MACPA Statement // Spring 2023

MACPA’S

STATEMENT

SPRING 2023

‘The fog clears’

FUTURE OF FINANCE

ALSO INSIDE

Experiential learning: An evolution in how knowledge is obtained by prospective CPAs

Page 12

Adapt and prosper: The future for accounting firms

Page 22

What You Can Expect From The New MACPA.org

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2022–2023 BOARD OF DIRECTORS

Herbert J. Geary III, CPA, CGMA Chair

Christine Aspell, CPA Vice Chair

Thomas White, CPA, CGMA Secretary/Treasurer

Lexy Kessler, CPA Immediate Past Chair

Karl Ahlrichs, SHRM-SCP, SPHR, CSP

Maxene M. Bardwell, CPA, CIGA, CIA, CFE, CISA, CITP, CRMA

Elise Brouillette, CPA

Michael Kimbrough, Ph.D., CPA

Kimberly Mustard, CPA, CGMA

Dave Ryan, Esq., CPA (retired)

Brett Sanders, CPA

Savedra N. Scott, CPA, CGMA, CrFAC, MSA, MBA

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Bill Sheridan, CAE CCO

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CHAIR’S COLUMN

Legislative volunteers help change the narrative of what a CPA does

BY HERBERT J. GEARY III, CPA, CGMA / PARTNER, UHY LLP

There were no legislative emergencies — no rush to raise revenue by enacting a sales tax on professional services, no misguided attempts at tort reform that would raise the cost of doing business in Maryland.

The MACPA and its legislative volunteers keep a close watch on the General Assembly’s docket each spring on the off chance these hot-button issues should surface. Thankfully, all was quiet.

No emergencies doesn’t mean no action, though. In fact, this might have been the MACPA’s busiest legislative session ever.

Our tireless volunteers provided testimony for an astounding 21 bills this year — an all-time record. They offered comments on bills related to corporate tax rates and reporting issues, estate taxes, income taxes, the electronic filing of tax documents, and proposed financial literacy education in public high schools. Some of their most impactful testimony centered on Maryland’s Office of the Comptroller.

• The MACPA submitted testimony in support of a properly funded budget that will allow the Comptroller’s Office to retain its current team, hire additional qualified personnel by offering competitive salary levels, and allow for a more modern IT system.

• We supported legislation that would create a “21st Century Financial Systems Council,” which would be tasked with improving the operations and efficiency of the state’s financial systems.

• Legislative volunteer Jeff Lawson, chair of the MACPA’s State Tax Committee, testified in support of a bill that would create a Taxpayer Advocate Division within the Office of the Comptroller “to assist taxpayers and their representatives in resolving certain taxpayer problems and complaints and represent taxpayers’ interests in a certain manner.” Members of the MACPA’s Tax Community have supported the creation of a Taxpayer

Advocate in Maryland for years. This year, they finally had the opportunity to formalize that support.

And though they offered no testimony on the issue, our volunteers also offered guidance for lawmakers tasked with implementing the voter-approved sale of recreational cannabis to adults in Maryland. That guidance came in the form of 12 guiding principles of good tax policy that elected officials should take into account as they consider new legislation.

Equally impressive is the fact that all of this incredible work — much of it done by members of the MACPA’s Tax Community — took place during our profession’s busiest time of the year. Volunteering for work as important as this while also navigating the complexities and time constraints of tax season is a herculean effort indeed.

Our sincere gratitude goes out to all of our legislative volunteers who took up the cause. In my eyes, these are CPAs who can clearly answer the question I posed in a previous column: Why did you choose to become a CPA?

Debates continue throughout the profession on the best ways to address our depleted talent pipeline. Reasoned arguments and thoughtful ideas abound, and we continue to seek insightful ideas to add to the conversation. I’m convinced that a huge part of that conversation must include a change in the narrative about our profession. We’re not boring, stodgy, overworked numbercrunchers. We are passionate professionals whose work is vital not only to our clients and the economy, but the public at large. Students who are considering accounting as a career need to understand why.

The work our legislative volunteers do is as important as anything else they do in their professional lives. It’s not selfish work, either. This isn’t entirely about protecting our profession. As CPAs, our middle name is “public,” and testifying to our lawmakers in

Annapolis — either in person or in writing — is work that directly protects the public interest. I can’t think of a better purpose than that.

In a 2019 podcast interview, recently retired leadership expert Tom Peters spoke directly to our profession on this very point.

“Do not limit your definition of what you are,” he said. “A CPA is not somebody with technical skills. They are a business professional who can help people run their hospital, or their non-profit, or their retail operation better. The point is being helpful. There’s no reason why a three-person CPA firm can’t be the McKinsey of their community.”

Each of us has a story that illustrates the importance of the work we do and the reasons why we do it. The hard part is digging deep enough to find those stories. It’s critically important work, though. Those stories will help others see our profession as one worth joining. Here are some questions that might help you unearth your story:

• Whose life is different because of what you do?

• What is your proudest moment in your career?

• What was your most meaningful transaction?

• Who is your most satisfied customer? Why?

• What was the moment you knew the work you do is worthwhile?

The stories that will help attract a new generation of CPAs to our profession lie in the answers to these questions. Though my year as MACPA chair is coming to a close, I look forward to telling those stories with you in the weeks and years to come — and to strengthening our profession in the process. My sincere thanks for affording me the privilege of serving our profession on your behalf. It has been an honor.

FUTURE OF FINANCE

‘The fog clears’

New Leadership Advisory Group sharpens its focus on what the future holds for finance professionals

BY BILL SHERIDAN, CAE

The future doesn’t reside at some nebulous point down the road. It isn’t coming next year, or next month, or next week. It’s here. Right now. As global business expert John Spence has said, “What you do today determines who you will be tomorrow.”

Folks at the AICPA and the Chartered Institute of Management Accountants have been living that mantra for years now. They’ve been trying to define what they call “the future of finance” since well before the pandemic. In 2019 Ash Noah, managing director of CGMA learning, education and development at the Association of International Certified Professional Accountants, said preparing for finance’s future meant leveraging technology solutions, adopting a mindset of continuous learning, broadening our digital skills, and developing our teams’ “human” skills like leadership, empathy, creativity, and strategic planning.

Those ideas still apply today, though given the transformative business environment that followed the pandemic, AICPA officials have since adopted Abraham Lincoln’s philosophy as well: “The best way to predict the future is to create it.”

Specifically, they are co-creating it with a who’s who of senior finance executives, CFOs, and chief accounting officers known collectively as the Future of Finance Leadership Advisory Group. Its initial meetings have produced a crowdsourced vision of what the future of finance might ultimately look like.

“We’re all walking this finance transformation journey together toward what we now call the chief future officer. That’s the new role of the CFO,” Tom Hood, AICPA and CIMA’s executive vice president of business engagement and growth, told the Journal of Accountancy recently. “This group is helping us fill out what that future looks like. That’s what’s so exciting.”

