By Yael Parkoff
Here are my predictions for 2024:
CPA firms will need to put greater emphasis on staff retention. As the world settles into the hybrid post-COVID environment, many CPAs have become more focused on work-life balance and job satisfaction. CPA firms will need to continue to evaluate their employee benefits—including employee wellness programs, remote and hybrid work policies, and other noncompensation benefits—in order to attract and, possibly more importantly, retain staff while continuing to maintain client satisfaction targets. CPA firms can no longer just consider what their peer firms are doing. The competition has been widened to many other industries requiring people with the same skills. Staff retention in the profession has seemed to trend downward while the supply of new applicants has also decreased, making retention a much more important issue.
CPA firms must provide much greater strategic thinking and problem-solving solutions to clients. Automation and AI are continuing to be implemented into CPA firm audit, tax, and consulting procedures. This creates more space for CPAs to focus on offering strategic thinking and planning solutions to their clients. As clients increase their investments in selecting and implementing new accounting software (including PO/AP, Expense Management and AR systems, as well as full General Ledger or ERP software) to become more efficient, reduce costs in the long term, better utilize their inhouse staff, and ultimately focus more resources toward their mission, the need for CPAs’ strategic thinking, planning, and problem-solving abilities will increase. This will create opportunities for CPA firms to help their clients on a much higher level, but firms first have to recognize these opportunities and plan for them.
Predictions for 2024
By Steven Zelin
There will be greater adoption of the add-ons and extras in communications technology. This will help working with clients and establishing group meetings with more active collaboration by the participants. It will also provide better continuous training for my virtual staff of 25—including added training on the full uses of communications software, which I believe is greatly underutilized. In today’s fast changing digital age, CPAs need to be able to communicate faster and better, provide quicker feed-back, share documents, perform culture strengthening, enhance brand identification, and deliver results in as close to real time as possible. I think in 2024 CPAs will recognize the benefits of training and resources to better master and be more effective with its communications software. They will make their state-of-the-art communications software state-of-the-art for their firms.
The ability of CPA firms to implement automation tools and harness information will play an even greater key role in business strategy moving forward. Accounting intelligence platforms pair powerful automation with artificial intelligence (AI) to deliver real-time accounting and personalized insights, empowering businesses and accountants to make better decisions to drive profitability. I think that in 2024, every firm will have their own customized chat-bot for finding resources and answers at their firms. For example, if the human resources manual and all the tax templates are in an AI chat bot, a junior accountant can find answers about the vacation policy and find an engagement letter or Schedule E template with a simple prompt to the firm’s chat bot.
Every CPA will have an assistant—nowadays with the hundreds of emails we receive each day and the never-ending to-do lists, everyone needs an assistant. My prediction for 2024 is that everyone will get one, whether it’s an “in-house” person outside their office or one that’s virtual (in their same city, state, country, or even out of country), or even digital. Many people used to be hesitant to enter our credit card information online, but in 2024 I think we will be asking for the help we need with tasks and getting that help from our AI assistants or virtual assistants.
Predictions for 2024
By Edward Mendlowitz
My predictions for 2024 cover changes in legacy operating paradigms—not the typical resolutions or punch card lists of things to do in the new year. I believe my four predictions are practical and attainable, and would improve the performance of firms that adopt any or all of these changes. As a preface, public accounting is undergoing rapid changes in technology; adapting to the entry of private equity into our “industry”; adjusting to staff working remotely, globally, and with greater flexibility in working hours; 24/7/365 real-time data availability; adding and expanding services; and staffing pipeline pressures. My predictions for all of these, and many other similar activities, are that they will all be accepted and adjusted to, just as we as a profession have been at the forefront of all the other changes that have brought us to today.
Practice management. There will be a major shift in practice management. CEOs and management committees will remain responsible for the running of an accounting practice, strategic planning, growth and leading the practice into the future, seeing that all parts of the practice collaborate and work cohesively, the cash flow, and everything else they have been doing. But each non–managing partner that runs a book of business will be given greater responsibility and accountability for growth, staff mentoring, training and retention, client satisfaction, pricing and profitability, being an advocate of cross selling of firm services, becoming leaders in their client’s industries, and strengthening the practice’s culture among their staff. This has been an overlooked area and it is where many non–managing partners have been discouraged from attending practice management courses and training. They now will be pushed to adopt a rapid growth posture in these areas. Furthermore, every CPA firm needs to find ways to effectively communicate its capabilities to all of its partners and stakeholders.
