At the end of 2019, few people could have imagined what the coming year would bring, so it’s with some trepidation that we present our annual report on what to expect in the next 12 months.
Nonetheless, the data from our survey of a wide range of firms (see
What trends should accountants most keep an eye out for in 2021?
Mark Koziel, president and CEO, Allinial Global: I see a number of trends in 2021 that I think are directly related to the pandemic and the opportunities it has created:
- An increase in firms ready to sell. Firms with more senior owners will want to cash in and get out, rather than practice in this new environment of remote working and technology-driven relationships.
- An increase in outsourced accounting. Small businesses will continue to ask for help in accounting and technology so they can focus more directly on their business.
- CPAs as the most trusted advisor. Now it’s time to capitalize on that status and create long-lasting client relationships by building in advisory and support into all client engagements with subscription pricing.
Amy Pitter, president and CEO, Massachusetts Society of CPAs: No surprise … it’s still technology. Specifically, I think the trend will be to use technology to automate routine functions and compliance functions and use that freed-up capacity to offer value-added advisory services.
Mark Stewart, president, National Conference of CPA Practitioners: Be prepared for your clients to not have sufficient cash flow to cover their tax liability this coming April 15. Remember, clients are likely to have taken advantage of extended unemployment benefits and to have dipped into their retirement savings. Very often clients do not have sufficient tax withholding from these types of income streams, and will not be prepared for the April 15 liability as a result. Practitioners will be doing more offers in compromise and installment payment agreements than ever before.
Jennifer Briggs, president and CEO, Indiana CPA Society: It’s two trends in one: technology and expanded services. Often, new technology allows for expanding services to clients. I know the Paycheck Protection Program loans, extended tax deadlines, etc., were difficult, but now is the time to invest in the technologies you’ve been talking about, to make the structural, hiring or upskilling changes you need to make to expand services to your clients. Your clients looked to you for help in attempting to future-proof their businesses during a chaotic time. Now, let them know what else you can do for them.
Anthony Pugliese, president and CEO, California Society of CPAs: The first trend I see involves diversity, equity and inclusion and ESG/corporate sustainability disclosures/nonfinancial reporting. Already driven by well-intentioned social and environmental factors, sustainability is also a compelling business strategy, where corporate responsibility, ethics and financial performance intersect.
Tom Hood, president and CEO, Maryland Association of CPAs: The great COVID Accelerator, which is accelerating all of the trends happening before COVID. This means that all of the trends around digital transformation, client accounting, e-commerce, visual communication, cloud accounting, data security and big data will continue to accelerate and those who wait risk falling behind. The trend of the CPA/professional accountant as the most trusted advisor has also accelerated as a result of COVID.
Joanne Barry, executive director and CEO, New York State Society of CPAs: Two trends that had been building for years before will see a major acceleration in 2021: the rise of remote work and the growing emphasis on diversity and inclusion issues. …
The workforce has been liberated from long commutes and is defining a new work-life balance that has been elusive thus far. A focus on remote work will open businesses to a pool of new talent beyond the borders of a traditional commute. …
Similarly, the intensity of this year’s protests for racial justice has caused businesses everywhere to become more reflective about their role in this fight, and accounting firms are no exception. … Actions to defeat systematic racism seem weightier and more purposeful this time, which will make them better poised to outlast the moment and push for real change.
Pugliese: The second trend I see involves pandemic-triggered business model transformations. Businesses and employees have had to adapt significantly in the COVID-19 era, and the same is true for CPAs and firms. Most accountants have moved from corporate environments to home offices, further blurring the line between modern professional and private life and adding new challenges to the ever-elusive work-life balance. Moving to a virtual environment is “renorming” everything we do.
What do you think will be the most surprising thing for accountants in the coming year?
Briggs: The most surprising thing for accountants in the coming year will be their comfort level with uncertainty. … Accountants have thrived in 2020, and while I desperately wish COVID had never happened, a huge takeaway is the resilience and flexibility shown. I think we will all be surprised by our ability to swim around in uncertainty like we’ve never done before.
Pugliese: We will see an accelerated shift from traditional services, like audit and tax, to consulting services, where advising will become a key driver for firms and CPAs. … Some upskilling within the profession will be necessary for us to adapt and move into this space. Still, the demand is already there, and CPAs are well-positioned to expand advisory services in these areas.
Stewart: As practitioners, we have many clients that abandoned their homes and moved to different cities and different states. We will all be facing how to determine residency for purposes of preparing a client’s state tax returns. … Furthermore, all states and localities are in desperate need of income streams due to lost tax revenue combined with emergency spending during the pandemic. Expect states as a result to be very aggressive in residency cases.
Barry: Human capital will be weighed and valued differently. Success is no longer measured by hours behind a desk in an office environment, but instead by the volume and quality of work produced. Prior to the pandemic, there were concerns that a mass migration to virtual would utterly wreck productivity and alienate clients. Yet, here we are nearly a year into just such a mass migration and we observe that the world has not yet ended. … The pandemic has highlighted the vital link between human physical and mental health and business success.