Going forward, Hood said the group’s mission is to “sharpen its focus” and bring more clarity to what the long-term future of the profession looks like. At the center of that vision are talent, technology and, perhaps most important, trust. “That’s a huge advantage for our profession,” AICPA President and CEO Barry Melancon said. “It’s what society at large wants and needs, and we’re well-positioned from that standpoint.”

Hood spoke with MACPA Chief Communications Officer Bill Sheridan for a recent edition of the association’s “FutureProof” podcast, a conversation that centered on the trends that are impacting finance professionals, the opportunities that exist in this post-pandemic world, and the ideas that are emerging from meetings of the Future of Finance Leadership Advisory Group. The following is a transcription of that conversation.

BILL SHERIDAN: Tom, thanks, as always, for joining me here. The future of finance is a phrase that gets thrown out a lot these days in terms of the trends and challenges and opportunities facing our profession, but you’ve taken the reins of a fairly new group that’s trying to put some meat on those bones — the Future of Finance Leadership Advisory Group.Tell me a little bit about the makeup of this group.

TOM HOOD: When I first came over to the AICPA and CIMA, Barry Melancon and Andrew Harding (chief executive of management accounting with the Association of International Certified Professional Accountants) wanted to connect more deeply with the CFO community. Almost half our members work in business and industry, finance, accounting, non-profits, et cetera, and that’s my background, too. The first 18 years of my career was as a CFO in private industry. So we started reaching out to many of these folks and found out that they are all dealing with the same issues. That raised the question: Would you like to get together and co-create what we think this new future is going to look like? Coming on as the fog clears from the pandemic, what’s going to be new and different for the future of finance? They all said yes.

Over the past 18 months, we have met every other month for about an hour and a half. We had our first summit in Nashville in 2021, and by the time we held our second summit this past December in Austin, the group had grown considerably. We had just over one hundred CFOs from very large, well-respected companies, from Amazon Web Services to Hewlett Packard — a great mix of middle market to large corporations. The energy and enthusiasm was incredible. Most important, our Future of Finance Leadership Group designed the agenda by prioritizing the major themes that we were talking about. Andrew Harding even said, “We were in this two-day conference and we didn’t talk about numbers once.”

BS: Pretty remarkable for a group of CFOs.

TH: Exactly. So what are those priorities? We updated our poll of what the top issues are. Number one is talent, recruitment and retention, the pipeline. Number two

is the need for new skills. Number three is digital transformation, and number four is leading and managing a remote and hybrid workforce and keeping your culture strong.

BS: That’s a really interesting list there. All of the issues seem to be related to people. What stood out for you as that list took shape?

TH: That list has shifted a bit. We’ve been carrying this polling across conferences and with this group for the last year and a half. Interesting enough, when we first started, talent didn’t even show up in the top eight. Then pretty quickly, it shot up to number two and then to number one, and it has stayed at number one ever since. The other ones have shifted. For instance, inflation was probably number five initially.

One of my favorite things during the pandemic was a cartoon that showed a group of people sitting in a conference room in a high-rise building. One of them says, “Digital transformation is years away.

technology automates a lot of the basic accounting and financial functions.

BS: What skills are they finding that they need the most?

TH: It goes back to the T-shaped professional — the boundary-crossing skills that are needed now that all the finance professionals are starting to move quickly into the role of value creator or finance business partner to the organization. That requires strategic thinking, communication, awareness, anticipation of the trends in the environment. Agility is another skill that keeps coming up. Businesses are having to move a lot quicker, and finance teams are having to keep in step with that. And you can wrap all of that around collaboration, which is critical to work with different organizations. Those skills, along with digital business model skills, are the things that are necessary today, and they all happen to be part of the CGMA strategic level of our finance leadership program. The need for talent and the need to upskill that new talent

I don’t see our company having to change anytime soon.” And meanwhile, just outside the window, a big wrecking ball labeled “COVID” is swinging in. Who’s going to lead our digital transformation?

It’s COVID. Futurist Daniel Burrus said COVID accelerated all the major trends in business by at least five years — e-commerce alone accelerated by 10 years during that period.

Every one of these finance groups, regardless of their size, are in the midst of an ongoing finance transformation. On top of the talent shortage, this transformation has created the need for new skills — an upskilling of critical finance areas as

are showing up in a big way for these finance folks, but they also have to lead their transformations and they have to help their companies navigate inflation, increase costs, supply chain issues — all of these other issues.

What they tell us consistently is this: The problem isn’t any one issue, it’s that they’re all happening at the same time.

BS: That seems to require some shortterm focus and a much longer-term focus almost at the same time. And that’s got to be challenging, to say the least.

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“Every one of these finance groups, regardless of their size, are in the midst of an ongoing finance transformation.”

TH: No doubt. It’s interesting, because the group came together and we started to see a community emerge. This group really came together, one hundred of them, and they all said consistently that they felt like they were all walking the same journey. They found a group of kindred spirits that are all trying to deal with this, and they love the fact that we convened this group to help each other. It really was like a big CFO self-help group. We had plenty of case studies on what companies were doing and what kind of skills they were looking for. That sharing and collaboration was just powerful — talk about the wisdom of the crowd! All of the content was created by this community. We had a couple of keynotes, a lot of workshops, and then the leadership advisor group put on several of these big sessions, everything from talent and the transformation stories to how they’re dealing with some of the critical issues in business. It was truly remarkable.

BS: That speaks to — and you’ve talked about this for years, but the idea that none of us are going to find our own way out of this. We’re at a point now where we’ve got to co-create what comes next with those who we might have once seen as rivals. I think it’s become obvious that we’re all in the same boat here, and we’ve got to work together to find our way out of it.

TH: I think that’s it, because there’s no way that any one person could keep up with all this stuff, and the fact that you’ve got this group of one hundred and they’re showcasing the different stages that they’re all in.

The other part that came out of this is the idea that we’re going to see continuous waves of transformation. This group came to an awareness that it’s not going to end. We have to prepare our teams, our organizations for this kind of constant moving and transforming as new things emerge on the horizon. We’re going to see wave after wave, getting bigger and faster. One of my favorite quotes is, “We can’t stop the waves, but we can learn how to surf.” I like to think about this group as a collection of surfing lessons for these big waves of transformation.

BS: It’s all about learning the lessons from the first wave so we can make the transition a little bit smoother the next time around.

TH: Exactly.

BS: Was there any talk among the group about the opportunities that exist for our profession, or next steps we should be taking?

TH: Yeah, there are lots of opportunities. For instance, talk about becoming a value partner, but let’s look at ESG. This group, even back in Nashville in 2021, said, “CFOs need to lead environmental, social, and governance issues,” because ESG puts them in a place of looking at value creation for the organization and not strictly taking a defensive reporting stance. The idea is, let’s move out of compliance. Yes, we’re all going to have to help do the reporting and figure that out in our companies. But the group said, “This is a chance to look at these things from a different perspective. Yelp did a preview for us of how they’re looking at ESG. BP talked about agile finance. There were a lot of examples coming from the group that were powerful.

