Melancon: Extraordinary Changes on Horizon for CPA Profession

In this blog entry, Marc Rosenberg discusses Barry Melancon’s “stunning” presentation to Rosenberg’s Chicago roundtable. Melancon, CEO of the AICPA, discussed the state of the CPA profession. Here are some excerpts from the blog entry, reproduced with permission:

• We won’t recognize CPA firms in 10 years because of the merging of humans and technology that will be taking place. Like most innovations, the changes will occur first at the Big 4 and several mega-regionals, but it will eventually trickle down to medium and small local firms.
• The current buzzwords for CPAs are blockchain, artificial intelligence and data analytics. Today, most of us cannot properly define these terms. Tomorrow, they will be as familiar to us as debits and credits. 
• The coming [technological] innovations will make past conquests pale by comparison. Examples: Auditors will test entire populations of data rather than sampling, and in a fraction of the time. Replacing the inevitable revenue loss from traditional audits will be a dramatic increase in cybersecurity audits, which will largely be annuity-based.
• Says Melancon: “The need for trust in all areas of our society will increase and thus, there will always be demand for attest work. It will simply take a different form in the future.”
• The Big 4 are already investing hundreds of millions of dollars [in] the new technology. “My greatest fear is that the enormous cost to acquire this new technology will further widen the gap between the way the large and smaller firms operate,” said Melancon.
• Technology advances will reduce — not eliminate — the need for staff labor. An increasing number of new hires at larger firms are now non-accounting graduates in technology, engineering, etc. According to Melancon, the shape of CPA firms’ organization structure will move from its present triangle to a diamond shape with a bulge in the middle.

What you just read is so extraordinary that it will likely cause CPAs, who some say were born conservative and skeptical, to either deny the reality of these changes or adopt [a wait-and-see approach]. Says Melancon, “My greatest fear is denial by CPA firm partners.”

For the complete entry, read “CPA Industry: Stunning Update from Barry Melancon” 

From The Marc Rosenberg Blog, January 22, 2018, blog.rosenbergassoc.com.