Forecasting the future for accountants has rarely been more difficult, according to American Institute of CPAs president and CEO Barry Melancon.
"The profession today is in a very unpredictable landscape. Young people have never known anything but this environment," he told attendees of the AICPA Executive Roundtable, a gathering of technology executives held in New York City last week. "For most people alive today, they've never experienced a world with as much unpredictability and uncertainty as today."
The upcoming presidential elections are a perfect illustration, with a huge range of possible outcomes on the tax issues that are of key concern to accountants.
"If you assume a Republican Senate and a Democratic house and just say either a Democratic or a Republican White House, what happens from a tax perspective is totally different from what happens if you have a clean sweep of either party," he said.
What's more, the likelihood of closely divided government — with the most common current predictions calling for the Republicans to have narrow control of the Senate and the Democrats to have narrow control of the House — makes resolving the large number of what Melancon called "dicey tax issues" even more difficult.
"This is a danger point for our country," he said. "We live in a world where the difference in who controls the House or the Senate will be a very narrow margin. … That makes managing government very difficult. Our government is based on compromise, and there isn't a lot of room for compromise now in Washington."
Because of that division, Melancon and the AICPA tax team don't think there's a very high prospect of major tax legislation; instead, there will be more restrained activity based on the priorities of the party with more power.
He noted, for instance, that a clean sweep by the Democrats would lead to a focus on the state and local tax deduction, and that corporate taxes would go up. It would also likely lead to stricter regulators. "There's certainly a lot of concern in the profession about the regulatory environment with the Public Company Accounting Oversight Board," which has been extraordinarily active over the past two years.
On the other hand, if the Republicans were to make a clean sweep, Melancon suggested that they might look at the SALT deduction (though to a lesser extent than the Democrats), but that their main priority would be extending the expiring provisions of the Tax Cuts and Jobs Act, and particularly the R&E credit.
Outside of tax, Melanon did see one area where divided government might not matter as much: artificial intelligence.
"AI legislation is probably one of the most bipartisan issues in D.C.," he said. "It's likely we'll see something in that space. What it is will depend on who's in office."
Despite the bipartisan interest, however, he is skeptical about the effectiveness of governments in regulating AI, given the international scope of the technology and the speed with which bad actors can advance it.
A changing profession
Changes to tax laws are only one small portion of the disruption that accountants face, according to Melancon.
"There is a lot of true innovation and transformation of what accounting's all about," he said. "The profession's footprint has changed from accounting, audit and tax to a much broader notion of a business information set, and of who the stakeholders are. That group is much broader today — it's investors and entrepreneurs, to be sure, but also employees and regulators and society at large."
"What an accounting firm is is changing, as is what is the finance function in corporate accounting," he added.
The ever-quicker pace of technological transformation — with AI in particular — is having a major impact.
"Technology and AI will affect jobs; I'll be honest about that," he said. "It's going to move people around. It's going to affect entry-level positions and how we get people into higher positions quicker."
Also having a major impact is the pipeline crisis, with not enough young people choosing to work in accounting.
"Where is the next generation of professionals going to come from?" Melancon asked. "Some of the capacity will come from technology, but the biggest number of young people is in the continent of Africa as a whole, and in Saudi Arabia — it's a smaller center, but it's the youngest population center of any part of the world."
Hard demographic trends like those, and the constant evolution of technology, require flexibility and proactivity on the part of the profession.
"You have to look at efficiency, automation and growth, because that's what you can manage and change," Melancon advised. "You can't change the other factors."
Even with all those pressures on it, however, the profession has plenty going for it.
"The past four years have been the best run for accounting firms in a long while, no question," Melancon said. "If I randomly brought in 10 CEOs or managing partners, nine out of 10 would say that their most profitable year was either 2022 or 2023. And for the others, it's still some of their best years ever."
Much of that is due to the circumstances of the pandemic and the economic changes surrounding it, but credit must also go to the values of the profession.
"The value of lifelong learning and competency and integrity and leadership skills and all those things — they remain valuable," Melancon explained. "This is what the profession is all about."
"In upturns, the trusted advisor is critical; in downturns the trusted advisor is critical," he concluded. "The reason why we're trusted and why the profession is successful is because we help people get through the challenges that they face."
