With the economy reeling from the coronavirus pandemic, accountants find themselves in an unprecedented position to help create a new normal for both themselves and their clients. We asked the leaders of several CPA state societies to share how they are seeing their members respond to these challenging times, what guidance they are providing them, and the impact this crisis will have on the profession now and into the future.
What are the biggest challenges for accountants at this time?
Anthony Pugliese, chief executive officer, California Society of CPAs: For those in public practice, CPA firms are not only helping their clients but their own practices to stay viable. Meaning, what CPAs are learning to help their clients minimize loss and expedite financial recovery is also helping their firms stay economically viable by using the same actions. Another challenge CPAs in public practice face is showing more value to their clients in these times of crisis — thus the importance of remaining calm, objective and open-minded and helping their clients with the new opportunities that the [Coronavirus Aid, Relief, and Economic Security] Act or state government economic programs could offer their organizations.
CPA firms and CPAs in industry are being provided, almost on a daily basis, guidance on tax issues coming from the IRS and other tax authorities because of tax issues that are not only linked to updates regarding tax filing extensions but changes in federal, state and local tax regarding payroll tax, real estate and property taxes, and sales tax. All three levels of government have various levels of modification or clarification that are in motion that CPAs will need to continue to monitor for themselves, clients and companies they support.
Tom Hood, president and CEO, Maryland Association of CPAs: It is a perfect storm of four converging trends:
1. The COVID-19 crisis created urgent needs from small businesses. The biggest challenge at this moment is the urgency of helping small-business clients get access to the relief programs in the CARES Act and the Paycheck Protection Program in particular, while in the middle of tax season. This requires firms to pivot to consulting immediately as advisors to help those businesses make it through the shutdown. Things like cash flow forecasting, financing option review, and helping businesses go online are major opportunities for firms right now. Next will be remote auditing, supporting relief loan forgiveness, and interpreting more relief packages will continue through the spring and summer.
2. Being thrust into “work from home.” While many firms were exploring flexible and remote work, the immediate shutdown forced it, and firms are scrambling to adapt and adopt new ways of working and new tools like Zoom, Skype and Google Hangouts.
3. Rapid acceleration of moving everything to the cloud. Many firms are reporting challenges with Zoom and other visual communications systems not working well in Citrix environments. This means many firms will reconsider and speed up moving more systems to the cloud as they come up for air. Outsource and client accounting services on all cloud environments will excel in this environment.
4. Workflow.
Joanne Barry, executive director, New York State Society of CPAs: Understanding and communicating their value. CPAs need to be proactive in client interaction and to be the facilitator of meaningful and swift action to save their clients, to save jobs, and to save Main Street businesses. They have the tools to help clients pivot to new opportunities and/or to help them survive short-term business challenges. CPAs are the engines behind thrusting their clients into the future and are the bridge to help them get where they need to be. Now more than ever, clients need their CPAs. The help CPAs provide now will translate into lifetime client retention.
Jennifer Briggs, president and CEO, Indiana CPA Society: I know we always say keeping up, but this is incredibly true right now. CPAs helping their clients and their companies need to have fast and accurate information, and it’s coming at them at a furious pace. Unfortunately, many small businesses are not prepared for such a sudden change in operations, and the accountants will be the ones to see them through this time by acting quickly under rapidly changing circumstances.
Amy Pitter, president and CEO, Massachusetts Society of CPAs: This is always the hardest time of year for accountants, and it’s not unusual for members to be working 70 to 80 hours a week during a normal busy season. COVID-19 has added new challenges to an already busy time, which has made this tax season more complex for both our members and their clients. Specifically, members have had to quickly pivot to become experts on rapidly changing information and legislation, so they can advise clients at a time when their guidance is needed the most. This is what we’re hearing:
Most of our members have the technology to work remotely, but they are not set up to do so seamlessly. Picture an accountant at the office with top-of-the-line printers and scanners and two or three large monitors. Now, picture that same accountant at home with their kids, partners and roommates doing the same work on a laptop and home all-in-one printer/scanner. It’s not the same situation, but accountants have had to adjust quickly to their new, temporary working environments. Adding to this, accountants can’t meet face to face with clients right now, with many relying on video meetings or phone calls in its place, so the client relationship has also had to adapt to this changing time.
