Are CPA Firms in Danger of Becoming Irrelevant?
Source: The Marc Rosenberg Blog
The following includes excerpts, reproduced with permission, from a blog entry by Marc Rosenberg.
Twenty of Accounting Today's 2016 Top 100 Most Influential People cited “relevancy” as a major issue facing the CPA profession. The CPA industry is operating an outdated model. Here are examples. The focus below is mostly the typical local firm with annual revenues of under $15M.
How staff see CPA firms. Up until the relevancy issue surfaced, the words ‘boring, nerdy, uncool, long hours, tax season, work-life balance' and ‘low use of technology' were thought to explain the CPA industry's labor shortage. But we need to dig deeper. The issues below further deter young people from seeing accounting as a lifelong career choice.
Being a trusted advisor instead of just an accountant. Blog reader Richard M. wrote me: “If the profession continues to generate most of its revenue from selling what consumers merely need (compliance services) instead of providing what they really want (all kinds of future-looking services and planning applications), then it's clear that CPA firms are becoming less relevant.”
Firms run like factories. ‘Get the clients in and get the work out so we can quickly move on to the next client project, and the next…' Partners are too busy pumping out prodigious amounts of billable hours, leaving precious little time for firm management, strategic planning and, especially, training and developing their staff. Instead of partners averaging 1,200-1,500 annual billable hours, this number should be closer to the 500-800 range.
Over-emphasized importance of ownership. At most CPA firms, staff feel that to “make it,” they need to be owners. Not true in most businesses.
The path to partner. It typically takes 12 to 20 years to become partner, an awfully long time for bright, ambitious staff to wait. Firms need to speed this up.
Other issues discussed are teamwork, growth, tax season, and issuance of audit reports.
For the complete entry, read “Is an Outdated Business Model Threatening the Relevancy of CPA Firms?”
From The Marc Rosenberg Blog, May 9, 2016, blog.rosenbergassoc.com.