CPA tech talk: When it comes to transformation, where do you start?

Description: Donny Shimamoto, CPA/CITP, CGMA, is one of two accounting firm leaders presenting at AICPA & CIMA ENGAGE on where to begin when it comes to starting a technology-focused advisory practice. Client advisory services (CAS) are a growing opportunity for firms, so the presentation by Shimamoto and Liz Mason, CPA, is timely.

In this episode, Shimamoto takes a look back — at how firms and CPAs in general worked to integrate technology — and a look ahead — to what advisory services could look like in the future.

Also, learn the specifics on 2023 maximum contributions to health savings accounts.

What you’ll learn from this episode:

• How “tech-integrated” is different from “tech-first” and why that distinction is important to Shimamoto.
• Three key skills that firms need to become more tech-focused in their service offerings.
• The specific services, in Shimamoto’s mind, in which “deeper technical expertise” is needed.
• Why CPA firms who offer technology services can have an advantage in perception.

Play the episode below or read the edited transcript:

— To comment on this episode or to suggest an idea for another episode, contact Neil Amato at Neil.Amato@aicpa-cima.com.

Transcript:                                                            

Neil Amato: Coming up on this episode of the Journal of Accountancy podcast, we have a conversation with CPA firm leader and speaker Donny Shimamoto on starting a technology-focused advisory practice. We touch on the difference between tech-first and tech-integrated, among other topics.

Also, we will let you know the 2023 maximum contribution amounts for health savings accounts, or HSAs. That’s all coming up after this brief sponsor message.

Amato: Welcome back to the Journal of Accountancy podcast. This is your host, Neil Amato. Donny Shimamoto is joining me now on the show. Donny speaks in about five weeks at AICPA & CIMA ENGAGE as of this recording, and we are happy to have him back on the podcast. Donny’s session has the title, Starting a Technology Focused Advisory Practice: Where to Begin. He’s co-presenting with Liz Mason.

Donny, first, I’ll ask you about this transformation. It seems like it has to be one of mindset first before anything else. What can you say about a tech-focused mindset and adopting that?

Donny Shimamoto: By the way, thanks for having me back. But the whole tech-first mindset, I think it’s a change that we as a profession are going through as a whole. I really feel when we look at, for example, CPA Evolution, the changes to the curriculum, the model curriculum which I was involved in, what we’re really doing is just incorporating tech into everything that we do.

If I even go back farther to 2011–2012 when we did the CPA Horizons Project, which I was a part of that advisory group, at that time, we had predicted and we actually took tech out of the CPA core. Not that it was not part of CPA, but it was going to be basically table stakes. It was just integrated in everything that we do, so we didn’t feel that it was going to be a differentiator anymore.

Here we are almost at 2025, we’re only three years away, and you already see it’s starting to happen. Actually, as I said that I don’t know if it’s tech-first, so much as it’s tech-integrated. Like, tech needs to be in everything that we do.

Amato: Well, on that tech front, obviously, if you’re going to get more tech focus, chances are you need to have certain skill sets. Do you want to talk about what those things are that maybe firms need to be on the lookout as far as advancing skills to start such a practice?

Shimamoto: Sure. I take a lot of people back all the way back to the curriculum and the core course that is involved in this is actually the accounting information systems course. In that course, we were really learning to look at processes and model processes, we were looking at data and how to create data models and work with data structures, and then we looked at how does tech play a role in the overall strategy within an organization.

You take all of that together, and that’s the foundation for internal controls work with a business process analysis. It’s the foundation for data analytics work because you’re trying to understand how data is moving or what is happening with data throughout an organization, how is it structured, how can I then analyze it. All that is coming together from that accounting information systems course.

When I take that course’s basics and I turn it into, “What are the skill sets?”, then I normally describe it as two different things. One is the business analyst, so not the systems analysts, but the business analyst. It’s the person that, again, is looking at people with looking at, they’re looking at process, they’re looking at data or information. The second one that I always look at is the data scientist. Now, this one I’ve actually debated because I feel like if you’re super deep in the data like that stat mathematics Ph.D., that’s in the IT side, the system side, that heavy, deep technical statistics, that’s their work.

But on our side from an accountant’s standpoint, it’s about pulling the insights out of that information and then figuring out what is the story that this information is telling us. We always talk about the financial statements help tell us a story of a company while as we go beyond just a financial statement into operational data, into nonfinancial data.

That’s where the story can tell us what’s happening in the business process. The story can tell us what’s going on and what’s related or what’s not related, and that’s where you start to hear the statistics and the relationality of data start to come into place. I always look at it as initially these two: the business analyst and then the data scientists.

Then the third one that I’ve recently started throwing over that, is that of the IT auditor. How do I give assurance around a process or around a system? I don’t mean system in a technology standpoint, I mean system and a bunch of things that is working together. That’s that third lens that I think needs to come in to tell us that we can actually trust the data that we’re working with. Those are the three: business analyst, data scientist, and then IT auditor.

Amato: I’m going to ask in your work for IntrapriseTechKnowlogies, how has that lens just for you personally changed maybe over the last five years, 10 years as you go to a client and you’re applying technology?