Speaking of pivoting, accountants must help their clients quickly figure out how to navigate the benefits and new obligations of the CARES Act, in addition to doing all their normal work during the busiest time of year. To further complicate things, the CARES Act was promulgated without a lot of guidance available immediately because it was feared that money would run out quickly, so the first filers might be the only beneficiaries. The biggest challenge for accountants in this situation was for them to have the most accurate, up-to-date information to help their clients.
While the long-term impact of this situation has yet to be seen, accountants who are in a niche that is disproportionately impacted by the virus may suffer if those clients go out of business. At the very least, these clients may have short-term issues around viability and ability to pay their bills, so accountants need to prepare to handle those situations.
Pugliese: Using the stimulus relief program and explaining the components and how to interpret the various provisions is another challenge many CPA firms face at this time. For those accountants, as members of business and industry, keeping their own companies afloat and taking advantage of the stimulus relief program and other offerings available from strategic partners like banks to assist their business community will be a major challenge, as will helping organizations stay productive and adjusting to the new normal that we as a nation face.
Do you see any opportunities emerging for accountants?
Barry: Absolutely. Change creates opportunity. CPAs that pivot will benefit from enormous opportunities. Now more than ever, the skills of a CPA are needed on both sides of the spectrum. They can help clients refocus their portfolios to take advantage of new opportunities in emerging industries that are a result of the unfortunate circumstances of the pandemic. Businesses themselves will pivot to embrace new product lines in the health care industry, biotechnology, remote technology and e-commerce software development. They will need their CPAs to develop strategies and roadmaps to assess risk and opportunity. On the other side of the spectrum, clients that are struggling will need help with mitigating cash flow risks, quantifying the impact of losses, and applying for credit. They will need help navigating the federal support available. CPAs are the constant in the life of a client in good times and bad.
Hood: Lots of opportunities, like continuing to create a dynamic and flexible culture based on remote work, and imagine the savings in physical locations. Creating strong bonds with clients based on continued consultative services along with increasing compliance demands in reporting and analysis post-COVID. Increasing the use of technology to save your professionals time, add deeper analytics and consulting capabilities, and train your whole firm on these new skills.
Pugliese: Coming together as a profession and supporting economic recovery as soon as possible. Give sound advice to clients and employers on how to utilize the stimulus relief package to protect their businesses and employees. There are opportunities for accountants and their clients to adapt to new technologies for remote services such as audits, tax and advisory work. Help prevent cyber risk and fraud, which always rises in crisis. And finally, ensure effective internal controls and security protocols are in place to protect organizations.
Pitter: This is an opportunity for CPAs to truly position themselves as the trusted business advisor and the go-to resource for business owners. We’re seeing this with firms of all sizes; business clients need them now more than ever, and they trust them — just as they would trust a partner — to guide their businesses through this uncertain time. It’s prime time for CPAs to differentiate themselves from the “tax professionals” of the world, and to show the true value that comes with the CPA designation.
Adding to that, the complexity and urgency of figuring out the benefits and obligations of small businesses under the CARES Act will create a great deal of work for accountants. Similarly, clients who have been disproportionately impacted by the virus will need their most trusted business advisor to help them manage cash flow and develop a path back to viability. On the other hand, it isn’t clear that the money will be there to pay fair value for services, so some of this might be an exercise in building goodwill.
Briggs: We know the skill set in accounting is varied and it is a trusted role. This is the time to let the communications and strategy skills that so many CPAs possess shine. There is opportunity to help in the short term, but also to prove long-term value and help businesses not only cope but come out of this more resilient and flexible than ever.
What aren’t accountants doing that they should to make it through the crisis?
Briggs: Honestly, I’ve seen only really positive actions by the members of our organization. Most are thinking long term, understanding their roles in business and in their communities, and working on all of the urgent issues while also doing their best to create scenarios and plan during an uncertain time.