Pipeline. Increased efforts in staff retention will be aggressively implemented to try to offset the pipeline problem, which does not appear to be solvable in the next year. My prediction and suggestion to improve retention is to establish a base starting salary that is about 20% greater than at present and then upwardly adjust staff salaries across the board accordingly. Present overtime hours and payment methods need to be trashed, and new ones established to address the reasons why so many younger staff leave. These will include a reasonable mandatory overtime requirement and optional overtime beyond that, plus full payment for all overtime worked. This will not cut too much into firm profitability, because turnover would be reduced and onboarding costs would be lower as a result. [Note that much onboarding costs are not captured since that time is included in client service hours, but these are real and substantial costs; plus the lack of a stable staff pool increases annual time rather than stabilizing or reducing it; it also increases supervisory and review time.] Overall work hours would likely be somewhat reduced, but greater efforts to improve staff scheduling, reallocating some work into less busy periods, increased training, and enhanced quality could offset some of those reductions. Further, the overtime payments would encourage many staff to continue to work as many hours as they can.
CAS. Client Accounting Services (CAS), including outsourced or fractional CFO services, will become even bigger than before, and companies will rush to have these services outsourced. Firms need to be prepared internally with their infrastructure and training, with the use of nonaccountants performing many facets of these services. It will also be up to the practice’s management to develop deliverables that are relevant, useful, essential, predictive, and user-friendly to the clients, and to provide protocols for regular contact with the client to discuss the data in ways that create client actions when and where necessary.
Back office. While CPA firms will be promoting their CAS services, they will be divesting themselves of these services for themselves. Smaller CPA practices will begin consolidating their own back offices to professional CAS firms that will handle these services. This will be cost-effective, eliminating the need for each participating firm’s own back office and the oversight and management time needed to ensure the flow and delivery of these services. This shift will also include centralized tax form assembly and processing, administrative functions, financial and other types of professional reports, engagement proposals and letters preparation, proofreading, HR administration, workflow, customer relationship management (CRM) and time systems, and all non-client engagement and facing services.
Tomorrow’s successful firms will be thinking not only about next year’s changes, but also the changes that will have occurred five years from now and how to adapt to the five years after that. There have been some revolutionary changes over the last 10 years that have reshaped the status quo. To be successful, CPA firm growth has to be continuous and relevant to what clients need. CPAs cannot merely be responsive to our clients’ calls—they need to initiate the calls and then lead clients to where they need to be. Only then will CPAs be where they need to be. This will require listening to our clients and understanding their problems (especially the problems than are no bigger than a small pebble in a shoe), and then proffering imaginative solutions. Successful leaders solve problems before they develop with no one aware of them or their role, making them unsung heroes. The acknowledgement of the CPA’s role is the consistent and continuous involvement in everything new and important that clients undertake.
Predictions for 2024
By Orumé Hays
I’m delighted to share three predictions for the 2024 accounting landscape:
Using Generative AI in accounting will be the norm. 2024 looks good; the accounting profession is poised to witness a significant transformation through the increased adoption of generative AI tools. More and more CPAs are recognizing the potential of AI in automating routine tasks, enhancing data analysis, and providing valuable insights. From automating data entry processes to generating financial reports, generative AI is streamlining operations, allowing accountants to focus on strategic decision-making and client interactions. This shift boosts efficiency and empowers CPAs to elevate our roles as trusted advisors.
There will be a surge in ESG reporting services. In response to the growing emphasis on environmental, social, and governance (ESG) considerations, 2024 will see a notable uptick in ESG reporting services provided by CPAs.
With stakeholders increasingly prioritizing sustainability metrics, CPAs are becoming pivotal in helping businesses navigate ESG reporting requirements. Firms offering specialized ESG services will see a surge in demand as companies seek expert guidance in measuring, disclosing, and improving their ESG performance.
DEIB challenges. While 2024 might continue to see some improvements in diversity, equity, inclusion, and belonging (DEIB), the recent trend of states reversing DEI initiatives and eliminating critical race theory (CRT) education represents a significant challenge. Reversals in DEIB initiatives might lead to a less inclusive environment, potentially affecting collaboration and employee morale. CPA firms committed to fostering DEIB will lead the path for the profession and contribute to the positive changes needed despite the prevailing headwinds.