Another opportunity centers on our newly registered apprenticeship program. We are the first registered apprenticeship program for finance and accounting in the United States. In mid-November the Secretary of Labor recognized our profession as one of the top three innovative talent apprentices in the United States. Now, when I say apprentice, what comes to mind?

BS: To me, it’s a blue-collar notion.

TH: Exactly. Concrete workers. I was in the asphalt business earlier in my career and we had tons of apprentices. Now there’s this new breed called professional apprenticeships. Among those recognized by the (Department of Labor) are finance and accounting, cybersecurity — actually, it was McDonald’s cyber work that they’re doing for their headquarters in Chicago, and then a nonprofit association for cybersecurity and the work they’re doing in that area. It’s a whole new model. Now, we added a two-year pathway specifically to address diversity, equity and inclusion opportunities. You can take someone literally out of an HBCU (historically black college or university) or a two-year program and get them on a path through our profession. Every apprenticeship has to have required technical learning, and it turns out that the Department of Labor certified our learning as the right learning to give the experience needed for finance business partners.

So we’re now kicking that program off, and it’s pretty exciting. That’s about addressing the talent pipeline without hurting the CPA pipeline. We’re opening the aperture on it and offering some of these new pathways and ways for employers to get in and get experienced hires coming out of school.

BS: And there’s a Maryland tie-in with this apprenticeship program, am I correct?

TH: These employers are all over the country, but we started to talk to folks in Maryland, and the Maryland Department of Labor — which also licenses CPAs, by the way — they helped us, and we got a grant approved for scholarships that will help pay for a CGMA education for up to about 20 apprentices.

“They found a group of kindred spirits that are all trying to deal with this, and they love the fact that we convened this group to help each other.”

Basically, we’re offering employers in Maryland that apprentice for free. You have to do a little bit of reporting, and we facilitate all that. But we’re talking to Maryland employers right now about that. If anyone reading this is interested, just reach out to me and we can connect to them and talk about it. That’s pretty exciting.

BS: A lot of this stuff sounds almost like a shift in mindset. Have you noticed anything that the most innovative or forward-thinking finance leaders are doing in terms of these challenges that the rest of us aren’t doing? What’s setting apart the cream of the crop in your mind?

TH: What many of them are saying is, “We can no longer wait and hire people from the outside.” Most big companies hire their finance talent from their auditors. What they’re saying is, “We have to build our own pipeline.” So the innovators are looking at their transformation objectives and their timelines, and they’re beginning to create learning programs for their professionals that are developing the right skills so when

Then you have to understand how their careers are working and begin to match that information to your transformation journey. Most of these big companies, and even some mid-size companies like Liberty Bank are applying these new skills. As they say, it’s not enough to know anymore — you have to know how. The apprenticeship is on-the-job training on top of experiential learning. The CGMA finance leadership program is scenariobased. It’s case studies. It’s like doing the job. That gives you the learning to supplement what you learn in college and take it to an experience level and then apply it on the job, which is where you get that extra mentoring from the apprenticeship. Now, not everybody is going to be an apprentice, but the point is you need more experiential learning scenarios and application to go with your knowledge. That’s the big emphasis right now. We’ve got to accelerate people on our teams to get that experience quickly so they can continue to learn and develop.

comprised mainly of educators. A couple hundred college professors in management accounting got together in Atlanta recently. In that, we had several sessions where we brought in future of finance people to give them the reality of what’s going on in the marketplace. It was eye-opening, quite frankly, for these professors because they’re struggling with the talent issue as well. The pipeline is thinner, fewer applicants are coming into their colleges. So we’re trying to help them figure out how they can play a role in recruitment and how they can also adjust their curriculum for the real world. There were some rich discussions and we’re going to continue that journey.

We’re trying to work at all levels. (The AAA) is the entry level of the pipeline from college. Then, with this future of finance group, I think the next step is to present at a number of conferences this year. We also will begin talking with state CPA societies who are interested about how to plug in a future of finance element

automation starts automating things, they’re ready to move up into that next level of analytics, storytelling, and communication. It’s about investing in your talent strategically with the right capabilities, competencies, and skills, and that’s where we’re trying to help them.

BS: Where should finance professionals focus their efforts in the very near future, based on what you’ve learned from this group?

TH: One area is understanding demographics. We’re now experiencing a very different wave of demographics. The boomers are retiring. We know there are not many Gen Xers in the workforce — that’s been challenging all along. Then you have a big pool of millennials and members of Gen Z coming up behind who have very different mindsets. To that point, you have to understand the demographics of your group.

BS: For readers who might want to learn more or follow the conversation or actually be part of the conversation going forward, where should they turn to learn more about this?

TH: On LinkedIn, you can follow #FutureOfFinance — all one word. If you search for that on LinkedIn and click “Follow,” you’ll see all of the feeds that are coming from that. Most everything we’re doing, we’re putting out there. You can also reach out to me at tom.hood@ aicpa-cima.com, or connect to me on LinkedIn, and then you can message me and we’ll figure out how to get you what you need. We’d love to hear from more folks.

BS: What’s on the horizon for you and your team?

TH: We just finished up at the American Accounting Association’s Management Accounting Section. The Triple A is

and take the resources that we’ve got and bring them to the local level. From there, we’ll begin to accelerate getting feedback and perspectives from this audience. It’s about learning from the entire group. We’re trying to figure that model out right now, but that’s what we’ve got in store.

BS: Much more to come, so stay tuned on all that. It’s going to be fascinating to follow and to work with you and find out where we’re going with all this. Thanks for being here, and for your insights and all you do.

TH: Thank you, Bill. It’s going to be good to stay connected on this.

Bill Sheridan, CAE,

is

editor of The Statement and chief communications officer of the Maryland Association of CPAs.

“We are the first registered apprenticeship program for finance and accounting in the United States.”

Experiential learning: An evolution in how knowledge is obtained by prospective CPAs

Editor’s note: Debates continue throughout the profession on the best ways to address our depleted talent pipeline. Reasoned arguments and thoughtful ideas abound — including an AICPA pilot program called the Experience, Learn and Earn Program. While the MACPA has not taken a position on these arguments, it continues to seek insightful ideas to add to the conversation.

With that in mind, we offer the following opinion piece from Joseph Petito, Esq., a retired principal with PwC and former legislative manager with the AICPA who now serves on Maryland’s Board of Public Accountancy. We encourage you to seek new ideas, keep an open mind, and play your own role in solving our pipeline challenges by rediscovering your passion for our profession and sharing it with others.

