Firm Evolution 6/27/2017

Transcription

1 Firm Evolution Texas Society of CPAs Annual Meeting June 30, 2017 Carl Peterson, CPA CGMA, VP Small Firm Interests Association of International Certified Professional Accountants Disruption has many faces. Like innovation, it is both creative and destructive. It can arrive at your doorstep at hyperspeed or creep in unseen in a glacial movement. Source: Conference Board CEO Challenge 2017 Leading through Risk, Disruption and Transformation External forces driving change 2016 US election Geopolitical instability Technology and cyber issues Workforce changes Regulatory complexity Financial challenges worldwide 1

2 Technology driving transformation billion connected smart devices worldwide twice the number in 2014 By 2020 At least 66% of global population online 50 billion smart devices will be connected to the internet AR/VR could be in use by hundreds of millions Cloud projected to grow to $240 billion from $40.7 billion in % of banks will have blockchain solutions in production Sources: Statista; Deloitte, Technology, Media, Telecommunications Predictions, 2016; Techcrunch, April 2016; DHL and Cisco Internet of Things Trend Report, 2015, IBM, September 2016 Business models are transforming From ecosystem lock to partnerships From search to driverless cars; consumer products From soda to non-waterbased beverages and snacks From software to mobile and gaming From unique platforms to costsharing platforms and components From hardware to services and data From hardware to software From shopping to delivery services and cloud From direct entry to country partnerships From products to digital and services Sources: KMPG CEO survey; Interbrand; AICPA Video spotlight: Amazon Go 2

3 Top Issues PCPS CPA Firm Top Issues Sole practitioners 2 5 professionals 6 10 professionals professionals 21+ professionals 1 Keeping up with changes and complexity of tax laws Finding qualified staff Finding qualified staff Finding qualified staff Finding qualified staff 2 Seasonality / workload compression Seasonality / workload compression Succession planning Retaining qualified staff Retaining qualified staff 3 Finding qualified staff Succession planning Retaining qualified staff Bringing in new clients Bringing in new clients 4 Bringing in new clients Retaining qualified staff Seasonality / workload compression Succession planning Managing work / life balance initiatives 5 Succession planning Keeping up with changes and complexity of tax laws Keeping up with changes and complexity of tax laws Owner / partner accountability and unity Transitioning to Trusted Adviser 3

4 2017 PCPS CPA Firm Top Issues Impact Over Next 5 Years 100% % of Firms that Rated Each as 4 or 5 90% 80% 70% 60% 50% 40% 30% 20% Solo % 0% Changing Client Needs Technology Competition Staffing Regulatory Environment Mergers / Consolidations 2017 PCPS CPA Firm Top Issues Impact Over Next 5 Years Sole practitioners 2 5 professionals 6 10 professionals professionals 21+ professionals 1 Technology Staffing Staffing Staffing Staffing 2 Regulatory Environment Technology Technology Technology Technology 3 Changing Client Needs Changing Client Needs Regulatory Environment Changing Client Needs Changing Client Needs 4 Staffing Regulatory Environment Changing Client Needs Regulatory Environment Regulatory Environment 5 Competition Competition Mergers / Consolidations Mergers / Consolidations Mergers / Consolidations The easiest thing is to react. The second easiest is to respond. But the hardest is to initiate. Seth Godin Author and Agent of Change 4

5 Positioning for future success Preparing firms for the future Key factors for success Structure, strategy and business model Use of technology Client and relationship building Staff development and culture aicpa.org/pcps/inmotion Move toward a culture of transparency Firm Structure Firm Economics Organizational Key Profit Drivers Leadership Revenue, Expenses and Staff Leverage and Right Sizing Metrics Benchmarking Service and Client Mix Billing and Collection Client/Engage ment Management Path to Leadership Partner Attributes Partner Measures Equity and Types Private Companies Practice Section 5

6 Preparing for Generation Z of 20% workforce by % more likely than millennials to want to start a business and hire others 60% want to have an impact on the world Typically has an 8-second attention span adept and self-directed 52% using social media for research Embracing future learning concepts Sources: Robert Half Gen Z Research, Small Business Trends, July 2016, Sparks & Honey, Meet Generation Z: Forget Everything You Learned About Millennials, June 2014, Microsoft Maximize talent retention and engagement Establish diverse and inclusive workplaces Support the retention and advancement of women Encourage innovation Incorporate flextime and telecommuting Explore mentoring/sponsoring options Individualize career pathing aicpa.org/diversity aicpa.org/mentoring Journey Towards a More Inclusive Workforce Private Companies Practice Section 6

7 From Diversity to Inclusion Private Companies Practice Section Unconscious Bias: Heidi Howard Study 7

8 Discovery Your Implicit Bias And More! Private Companies Practice Section Creating an Action Plan Private Companies Practice Section Establishing the right culture Combined factors for leaving public practice 89% Compensation 85% Manageable Work pressure to perform 84% Flex time 84% Support for professional development 78% Opportunities for career growth 70% Mentoring program to become partner Most important firm attributes for young professionals % rank as extremely or very important Source: AICPA Career Perceptions Research 8

