Changing the Face of Accounting – Part II
Last week we announced the publication of our new book, “Changing the Face of Accounting: Forward-thinking conversations about reinventing the CPA field” by HaydenRock partner Ian Welham.
The book features 15 industry experts, including five of Accounting Today’s 100 Most Influential People, and is scheduled to be released later this month.
Today we’re sharing an excerpt from Ian’s interview with Tom Hood, CEO/President of the Maryland Association of CPAs and member of the CPA Practice Advisor Accounting Hall of Fame. Tom is the number two most influential person in all of accounting according to Accounting Today.
During their conversation, Ian makes the point that ‘business as usual’ is no longer going to cut it in the years ahead. He wonders if CPAs are ready to make changes in what they do day to day, and asks Tom what advice he has for CPAs.
“I would argue that the pace of change is accelerating. It’s hitting a level we would say is at an exponential pace. In that change, standing still is dangerous. It’s like coasting uphill. You’re immediately falling behind. I think that’s what’s been keeping me up at night, and where we try to prompt some of our CPAs to start thinking more proactively about the future.“The fundamental thing here is the gravitational pull of the past. Like a rocket leaving earth’s atmosphere, they say they use something like two-thirds or three-quarters of their fuel just to get beyond earth’s gravity.
“Many CPA firms have been around for multiple generations. In that case, the legacy of success makes it extremely hard to change firm culture. Throw into that the partners who are real close to retirement and they don’t want to risk any money. That’s another one of those gravitational pulls. The flip side is: What’s the opportunity if they do something?
“We are seeing firms that are starting to make these changes. Everything from going to value pricing, starting to change their whole focus to a more proactive and anticipatory approach, changing their culture… those firms are increasing profitability and market share much, much faster than the firms that are not. It’s the first time we’re starting to see where the gap is widening. The gap between those who are taking some risk and changing and those who are steadfast, holding on to the past.
“[CPAs need to do] much more thinking about value-added and proactive services. The compliance services, traditional compliance services, like audit, or even tax, if it’s purely compliant — that’s a commodity. It’s getting squeezed from a price standpoint, or quite frankly, it’s getting automated.“There’s a big buzz about IBM Watson and tax services… The new firms are taking that skill set and upskilling it so that they’re more strategic thinkers. They’re able to provide that value-added consult to their clients. That’s number one.
“Number two, many of them are thinking about billing differently. You have to think about billing for value and not just billing by time.
“Some of them are asking for the roadmap. I’d like to say they really want the checklist, right? They’d love to have the firm of the future in a box that you could give to them and do it. I know you guys have been doing some work in that area. I think that’s a starting point, but you still have to do the hard work of getting your people to buy in, right? To break through that gravitational pull.“There are plenty of models and frameworks and roadmaps that you should go consider. Then I think what you need to do is bring it back and get a group of people that are ready to champion it, that are open to making some decisions to change that trajectory.
“The ones that are moving the fastest are the ones that have figured out a way to involve and include more of their people. It’s more collaborative. If you do a mandate from the top down, oftentimes that’s when the resistance grows and you end up with a challenge.“We like to say if you create a culture, then you’re going to become a talent magnet. You’re going to be sucking talent in from everywhere and keeping it. That’s the next big challenge that we’re going to see CPA firms face. It’s this whole talent war. It’s getting more and more heated. It’s going to continue to get worse the next five years.
“I got back from the AICPA’s governing body, called Council. There’s stuff there from what’s the future look like to these young folks, as well as recruiting them to become CPAs. The whole CPA exam is changing to reflect these value-added skills. There’s more strategic thinking being incorporated into the exams, so trying to use the exams to drive curriculum changes in the profession. I think overall, the profession is trying to position itself from that perspective.”
Next week in Part III, we’ll share an excerpt from Ian’s interview with technology maven Jim Bourke of Withum Smith+Brown. Jim has one of the most enthusiastic and infectious personalities in all of accounting. You don’t want to miss his insights.