No policy issue has dominated the accounting profession over the past several decades as much as accountant education — specifically, the 150-hour education requirement.

As the AICPA and NASBA consider new ways to enhance the attractiveness of the profession to counter a drop in accounting student enrollments and retain them while they proceed through to the CPA exam (the “pipeline” to becoming a CPA), the

150-hour education requirement is both on and off the table for discussion — off the table as a discussion topic for the AICPA and NASBA as they develop a new Pipeline Acceleration Plan, yet on the table for numerous state CPA societies, large CPA

FROM JOSEPH PETITO, ESQ.

firms, minority organizations, and others. All the parties have as their objective increasing the number of students becoming CPAs, but to some degree they are arguing past each other over the 150 hours of education requirement since neither side wants to eliminate it as the standard for becoming a CPA.

Many of those who want to have the 150hour requirement included in the pipeline reformation discussion want to explore enabling prospective CPAs to be able to utilize substantive work experience to satisfy part of the 150-hour educational requirement. Proponents for such experiential learning believe the ability to learn while earning a full-time salary, presumably at a CPA firm, will especially assist financially vulnerable minorities

a CPA, it should be possible to find a compromise between these positions that allows both options: Prospective CPAs could substitute substantive work experience for semester credit hours and / or could obtain credit hours online while gaining part-time work experience and being paid for doing so. Any solution that is adopted would need to be scaled up quickly, be practical to implement, and not destroy current CPA mobility, as many in the profession are concerned will happen with experiential learning.

The objective would be to craft work experience programs that would be “substantially equivalent” to academic semester hours of learning. If work experience could be made to be “substantially equivalent” to certain

students, including those who obtained their 150 hours of education through some or a majority of online classes. No doubt, further research will be undertaken (including as part of the Pipeline Acceleration Plan) about the effectiveness and efficiency of such learning, which should be done.

The profession is also no stranger to experiential learning. Work experience to become a licensed CPA has been an important part of the “three Es” (education, exam and experience) since the profession’s start. Prior to adoption of the 150-hour educational requirement as part of the Third Edition of the Uniform Accountancy Act, states typically required a baccalaureate degree in accounting and two years of experience in order to become licensed as a CPA. The Uniform Accountancy Act eliminated the second year of experience with adoption of the 150-hour education requirement, partly because of the fear that adding an additional year of education on top of two years of experience would significantly deter students from the profession.

and others for whom the “fifth year” of education is too expensive. They believe, combined with the other elements of the pipeline program, such an approach would greatly enhance the number of CPAs. Opponents to allowing work experience to count as part of a CPA’s education, including the AICPA and NASBA, believe substituting experience for academic credit hours will reduce the education required to become a CPA at a time when less education is a bad idea, both politically and practically. Instead, they have proposed a program that enables college academic credit to be earned online, outside of a classroom setting, allowing an individual to work part-time and earn while learning, though no credit is given for the work experience obtained. If neither side wants to eliminate 150 hours of education as a criteria for becoming

numbers of credit hours, then the overall educational program should be the same, as would the total amount of knowledge gained. The only thing that would change would be how the knowledge was delivered — for example, via online Zoom classes or through experiential learning vs traditional in-school academic classes. Presumably, the mobility of a licensee who obtained their 150 hours of education via online classes or experiential learning would not be affected since the total sum of their education would remain the same; only its composition would vary.

The idea of online learning got a boost as a result of the impact of the pandemic on in-class learning and the need to continue providing education in some manner to students. No one in the accounting profession has so far questioned the quality of the online education provided to

After adoption of 150 hours, experience has continued to be relevant to the profession, particularly for foreign accountants seeking to practice in the United States. Through a series of “mutual recognition agreements,” the AICPA and NASBA have enabled foreign CPA equivalents to practice in the U.S. Most of them have only a baccalaureate degree of education, though in some cases up to five years of practical experience as a condition to obtaining their certification. NASBA has evaluated the experience to determine if it is “substantially equivalent” to the education required to become a CPA. Professional bodies in which this is the case include the South African Institute of Chartered Accountants, CPA Australia, Chartered Accountants Australia and New Zealand, CPA Canada, Chartered Accountants Ireland, the Institute of Certified Public Accountants in Ireland, Instituto Mexicano de Contadores

CONTINUED ON PAGE 14

“They believe, combined with the other elements of the pipeline program, such an approach would greatly enhance the number of CPAs.”

Publicos, and the Institute of Chartered Accountants of Scotland.

The UAA and most states very broadly define the type of experience necessary to qualify for a CPA license. UAA Rule 6-2(a) states that experience may consist of providing “any type of services or advice using accounting, attest, compilation, management advisory, financial advisory, tax or consulting skills.” It allows the experience to be gained while employed in “industry, government, academia or public practice.” The experience can be obtained from between one to three years and must be verified by a licensee.

Given that the terms for experience are typically fairly broad, there had been criticism over the years that the quality and quantity of candidate CPAs’ experience have varied widely. As a result, creating a new experimental learning option provides the opportunity to both tighten up and improve the quality of work experience obtained by CPAs today.

NO ONE MODEL FITS ALL

It is clear the profession has the competence and capability to determine what type of experience, and how much of it, may be substantially equivalent to academic hours of learning. Given the flexibility of the academic composition of the 150-hour education requirement, the rules to implement it and the current experience requirement, varying types of experience programs could be developed. The experience would not always have to be accounting or auditing specific, given the current education and experience rules, but could focus more broadly on general business and soft skills. The key point is there could be a variety of experiential work / learning programs that vary with the educational background of the student and the timeframe the student seeks to use to gain the experience. There may be a one-year intensive accountingfocused program for some, or a threeyear broad-based business / consulting

program for others. Not only would such an approach reach students where they are with their in-class education, but it would also benefit different-sized and types of accounting firms which would offer the experience. Any experiential work / learning program must include the small and smaller-sized CPA firms to which especially minority students are drawn due to their mostly non-urban locations.

some portion of what had previously been in-classroom learning should be considered an evolution in how knowledge is obtained by prospective CPAs, not unlike online learning. The stakes are certainly worth the effort as students, and especially minorities, are failing to see the profession as worth the increasingly expensive entry costs. Allowing extensive online and experiential learning, and the ability to work while gaining that

Academia could play an important role in helping crafting specific experience programs, perhaps in tandem with their existing academic programs. But in order to be successful, the experiential work / learning programs must be offered outside of the schools themselves, so that students do not have to pay tuition as part of their experience. Not only would paying tuition make the program unavailable to many financially challenged students, but it would also disadvantage CPA firms that are unable to pay students both for their work and help with their tuition expenses.

As with the current experience requirement to become a CPA, in order to satisfy regulators, CPAs and firms would need to meet and certify to exacting experience programs that had been pre-approved by the state accountancy board. Presumably, NASBA could play a role, as it does with foreign CPA certification, in evaluating experience programs. Not unlike CPE, audits could be performed to assure CPA firm and student compliance.

