These are challenging times for the accounting profession. Once considered one of the most stable industries for its steady demand and wide range of applications, accounting firms are experiencing challenges on many fronts including labor, profitability, the race to keep up with technology and the changing scope of the industry itself.
“The accounting profession is evolving at a much quicker pace than ever before,” said Jeremy Vokt, managing partner with Bland & Associates, P.C. “Firms have been merging at a feverish pace over the last 12 months in order to add complementary service lines or companies.
“Most of that change relates to technology. Firms are utilizing new technologies to serve their clients, better their processes and increase efficiencies. We are seeing increased demand for data analysis and process automation from our clients.”
This evolution of the accountant’s job description has forced firms and individual practitioners to take stock of skills needed to meet the demands of the future.
“The profession is evolving on a continuous basis in terms of services, as well as technological capabilities,” said Jerry O’Doherty, Omaha market leader with Eide Bailly, LLP. “robotic process automation (RPA) as well as leveraging artificial intelligence (AI) capabilities will allow us to better serve our clients.
“In addition, our clients are looking for a one stop shop to help with all their needs. As a trusted adviser, it simplifies the process for our clients when they know they are going to receive services from someone they can count on.”
Recent statistics show accountants across the country view themselves differently than their predecessors. In one study, respondents listed the most important skills for the job to be: financial business advisory (51%), technology literacy (43%), and third, client management (34%), per Sage’s 2020 The Practice of Now Report.
“The accounting profession is moving into more of a consulting role versus the traditional data entry and compliance-only tasks,” said Ryan Cook, audit and consulting shareholder with Lutz. “More and more clients are looking for real-time data to run their business. Financials are still relevant, but with the capabilities of technology, being able to bring data together through data analytics helps tell the story for those decision makers.
“Given the real-time data available right now, business owners are looking at their accountant as being more their business partner versus compliance-driven in nature.”
Driving these trends in large measure are client expectations of their service providers. Accounting services per se are still in-demand. Wasp Barcode Technologies reports more than 70% of small businesses outsource their tax preparation, half outsource their payroll and auditing, and 30% their tax planning. But the way they expect that work to be done is much different than in the past.
“[The] big trend, especially as far as small and even medium-sized businesses, is outsourced accounting,” said Scott Becker, managing partner with HBE. “We have a division in our firm where we’re the clients’ empowered accounting sub, which could be a bookkeeper, a controller [or a] CFO.
“And the way that we make that happen is through technology with more services that are cloud-based. We’re seeing more clients using software that’s cloud-based, there’s nothing really new about it, but it’s more prevalent now.”
Relying on technology is also helping firms deal with the labor pinch in which the accounting industry finds itself.
“The challenges within the profession currently are attracting talent,” Cook said. “Across the various universities, enrollment numbers have been declining over the years and that’s projected to continue in the future. This has pushed those in the industry to continue to utilize technology to be as efficient as possible along with looking at offshoring solutions where applicable.”
Even before the Great Resignation cut into the number of accountants in the U.S., numbers had been falling due to baby boomers’ retirement and decreasing numbers of students studying accounting in college. In 2015, the Association of International Certified Public Accountants estimated that 75% of its membership would be eligible to retire by 2020, and college graduates have done little to fill those jobs. Per the AICP’s 2019 trend report, the number of master’s level accounting students in 2017-2018 fell 6% year over year, while the number of accounting undergraduates fell 4%.
Not only is the battle to recruit talent particularly fierce these days but retaining employees is proving just as challenging for many firms. Inside Public Accounting reported in 2020 that staff turnover averaged 13.7% across all accounting firms with the biggest increases in turnover affecting firms in the $10 million to $30 million range.
Various sources blamed multiple issues for the situation. Stagnated earning power, as well as changes in mandatory education were cited hurdles. Requirements included 150 hours of classroom study to be eligible to sit for the CPA exam.
“The demand for the accounting profession continues to be strong, but many within the profession find attracting talent is a challenge,” Cook said. “Across the various universities, enrollment numbers have been declining over the years and are projected to continue in the future.”
“The numbers are definitely down,” Becker said. “We’ve been fortunate to be able to hire new college graduates basically because we have a great internship program. But overall, I think it’s a tougher market to find people with higher level skills in accounting, those specializing in tax and accounting services, or those who might have a finance degree or a data analytics degree on top of an accounting degree.”
Even with all of the change and in the face of steep staffing issues, experts generally graded the health of the local accounting industry well, although almost all offered caveats for the future.
“Firms locally are growing due to various reasons,” Vokt said. “We have merger activity happening locally, we have smaller firms retiring, meaning their clients are moving on to other firms, and we have firms of all sizes making strategic choices of what types of clients they will be serving into the future.
“The reason for the latter is due to the shortage of accounting talent affecting the ability to serve all those clients. This is a nationwide issue our industry has been facing and it’s starting to really show within our local market.”
O’Doherty credited an abundance of government programs and other in-demand services.
“Clients still look to us to find solutions to their problems, even problems that they do not yet realize they have,” he said. “However, it is incumbent upon us in this profession to educate those undeclared majors, as well as those in high school, about the benefits of public accounting.
“With the disruption that took place during the pandemic, and seeing how our clients relied on our help to navigate through the myriad of obstacles and opportunities that arose, it showed the importance and value of being that trusted business adviser.”