Shimamoto: Well, it’s interesting to hear you say as we’re going to a client and applying technology. I’ll actually take you back 20 years when I founded the firm. Last year, we made our 20th year in business. When I started this out, we were doing a software or application development, and so we were very tech-focused. In fact, everything that we did was around the systems development life cycle, and that lasted for about the first five years.

Then I actually got involved with a lot of what was going on with the AICPA. I had started with the IT, what was at that point called the IT Executive Committee. I really started seeing this bigger picture that we as CPAs work with in terms of actually everything I just described. It’s beyond just the data, it’s beyond just the coding, it’s how do I use this information to make better business decisions, not just better technology decisions, but better business decisions. That’s where we started moving into the business analyst area. That probably lasted us for another five years.

Then I really got more involved in the overall strategy and really started looking at the governance aspects of things, and that’s where we really were looking at business decision-making, business strategy to get to the point of what’s now called business transformation. Not just digital transformation, but business transformation because sometimes it’s digital, which often is going to be the technology and the data.

But more often now, it changes in business practices. It’s incorporating more like agile methodologies in terms of project management, not just for software development, but in the way we run organizations. It’s using evidence-based decision-making and data and information to actually support the decisions. It’s using scenario planning and modeling to figure out how are different decisions going to play itself out.

We’ve really come quite far in the evolution from being a technology consultancy to being a business advisory area to now being a business transformation adviser. I think it’s an evolution our profession is going through at the same time as well.

Amato: Would you say that there are some firms that this path is for more than others? This path to becoming a tech-focused advisory firm?

Shimamoto: If we’re talking about becoming a tech-focused advisory firm, and by tech, and actually, again, I’m going to go where to truly become that specialist in the tech area where you understand the technology, you understand what’s available, you understand how things work together, then that deeper piece side, I’m going to say that’s maybe not for everyone.

We’re seeing a lot more firms get into it, it’s part of systems implementations. We see a lot of firms getting into systems and innovation. From the IT audit side, we see a lot more cybersecurity and the focus there, so when I look at that, I say that one you really need the deeper technical expertise, you need your CPAs working with technology people. But as we look at the broader business transformation piece, that’s where I feel like there’s a lot of opportunity for firms as a whole to work with clients through this great change that so many organizations are going through.

As we look at that, it’s not just about the technology piece, but it’s also, for example, about the HR piece and mitigating employee engagement risk, stopping this turnover, this Great Resignation that we keep talking about. I think there’s opportunity in a lot of different advisory areas. If they have the right IT skill set, if they have the right CPAs that have that stronger IT understanding, process understanding, data understanding, then I think yes, definitely we should go into the tech side.

Amato: Your session is going to cover a lot of this, it’s going to fill in a lot of the blanks maybe that we’ve set out for people who are listening, but what I want to get at is this: Once you set up this capability, you have these new service offerings, this new technology that you’re using, how do you go about positioning your firm, marketing yourself as a provider of these new services?

Shimamoto: All of these services, they’re really an extension of what an accounting firm does itself and it’s an extension of the CPA’s role as a business adviser. Liz Mason is going to be my co-presenter in that session. When you look at her firm, technically, it’s a traditional client accounting services or a CAS practice, but what she’s done is she’s woven her technology platform at her choices that are part of her platform into the way that they deliver services to try and maximize their automation. But in the end, they’re still a CAS practice.

Compared to my firm it is a little different. We tend to work more with the mid-market, so we’re more like an extension of what the firms previously would have called consulting or technology consulting, but we take a whole different spin on it by elevating it up to this business advisory level.

When I start to look at all of the differences and approaches, and that’s what I like, that’s why Liz and I pairing up on this session, is we’re trying to paint like there’s different avenues that you can go towards this, and then there’s different strategies, whether it’s around pricing, whether it’s around the way you are entering into the market. But I can tell you the one thing that is similar and what Liz and I are doing is we both position our firms as CPA firms.

The part of that is the fact that as CPAs, we have that trust, we have that higher level of perceived competency of the public. It allows, for example, me to compete with the other technology consultants and to say, “I’m not just a technology consultant, I’m a technology consultant and a CPA, so I can bring you business advice as well as technology advice and help mitigate risk.”

Amato: At the time this episode airs, it’ll be about a month from AICPA & CIMA ENGAGE at the ARIA in Las Vegas, and Donny will be there along with many other finance professionals, of course. Donny, anything you’d like to add in closing?

Shimamoto: I would tell everyone, come on out. We talked a little bit about what we’re going over here in the podcast, but Liz and I really are going to be there and we’ve spent some time deconstructing this evolution of our practices in the way we position ourselves. Come on out, come meet us in person. I know she and I both always hang out over at the conference, so whether it’s within our session or it’s just around the conference hall or anything, we would love to get to see everyone.

Amato: Thanks to CPA Donny Shimamoto for his time on the podcast. We will link to the AICPA & CIMA ENGAGE homepage in the show notes for this episode. The event has in-person and online options. In other news, the IRS late last week released health savings account or HSA maximum contribution amounts for 2023. Individuals with self-only coverage can contribute $3,850, and individuals with family coverage can make a top contribution of $7,750. Those amounts are both higher than the current limits.

You can find more details on those numbers on the JofA site. We will link to the article in the show notes. That’s our episode for Thursday, May 5. Thanks for listening to the Journal of Accountancy podcast.