Rather than be considered a step back, the use of experiential learning to satisfy

knowledge, may go a long way to offsetting those costs, making the profession a much more worthwhile investment.

Author’s note

I’ve been fortunate to be at the epicenter of change within the accounting profession for nearly 30 years and involved with many of its major public policy issues, from federal RICO and security litigation reform legislation, to state-level issues as LLP and LLC laws, legal liability reform and CPA mobility — first as a legislative manager with the AICPA, then as a principal at Coopers & Lybrand and then PwC, and now, post retirement, serving on the Maryland Board of Accountancy. During the entire time of my working on public policy issues impacting the profession, one issue was continually discussed — accounting education and the 150-hour education requirement.

“The stakes are certainly worth the effort as students, and especially minorities, are failing to see the profession as worth the increasingly expensive entry costs”

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MACPA testifies on Maryland Comptroller’s budget

FROM BILL SHERIDAN, CAE

A key part of the MACPA’s legislative agenda is coming to life.

As Maryland’s General Assembly begins deliberating Comptroller Brooke Lierman’s budget requests, Lierman’s office has reached out to the MACPA and its members for support — and with good reason.

The association’s 2023 legislative agenda includes support for a properly funded budget that will allow the Comptroller’s Office to retain its current team, hire additional qualified personnel by offering competitive salary levels, and allow for a more modern IT system for efficiency of the agency’s tax administration operations.

The MACPA has submitted testimony to both the House and Senate in Annapolis in support of the Comptroller’s budget requests. A paper distributed to legislators during CPA Day 2023 in January outlines CPAs’ support for an appropriately funded Comptroller’s Office, as follows:

“Among its many functions, the Comptroller’s Office is responsible for collecting tax revenue and enforcing compliance with the state’s tax laws. As the collector of much of the state’s cash, it is logical that the Office be supported with a proper budget for appropriate personnel levels as well as technology resources.

“MACPA members recognize the dedication and hard work of the Comptroller’s staff; we also observe the challenges the Office experiences, not only with the ongoing overall labor shortage in the economy, but also with the constraints of competing with the other employment options that current and potential future employees have, which lead to difficulties in retaining and recruiting the proper number and appropriate experience levels of personnel.

“The Comptroller’s Office’s personnel and systems have been subjected to great strain in recent years, and all signs point to more of the same. The COVID-19 pandemic added unforeseen responsibilities to a staff that was already stretched very thin. Maryland’s RELIEF Act of 2021 required the Comptroller’s Office to issue and distribute economic impact payments to low-income taxpayers and administer newly enacted exemptions and credits, among other provisions, in addition to the usual tax administration tasks. During the same time frame, there were federal tax changes in addition to the Maryland changes, all of which required the Comptroller’s staff to educate Maryland’s citizens about the new provisions by issuing various communications, create multiple filing forms, and revise IT processes. In addition, personnel had to field thousands of emails and phone calls about the many new issues, on top of the high rate usually experienced during tax filing season. Further federal and Maryland tax law changes in the subsequent years have created a similar environment each year, albeit over different areas of change. Throughout, the agency’s ancient IT system has added to the challenges the staff face in performing the Office’s required functions.

“Most recently, the General Assembly enacted legislation mandating that the Comptroller’s Office establish a Legal Division and a process for issuing private letter rulings to taxpayers and practitioners, so that taxpayers have a way of receiving binding answers to their Maryland tax questions. The MACPA applauded this change as a hallmark of good tax administration, and one that will benefit not only the taxpayers but also the state when the taxpayers know the correct tax amounts to pay currently rather than years later after audits or even litigation. However, it is a process that requires specifically trained and highly experienced tax attorneys and CPAs, only some of whom currently work in the Comptroller’s Office.

“We support a properly funded budget that will allow the Comptroller’s Office to retain its current team as well as hire additional qualified personnel by offering competitive salary levels, and also allow for a more modern IT system for efficiency of the agency’s tax administration operations.”

Further details on how the Comptroller’s budget progresses as it makes its way through the legislative process will be provided as developments warrant.

NEWS & VIEWS

Maryland Comptroller Lierman releases transition team report

FROM MARYLAND.GOV

Maryland Comptroller Brooke Lierman has released a robust transition report, concluding the efforts of her transition team that began shortly after she was elected last November. Lierman tasked the team with creating a blueprint of recommended changes for the Office of the Comptroller.

“The transition team’s report represents a new starting point for our agency,” Lierman said. “I am dedicated to working with our new executive leadership team, all Comptroller employees and partners across the state to reimagine how the Comptroller’s Office can build communities that are more equitable, more resilient and more prosperous.”

The Comptroller’s transition team comprised of more than 100 Marylanders, including advocates, thought leaders, business owners, and elected officials. Additionally, online feedback from more than 100 members of the public was incorporated into the document, shaping the report’s final recommendations.

The three honorary chairs of the transition team included former Comptroller Peter Franchot, Prince George’s County Executive Angela Alsobrooks, and Secretary of State Susan Lee. The working chairs included former Treasurer Nancy Kopp; Del. Joseline Peña-Melnyk, representing District 21, including Anne Arundel and Prince

George’s counties; and Candace DodsonReed, vice president of the University of Maryland Baltimore County. Comptroller’s Research Director Dani DiPietro served as transition coordinator.

Under their direction, the transition team was divided into six workgroups designed to reflect the key functions the Comptroller’s Office. The topic areas for recommendations included:

• Data and innovation

• Tax administration and customer engagement

• Pensions and investment

• Procurement and the Board of Public Works

• Local government engagement

• Public engagement

The report identifies opportunities for the Comptroller’s Office to be a more effective advocate for Maryland’s taxpayers, businesses and key stakeholders, with a focus on the following key areas:

• Modernizing technology across the Comptroller’s Office so that it becomes easier to collect and analyze data, manage risk, administer taxes and process payments.

• Building active partnerships with local government, non-profits, small businesses and Maryland residents to ensure the Comptroller’s Office is accessible and communicating proactively.

• Improving transparency and accountability appropriate to the diverse range of the Comptroller’s responsibilities by building public-facing dashboards and other publicly available tools to track key metrics.

• Improving public engagement and customer service by updating the Comptroller of Maryland website, tax forms and other forms of communication to 21st century standards, with a focus on translation services to address the needs of Maryland’s diverse communities.

• Prioritizing diversity, equity, inclusion and accessibility within the agency and ensuring that DEIA is a central tenant in all policies, processes, decisions and communications.

• Identifying and creating opportunities for the Comptroller’s Office to be a leader in climate resiliency – both internally and through the Comptroller’s external impact on state procurement and spending, investments, and community engagement.

• Attracting and retaining a highly skilled, diverse workforce in Maryland, while developing a pipeline and ecosystem for future members of the workforce.