Pitter: Right now, the most important thing anyone should be doing is staying healthy. Our members have been designated an essential service, and many of them need to go to their offices to check mail, scan client documentation, and (possibly) to work in solitude to ensure accuracy and high standards continue to be met. To beat this thing, we must socially distance, sleep right, eat right, and drink lots of water, and I’m not sure how many accountants are taking that advice during the avalanche of work they are trying to manage right now.
Everyone is facing tremendous financial pressure now, including accountants whose cash flow has been decimated by the economic shutdown. A lot of them are worried about how they are going to get paid for the work they are doing, especially on the PPP where issues around “agency” and payment are complicated. I hope our members can focus on showing their value to clients and playing the long game, instead of focusing on this year’s cash flow.
Hood: Starting to look ahead for future opportunities.
Pugliese: Everyone is doing the best they can during these difficult times. Most of us have never seen something of this magnitude in our lifetimes. It’s global and far-reaching, impacting every single aspect of business and society. No one is off limits. It will take a global village to recover. We are each part of something greater than ourselves, and more than ever we need to focus on being human and emphasize compassion over commercialism
Barry: They can’t look back and they can’t stay stuck in the present. The successful firms will make it through this crisis because they are looking into the future and defining their services proactively. Those that have become experts on the federal and state guidance that is available are providing that value to clients already. Steps they took to move into the future pre-pandemic are serving them well now. They embraced technology, and a remote work environment. For smaller firms that may not have the resources they need, their state societies and the American Institute of CPAs have developed a wealth of resource materials for them.
What should accountants be doing to prepare for the next few months and beyond?
Pitter: This is also an opportunity for firms to make important technology and cultural changes that allow staff to work remotely after this pandemic is over. In the aftermath, I foresee a clamoring for greater flexibility to work remotely, as many staff will realize that they can do their jobs from home and have a better work-life balance (and a much shorter commute). Firms will have to adapt if they want to find and retain top talent, and the ones who do this will have the advantage.
Additionally, firms who are engaging in advisory services now should figure out how to make that a normal part of their offerings going forward, including pricing, independence and niche. This all goes back to CPAs using this time to truly position themselves as the trusted business advisor and the go-to resource for business owners, which shows the value of the CPA designation. Firms who succeed at this are looking at greater success in the future.
Briggs: They should be looking at where the holes are in an organization’s ability to work remotely, remain sustainable, manage cash flow and that kind of thing. There is no guarantee that this will just “end” or that there won’t be similar events this fall. I hope things go back to some normalcy quickly, but seeing what has happened over the last few weeks, accountants need to be able to challenge themselves and their companies and clients; they need to be very transparent about near-term and long-term decisions that need to be made. And when we do get back to “normal,” it will look different; accountants will need to be persistent that these important questions get answered. There’s no way to fortify a business entirely against an unexpected natural disaster, but now that we’ve seen something as unprecedented as COVID-19’s impact, the profession has a big part in helping mitigate risk in the future.
Barry: CPAs need to help their clients manage through the crisis, but more importantly, they need to lead their clients through the crisis — to help define for them a new future of business opportunities. To do that, CPAs need to devour federal and state guidance, understand supply chain issues, define long-term planning and risk for themselves and for their clients, embrace technology and remote work environments, and stay connected to their state societies. Never before have I seen such a network of community through our committees and through our online platforms than I have over the first weeks of the pandemic. Associations will always provide a sense of community. Right now, the ability to provide that community virtually is a tremendous resource.
Pugliese: We will need to adjust to virtual business models using all the technologies and communication platforms needed to fulfill our roles as accountants and financial professionals, and also maintain our ethical standards throughout the process. A lot of firms are having to cancel internships because schools and workplaces are virtual right now, but the work will be there when COVID-19 ends. Firms must focus on keeping valuable staff, even if they are not fully engaged right now, and continue to make good hires in the absence of internships.
Hood: Once we get through the virus shutdown and taxes are done and CARES relief loan applications and funds are flowing, we will turn to supporting calculating loan forgiveness and cash flow impacts where appropriate for small to midsized businesses. Putting the business plan together to account for all of the new areas from loans to expense deferrals (rent, health care, payroll taxes, etc.) and even renegotiated loans, leases, etc., will be needed by many clients. Then the next wave will be preparing for the tax impacts of all of this into the 2020 tax season and beyond.
