you want to see what lies ahead for tax and audit, look at what we’ve seen in client accounting services over the past decade – with the cloud, virtual CFO services are now an increasingly important driver of CPA firm revenue growth,” said CPA.com CEO Erik Asgeirsson. 

Specifically, CPA.com plans to:

• Set up roundtable groups of client accounting practitioners, keyed to firm size, to provide a support network and a means to exchange best practices
• Create advocacy materials for CPAs looking to get internal buy-in for their teams to build or expand client accounting services practices
• Design a comprehensive benchmarking survey, in collaboration with the AICPA’s practice management section, to set metrics for client accounting services pricing and best practices

Asgeirsson also outlined several broad initiatives already underway. These include:

• A collaboration between CPA.com, the AICPA and CaseWare, a global provider of audit and analytic software, to create a broad, automated audit solution. One piece of this collaboration – the creation of a dynamic preparation, compilation and review solution – was announced earlier this week at Digital CPA.
• Expanded uses for the RIVIO Clearinghouse, a secure hub for private company financial information jointly developed by CPA.com and Confirmation.com, such as the managed distribution of reports from System of Organization Control (SOC) engagements. Asgeirsson noted that there is growing interest in RIVIO within the credit union industry, and within the Top 20 accounting firms.
• Taking a leading role in defining the impact of blockchain on the profession through a collaboration with the AICPA and Wall Street Blockchain Alliance.
• Offering insight into emerging technology trends through CPA.com’s sponsorship of 1.) an annual executive roundtable for accounting technology CEOs, and 2.) formation of a startup accelerator with the Association of International Certified Professional Accountants.

Four entrepreneurial companies have been chosen as the initial class of a startup accelerator sponsored by the Association of International Certified Professional Accountants (the Association) and CPA.com.

The startup accelerator was launched this past June to help jumpstart innovation in the accounting profession and provide insight into disruptive technologies and automation trends for CPAs and Chartered Global Management Accountants (CGMAs). The finalists get a modest amount of seed money and gain access to senior leaders of the Association and CPA.com, as well as to an advisory panel of leading practitioners and thought leaders who collectively will provide expertise about global trends and marketplace needs within the accounting profession.

“We were impressed with both the quality and breadth of applicants for the accelerator,” said Erik Asgeirsson, president and CEO of CPA.com, the technology subsidiary of the American Institute of CPAs. “The Association and CPA.com are committed to keeping the accounting profession in the forefront of technology, and we look forward to working closely with these promising startups over the next year.”

The four finalists are:

• TrueUp – The Los Angeles startup uses gamification to help companies assess the technical skills of job candidates and improve those of current employees
• RegroupTax – A La Mesa, Calif., firm that built a cloud-based program and app that creates a trial balance and workpapers for business tax preparation
• Pluma – A San Francisco company that offers a professional development platform pairing working professionals with experienced executive coaches through in-app messaging and video sessions, accessible by computer or mobile device
• North Capital – A Salt Lake City marketplace solutions and advisory firm whose technology platform allows broker-dealers, funding platforms, and issuers to conduct online private securities offerings

Each finalist will be given the opportunity to present information about their company next summer at AICPA ENGAGE, one of the leading events devoted to public accounting in the United States.

“At the start of this process, we identified two key areas of focus for applicants: 1) technology and financial information and 2) professional competency innovation,” said Lawson Carmichael, the Association’s executive vice president for strategy, people and innovation. “Our finalists nicely balance those priorities.”

The finalists were announced at the Digital CPA Conference, one of the leading U.S. events on technology adoption and practice management improvement for CPA firms.

For more information about the startup accelerator, please visit aicpaglobal.com/accelerator.

Technology is rapidly transforming the practice of accounting, and there has never been a better opportunity for CPA firms to grow and thrive, the chief executive of CPA.com said in a keynote speech at the 2017 Digital CPA Conference.

The rise of autonomous business, marked by the continuing automation of accounting and finance functions, has hastened the shift of CPA firms into advisory services, said Erik Asgeirsson, president and CEO of CPA.com, the technology subsidiary of the American Institute of CPAs. That pace will only quicken as artificial intelligence, machine learning, blockchain and the ongoing evolution of data analytics become more common in everyday business transactions.