The full report and more specific recommendations can be read online at bit.ly/ComptrollerTransition

Recommendations based on principles of transparency, diversity, equity, inclusion and resilience

A positive take on employee turnover

BY SANDRA WILEY

It’s a difficult reality in any profession, but especially for CPA firms: employees eventually leave. It can be disruptive, have financial implications, and generally cause anxiety within your team. But there are ways to respond to this disruption by strategically looking at the positives of resignations and approaching them with an open mind. If you’re a leader of a CPA firm coming to terms with one or more employee departures during the Great Recession, here’s how to face this change head-on by capitalizing on present opportunities and preparing your firm for future success.

OPPORTUNITY FOR NEW BLOOD, NEW IDEAS, AND NEW GROWTH

Employee turnover can be an opportunity for new blood, new ideas, and new growth if approached in the right way. Use turnover as a chance to bring fresh perspectives into your organization. New employees might have creative ideas to refresh stagnant processes, improve productivity, offer additional services or deliver an even better client experience. They often bring valuable knowledge and experience to the table, so look for ways to tap into it and open up exciting growth opportunities.

WEEDING OUT EMPLOYEES WHO AREN’T THE RIGHT FIT

Unfortunately, many firms have people on their teams who aren’t the right fit. They might be actively disengaged, have a negative attitude or refuse to use certain technologies or follow processes. Turnover can be an opportunity to weed out these non-right-fit employees who don’t fit the company culture.

A CHANCE FOR INTERNAL EMPLOYEE DEVELOPMENT

Employee turnover can also be a time for personal growth within the company.

When someone leaves, other employees often have to take on additional work. With an open position available, you may have an opportunity to develop existing team members by offering promotions or lateral moves that can help stimulate job satisfaction and career development. This allows people to learn new skills, boost their credentials, build new relationships with colleagues and get better acquainted with the firm—all of which can be extremely rewarding and beneficial for future success.

IMPROVE MORALE WITHIN THE FIRM

We tend to focus on the negative impact on morale when someone leaves, but employee turnover can also positively impact morale. Employees who are disengaged or dissatisfied in their roles can bring others down. Maybe their performance has taken a nosedive, and other team members have had to pick up the slack. Maybe their negative attitude is dragging others down. Either way, when someone like that leaves, the remaining employees may feel a sense of relief and a renewed passion for doing their best work.

AN OPPORTUNITY TO LEARN FROM YOUR FORMER EMPLOYEES AND IMPROVE YOUR BUSINESS

Employee turnover can also be an opportunity to learn from former employees and improve the business. With the departure of a team member, you have a chance to take a step back and

evaluate what your team could have done better. By reflecting on where things went wrong, you can gain valuable insight into how to improve retention in the future and improve your firm’s technology, processes or business model.

EMBRACE THE CHALLENGE OF FINDING NEW TALENT AND TRAINING THEM TO FIT INTO YOUR COMPANY CULTURE

Employee turnover can be viewed as a positive opportunity for you to bring in new talent and train them to fit into the company culture. If your employee recruitment, onboarding, training or development processes left something to be desired in the past, now is a chance to make a change and do a better job.

While it can be difficult to lose valued team members, employee turnover can give your firm a unique chance to improve and grow. By approaching employee turnover in a positive light, you can use it as an opportunity to bring new people and opportunities into the firm, incentivize existing employees and ultimately make strides toward long-term success. With thoughtful planning and execution of these strategies, you’ll be better equipped to attract and retain talent that comes your way in the future.

Sandra Wiley is a shareholder and president of Boomer Consulting, Inc.

“Turnover can be an opportunity to weed out these non-right-fit employees who don’t fit the company culture.”

Adapt and prosper: The future for accounting firms

Editor’s note: The following article originally appeared in New Jersey CPA magazine. It is reprinted here with permission.

BY CHRISTOPHER R. CICALESE, CPA, MSTFP

If the pandemic has taught the accounting profession anything, it is that traditional accounting firms full of paper, office hours and in-person meetings are officially on the outs and firms must start to adapt to the new era.

The days of ledger paper and in-person meetings are scarcer than ever, and tech stacks and remote work policies are now the focus for many firms. To compound the issue, the profession has started to see a talent shortage that is requiring firms to figure out how to increase capacity to maintain sanity during busy time and leverage their teams appropriately.

CLIENT EXPERIENCE

At the beginning of the pandemic, virtually every professional was forced home. For tax professionals, it came at the worst possible time with the April 15 deadline looming.

Despite the various extensions, firms had to pivot, if they had not already, to adopt an electronic delivery system. Client portal systems and safe file-sharing services that focus specifically on the electronic delivery of tax returns became vitally important. But firms shouldn’t stop there. Consumers are using apps to conduct many facets of business and commerce, and humanto-human interaction is less prevalent. Even with businesses returning to more “normal” operations, customers will still want a choice in how they interact. And this includes clients’ interactions with their accounting firms.

In addition to improving the customer experience with apps, overall accounting has changed for the better. Clients who were stuck on outdated software that made seamless collaboration next to impossible

were forced to make a change, or at least be more open-minded about change, so they could run their businesses remotely. The increasing prevalence of cloud-based software has opened the possibility for any accounting firm to adopt more of an advisory approach to their services and provide more value by automating lowerend services.

INTERNAL CHANGES

Any accountant who has had the opportunity to follow the #TaxTwitter community on social media will tell you that traditional firms are under fire. Various “members” have been promoting their firms’ low-hour busy season work week, unlimited supply of talent and absence of time tracking. To some, this all seems too good to be true. But potentially, to some extent, this is the way of the future.

PUBLIC PRACTICE

Many firms perform a large majority of their services in the first 25 percent of the year, and this often requires a significant overtime commitment to make sure that the workload gets completed timely in such a compacted period. Successful firms will strive for creative ways to increase capacity and decrease burnout. Hiring per-diem help during crunch time is a solution many firms have used for years. This concept has expanded recently with more professional service firms offering outsourced businessto-business services.

For accounting firms, outsourcing can take various forms. One is sending tax returns to an outsourcing provider, and another could be having a “team member” from anywhere helping the team as a temporary, remote employee. If there was a bottomless talent pool, there would not be an issue; however, it is a struggle for teams to find talent. By adopting remote desktops, firms can add employees from other states. This opens the talent pool, but also requires a firm to be able to work, communicate and train remotely.

The unicorn for many accountants is the day that they no longer need to keep time sheets. In an age when firms utilize realization statistics and KPIs to help evaluate staff members, it may be hard to eliminate the time sheet. But firms with no timesheets still have time as a component of the conversation. The timesheet is more of an internal measurement strictly to ensure that jobs are not a bottomless pit of time. Firms that do not keep timesheets can focus on making sure their staff have shortterm, hard deadlines that they are required to meet to promote quick turnaround. This concept is still evolving, and traditional firms will likely not eliminate timekeeping altogether, but it is a step in the direction of the future. When the larger firms figure out how to do this and successfully evaluate team members, other firms will likely follow. The pandemic has proved that working remotely can be successful. While lessexperienced staff may need to be in the office to develop their skills and learn from management, it is possible to work

remotely for extended periods of time and still get the work done. This gives employees the flexibility to not only choose their own hours, but also to choose where they work. Logging in from a vacation home or Air B&B could be just as productive as logging in from home.

