Tax law changes join staffing as a top issue for CPA firms

By Courtney L. Vien

Finding qualified staff and keeping up with changes to tax law are among CPA firms’ top concerns, according to the 2019 PCPS CPA Firm Top Issues Survey. Sole practitioners ranked keeping abreast of tax law changes as the issue that impacted them the most, while firms employing two to 20 professionals ranked it as their second-greatest concern after hiring qualified staff.

These results likely reflect the impact of the law known as the Tax Cuts and Jobs Act, P.L. 115-97, upon smaller CPA firms. While sole practitioners have named tax law changes as their top concern for five Top Issues Surveys in a row, firms with two to 20 employees didn’t rank the issue so highly in 2017.

The AICPA Private Companies Practice Section (PCPS) released results of the survey Wednesday at the AICPA ENGAGE 2019 conference in Las Vegas. The PCPS conducts the survey every other year.

Staffing, a perennial concern of CPA firms, featured prominently in this year’s results. All firm segments with more than one employee ranked “finding qualified staff” as the issue that impacted them the most. Firms with 21 or more professionals ranked retaining staff as their second-greatest concern.

Managing privacy and security risks emerged as a top issue this year. Firms of all sizes ranked privacy and security risks as one of their five most-pressing issues, with sole practitioners ranking it as their second-greatest concern. In 2017, privacy and security did not appear as a top-five issue for firms of any size.

Firms’ “heightened awareness” of the risk of cyberattacks explains why privacy and security ranked so highly among their concerns, Carl Peterson, CPA, CGMA, AICPA vice president–Small Firms, said in an email. Many CPAs know firms that have experienced data breaches, he said, or were affected by the Wolters Kluwer outage, which occurred in early May during the same time the survey was in the field.

Looking ahead

The survey also asked firms to indicate to what extent they expected certain issues to impact them over the next five years. All firm segments with more than one employee ranked staffing as the issue they anticipated would affect them the most, while sole practitioners ranked changing client needs as the top issue that would affect them in the near future.

Firms of all sizes ranked changing client needs and emerging technologies among the top five issues they thought would impact them most over the next five years. Firms with one to 20 employees ranked the regulatory environment as a top five concern. Firms with one to 10 employees and firms with 21 or more employees ranked competition among their top five issues over the next five years, while firms with 11 or more employees ranked mergers/consolidations as their fifth-greatest concern.

Survey methodology

The Top Issues Survey polled 1,203 respondents, representing firms of various sizes in May 2019.

The methodology of this year’s survey differed slightly from previous years. Respondents were given a list of issues and asked to rank their impact on a scale of one to five, with one being “minimal impact” and five being “extreme impact.”

Top issues

Sole practitioners

2019

  1. Keeping up with changes and complexity of tax laws
  2. Managing privacy/security risks
  3. Keeping up with changes in technology and managing associated costs
  4. Technical training of owners/partners and staff
  5. Seasonality/workload compression

2017

  1. Keeping up with changes and complexity of tax laws
  2. Seasonality/workload compression
  3. Finding qualified staff
  4. Bringing in new clients
  5. Succession planning


Firms with 2 to 5 professionals

2019

  1. Finding qualified staff
  2. Keeping up with changes and complexity of tax laws
  3. Managing privacy/security risks
  4. Seasonality/workload compression
  5. Developing and executing a succession plan

2017

  1. Finding qualified staff
  2. Seasonality/workload compression
  3. Succession planning
  4. Retaining qualified staff
  5. Keeping up with changes and complexity of tax laws


Firms with 6 to 10 professionals

2019

  1. Finding qualified staff
  2. Keeping up with changes and complexity of tax laws
  3. Seasonality/workload compression
  4. Managing privacy/security risks
  5. Developing and executing a succession plan

2017

  1. Finding qualified staff
  2. Succession planning
  3. Retaining qualified staff
  4. Seasonality/workload compression
  5. Keeping up with changes and complexity of tax laws


Firms with 11 to 20 professionals

2019

  1. Finding qualified staff
  2. Keeping up with changes and complexity of tax laws
  3. Seasonality/workload compression
  4. Retaining qualified staff
  5. Managing privacy/security risks

2017

  1. Finding qualified staff
  2. Retaining qualified staff
  3. Bringing in new clients
  4. Succession planning
  5. Owner/partner accountability and unity


Firms with 21+ professionals

2019

  1. Finding qualified staff
  2. Retaining qualified staff
  3. Managing work/life balance initiatives
  4. Owner/partner accountability and unity
  5. Seasonality/workload compression and Managing privacy/security risks (tie)

2017

  1. Finding qualified staff
  2. Retaining qualified staff
  3. Bringing in new clients
  4. Managing work/life balance initiatives
  5. Transitioning to a trusted client adviser


Impact over next 5 years

Sole practitioners

  1. Changing client needs
  2. Regulatory environment
  3. Competition
  4. Emerging technologies
  5. Staffing

2 to 5 professionals

  1. Staffing
  2. Changing client needs
  3. Regulatory environment
  4. Emerging technologies
  5. Competition

6 to 10 professionals

  1. Staffing
  2. Changing client needs
  3. Regulatory environment
  4. Emerging technologies
  5. Competition

11 to 20 professionals

  1. Staffing
  2. Changing client needs
  3. Regulatory environment
  4. Emerging technologies
  5. Mergers/consolidations

21+ professionals

  1. Staffing
  2. Emerging technologies
  3. Changing client needs
  4. Competition
  5. Mergers/consolidations


Courtney L. Vien (Courtney.Vien@aicpa-cima.com) is a JofA senior editor.

SPONSORED REPORT

A new line of business to consider

Technology assessments may open the door to new engagement opportunities for your firm. What is a technology assessment? How do you perform one? JofA Tech Q&A author J. Carlton Collins shows you in a detailed explanation.

FEATURE

Maximizing the higher education tax credits

A counterintuitive strategy can save taxes by including otherwise excludable scholarships in gross income.