To complement the data-driven analysis presented in the Rosenberg Survey (see page 20), the authors assembled a virtual roundtable of observers from around the profession to give us their predictions for the 2022. What will this new year bring? What will the “new normal” of the macro environment look like? Which trends will continue, accelerate, or change course? And what can CPAs take away from the past year to help them succeed in 2022 and beyond?
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On diversity in the profession, my prediction for 2022 and beyond is that, regrettably, things will remain relatively the same. It was heartbreaking to read some of the participant quotes in the recently published report “Diversifying U.S. Accounting Talent: A Critical Imperative to Achieve Transformational Outcomes” (IMA-CalCPA, https://bit.ly/3IHegbp).
The report shared responses from professionals in the field who left their firms or the profession due to lack of diversity, equity, inclusion, and or advancement in their careers. (I identified with many of their thoughts.) And yet there are others who feel that DEI efforts are overrated and access to opportunities in the profession should be based only on skill.
The profession I love is far behind others in diversifying. African Americans, while 13% of the U.S. population, still only make up about 1% of CPAs, and under 1.5% of leadership in the profession. Hispanic/Latino Americans, whereas 18.5% of the U.S. population, make up about 5% of CPAs and under 2% of leadership in the profession. Asian Americans are doing much better, as they make up almost 10% of CPAs and about 5% of leadership in the profession, even though they account for 6% of the U.S. population.
- Firms continue to pledge to enhance their DEI [diversity, equity, and inclusion] initiatives; the reality is that, while we are making some progress, the progress is extremely slow. The profession as a whole has to be more intentional about these initiatives and make them a strategic priority. Otherwise, I am afraid 2022 will come and go, the profession will continue to thrive, but diversity in the profession will continue to change at a snail’s pace.
As we find ourselves in the midst of the Great Reshuffle (a term I find more apt than the Great Resignation), it is more important than ever that the transformation of our profession go beyond talk. The long-term future of the CPA profession depends on what we do now—from the pipeline, to those who are already in the profession:
- Organizations and firms are moving to expose students to the CPA profession as early as middle and high school. To grow the pipeline, the CPA must move from being a generational profession, where most CPAs have a family member who is or was a CPA, to a top profession that is understood more widely. In the same way that people know about doctors and lawyers, students should know about, and aspire to be, CPAs.
- With the Great Reshuffle, people are thinking more, and not just which career paths they can follow, but which career paths they want to follow. Therefore, we must think about how we can ensure that people not only want to become CPAs, but want to remain CPAs. Some things to think about include:
- Changing how and where we work;
- Reimagining what the CPA career path could look like; and
- Broadening where and how CPAs can make an impact. We can do this by not only providing a wider range of services for our clients (who already see us as trusted advisors), but also by taking a holistic view of the world, with its ever-changing technologies and opportunities, and exploring where the skills and expertise of a CPA can add unique value.
One thing that excites me about the future of our profession is the innovation in the space of education and continuing education, where creators and providers are focusing on learning that builds skills and capabilities, not merely compliance—learning that is fun!
Here is what I predict we will see in 2022:
- Market conditions remain in flux. Organizations will continue to face supply chain shortages, rising inflation, and other business disruptions. In response to this, we can expect to see an emphasis on dynamic financial planning, powered by scenario planning tools. This will enable accounting and finance teams to continuously reset forecasts according to real-time data to meet ever changing market conditions.
- The age of AI-powered accounting. Promising significant time and cost savings, reduced errors, and higher-level insights, AI has been heralded as a game-changer. Yet accounting teams have been slow to adopt these advanced technologies. As businesses continue to emerge from the volatility of the pandemic, expect to see organizations finally taking the plunge into AI-powered accounting technologies.
- Zero-based budgeting is back. ZBB is gaining in popularity, and it is not the slash-and-burn tactic it once was. Instead, with the help of automation, cloud platforms, and AI, ZBB allows finance and accounting teams to roll out budget changes quickly while increasing flexibility—from capturing operational efficiencies and stimulating growth to boosting performance.
- Financial and operational planning unite. As businesses continue to grapple with ongoing market disruptions, objectives will shift, and business models will be altered. To address these constant changes, it’s essential for businesses to unite financial planning with operational planning—a trend supported by a recent survey from Gartner (https://gtnr.it/3oIKoU5), which revealed that 96% of respondents plan to connect FP&A to one or more operational planning application by 2024.
- ESG takes hold: Global climate investment is projected to surge to $50 trillion by 2025 (https://bit.ly/3lSiZ0a). Organizations that commit to implementing sustainability strategies in 2022—including arming accounting teams with ESG [environmental, social and governance] reporting best practices—will be able to tap this capital and prevent missed profit opportunities.