NEXT STEPS

While not every firm may be ready to make the leap to future-proof themselves all at once, changes can be made one step at a time. This could be as simple as testing software by putting a small batch of work through it or having a few remote-only days during the slower months to help with work-life balance. At the end of the day, the profession is changing, and those who do not adapt will slowly fade away.

Christopher R. Cicalese, CPA, MSTFP, is an associate partner at Alloy Silverstein Accountants and Advisors.

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BUSINESS AND INDUSTRY

Momentum builds for corporate ESG reporting and assurance, yet disclosure inconsistencies linger

Third report from IFAC and AICPA-CIMA identifies sustainability trends and progress over three-year span

BY THE AICPA

The largest global companies continue to show momentum on corporate reporting and related assurance involving environmental, social and governance (ESG) issues, according to a new report from the International Federation of Accountants, the AICPA and CIMA, the latter two of which form the Association of International Certified Professional Accountants.

Significant hurdles remain, however, when it comes to providing consistent, comparable and high-quality sustainability information for investors and lenders,

Some 95% of large companies reported on ESG matters in 2021, the latest year available, the study found. That’s up from 91% in 2019. Sixty-four percent of companies obtained assurance over at least some ESG information in 2021, up from 51% in 2019. The inability so far to coalesce around agreed upon global standards continues to create challenges, however.

“Even as we see companies increasingly report on ESG and sustainability, the data we’re tracking reveals continuing fragmentation around the world in terms of which standards and frameworks are used,” noted IFAC CEO Kevin Dancey. “Eighty-six percent of companies use multiple standards and frameworks. This patchwork system does not support consistent, comparable, and reliable reporting. Importantly,it also

does not provide the necessary foundation for globally consistent, high-quality sustainability assurance.”

The report also examines the extent to which companies provide forward-looking information on emissions reduction targets and plans. While two-thirds of companies disclosed targets, they lag the rate at which companies report their historic greenhouse gas emissions (97%).

“Steady increases in reporting and assurance are significant, yet more companies need to take the additional step to obtain assurance to build trust and confidence in what they report,” said Susan Coffey, AICPA & CIMA’s CEO of public accounting. “Our profession’s role in providing that assurance is crucial. CPAs have unquestioned competence, professional judgment and operate within a robust system built with public protection in mind. We should be the clear choice for instilling trust and value in ESG data around the world.”

ADDITIONAL KEY FINDINGS

Use of Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-Related Financial Disclosures (TCFD) framework have increased significantly between 2019 and 2021: There was a 29% increase for SASB standards usage and 30% for the TCFD framework.

While accounting firms conduct more engagements, their market share — 57% of sustainability / ESG assurance engagements — has declined from 63% in 2019.

When companies obtained assurance from a professional accountant, they chose their statutory auditor 70% of the time.

Globally, the International Auditing and Assurance Standards Board’s International Assurance Engagement Standard 3000 (Revised) remains the most popular standard when providing assurance:

Ninety-five percent of firms providing assurance use ISAE 3000, up from 88% in 2019.

Thirty-eight percent of non-accountant service providers use ISAE 3000, up from 34% in 2019.

ABOUT THE STUDY

IFAC, the AICPA and CIMA partnered to understand the environmental, social, and governance reporting and assurance practices on a global basis by capturing reports containing ESG information in 21 jurisdictions. Some 1,350 companies were reviewed — 100 from each of the largest six economies, with 50 companies reviewed in the remaining 15 jurisdictions. The current report includes data from 2019-21.

Full methodology is available at bit.ly/ESGstudy

Seizing the opportunity to close the skills gap

Editor’s note: The following article was originally published on March 1, 2023 by Financial Management magazine. It is reprinted with permission.

BY PAUL TURNER

There is a widening gap between the skills employers need and those workers have, recent AICPA and CIMA research found.

I’m a great believer that every challenge is really an opportunity. It is no secret that employers are struggling to recruit staff with the right skills for their organizations. If we could find a way of resolving that shortage, companies would be able to grow more easily, and their employees would have more opportunities for professional advancement.

AICPA & CIMA’s research into the future direction of the accounting and finance profession has highlighted the importance of continually learning, unlearning, and relearning skills. This is because the modern workplace is evolving rapidly as a result of digitisation and changes to working practices that developed during the pandemic, such as remote working. The productivity gains that

could result from exploiting the opportunities of the new business environment make the process of continued upskilling worthwhile for both workers and their employers. Unfortunately, the skills gap — the disparity between the skills the workforce has and the skills employers need — is currently widening, according to AICPA and CIMA research released in February.

In the UK, one of the markets I lead for AICPA and CIMA, we commissioned polling which found that 82% of SME employers identified skills gaps within their organization in the past 12 months. When this question was last asked in 2020 the figure was 65%. This is a global problem. McKinsey & Co. research from 2021 showed that 87% of companies

were experiencing skills gaps or expected to within a few years.

I want to stress that it would be utterly wrong to solely blame employers for this. On the contrary, the employers we polled showed a real desire to upskill their workforce themselves. A total of 54% of employers favored developing employees in-house, either by recruiting individuals with the right personal qualities and attitude and upskilling them internally (30%) or developing their own employees rather than recruiting from outside (24%). Only a fifth (21%) preferred to recruit high performers with experience from other organizations.

Employers don’t just say they want to upskill their employees, a great many of them are doing it. We should celebrate how hard they are working to do this. Nearly four-fifths (78%) of the SME employers we polled invested in training and professional

BUSINESS AND INDUSTRY

development for their employees in 2022 beyond what was mandatory. That is a thirteen-percentage-point increase since 2020, a period which covers the economic disruption caused by the pandemic. That shows genuine commitment to addressing the problem. However, despite their best efforts, they have been unable to plug the skills gaps in their organizations.

BARRIERS TO TRAINING

The sad fact is that 90% of the SME employers we recently polled told us that there are barriers preventing them from offering more training, including a lack of time and expertise. However, the biggest barrier — cited by 30% of employers — is a lack of financial resources as a reason they could not train staff further. This is a legitimate point. SMEs do not have the training budgets available to large corporations and will have many competing demands on tight resources. This is especially true in today’s tough economic circumstances.

From a macroeconomic perspective, it is highly undesirable for SME workers to miss out on upskilling due to barriers preventing their employers from offering it. According to the World Bank, SMEs account for around 90% of businesses and more than 50% of employment worldwide. If we want to bridge the global skills gap, it would be self-defeating to ignore half of the global workforce.