Pitter: Congratulations — just as you were getting used to hiring and onboarding millennials, your new hires will now be members of Gen Z. You might like them. They are more like older folks in that they really value job stability; also, they are very tech-savvy and in fact are more likely to turn to technology than they are to people to solve problems. On the other hand, they are known to have very short attention spans and need to be challenged. They are also very entrepreneurial, so it is important for them to understand the many ways that accounting is an entrepreneurial profession.
Koziel: Many firms that I’ve spoken to have expressed their concern that 2021 will be the time they feel the pinch and see a downturn in their business. I do think there’ll be concerns over additional small-business closings that affect smaller firms. But overall, I think the surprise will be that once again, the profession will come out of this relatively unscathed. 2020 is still showing flat or modest growth for many. 2021 will probably be the same.
Hood: How we will continue to play a significant role in helping our nation and economy recover and grow. The accounting profession can make a huge difference due to our commitment to the public interest, and this is our time to emphasize that in an era where so many of our institutions have lost the public trust.
What one piece of advice would you give firms going into next year?
Hood: Keep moving forward and keep focusing on the human dimension of your teams and your clients.
Pugliese: It’s vital to maintain an open, growth mindset and be flexible and adaptable to change in times like these. There are new opportunities to expand business in this climate to help clients and employers meet their goals. Use this time as an opportunity to invest in technology and your people.
Pitter: I’m going to advise firms of all sizes to be aware of the mental health challenges you and your staff may be facing in these difficult times. … Create an atmosphere where your staff feels like they can have those difficult conversations, publicize your employee assistance plans, and encourage your leadership and management to listen and look for signs of extreme stress or burnout and to offer solutions.
Briggs: Listen to your people. … They have ideas about what the firm can do to make day-to-day life better in your firm or organization. We have all learned lessons during this time; listen to your people and find out what they’ve learned. Find out what they want and how the culture of your firm can get better and not just get by after the tumult of 2020.
Koziel: Create a plan for now and well into the future that handles flex work, remote client access, and having a completely virtual office experience. Those firms who embrace the idea of flexibility between remote and in-office experiences will win the recruiting wars well into the future. Those firms who fight it will struggle to attract and keep talent. Leadership will need to carry a strong message of flexibility.
Stewart: It is unlikely that we will get clear answers to many key issues before the first group of business tax returns come due on March 15, 2021. … Be prepared, and prepare your clients, that they will unfortunately be stuck going on extension in 2021 in many instances, despite our best efforts as practitioners. Schedule your workflow accordingly and have this discussion with your staff, and clients, now.
What’s one important lesson the profession should take from the coronavirus pandemic into 2021?
Stewart: Always be one step ahead of the technology curve, not one step behind. … Whatever the next technology trend is, embrace it … do not fear it. Embracing it might be a lifesaver in the future, as it proved to be when the pandemic broke out.
Koziel: Preparedness. Being prepared for the unknown is absolutely critical. Firms adjusted quickly, but some struggled in the early days of the pandemic. Having a firm that is purely virtual so the firm can operate no matter what condition is essential. There are so many firms who learned that lesson from natural disasters over the years. Now, as a profession, we all know how important this is.
Barry: “Business as usual” will become an increasingly outdated concept because nothing about business this year is even close to usual. This is unlikely to change much next year. As such, the most successful firms will be the ones that value adaptability, flexibility and outside-the-box thinking. These are the qualities that must be emphasized in order to survive a world of rapid change. … There is no going back, not even at the end of this terrible pandemic because, by then, the landscape will be filled with players who chose evolution and became far more suited to the environment than those who waited for things to go back to normal.
Pugliese: If we’ve learned anything this year, it’s that being prepared can help mitigate the adverse effects of almost any situation. CPAs should play a key role in ensuring that clients and organizations have a preparedness plan before a crisis strikes, which helps with recovery efforts.
Briggs: We know — really know — now that we can work effectively in a remote environment. Use that knowledge to your hiring advantage. If you truly want diversity in the people you hire and the best and the brightest, you can recruit from places you haven’t previously recruited.
Pitter: In general, the profession is doing very well during the crisis, but the firms that are doing the best are the ones that have had the most open and progressive mindset. Those who have been open to new technologies were faster out of the gate in adapting to working from home and working remotely with clients. Those who saw themselves as business advisors and consultants have been able to pivot to the real needs of their clients during these difficult times.
Hood: The most important lesson is that we learned how to be even more human in this crisis. We learned how to support our clients and our teams in an instant work-from-home environment. We learned how quickly we could understand complex and evolving legislation and adapt to be able to support our companies or clients even without clear answers by trusting our people and their professional judgment. Let’s be sure to take that with us into the post-pandemic world, hopefully just around the bend.