Predictions for 2024
By Michael Kraten
An ESG Accounting Prediction for 2024: Ready? Aim? Shrug. In the ESG accounting sector, the past three years have featured a remarkably consistent pattern. We get ready to change the status quo. We aim to do it. And then? We shrug.
Consider the publicly stated intention of the U.S. SEC to require carbon emission disclosures. The agency initially noted that it would be ready to issue its requirement in April 2023. Then it aimed for October. Both target dates came and went without any action.
Why? Perhaps for the same reason why the recent global COP 28 climate change conference deadlocked over a proposal to pass a nonbinding resolution to “phase out” carbon energy sources. The conference eventually issued an even weaker resolution to “transition” away from fossil fuels, perhaps the only possible outcome with political polarization rendering any binding resolution impossible.
Meanwhile, with a Presidential election year imminent in the United States, the SEC may have likewise found it impossible to move forward after receiving a barrage of letters that criticized its plans. Ironically, the same blanket press coverage that made climate change an SEC priority may have helped to politicize the topic, thereby making regulatory action politically impractical.
Another irony is that the obvious meteorological impact of climate change on the environment may have deprioritized the attention paid to the social and governance legs of the ESG tripod. And without a strong and stable system of responsible and ethical governance in the corporate sector, new regulations may simply be evaded by the business community.
Consider also, the two sustainability disclosure standards that were actually issued by the IFRS Foundation’s International Sustainability Standards Board (ISSB). Years in the making, S1 and S2 were acclaimed as landmarks in global accounting regulation until stakeholders realized that they were purely voluntary guidelines. To date, there has been no mad rush to embrace them.
Then we have the organizational merry-go-round of nonprofit standard-setting agencies. The International Integrated Reporting Council (IIRC) joined with the Sustainability Accounting Standards Board (SASB) and formed the Value Reporting Foundation (VRF). Then the VRF joined the Climate Disclosure Standards Board (CDSB) and was consolidated into the International Sustainability Standards Board (ISSB), itself a creation of the International Financial Reporting Standards (IFRS) Foundation. There’s no hard evidence that any of these changes in organizational form has led to the issuance of significantly improved accounting standards.
With all this in mind, what can one expect in 2024? Let’s not be surprised if we hear of more target dates, followed by more delays. More voluntary guidelines that aren’t embraced. More political gridlock. And more changes in organizational form over substance.
In other words, more readying. More aiming. And then? More shrugging.
Predictions for 2024
By Melissa Bucukovski
Here are my internal audit predictions for 2024:
Changes, legislation, and new standards for internal auditors from regulators, legislators, and internal audit organizations. The IIA (Institute of Internal Auditors) is releasing updated standards in January 2024 which will become effective in 2025. I think the updated standards will bring heightened attention to internal audit as a function and highlight its value within an organization via simplification of the critical components in a more intuitive manner. Some of the key changes are as follows:
- ▪ The standards will have a new name—they are switching from “International Standards for the Professional Practice of Internal Auditing (IPPF)” to the “Global Internal Audit Standards.”
- ▪ Introduction of topical requirements related to key functional areas to drive consistency in all internal audit functions regardless of size or industry and to keep standards relevant in a continuously evolving risk environment.
- ▪ Switching from the current framework of six elements (mission, definition, code of ethics, core principles, standards, and implementation guides) to a five-domain framework comprising purpose of internal auditing, ethics and professionalism, governing the internal audit function, managing the internal audit function, and performing internal audit services.
Fraud risk. There is always a risk of fraud in a corporate environment because there is always going to be profit pressure to some degree, depending upon the performance of individual companies and the industry they are in. But today, fraud risk is heightened, and it will stay that way over the next couple of years because of rising costs of materials and labor, negatively impacting margins. Plus, the post-pandemic economy is still recovering.
The shortage of talent entering the pipeline. I think we will see organizations increasingly looking to outsource or co-source their internal audit functions to CPA firms to gain the expertise they are looking for. In addition, “agile auditing” is a new type of internal audit methodology that has recently gained popularity. It is intended to make audit plans more adaptable and flexible based on current events, emerging risks, and so forth, so that “low-impact” or “unnecessary audits” don’t use up resources, both on the internal audit side and the operations side. Agile auditing also involves less rigid and structured planning replaced with a more iterative process based on collaboration and milestones.
