With the world embarked on a period of extreme uncertainty, the trust people have in the accounting profession is a huge advantage — but so is its much less heralded capacity for innovation, according to leaders at the American Institute of CPAs.
“What we bring to the table as a profession is this incredible reputation of trust, in what we do, how we give advice, our willingness to do the right thing, to volunteer and make a difference in the communities where we live, and so much more,” president and CEO Barry Melancon told attendees of a keynote panel at the institute’s Engage 2022 conference, held this week in Las Vegas. “We could not be better positioned as a profession — the thirst for that integrity has never been greater in any part of the world. It’s one of those hallmarks that I hope you talk about with clients and employees. We have to leave that to the next generation of accountants.”
“We live in a world that is devoid of trust, and people are dying for it, and we as a profession can provide that. We can fill that gap,” concurred recently installed institute chair Anoop Mehta. “I have a sign in my office that says, ‘Trust is hard to win, and harder to win back.’ Everything we do should be focused on trust.”
One important way to begin to fill that appetite for trust is by unleashing accountants’ capacity for innovation — a capacity that Melancon insists they have been demonstrating all along, no matter what stereotypes may be claimed about the profession.
“Whether the world puts ‘innovation’ into their definition of our profession doesn’t matter, as long as we understand that we have been innovative and are committed to being innovators going forward,” he said. “If you think about your career and the milestones in your career, you’ll quickly realize that innovation has been a part of your career — it’s not something we shy away from.”
Melancon and his fellow panelists highlighted a number of areas where accountants have opportunities to combine their well-known integrity with both their entrepreneurial spirit and their creativity to thrive financially and bring value to their clients and their communities.
Building and leveraging trust
Interestingly, an area with a longstanding reputation as one of the profession’s most traditional — audit — is actually a hotbed of transformative developments these days.
“We have to innovate in the audit space,” said Sue Coffey, the CEO of public accounting at the Association of International Certified Professional Accountants, highlighting a number of ongoing developments, ranging from an almost decade-long effort by the AICPA and auditors to identify and remedy areas of weakness in different parts of the audit, to a new initiative the AICPA is working on with the government to try to create a simpler alternative to the single audit for nonprofits. She predicted as many as 30,000 new single audit engagements in the near future, thanks to the flood of government money into the sector during the pandemic — and a serious dearth of auditors able to perform this unique kind of engagement.
Most important, she highlighted one of the two biggest current developments in the field: “We’re sponsoring the Dynamic Audit Solution — a technology-based tool that doesn’t automate what we do now, but reimagines the audit based on the technology we have now,” she explained. Being built by a consortium of the institute, CPA.com, CaseWare and a large group of major firms, DAS promises an entirely new approach to a century-old service.
She also pointed to the other headline development in the field: “There is huge opportunity beyond the audit of the financial statement.”
SOC engagements, for instance, are rapidly growing — but the area of expansion on everyone’s mind is the potential in the environmental, social and governance arena, where the profession is engaged in helping set reporting standards at an incredible pace, according to Melancon.
“What took us decades to achieve in accounting is happening in just a few years in ESG,” he explained, adding that the five key elements of ESG reporting all touch on the accounting profession: controls in business; reporting standards; telling a story for decision-making; external reporting; and assurance and attestation that says this is something stakeholders can rely on.
Given those strong connections, ESG reporting and attestation represent a natural fit for the profession, and a major new opportunity.
“This is really our space to grab,” said Mehta. “We’re not looking at the short term, we’re looking at long-term sustainability.”
Audit isn’t the only area where accountants are leveraging innovation and integrity, though.
Client accounting services, the fastest-growing offering of the past decade, is transforming accounting firms across the country — and being transformed itself, as it moves from what CPA.com president Erik Asgeirsson described as CAS 1.0 to CAS 2.0, and the “A” shifts from “accounting” to “advisory.”
“We’ve launched CAS 2.0 to help firms build out the methodology for building out a CAS practice,” he explained. “CAS 1.0 is really financial CAS, where there’s a lot of automation of a company’s back-office work. And then you move up the value chain in CAS 2.0. That’s about augmented work — the CPA leveraging the data from the cloud accounting platform and providing insights from that and living up to the ‘most trusted advisor’ name.”
