The next couple of decades will see massive change for the accounting profession. More than 100,000 baby boomer CPAs are likely to retire, creating a void that new leaders will have to fill. Technology will radically redefine what accountants do and how they do it. A rapidly evolving global economy will create unprecedented challenges and opportunities. The confluence of so many changes is prompting many to ask what the future holds for CPAs.
Perhaps the more pertinent question is, what does the next generation of accounting leaders have in store for the profession? The JofA gathered five members of that generation to discuss how the accounting profession—and the professionals in it—will evolve over the next several years and how today’s leaders can best motivate and mold the CPA leaders of tomorrow.
Participating in the discussion were:
- Jason Blumer, CPA/CITP, owner and chief innovation officer of Blumer & Associates CPAs in Greenville, S.C. He also is founder of the THRIVEal+ CPA Network, a blog and private online community for current or prospective “next-gen” CPA firm owners that seeks to promote disruptive change in the accounting profession.
- Lauren Foster, CPA/CITP, CGMA, global tax technology lead at General Motors. An alumna of the inaugural AICPA Leadership Academy, she previously worked at KPMG. She is also vice chair of the Michigan Association of CPAs Ethics Task Force and chair of the Detroit-based Health Alliance Plan’s audit committee.
- Greg Kyte, CPA, controller for the Utah Valley Physicians Plaza, a fellow of the VeraSage Institute, and the co-host, with Jason Blumer, of the THRIVEcast, the monthly podcast of the THRIVEal+ CPA Network. He also regularly performs as a stand-up comedian.
- David Nagy, CPA, owner of Nagy & Associates, an eight-person CPA firm in Wilmington, Del. He is active in the AICPA Private Companies Practice Section small networking group, as well as in his state society.
- Kem Washington, an accounting professor at Dillard University in New Orleans who writes a personal finance column for the New Orleans Tribune and has her own financial blog at kemberley.com. She previously worked as a revenue agent and a criminal investigator with the IRS.
Jeff Drew, a JofA senior editor, moderated the discussion. Following are edited excerpts of the conversation. To access a two-part podcast of this conversation, click here.
Drew: How do you see the marketplace and structure of CPA firms changing over the next 10 to 20 years?
Kyte: I think we’re going to see a lot of similarities between the accounting profession and what we’ve seen in manufacturing in the United States. In manufacturing, the grunt work is being done by robots. In accounting, the pick-and-shovel, staff-level accounting work is going to be done largely by computers. It’s going to be automated, and it’s going to be commoditized.
A lot of trends support automation. We’re seeing XBRL (see “The Future Is Now: XBRL Emerges as Career Niche,” page 122), where you’re tagging data. We see the IRS talking about real-time tax system initiatives, where they’re giving feedback about your tax return, while it’s still in process. In terms of structure for CPA firms, I don’t think you’re going to see as many levels of management, because those commoditized, automated services aren’t going to be in the firm anymore.
I also am convinced that, before I’m done with my career, the billable hour is going to go away. The billable hour is suboptimal, not just for your clients, but also for your firm. It’s a great way to disincentivize your employees. We’re seeing more (accounting firms) moving away from billing their time to fixed-price agreements, to value pricing.
Those firms are enjoying a wonderful competitive advantage. As more firms see that competitive advantage, they’re going to switch, and eventually the last few people to switch from billing their time by the hour to a fixed-price agreement, they’re going to have to make the switch out of necessity. Right now is a really important time for firm owners to try to think through: Do I want to get in on this fixed-pricing thing while it still is a competitive advantage, or do I want to hang onto the billable hour until it almost puts me in my coffin?
Blumer: It’s hard to imagine a professional firm without the billable hour. When you first attempt to walk down that road, you turn your gaze toward your customer. You have to say, what is valuable? If it’s not my hours, then what? And the only thing you can do is ask your customer, “What do you need? What do you want?”
That means sitting down with your customer, spending sometimes an hour to two hours delving into what the customer want(s), and pricing (services) based upon their value. So it’s no longer a homogeneous hourly rate that applies to everything we do. Some of the work we do is higher value.
Nagy: When it comes to changing the way you price your services, the other critical part is communicating the value to your customers—(and) proving that value.
So if you came up with a tax strategy that saved a customer $10,000, that has to be communicated, because otherwise, they just don’t know. They just see nice, pretty papers in front of them with a “sign here” sticker.
Communicating the value is critical in changing from the billable hour to the value-pricing model.
Drew: What should young CPAs be doing to position themselves to move into leadership roles, both in business and industry and with accounting firms?