As the world continues to work through the challenges of 2020 and 2021, we can envision an amazing future on the horizon. The possibilities are only limited by our imagination and aspirations. Here are a few areas for 2022 and beyond that can be limitless—if we choose to make them so.
- Technology. We will see capital investment in technology like never before. Why? Because if you are not a disruptor, you are a distruptee. In a November 2021 EisnerAmper survey of business executives, they expect their largest investment over the next 12 months to be in technology (65%). The playing field is changing. Emboldened new competitors, accounting firms and non-accounting firms alike, are coming to market built primarily around technology. Game-changing automation and analytic technologies provide real-time, actionable data; add value to client relationships; and improve the overall client experience. More clients than ever will be asking us to outsource their finance, accounting technology, and cyber functions, all of which will require substantial investments in technology.
- People. The future of work is here, and its name is flexibility. Whether a firm has an on-site, remote, or hybrid model, the profession needs to suit the lifestyle of its workforce. Over time, this will help create balance. In the aforementioned survey, the biggest risk to business leaders over the next 12 months is staff recruitment/retention (37%). When asked if they are having a harder time finding talent now versus 12 months ago, 54% said yes. The HR “holy grail” going forward is not where people will work, but how firms can offer work that is interesting and challenging within an organizational culture that is nurturing and conveys trust and respect for its people. That’s the recipe for success. For our colleagues and the firms that embrace these changes, the opportunities are there for the taking. Global staffing, collaboration technologies, new learning and development programs, and managing remote teams will be the keys.
- Consolidation. This, without question, will continue. Broader M&A [mergers and acquisitions] strategies for firms will focus on acquiring advisory and technology practices. New ownership models (e.g., private equity investment, partnering arrangements, joint ventures) will unlock the real value of traditional accounting practices. Those firms that leverage technology and leading-edge service lines will create even more value.
- DEI. The profession needs to do a dramatically better job on DEI and commit to DEI programs that have measurable results. Over the next three to five years, the profession’s leadership will more closely mirror our changing population. Our colleagues want to find meaning and purpose in the work they do, and they want to work at companies that embrace equal opportunity and have a social mission. It’s been proven time and again that a company can do well while doing good.
- Assurance services. Capital sources and regulators are demanding increasing transparency on a broad range of environmental, social and governance matters. As their requirements for transparency and standardized reporting grow, there will be a great opportunity for accounting firms to provide assurance on these matters. Firms will also have an ever-increasing opportunity to provide assurance on the systems and methodologies underlying financial reporting, cybersecurity, data privacy, and DEI, to name just a few.
- Regulation. The regulatory environment will be much tougher for the profession. We will see closer scrutiny from the SEC, PCAOB, and the Department of Labor, particularly with respect to audit quality.
- Digital currency/cryptocurrency/blockchain. The evolution of currency will continue, enabling the democratization of financial systems. Financial intermediaries will be disintermediated and disrupted. Would Amazon want to pay a processing fee to a credit card company when it can create its own form of digital currency? This will all require significant investments in blockchain and other technologies, and firms will need to invest heavily in developing expertise in these areas.
- Next Gen. The classroom will emphasize technology along with soft skills. Firms need to be solutions driven rather than compliance driven. Thinking will need to focus on solving client problems. The challenge for leaders at accounting firms is how to get college graduates and new staff excited.
In the beginning of his excellent 2018 article, “Changing Times and Challenges to the CPA Profession’ in The CPA Journal, Vincent Love offered the following quote:
“Progress is impossible without change, and those who cannot change their minds cannot change anything.”
— George Bernard Shaw
When contemplating the future of the profession, Shaw’s observation is apt. The environment in which we operate features significant change and, for progress to occur, accounting professionals must navigate through this changing environment. Those who do so will reap the associated financial and professional rewards at a cost to those unwilling to change.
In 2022 and beyond, I believe the accounting profession will be challenged by and benefit from several new and continuing professional issues:
- Attracting young people into the profession. I believe attracting young people into the accounting profession will be our number one challenge. We are competing with other career options that are either more lucrative (e.g., finance and financial services), or have higher brand identification (e.g., marketing and sales), or are both more lucrative and have higher brand recognition (e.g., information data analysis and systems design, analysis, controls).
- The enrollment cliff. For the last few years, colleges have experienced declines in enrollment due to the increasing cost of higher education versus its perceived value proposition. In the near future, however, college enrollment will decline significantly because of demographic, rather than economic, factors. Known as the college “enrollment cliff,” U.S. demographers say that the number of college-age young people will decline 15% starting in 2025 because of declining birth rates following the 2008 recession.
