Developing Today’s Accounting Firms – The CPA Journal

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Over the past 20 years, many accounting firms have transformed into accounting firms, with some even becoming multi-faceted professional services organizations.

The change was precipitated by the emergence of efficient and inexpensive software for small businesses; artificial intelligence and machine learning applications; and manipulated wearable devices that can access information in the cloud. The coronavirus (COVID-19) pandemic has accelerated these trends, but the biggest shifts have been in attitude and recognition of the effectiveness of virtual work rather than overnight inventions of software and options of connectivity. For many companies, COVID-19 has compressed the adoption of already existing technologies into days or a month. Companies that were already using these tools effectively had a huge head start on the near-complete migration to virtual work. Some new providers started, but the services were already available; COVID has created a much wider playing field and allowed new entrants to capture market share.

The change in the accounting firm model was a reaction to the fact that clients had access to the preparation of financial statements, reports, schedules and analytical data as by-products of their accounting programs. Low cost. At the same time, there has been an increase in demand for data which has created pressure for new methods of reporting information, increased disclosures, more extensive and transparent data, and more detailed and specific accounting rules for ensure proper reporting of income. Traditionally, the scope of data has been defined by the availability of timely information. The explosion of small business software has led to a thirst for deeper data. User needs have outstripped available data and pushed for greater complexity; independent accountants are best placed to meet these needs.

Some of the new information requested goes beyond the traditional boundaries of the profession. For example, traditional accounting and tax expertise is no longer sufficient; there are now frequent and rapid changes, forcing companies to hire specialists in particular fields. The tax changes drift into issues of state taxation, classification of employment status in certain industries, stimulus payments and credits, and international inbound and outbound tax issues. Accounting rules define revenue recognition, lease recognition and fair value measurement more precisely.

Accounting firms, including smaller ones, have owners, partners, and staff who can keep up with many of these changes based on the needs of their clients. Moving away from these traditional services, assisting customers with borrowing (including leasing) has become more complex, as has measuring risk, including internal controls, budgeting and strategic planning. , inventory measurement, cash flow management, cost accounting systems and personal financial planning.

What has emerged are client needs for additional services beyond the tax, audit and advisory services traditionally associated with accountants. These additional services have caused accounting firms to grow and change, causing them to morph more into businesses than professional practices. Accountants identify the services clients need, not just what they’ve been hired to do, and then build the infrastructure to deliver those services. Some of these services are endemic to accounting firms, and some require firms to approach others either as partners in service delivery or as part of their permanent staff. This further pushes an accounting practice to become more of a business, with a departmental structure, cost control centers and stronger internal management – ​​and perhaps a need to borrow to fit into this new paradigm.

Most accountants generally have strong relationships with their clients and offering new services becomes an easy sell. In addition, there is a growing trend among clients to outsource essential, but non-essential services to their business mission, such as their accounting, bookkeeping, and payroll functions, which accountants are well positioned to perform. It is also easier, more efficient and more effective if additional services are performed by fewer vendors and if everything is kept under “one roof”, perhaps with a single relationship manager coordinating all functions.

Create value

Every step, every change, every added involvement is designed to add value to the customer relationship. In the long run, clients become more profitable, able to focus on growing their core business without being distracted by managing ancillary operations and overhead – and the accounting practice, which has evolved into an accounting business, will benefit from it.

Non-traditional services added by some accounting firms

  • Property and Facilities Management
  • Back office and supply chain operations
  • Network billing and collection
  • Cost segregation
  • Research and development tax credit studies
  • Transfer pricing studies
  • Appraisals of tangible and intangible fixed assets
  • Forensic investigation services
  • Business valuations based on long-term value creation rather than projected cash flow and return on investment
  • Succession planning and training
  • Investment banking
  • Advice on mergers, acquisitions and transactions
  • Asset and Wealth Management
  • Family office services
  • Insurance and risk management
  • Human Resource Management
  • Conceptualization, establishment, supervision and management of employee benefit plans
  • Optimization of the income of medical practices, hospitals and care establishments
  • Chief financial officer on demand
  • Planning and implementation of strategy, innovation and change management
  • Optimization of commercial management
  • Cybersecurity and Incident Resolution
  • Turnkey commerce sites on the web
  • Selection, adaptation and implementation of technology and suppliers
  • Data privacy, compliance and security, and customer immersion
  • Government agency regulatory compliance risk assessments
  • Electronic Discovery
  • Sustainability certificate

Edward Mendlowitz, , CPA is Withum Partner Emeritus, Adjunct Lecturer at Baruch College, New York, NY, and author of 29 books.

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