Foster: Act in ways that true leaders do, and develop the skill sets needed to show leadership (see sidebar, “Leadership Development Tips for Young CPAs”). Some of those skills include taking accountability; developing their staff, if they’re working with teams; being a team player; and giving overall support. For people who don’t have staff … they can serve as a mentor, maybe for a student.
But I think that it’s about acting as a leader and doing the things that would get you acknowledged as a leader and promotable.
Nagy: One piece of advice I would give to young CPAs, if they’re seeking leadership positions, is (to) not be afraid to speak up and set expectations for themselves. Often, they wait for managers to give them clear direction, and a lot of times it just doesn’t come, because managers are busy or they neglect those responsibilities.
But employees can take the initiative and ask questions like: “How much time are you expecting me to take on this job? Did I make too many mistakes on this tax return? Do you think I’m ready for more challenging work?” (By) showing initiative and asking those questions, your manager is going to respect you, and as a result, (will) help set the path for you to progress.
Washington: Another thing I would suggest is networking as much as possible. Let people know who you are and what you are doing, and seek out those who are doing what you would like to do. Connect with them. Maybe have lunch with them, ask them questions about how … they (got) there.
Another thing is use those social media outlets that you’re using already, like Facebook and Twitter, to connect with other CPAs.
Drew: Which CPA services and skills do you see having the most growth potential over the next decade, and which ones do you see declining in importance?
Washington: Communication is a big key. Being able to present well. (You) definitely (need to) have strong computer skills and (be) able to multitask.
Kyte: I read an article recently that said with the advances in technology lately, it’s becoming even harder to detect and prevent fraud. So assurance work is going to become more important, but I also think it’s going to become more automated and more commoditized. So actually, the skills that CPAs have to develop are going to be higher-level skills than what we’ve had before. It’s not going to be your traditional assurance and attest skills. You’re going to be trying to think like a crook to try to outsmart that crook. It’s higher-order thinking skills that are going to be the growth space in accounting in the next 10, 15 years.
Drew: What are the best practices you see in managing and incentivizing young CPAs?
Blumer: As we’re hiring younger people in our firms, we’re experimenting with a results-only work environment (ROWE), where we’re bringing on new employees, giving them the vision for the position, coaching them through the process of realizing what we and our customers need, and then letting them manage what the results look like for them (see sidebar, “Best Practices for Developing Young CPAs”).
We have no performance reviews. We don’t have dress codes. You don’t have to work in the office. (Leadership is) really more about coaching now and helping employees be successful, pushing them toward what their strengths are. We’re hiring people so self-motivated that they’re able to run their own departments.
Foster: Business and industry is very different for a CPA. In many instances, there are few CPAs in a large company, and they’re not singled out as professionals. At General Motors, you have engineers, lawyers, MBAs, technology experts, a whole gamut of different professions.
I would say that it’s up to CPAs to help their employers understand what their profession is (and) what type of support they need. With a business and industry employer, a lot of times young CPAs are not getting basic support for their CPE, licenses, professional organization dues, things that they might have taken for granted in a firm environment. In my experience, I’ve had to ask for what I needed, and when I have done that, I always have received positive reaction and support.
Washington: One thing employers can do is to provide young CPAs with more opportunities to lead. I serve on the board with the Society of Louisiana CPAs, and one method used is identifying talented young CPAs and allowing them to chair a committee early on. This gives the young CPA confidence, in addition to leading to more leadership roles.
Drew: Lauren, what advice would you have for accounting undergraduates and young CPAs considering a career in business and industry?
Foster: There are so many different ways that young CPAs can enter the business and industry world. If there’s something that you’re passionate about, definitely try and find a company that works in that (field). Also, make sure, when you come in the door, that you are looking at the vision, the leadership, the mission, and the objectives of senior leadership within that company. You don’t want to board a train going in a direction you don’t (want to go).
In business and industry, it’s really important for young CPAs to understand that you want to check your ego at the door. Although there (are) corporate politics of all different kinds, the more humble you can be and the more you can exercise discretion and leadership and awareness, the more successful you’ll be.
Drew: Jason, you took over your father’s firm and made major changes. Can you describe what you did and how the changes you made affected the firm’s performance?
Blumer: I took over my father’s firm almost 10 years ago. I got to start being creative and trying new things, trying new consulting models, and it’s been so fun. We really have made a deep dive into the niche of serving only creative customers (businesses such as advertising agencies and other organizations that embrace creativity). We don’t bill by the hour. We do a lot of strategic pricing upfront so that we draft all of our fees monthly.
