In the past year (2019) have you noticed any trends in practice at your firm/organization? For example, changing workloads; challenges in recruitment and retention, training, or promotion; outsourcing of accounting services; staff shortages; or tapping into retirees?
We have definitely seen a change in demand from clients. As financial technology makes real-time financial reporting possible, we have seen our techsavvy clients want more of their systems talking to each other. This means, for example, that the payroll system syncs data directly into the general ledger the day the payroll is run, or that when a vendor sends an invoice to the client’s inbox, it is automatically coded to a general ledger account and sent to the person who is in charge of approving it. These systems aren’t all new, but we have seen the adoption rate creep up by our clients who need a constant view of their numbers so they can make decisions as it relates to hiring, setting prices, and budgeting moving forward.
In terms of recruitment, some accounting graduates are choosing more in-demand jobs in the technology industry. This may have an impact on the talent pool over time, although it’s too early to tell at the moment. This could be an advantage in the future, as CPAs may need to have a more diverse skill set, especially when it comes to analyzing data and technology.
According to the 2019 Rosenberg Survey, there is a huge divide between the age of partners and professional staff. Have you seen the same? Do you think this has an impact on retention?
Through our work of hosting quarterly sole practitioner roundtables through the NYSSCPA Queens/Brooklyn Chapter, we have heard from senior firm owners who are planning ahead and trying to establish succession plans. As these sole practitioners plan for retirement, they are keen to stay involved in the running of their practices well into retirement and aim to augment their lifestyle to facilitate this. Technology helps here, as aging practitioners can work from home and move to low-tax states while still maintaining a degree of control over their practices. Older practitioners still have their fingers very much on the pulse of the latest technologies compared to prior generations, so age may be just a number when it comes to this.
Many folks who are coming out of college and business schools are choosing to join startup companies instead of more traditional finance, accounting, and Fortune 500 companies. I think the key here is equity. People want to have some skin in the game, as the days of defined pensions are long gone and the prospect of staying in one company for 30 years with them. CPA firm partners probably scoff at the thought of offering equity to an associate on day one, but that is what they are competing with today.
The 2019 Rosenberg Survey found that the percentage of women partners continues to grow very slowly, especially at large firms. What have you experienced? What explains the challenges the profession faces in achieving greater gender parity? How about racial and ethnic diversity?
In summer 2018, the NYSSCPA Queens/Brooklyn Chapter hosted a women’s sole practitioner roundtable where we discussed this very topic. Many of the women on the panel said that starting their own firms was a way for them to take control of their own destiny instead of waiting for a promotion at the larger firms they worked with. If the mid-size and larger firms don’t solve this problem, this trend will continue; more women and minorities will feel disenfranchised from the profession and choose to start their own firms or switch career paths.
If the midsize and larger firms don’t solve this problem, this trend will continue; more women and minorities will feel disenfranchised from the profession and choose to start their own firms or switch career paths.
At the Society level, my colleague Rumbi Petrozello in the Queens/Brooklyn Chapter has been leading the diversity and inclusion committee, which is doing some great work, including a conference coming up to tackle these initiatives head-on.
According to the survey, revenue per partner and equity per partner are increasing. Leverage (the ratio of professional and administrative staff to partners) seems to impact this. Can you comment on this—do you see burnout and extra work increasing among nonpartners? Are you witnessing greater unhappiness or staff turnover?
We have grown our firm since the start of the year from three to five, and may add one to two more individuals in 2020 if the economy continues its strong growth. A downturn could change this, however, so small firm owners are keeping a watchful eye on their clients. A growing economy is helping revenue per partner increase, but this can easily reverse. CPAs are notoriously risk-averse, and protecting your revenues and bottom lines through annual contracts can be a way for sole practitioners to mediate some of the ever-present risk.
Can you weigh in on what you’ve seen in 2019 in terms of new practice areas, new regulation, legislation headaches, and new emerging technologies and practice growth areas?
Our firm has found a niche in helping early-stage technology startups. This area is ripe for growth, and there are many different verticals within that broad category, including fintech, fashiontech, media-tech, proptech, agri-tech, hardware-tech, and the “Internet of things.” It’s a matter of choosing a vertical that you want to specialize in or already have experience with and going from there. The emergence of cryptocurrency and the potential legalization of recreational marijuana in New York are also emerging areas to specialize in. We are also seeing some CPA candidates with a background in either computer information systems or data analytics, which may be a great sign for future CPAs.
Can you weigh in on what you’ve seen in 2019 in terms of new practice areas, new regulation, legislation headaches, and new emerging technologies and practice growth areas?
The Tax Cuts and Jobs Act continues to be a challenge as CPAs get used to the new rules and interpretations, especially when it comes to the IRC section 199A qualified business income (QBI) deduction. The tax benefits associated with qualified opportunity zones is another area that many practitioners may want to take advantage of, but are a little uncertain of where to start and how to navigate as the IRS continues to release more guidance.
The political environment surrounding the 2020 elections may cause some uncertainty and stop the runaway economic expansion we have seen over the last decade. As a small firm, we try to lock in annual contracts at a minimum with our clients so we can better project cash flow.
As far as staying on top of things, there is no shortage of websites, such as CPAcademy.org, where CPAs can easily monitor the latest regulatory changes and complete CPE at the same time. The NYSSCPA has recently launched online CPE options, including webcasts and on-demand. At the chapter level, we continue to see fewer people attending our live CPE sessions, partly because it is easier than ever to complete CPE requirements online. If the Society wants to continue to grow and thrive, we may need to make it mandatory for CPE sessions at a chapter level to be available online.
What concerns do you have about the professional marketplace? Do you think there has been a dilution of the value of the CPA license?
I’m not seeing more direct non-CPA competitors, but I am seeing a rise in technology platforms that use a combination of automation and outsourcing to replace some of the work that CPAs have traditionally done, such as data entry and bookkeeping. In the last few years, however, as the world economy has bounced back from the Great Recession, outsourcing work for CPAs isn’t as easy, as accounting firms in India and the Philippines are raising their costs as a result of increased international demand and the rising middle classes within their own countries. Artificial intelligence and machine-learning algorithms are being deployed across multiple software platforms that accountants use every day, so a lot of our work is now about stitching together applications into the general ledger for faster reporting.