“If you want to see what lies ahead for tax and audit, look at what we’ve seen in client accounting services over the past decade – with the cloud, virtual CFO services are now an increasingly important driver of CPA firm revenue growth,” Asgeirsson said.  

CPA.com’s ongoing research has identified talent, pricing and the ability to identify prospective clients as three continuing challenges facing virtual CFO practices. To help firms address these, the company plans to:

• Set up roundtable groups of client accounting practitioners, keyed to firm size, to provide a support network and a means to exchange best practices
• Create advocacy materials for CPAs looking to get internal buy-in for their teams to build or expand client accounting services practices
• Design a comprehensive benchmarking survey, in collaboration with the AICPA’s practice management section, to set metrics for client accounting services pricing and best practices

Asgeirsson also outlined several broad initiatives already underway to support the rapid evolution of the profession. These include:

• A collaboration between CPA.com, the AICPA and CaseWare, a global provider of audit and analytic software, to create a broad, automated audit solution. One piece of this collaboration – the creation of a dynamic preparation, compilation and review solution – was announced earlier this week at Digital CPA.
• Expanded uses for the RIVIO Clearinghouse, a secure hub for private company financial information jointly developed by CPA.com and Confirmation.com, such as the managed distribution of reports from System of Organization Control (SOC) engagements. Asgeirsson noted that there is growing interest in RIVIO within the credit union industry, and within the Top 20 accounting firms.
• Taking a leading role in defining the impact of blockchain on the profession through a collaboration with the AICPA and Wall Street Blockchain Alliance.
• Offering insight into emerging technology trends through CPA.com’s sponsorship of 1) an annual executive roundtable for accounting technology CEOs, and 2) formation of a startup acceleratorwith the Association of International Certified Professional Accountants. Four companies that represent the initial class of the accelerator were announced at the conference today.

“At CPA.com, we’re moving forward on several fronts to help CPA firms succeed: thought leadership, the development of key tools and solutions, and collaborations to define and advance emerging technologies and practice management improvements,” Asgeirsson said. “We’re excited about the future.”

The Association of International CPAs and CPA.com announced on Wednesday that four tech companies have been named to the first class of the "Startup Accelerator" program. The finalists were announced at the Digital CPA Conference in San Francisco.

Launched this past June to help build innovation and raise awareness of new technologies in the accounting profession, the program helps finalists by awarding them seed money as well as granting access to senior leaders of the Association and CPA.com and a panel consisting of thought leaders who will advise on global trends within the accounting profession. All finalists are also invited to present more information on their companies next summer at the AICPA Engage conference in Las Vegas.

“We were impressed with both the quality and breadth of applicants for the accelerator,” said Erik Asgeirsson, president and CEO of CPA.com, per a statement. “The Association and CPA.com are committed to keeping the accounting profession in the forefront of technology, and we look forward to working closely with these promising startups over the next year.”

“At the start of this process, we identified two key areas of focus for applicants: 1) technology and financial information and 2) professional competency innovation,” stated Lawson Carmichael, the Association’s executive vice president for strategy, people and innovation. “Our finalists nicely balance those priorities.”

The four finalists are as follows:

• TrueUp – A Los Angeles startup that uses gamification to help companies measure the technical skills of potential job candidates and improve those of current staff members.
• RegroupTax – A La Mesa, Calif., firm that built a cloud-based program/app that creates a trial balance and workpapers for business tax prep.
• Pluma – A San Francisco company that built a professional development platform that pairs working professionals with executive coaches through messaging and video sessions available on computers and mobile devices.
• North Capital – A Salt Lake City marketplace solutions/advisory firm with a technology platform that allows broker-dealers, funding platforms and issuers to hold private online securities offerings.

For more on the program, head to the Association's site here.

The accounting profession will change beyond recognition over the next 10 years, according to American Institute of CPAs president and CEO Barry Melancon—except he really thinks it will come much more quickly than that.

“I really mean five years, but people get scared when I say that,” he said during a keynote address on “The State of the Profession” at the 2017 Digital CPA Conference, held in San Francisco by AICPA technology subsidiary CPA.com.