- Managing a diverse workforce in a changing working environment. I believe that, due to the extended periods during which employees operated in a remote or hybrid environment, firm managers and their human resource management teams will have to devise effective tools for bringing new entrants into the profession and assimilating those new entrants into the firm’s “culture.”
Machine learning and artificial intelligence are key to remaining competitive in 2022 and beyond. After attending my first fintech event in California about four years ago, I returned to New York City totally bummed out. I kept asking myself, “How will FiBrick, my small accounting practice, survive in this new world where bigger firms with powerful technology are our competitors?” And with technology evolving at a dizzying speed, the task of future-proofing my business felt impossible. It felt like I was already behind.
The good news is that fortifying a small practice with technology may be simpler than you think. If you are intimidated to start the project of modernizing your business—don’t be. The trick is to start small. There are already tons of software packages that can do pretty much anything you can think of. They can transform the way you do business—for the better.
The times when we could buy one simple accounting and tax software program and use it forever are far gone. With the evolution of machine learning and artificial intelligence, the accounting profession has seen a surge in the application of this technology in several areas, forcing accounting firms to adapt or risk becoming obsolete. This risk is higher for small practices and solo practitioners because the associated costs or the resistance to change delays the adoption of new technology by small firms. The reality is that if small firms don’t keep up, we will basically be giving up on our opportunity to remain competitive, or even stay in business.
These new technologies have disrupted the accounting profession in the way we conduct audits, analyze revenue and costs, generate forecasts, and conduct internal staff and project management activities. The impact of machine learning and AI can be seen in the audits of internal controls and fraud detection, predictive analytics for enhanced budgeting and cost containment, and the management of inventory and supply chain.
Adapting to these technological trends as small practices is not as monstrous as it seems. Much of the financial software available to us comes with built-in ML [machine learning] and AI capability. The biggest challenge you will find is convincing yourself to embrace it and take the plunge. Trust me, you’ll be glad you did.
The future of public accounting can be viewed by looking back at the past and toward tomorrow. The present is an exciting interlude, but it no longer defines our profession. CPAs have always been the closest advisors to their clients and the first persons called when a client needed an analysis, assessement, or guidance they could trust. CPAs have continually evolved by anticipating and then reacting to needs our clients had and that we felt they would have; that is in our DNA. We have driven and led growth by providing advisory services our clients needed before that term was in the lexicon. Whatever we got involved in, we became the leaders of, such as auditing, attestation and tax services, computer and information technology, forensic, valuation, succession, strategic, financial and international business consulting and planning, merger and acquisition consulting, transaction advisory services, and sustainability attestation. We are also leaders in the industries our clients serve. The skills we use, learn, and experience daily are adaptable to everything that’s new. At any point in time, the CPA has been intricately involved in the conceptualization and growth of what was new on the horizon. We find and anticipate the needs and provide the solutions for them, sometimes with a push or a pull.
As a profession, we have been very resilient and transitioned into nonstandard services when we needed to. There are many inchoate services that we will also get involved in when a client requests it, needs it, or we suggest it based on the client’s needs. Adopting new services also brings new types of competition, but we also are a new type of competition to the entrenched professionals in the new areas we enter.
CPAs also have an uncanny ability to apply their experiences in one industry to others, which creates a wealth of transferrable, mobile, and portable intellectual capital. As long as we have access and interaction with clients, our future will be a continuation of our past: innovative, “now,” and “tomorrow” exchanges that guarantee an even stronger, brighter, and more valuable future.
As a seasoned executive and owner of a CFO advisory firm for the past two decades, I have witnessed the ongoing evolution of the accounting profession serving Fortune 500s and growing companies globally. We’ve come a long way since past centuries, evolving rapidly alongside technology towards a better and brighter future.
Today, the stereotypical accountant is still expected to file taxes, keep books and records, and do payroll. I am confident that accountants will continue to develop even more dynamic careers and serve as multifaceted strategic advisors with valuable knowledge and skills to our clients and the public.
CPAs are trained to be methodical, organized, and detail oriented. We are incredibly savvy with numbers and intuitively develop a deep understanding of the financial situation and accompanying needs of businesses, individuals, and families.
Great accountants are amazing story tellers, quickly identifying and analyzing strengths, weaknesses, risks, and opportunities for the best strategic options for moving forward. In my book, Dear Accountant: Stories, Advice, and Explorations, I highlighted leaders in 11 disciplines within accounting. All of these leaders and executives have an open mind, a risk-taking mentality, and entrepreneurial spirit; they are able to use their accounting skills and business acumen to connect many pieces in business and impact the world.