We’re trying to do a lot of disruptive things to see what works and what doesn’t. For example, we’re going to shut our office down (for good) at the end of this year, and I’m curious to see what’ll happen. I wouldn’t suggest everybody do that, but we have set our firm up to do things like that. If things don’t work, we’ve learned as a small firm to pivot and change to continue to meet our customers’ needs. But our main goal was to be a 100% cloud-based firm, which we are, so that we can serve people all over the country. So, now, location is no longer a need for a firm.
Drew: I’m curious about your plans to shut down your office. I assume everyone will be working from home?
Blumer: Yeah. We’re just going to make a move to reflect reality, really. They’re all working at home anyway, and so I’m wondering what the heck I’m spending all this rent money on every month. So we’re just going to shut it down, and at that point, we’re going to require our clients to become digital in all their interactions with us. They can’t bring paper anymore, because there’s not going to be an office.
Obviously, we’re not going to be right for a lot of people. But our goal is to go so deep into our niche that the (clients) that are the right fit for our firm, they know it deeply, and the ones that aren’t, it’s very clear.
Drew: And how do you communicate with your employees?
Blumer: We have meetings periodically, and if we do something like that, it’s going to be a screen-sharing-type session. We almost only talk to our clients through Skype. We use Google Apps Enterprise for our calendar and email. There (are) chat features in that, so we do a lot of chatting.
I got all the staff iPhones, so we text a lot. We text a lot with our clients. We talk on the phone and do email, too. As we’re going to become truly 100% virtual, we’re going to have to put into place ways for us to come together, because I still believe in face-to-face relationships. But I think social technologies can allow you to build those relationships with anybody, anywhere. And so through Skype and through GoToMeeting, I still feel like we can stay a close-knit team.
Drew: Dave, you built your firm from scratch. Could you talk about your firm’s work environment and culture?
Nagy: We are problem solvers as CPAs, and to be a good problem solver, you have to be creative, because clients want you to look at their problems and come up with creative solutions. I also believe problem solving is a skill that can be developed.
Every week, we’ll play a few games that challenge us to think through new problems and come up with solutions. I think that spills over to how we service clients.
And actually, as an interview technique, I think it’s the best thing going. When we bring in job candidates, we’ll play a game with them and see how they react. You’ll have some people who are really uptight about knowing every single rule. Other people will laugh and go along with it, and not really care about winning. You really get to see someone’s personality when they play games.
Drew: Kem, did you have anything to add from the perspective of working with students? What are you telling them about the future of the profession?
Washington: You have to be more of a go-getter, working on your own, because most of these firms are not looking over your shoulder. They want to hire people who think independently. They want to know they can trust you if they give you a job, and, hey, you can do it at your home or wherever it is.
Leadership Development Tips for Young CPAs
- Take the initiative to ask senior management for performance feedback and opportunities for more challenging work.
- Set high expectations for career advancement, discuss those goals with management, and work with management to devise and implement a plan for climbing the career ladder.
- Network as much as possible. Leverage social media such as Facebook and Twitter.
- Seek out meetings with CPAs in leadership positions.
- Act as a mentor for a student.
- If working with teams, show leadership skills in developing staff.
- Take accountability, maintain a humble attitude, and be a team player.
- Develop creative solutions to firm and client problems.
- Refine communication and presentation skills.
Sources: Lauren Foster, David Nagy, and Kem Washington.
Best Practices for Developing Young CPAs
- Articulate a compelling vision and mission for the organization and position. Make sure young CPAs know what the organization and clients/customers need from them.
- Establish flexibility with work schedules, telecommuting, and dress codes.
- Help young CPAs identify their strengths and coach them to rely on and maximize those skills.
- Provide support for CPE, licenses, and professional organization dues.
- Offer opportunities to lead early in careers.
- Communicate through technologies—social media, texting, video conferencing, and web screen sharing—that professionals in their 20s and 30s already use extensively.
- Create an environment in which strategic thinking and creative problem solving are taught and promoted.
Sources: Jason Blumer, Lauren Foster, David Nagy, Kem Washington, and Greg Kyte.
- “Gaining (From) Your Clients’ Trust,” May 2012, page 38
- “The Last Word: David Nagy, CPA,” May 2012, page 80
- “The Last Word: Greg Kyte, CPA,” Nov. 2011, page 108
- “Business Development Skill Builders for Young CPAs,” May 2011, page 20
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- Practitioners Symposium and TECH+ Conference in partnership with the Association for Accounting Marketing Summit, June 11–13, Las Vegas
- E.D.G.E.—Sharpening the Next Generation of CPAs, Aug. 8–10, Orlando, Fla.
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