9 CPA Pipeline Accounting Grads vs. New CPA Candidates 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Accounting-related bachelor's and master's degrees awarded New CPA examinees Source: Updated 2015 Trends Report data New Candidates Entering the Pipeline 60,000 Number of New Candidates - By Year 50,000 40,000 36,078 38,513 40,839 44,204 49,597 39,083 42,157 42,962 41,266 42,653 48,004 30,000 20,000 10,

10 Overall CPA Examination Pass Rates % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% Percentage of Candidates entering the pipeline each year who passed all 4 sections of the Examination 0.00% Percent Pass All Percent Pass All 1st Attempt Number of Candidates Passing 4 th Section (Each Year) 35,000 Number of Candidates Passing Their Fourth Section 30,000 25,000 23,190 26,163 29,539 23,418 26,020 26,911 25,558 26,077 27,889 20,000 18,444 15,000 14,101 10,000 5, Examinees Passing All 4 Sections: N and Mean Attempts by Year Completed Testing N P a s s A l l M e a n A t t e m p t s N Passed All Mean Attempts

11 CPA Candidate Pipeline ~41,000 Candidates Enter the Pipeline ~93,000 Candidates in the Pipeline 57% Ultimately Pass* 43% Ultimately Drop Out* / Still Testing Average estimate, , passed sections are unique, * indicates overall pass rates (eventually), drop out = no sections taken in 18 months CPA Exam What you should know It s All About Higher Order Skills Critical Thinking Analytical Ability Problem Solving Professional Skepticism Effective Communication 11

12 Testing Windows Examination is offered quarterly 2017 testing windows (Q2) April 1 May 31* (Q3) July 1 September 10 (Q4) October 1 December 10 *testing will close on May 31 and standard setting will begin for the Examination. Standard Setting & Score Release 2017 Q2 (April 1 May 31)* Score Release: AUD, FAR, REG: August 17 BEC: August Q3 (July 1 September 10) Score Release: September Q4 (October 1 December 10) Score Release: December 22 *passing score to be set following the close of the testing window Transition Credit will be retained for any section(s) passed prior to April 1, 2017 This credit, along with sections passed under the current version Examination, will qualify toward licensure within the 18-month window 12

13 Emerging/changing client service areas Firm Services Today and Tomorrow Cybersecurity assurance services Integrated reporting Sustainability reporting Data analysis related services Integrated tax/financial planning Real-time tax planning Growth/expansion opportunity planning Forensics SB6 Audit of the Future Impact On Other Services Technology Data analytics and big data Standards changes New skills How will an audit be different 10 years from now? 13

14 Slide 39 SB6 text on right should be bigger Sonia Bauer, 4/18/2017

15 Improving transparency in valuations Quality and consistency in fair value measurements Standards, performance requirements Two new credentials: Certified in Entity and Intangible Valuations TM Launched January 2017 Complex Financial Instruments and Securities Fall 2017 aicpa.org/fvm Addressing cybersecurity risk management 70% of connected devices contain vulnerabilities 56% of business leaders: wouldn t be able to detect attack 87% rate reputation risk among biggest strategic risks Average total cost of data breach $4 million Cybersecurity Toolkit Resource Example 14

16 6/27/2017 Cybersecurity Toolkit Resource Example Client Assessment Template A Growing Number of Firms Have Formalized CAS Practice Based on years of work with leading firms Now Available! Received Accounting Today s 2017 Top New Product Completion includes a digital badge Visible, verifiable, sharable recognition of professional achievement Learning includes 33 hours of CPE 2 day interactive, live workshop 7 self-study, online classes 15

17 Getting Certified in Client Accounting Advisory Services Denver June Columbia, MD Sept Chicago Oct 5-6 Defining CAAS Technology Roadmap Guidance Workflow Design Client Interaction Client Assessment On-Boarding KPIs Taking a holistic approach to financial planning Tax compliance Tax planning Estate planning Integrated services for individuals Retirement planning Charitable planning Risk management Investments Opportunities in non-financial reporting Sustainability reporting Also known as triple bottom line reporting, corporate social responsibility (CSR) reporting Component of integrated reporting Engage the entrepreneurial interests of your younger talent Integrated reporting Six capitals Financial Manufactured Intellectual Human Social and relationship Natural 16

18 Professional issues and initiatives People Next generation of the Uniform CPA Examination Young CPAs Student pipeline and employer culture Diversity & Inclusion Advocacy 2017 tax filing issues Tax reform Uniformity and mobility Public policy issues Tax preparer registration DoL audit quality report Financial literacy Management accounting / CGMA Opening U.S. market to CGMA Learning program and CGMA exam Competency and Learning website Employer relations Specialized communities and credentials Fair value measurement credentials NFP Section and certificate program Core Services Enhancing Audit Quality Audit of the future; Future of Assurance Services Peer Review and ethics Center for Plain English Accounting Audit Quality Centers Opportunities Future of Learning State society collaboration Integrated reporting; sustainability Cybersecurity CPA.com Association Integration of strategy, operations and management Globalizing CPD Global voice for advocacy Thank you 2017 Association of International Certified Professional Accountants. All rights reserved. 17