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Many clients hire their CPA firm for consulting services based on their intimate business knowledge. If those businesses are in trouble at a later date, lenders and investors may seek a CPA’s confirmation of financial statement amounts.
New Technology
As accounting firms continue to evolve, technology continues to play a significant role. Firms use more software solutions for automation, better client experience, and enhanced collaboration. A CPA firm in Las Vegas also relies on new technology to help with specialized tasks, including data analytics.
For example, by moving to a cloud-based system, a firm can centralize information and documents for easier collaboration without emailing files back and forth. It improves the consistency of work, and a digital solution makes it easier to manage version control. In addition, it provides security because the information is stored in real-time and can be instantly recovered if something goes wrong—such as a lost laptop or power outage.
In addition, a digital system can provide more flexibility by allowing CPAs to access information and work from anywhere. It also can increase efficiency by reducing the need for employees to travel to and from their office, which can reduce the time they spend on transportation. Finally, it can help minimize technostress, a type of stress that can be caused by the use of technology at work.
Increased Competition
Increasing competition from new accounting firms is an ongoing challenge for established CPA firms. It’s essential that firm leaders stay ahead of the curve and continually evaluate and adopt new methods of operation to keep pace.
Many CPA firms are implementing permanent remote work options for staff and partners as an incentive to attract and retain talent. It is a great way to improve employee morale and create a more positive workplace environment. Firms are also promoting staff into partner ranks faster than before as a retention strategy.
Small to medium-sized businesses often need help to afford or maintain their department of in-house accountants. Therefore, they typically contract a CPA firm to handle their financials and taxes. This type of accounting model often involves after-the-fact reporting, which means business owners only have access to month-old information and need clarity about their current financial status.
CPA firms that rely on attest engagements for most of their revenue are vulnerable to client pressure regarding accounting treatment within the financial statements. It can negatively impact the quality of their audits.
Changes in the Business Environment
The impact of COVID-19 has made firms take a hard look at their business environment. Firms have also been looking at improving their services to clients. For example, some firms now offer more non-audit services such as taxation consulting, valuation, process automation, and data analytics. Other firms provide managed accounting services to help companies keep their financials up-to-date and accurate.
Accountants also find that there are more career advancement opportunities at local firms. For example, many small and midsize firms offer a clear pathway to ownership for those who want it. They may also be more flexible on staffing so that employees can balance work and family life.
Firms unable to bring on new hires during the pandemic find it challenging to keep current employees engaged and not burned out. For some, the slow periods are long gone, and now there is a constant load of attest work that leaves no time for anything else. To mitigate this problem, firms have explored alternative staffing strategies such as part-time hiring, leveraging retirees and stay-at-home moms, and even virtual office arrangements.
New Legislation
CPA firms are challenged with keeping up with legislative changes and new regulations. For example, the recent tax reform may require changes in how a business is run and how taxes are calculated. It also requires CPAs to keep up with the latest accounting treatments.
Recruiting and retaining staff is one of the biggest challenges for a CPA firm. In the past, hiring accountants was relatively simple. Still, as more senior accountants retire and leave the workforce, it has become harder to attract suitable candidates for a job with a firm.
As a result, firms have begun to offer flexible and remote work options and invest in professional development programs. It will help to attract and retain younger generations of accountants. Another issue is the growing number of students focusing on technology instead of accounting. Changing this trend will be essential for the future of the industry.
Increased Risk
Small- and midsize CPA firms have many clients for whom audit (and other attest engagements) comprise the major portion of the firm’s fees. As these firms rely heavily on this revenue source, they will continue to face pressure from clients regarding accounting treatment within the financial statements. This commoditization of the audit relationship could erode the quality of the service provided by these firms.
CPAs must ensure an adequate IT infrastructure that empowers efficient and safe telework. In addition, they need to ensure that employees are not selling server access and client information on the dark web, as some have been doing during this pandemic.
Business owners, CEOs, and presidents juggle multiple responsibilities, so they look to CPA firms for accurate and reliable back-office support. CAS providers provide these services by providing real-time management accounting data that can be relied upon by business leaders to make informed and timely decisions. It enables them to focus on business regulatory compliance, marketing, and pricing decisions that drive growth and profitability.