Next is to help businesses plan for what’s next. What trends are now shaping the “new normal?” More business going online needing e-commerce? New consumer buying habits? Will social distancing and limitations on gatherings continue after this crisis? This will cause an increased need for new business strategies and consulting at an accelerated pace. Finally, continue being even more human. Period. Taking care of your team and your clients at a deeper level will continue to be a major differentiator, especially in a post-COVID world.
How, if at all, do you see firms and the profession changing as a result of the pandemic?
Hood: I really think this is an “inflection point” that will cause fundamental shifts in how firms are run and the services they provide. I am sensing that the business community recognizes the important role of CPAs, finance and accounting professionals as we stepped up to be “first responders” to this financial crisis. Every one of these relief programs at the federal and state level are being implemented through accounting, tax and payroll systems, which our profession is uniquely qualified and even “licensed in.” This will accelerate the “most trusted advisor” role.
Second will be a permanent impact on firm cultures [that] will learn that remote work is here to stay and a focus on people and flexibility is not just for this time of crisis but a much better way to run our organizations.
Third is that it is time to automate everything we possibly can, all of those “hard trends” around regulations, demographics and technology are truly hitting us at an exponential pace every bit as much as this virus. The only answer is to embrace these trends and deploy new ways of dealing with them, which undoubtedly will point to more technology supporting us as “most trusted advisors.”
Pitter: It all depends on how the market changes. Firms and members are working nonstop to help their clients right now, and the aftermath of this pandemic has yet to be seen. Accounting is a complex profession, and like most changes, the brunt is felt by sole practitioners. While I could see some questioning the road ahead, we must remember that this is also a profession that has more jobs than qualified applicants — and there’s plenty of work to go around. Times like these prove that we need all the hands we can get. So, to those who may feel discouraged or concerned, I encourage you to give it time and to keep putting in the effort, because the profession still needs you.
Pugliese: A couple of ways: You will see wider use of work-from-home models, you will see wider use of online learning to maintain CPE and skill sets, you will see deeper investments in technologies to support this, new ways to maintain the human side of the equation if we are not getting together or this recovers quickly — how do we compensate for this lack of human contact? We have to come up with innovative new ways of coping, both personal and professionally. We can’t lose our humanity or identity, but we also must maintain our social fabric, which is partly through the business sector.
More than ever, accurate, real-time data is becoming more and more critical in making business decisions.
and CPAs can hopefully be in the middle of this transformation.
Barry: The profession has been thrust into a virtual world that is dependent on enhanced technological competencies. Embracing technology will change the landscape around how both firms and their clients operate. Working remotely will become part of the new norm, which will impact business operations in ways we have not seen before. The domino effect will impact commercial real estate, travel and related industries, and will force efficiencies, the acceptance of altered work environments — seen as a positive way to do business and not as a band-aid solution to a problem.
Pitter: I do see firms adapting their technologies and cultures to make working remotely an option for staff. Staffing continues to be the top issue for firms across the country, and offering a flexible work environment, especially to staff who have proven they can do it successfully, is one way to demonstrate that you trust and value them. Firms may have been forced into this situation during COVID-19, but I feel that it’s a move in the right direction to keep and retain top talent.
Lastly, after this pandemic, I hope CPAs are seen as advisors that businesses can’t live without. We’re hearing from firms of all sizes who are being called upon by their clients to help them navigate this most critical time, and it’s a testament to the value CPAs provide year-round. They are an essential service because of the simple fact that our economy needs them, and we trust them to make the right calls. I hope the profession uses this to promote CPAs, and their value is widespread — seen, felt and heard.
Briggs: I see more parts of the profession stepping up to implement the changes needed for businesses to thrive in this fourth industrial revolution. I think those who thought they could bide their time will realize that making changes in good times is much much easier than making changes hurriedly in a crisis. I feel strongly the profession will come out of this better than ever and will provide the guidance needed for their clients and companies to do the same.