“In a world in which everything is changing, who are we to believe that we won’t have to change as well?” he asked. “The speed of change in our profession—and in our lives—is at an all-time high, and we need to think in a more complex way about change.”

Technology is driving much of the disruption in the profession and the wider world as well, he noted, citing the driverless car as an example of complex ramifications: While it’s easy to see how it will affect professional drivers and auto manufacturers, Melancon explained, it will also affect local governments (who rely on traffic, parking and speeding tickets for much of their revenue), law enforcement (who spend much of their time in traffic enforcement), city planners, the real estate industry, and even health care (through fewer accidents, smarter cars will significantly reduce the number of organs available for transplant).

“It isn’t about thinking about any one technology,” he concluded. “It’s about the implications of technology, and we need to be helping our clients understand and deal with these.”

All too many businesses think they’re exempt from change, Melancon said, citing surveys where more than half of business respondents think their competitors will be disrupted by technology, but that they themselves won’t be.

“We see too many people saying, ‘Yeah, but not us,’” he said—and that includes too many accountants. “We face the challenge of making sure that we continue to be successful. We have to be smarter and more passionate and more committed to change.”

As a cautionary tale of the depth of commitment required, he talked about Kodak, which failed to make the transition to digital photography. In fact, the company had made a serious commitment to changing over to digital photography, but was caught flat-footed when the change it expected to take 10 years only took two, and more nimble competitors beat it to market.

Changing services

In the accounting space, technology is already affecting every aspect of what CPAs do. “One of the Big Four firms is one of the three largest users of bot technology in the world—not just accounting, but the whole world,” Melancon said. “They apply them in tax, and get a 40 percent efficiency rate with a 98 percent accuracy rate.”

Similarly, he noted, “I’ve seen the audit of accounts receivable changed to where there are only two points of human interaction—setting the scope, and checking exceptions.”

The largest firms are driving many of the changes in audit, applying artificial intelligence and cognitive computing to automate much of the grunt work and allowing auditors to discern new patterns and focus on higher-level services. “But how do we harness that change and bring it down to the 44,000 small firms?” Melancon asked.

“Who should transform auditing? Should we own that as a profession?” he went on. “We need to imagine a different approach to auditing. We need to imagine the technology we need, and to challenge the standards-setters to keep up, and to look at our methodology for auditing.”

Among the other changes facing the profession, Melancon noted that the challenge of cybersecurity is a major concern for both public accountants and those in industry, while the growing demand for sustainability information is reshaping corporate reporting.

In tax, technology is changing client expectations and empowering competitors. “Young people will think about tax and planning differently from the way Baby Boomers do,” he said. “Young people are using algorithmic advisors instead of financial planners, so brokers and financial advisors are going to give away tax return preparation to draw the young people in.”

“Tax practices that focus on simpler returns are at significant risk, when you combine technology, our competitors, and the new tax act,” he warned.

Skill sets

One major component of adapting to significant change will be learning to develop new and relevant skill sets, Melancon said, citing a World Economic Forum report that suggested that in five years’ time, more than a third of the skills currently considered important today will no longer be relevant.

“I worry about the entry-level people in our profession” who will have to develop new and different talents, he said, “but I worry more about the skills of people in the middle of their careers.” They may find it difficult to adapt to new demands—and that will cause problems for firms, he pointed out, mentioning a survey that found two-thirds of auditing firms reported difficulties finding job candidates with the needed skills in technology, communications, critical thinking and judgement.

“We need to learn new skills, but we also need to unlearn old ways of thinking,” he continued. Firm models will need to change, both internally—in terms of the ratio of entry-level to more experienced staff, for instance—and externally, in terms of how firms manage their relationships with clients. As an example, he said that he has seen more firms experimenting with subscription-based relationships, where for a flat monthly fee, the outside accountant takes care of all of a client’s accounting needs.

Despite his many warnings, Melancon remains optimistic about the future, and CPAs’ prospects in it.

“These are extraordinary times for our profession, with extraordinary opportunities,” he said. “The opportunities in a complex world for new types of attest, audit and tax work are significant. We are so well-positioned for the future—but we need to have the willingness to think differently, to be bold, and to have tolerance for occasional failure.”