Staffing concerns again top list of CPA firm issues

Finding qualified staff ranks as the top issue for U.S. accounting firms with more than one CPA, and those firms expect talent and technology to have the greatest impact on their practices over the next five years.

Those are two of the top takeaways from the 2017 PCPS CPA Firm Top Issues Survey, the results of which were released Wednesday by the AICPA Private Companies Practice Section (PCPS) at the AICPA’s ENGAGE Conference in Las Vegas.

The biennial survey also found that “Keeping up with the changes and complexity of tax laws” again ranked as the top concern with CPA firms with one professional—the fourth straight survey in which that has been the case.

For the first time this year, the survey asked respondents to rank eight issues expected to have the greatest impact on the operations of their firms over the next five years. Staffing ranked highest for four of the five size categories tracked by the survey, with technology second among those firms. Firms with one professional, designated in the survey results as sole practitioners, ranked technology No. 1 and contending with the regulatory environment No. 2.

Current issues

Staffing issues have often topped the list of accounting firm concerns since the PCPS CPA Firm Top Issues survey launched in 1997. The exceptions came in the wake of the 2008 recession, with client retention and recruitment emerging as the most pressing priorities in the 2009 and 2011 surveys.

As business has picked up in public accounting, competition for talent has escalated as well. In 2015, “Finding qualified staff” emerged as the No. 1 issue for firms with between two and 10 professionals, with “retaining qualified staff” taking the top spot for firms with 11 or more professionals (see “Staffing Issues Surge to Forefront of Accounting Firm Concerns”). This year, “finding qualified staff” ranked No. 1 in each of the four size categories besides sole practitioners.

“High demand for services is a great situation for CPAs as a whole,” Carl Peterson, CPA, CGMA, the AICPA’s vice president–Small Firm Interests, said in a news release. “From a firm management perspective, however, it poses some significant challenges.”

The PCPS top issues survey asks respondents to rank the impact of 91 issues divided among seven practice areas on a 1–5 scale, with one being “minimal” and five being “extreme.” They then were asked to rank their top five issues from among their highest-scoring items. The firm results are reported for each of five size categories, as the top concerns of smaller firms often differ from those of their bigger counterparts.

For example, issues related to increased complexity and seasonality and workload compression show up among the top five issues for firms in each of the smallest three size categories. Other issues are even more universal, as evidenced by succession planning cracking the top five issues for all but the largest firms, and “bringing in new clients” ranking in the top five for sole proprietors in addition to firms with 11 or more professionals.

Future impact

In addition to staffing and technology, “changing client needs” ranked highly among firms of all sizes as issues that would have the greatest effect on firms over the next five years, taking the No. 3 spots among all firm sizes except six to 10 professionals, where it ranked fourth behind “regulatory environment.”

Technology did not rank among the top five current issues for firms, making its inclusion among the top two future factors interesting. It may indicate that survey participants recognize the transformative potential of technologies such as blockchain and artificial intelligence but don’t see the full impact of those technologies reshaping public accounting in the next year or two.

Survey methodology

The PCPS CPA Firm Top Issues Survey was conducted online from April 20 to May 15, 2017, by Mktg. Incorporated. The 610 respondents represent a mix of practice types and firm sizes. The top five responses by firm category for 2017 and 2015 follow.

Top issues

Sole practitioners

Firms with 2–5 professionals

Firms with 6–10 professionals

Firms with 11–20 professionals

Firms with 21+ professionals

Impact over next 5 years

—Jeff Drew (jeff.drew@aicpa-cima.com) is a JofA senior editor.