Although the accounting profession has traditionally been resistant to change, many successful accountants have demonstrated success by thinking out of the box and focusing on value. These entrepreneurial accountants stand out by working closely with their clients, offering comprehensive services to solve problems, improving businesses, and making individuals’ and families’ lives better. They master their accounting skills while embracing all accompanying changes and challenges.
I think 2022 will see a focus on ESG and DEI.
ESG. The press for ESG will intensify, not wane, in 2022. However, the relationship between those three elements will continue to be seen as separate, when in fact they are interrelated. Furthermore, how these elements are measured by a coherent methodology will remain frustratingly absent. A suggested methodological approach to ESG is to see the three components as conjoined elements contributing to the well-being of the corporate body politic and its stakeholders. The environmental and social components cannot be effectuated without the governance component. Furthermore, corporate governance must acknowledge the relationship between it and environmental and social responsibility and bear accountability for accepting their importance and value as intangible assets. In addition, the measurement of the efficacy of the organization’s efforts to achieve these goals falls squarely on governance. One can only hope that governance will run to the challenge, not from it.
DEI. Like ESG, DEI is good business and good for business. Diversity is definable based on thinking, upbringing, race, and gender among a host of other factors. It can bring views to the organization that “seasons” the outlook of the corporate entity.
Inclusion is measurable and traditionally discussed in the context of representation throughout corporate structure and thought.
Equity is elusive in definition and melds into a less defined construct. I mention it last because this “E” becomes subsumed in “D” (diversity) and “I” (inclusion).
Let me respectfully suggest that equity is difficult to define and measure as it can only be viewed over an extended period of years and decades. Equity is both tangible and intangible, measurable and impossible to measure. It is the ability to own a house no matter where one was born on the economic ladder and to expect—no, demand—fair treatment under the law.
In summary, the corporate body politic and its boards are confronted with approaching definitionally ESG and DEI from a tangible and intangible asset valuational approach. Both concepts must be accepted, defined, and measured.
The competitive nature of business requires that companies operate in a nimble, forward-looking manner. As a result, accounting firms are challenged to provide higher quality services when attracting new clientele.
Over the last several years, steps to identify these needs have led to the AICPA/NASBA CPA Evolution Model Curriculum Initiative. Voices within the American Accounting Association (AAA) have expressed appreciation for the effort, while voicing concerns regarding the viability of the changes upon accounting curricula.
Having been employed in both the academic and practitioner setting, it is apparent to me that colleges and universities are not as nimble as private businesses. Several factors hinder the rapid transformation of accounting programs.
Keeping up with the CPA Evolution might require colleges to address challenges that fall outside the programs’ direct control. For example, in some states, the legislature controls general curriculum requirements for degree conferral and CPA Exam eligibility, not the state’s board of accountancy. Furthermore, significant enhancements to accounting curricula may require the approval of a state’s department of higher education. In addition, many programs must remain compliant with accrediting agencies, such as the Higher Learning Commission or the Association to Advance Collegiate Schools of Business.
When I started my solo practice in tax preparation nearly 35 years ago, it was possible to do so equipped with a pencil and a calculator. Tax preparation was mostly a manual endeavor; if a computer was used, it was those cumbersome data entry sheets that then needed to be sent to large computer computing companies that would take a week to send back. Fast forward to 2021, and now the initial investment to be self-employed is steeper. It requires the purchase of hardware and software and myriad other tools. The small practitioner is going the way of the solo doctor. But not everyone needs the services of a large CPA firm. So, we need to figure out how to nurture small firms before they become extinct.
The COVID-19 worldwide pandemic has been a challenge for all businesses. For small tax preparers, it has been double the challenge. The government granted some deadline extensions, but still it was extremely difficult to meet the deadlines while working remotely.
The pandemic has given us the opportunity to embrace and accept technology such as remote access, virtual meetings, and electronic documents. It was there all along, but clients as well as practitioners did not routinely used it. As with anything that is new, we don’t adapt unless the environment forces it upon us. What we have now embraced will stay with us going forward. The pandemic has at least this one positive outcome. I am proud that this profession will emerge stronger and more resilient.
Our world has changed a lot since COVID-19. Change is also happening to the CPA profession. The biggest challenges facing CPAs are the rapid changes in the federal, state, and local tax laws. All these changes exert pressure on the CPA professional to absorb and interpret the tax laws in a very short time frame. It is especially hard on sole practitioners with limited time and resources. Tax agencies have also experienced long delays in processing electronically and paper filed returns, increasing the workload for CPA practitioners.
In the future, sole practitioners will face more and more obstacles to survive and meet deadlines. In this environment, young CPAs are not confident about the direction of the profession and the ability to reach a good work-life balance. If too many young CPAs change to another career path, the accounting profession may face a labor shortage.