Predictions for 2024
By Liren Wei
I have three predictions for 2024, concerning the pipeline shortage, staff shortages, and accounting firm activity.
Pipeline problems and potential solutions. I foresee that the accounting profession’s pipeline shortage will continue in 2024 and beyond. While the AICPA, the NYSSCPA, and other state societies have initiatives in place to attract more young people to the profession, these will take longer than a year to achieve measurable results.
As NYSSCPA CEO Calvin Harris Jr. said during our recent round of Professional Issues Updates, fewer people are pursuing degrees in accounting, and even fewer are entering the field. According to the AICPA’s 2023 Trends Report, the number of U.S. students who completed bachelor’s accounting degrees in the 2021/22 academic year was 47,067, down by 7.8% from the prior year (https://www.nysscpa.org/2023-trends). The number of students completing master’s accounting degrees in that academic year was 18,238, down by 6.4%.
Harris provided an overview of one recent initiative to address the pipeline problem. On July 31, 2023, the AICPA announced the formation of the National Pipeline Advisory Group, representing a broad spectrum of the CPA profession to help shape a national strategy to address the profession’s talent shortage (https://tinyurl.com/42zcxnkz).
Because the cost of a master’s degree is an obstacle for some students to meet the 150-hour requirement, there are also some recent programs that are intended to help accounting students meet the requirement more inexpensively. In August, the AICPA and NASBA announced a post-graduate program, known as Experience, Learn, and Earn (ELE), in collaboration with the Tulane University School of Professional Advancement (https://experiencelearnearn.org/Index.html). This initiative would allow accounting graduates to join an ELE-affiliated firm as a paid staff member. Participants would earn up to 30 university credits through self-study online courses, with the firm agreeing to provide time during the week for course work in a balanced, flexible way. The credit hours would be set at affordable rates, and the participating firms would be expected to provide support and mentoring to help program participants work toward their CPA license. The ELE program is set to launch in spring 2024.
There are also work-for-credit programs, such as the ones that PwC (PricewaterhouseCoopers) has with Northeastern University in Boston (https://tinyurl.com/3tsa9m55) and with Saint Peters University in Jersey City, N.J. (https://tinyurl.com/yyvj72sf). The programs not only fund candidates’ tuition but also pay a wage while they are working for credit. The institutions don’t lose the tuition revenue because they’re being compensated, essentially, by the firm, and the candidates earn their last 30 credits. The programs effectively eliminate the cost to candidates of the extra 30 credits for licensure.
Staff shortages. The above programs are new or yet to launch, so even if they are highly successful, they will not solve the pipeline problem in 2024. Therefore, staff shortages will continue, especially as baby boomers retire and there are fewer professionals to take their place. There were approximately 1.65 million accountants and auditors in the United States in 2022, down by 15.9% from 2019, according to the Bureau of Labor Statistics’ current population survey (Mark Maurer, “Job Security Isn’t Enough to Keep Many Accountants From Quitting,” The Wall Street Journal, Sept. 22, 2023, https://tinyurl.com/4nac4jtc). Outsourcing from offshore and recruiting non-CPAs or non-accounting majors may partially resolve the problem, but it will still persist. During his Professional Issues Updates, Harris discussed several strategies and tactics that firms can adopt to help with recruitment and retention; these include salary, employee benefits, flexible hours, welcoming environment, and culture.
M&A activity. Finally, I predict that merger activity will continue to be high and—especially given the recent passage of non-CPA ownership legislation in New York State—more firms may adopt alternative practice structures. CPA firms will continue to merge in order to gain more service capabilities and expertise, as well to expand geographically. Some firms will merge for purposes of succession planning. Once firms are able to add non-CPAs as partners, they may more seriously consider joining up with firms in other states across the nation that already allow for non-CPA partners. Private equity will continue to play a significant role in merger activity because it provides firms with the access to funds to invest in technological improvements and the hiring of specialists, as well as the financial expertise that the private equity companies can offer.
I know many readers are facing these same challenges, and the NYSSCPA is working with firms and partners to find remedies and successful strategies.