In the UK market, AICPA and CIMA are delighted that the UK government is looking at reforms to boost skills, and we are very much looking forward to hearing more policy details, particularly with regards to reforming the Apprenticeship Levy.

If the right policies are put in place, and access to upskilling is made as wide as possible to address the global skills gap, great economic opportunities and other benefits await.

The modern workplace is rapidly evolving — digitization and changes to working practices brought about by COVID-19 mean that all of us need to develop our skills. The potential economic boost that would come from a workforce equipped to take advantage of the changing workplace would be enormous. The time to tackle the skills gap is right now.

Read AICPA and CIMA’s Mind the Skills Gap 2023 research at bit.ly/MindTheSkillsGap.

Paul Turner is vice president, UK and Ireland at AICPA and CIMA, together as the Association of International Certified Professional Accountants.

IRS warns of new filing season scams involving Form W-2 wages

BY THE IRS

The Internal Revenue Service has issued a consumer alert to warn taxpayers of new scams that urge people to use wage information on a tax return to claim false credits in hopes of getting a big refund.

One scheme, which is circulating on social media, encourages people to use tax software to manually fill out Form W-2, “Wage and Tax Statement,” and include false income information. In this W-2 scheme, scam artists suggest people make up large income and withholding figures as well as the employer it is coming from. Scam artists then instruct people to file the bogus tax return electronically in hopes of getting a substantial refund – sometimes as much as five figures – due to the large amount of withholding.

The IRS, along with the Security Summit partners in the tax industry and the states, are actively watching for this scheme and others. In addition, the IRS works with payroll companies and large employers – as well as the Social Security Administration –to verify W-2 information.

The IRS and Summit partners warn people not to fall for these scams.

“We are seeing signs this scam is increasing, and we worry that innocent taxpayers could be at risk of being tempted into falling into a trap that puts them at risk of financial and criminal penalties,” said acting IRS Commissioner Doug O’Donnell. “The IRS and Security Summit partners remind people there is no secret way to get free money or a big refund. People should not make up income and try to submit a fraudulent tax return in hopes of getting a huge refund.”

Two variations of this scheme are also being seen by the IRS. Both involve misusing Form W-2 wage information in hopes of generating a larger refund:

• One variation involves people using Form 7202, “Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals,” to claim a credit based on income earned as an employee and not as a self-employed individual. These credits were available for self-employed individuals for 2020 and 2021 during the pandemic; they are not available for 2022 tax returns.

• A similar variation involves people making up fictional employees employed in their household and using Schedule H, “Household Employment Taxes,” to try claiming a refund based on false sick and family wages they never paid. The

form is designed to report household employment taxes if a taxpayer hired someone to do household work and those wages were subject to Social Security, Medicare or FUTA taxes, or if the employer withheld federal income tax from those wages.

The IRS reminds people who try this that they face a wide range of penalties. This may include a frivolous return penalty of $5,000. Filers also run the risk of criminal prosecution for filing a false tax return.

For anyone who has participated in one of these schemes, there are several options that the IRS recommends. People can amend a previous tax return or consult with a trusted tax professional.

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Accounting automation evolution: Augmented or artificial intelligence?

Editor’s note: The following article was originally published on Feb. 24, 2023 by CPA Practice Advisor. It is reprinted here with permission. The original article can be found at bit.ly/AIforCPAs

BY ROMAN KEPCZYK

What is the reality of artificial intelligence tools utilized today in your accounting practice? Unfortunately, there is no clear answer, and in actuality it depends on your interpretation of AI.

Technology has made significant contributions to the practice of accounting and is on the verge of another evolution with the advent of artificial intelligence tools coming into the mainstream. In the past four months there has been a frenzy around Open Ai’s ChatGPT, which is a natural language application where you can type in questions and get comprehensive answers in a format that is almost impossible to distinguish from that which you would expect from another educated human.

The AI platform allows you to “fine tune” responses with additional information, emphasis and corrections which is already being used by bloggers, journalists, and students to assist with their research and writing.

The writing is so good that some educational institutions have banned its use and journalists have been called out for relying on it to write their content rather than doing it themselves.

Recent accounting articles have focused on how such chat tools can be utilized for developing marketing content, analyzing and summarizing financial data, and possibly in providing online responses to common accounting questions. For instance, in customer support situations where there is a history of data that the “chat” responses can interpolate from, the most common answer to the scenario can be provided by the system.

But what is the reality of artificial intelligence tools utilized today in your accounting practice? Unfortunately, there is no clear answer, and in actuality it depends on your interpretation of AI and how you apply tools incorporating touting various “AI” capabilities.

ChatGPT is just one of many AI chat tools on today’s market, but it garnered over one million users in its first week of release because it was easy to use and extremely robust (having been trained with more than 175 billion data points selected by OpenAI

prior to 2022). Artificial intelligence applications utilize highly sophisticated algorithms and massive computer power to generate responses, but in the end are only as good as the data they have been trained on, which gets us to the point about using artificial intelligence applications within the accounting profession.

There is a slew of accounting applications that promote an “AI” moniker and state they utilize artificial intelligence, but in most cases these tools have been preprogramed and/or need the assistance of “super users” to become effective accounting tools as I believe they have not acquired enough data to effectively respond independently.

We have seen firms benefit greatly from accounting automation tools including spreadsheets, accounting applications and to some extent data extraction tools, which I would say are incredibly beneficial when utilized by a trained user for accounting purposes. This is particularly true when the super user’s previous experience and knowledge has been codified or scripted within the application and then finetuned by active users.

I would describe this as “augmented” intelligence rather than “artificial” intelligence, which by my understanding artificial intelligence would be that which is interpolated by the computer application (which is the case with the current wave of chatbots).

“The writing is so good that some educational institutions have banned its use and journalists have been called out for relying on it to write their content rather than doing it themselves.”

HIGH-TECH SOLUTIONS

on the direction of ChatGPT and will bring it to our firms within their apps.

I believe we will first see computer generated AI within the Office applications (Excel, Word, Outlook, Teams, etc.) and then as these AI tools become more iterative and available at the commercial/ consumer level, that we will see the major accounting vendors (Intuit, Thomson Reuters, WoltersKluwer, BNA, etc.) beginning to incorporate true AI capabilities into their applications in addition to the specific purpose “AI” tools that are being promoted to accountants today.

I believe AI tools will become integral to the work of accounting to automate the repeatable, rote work that most accountants dread freeing time to focus on those areas where unique knowledge cannot be easily codified, which is the work where accountants truly add value and best serve clients.

This is not to say that existing accounting applications and the tools we use to run our practices do not have some intelligence built in. There are multiple instances of scripted intelligence being utilized in our profession to automate processes, with the best-known examples being the use of APIs (application program interfaces), ML (machine learning), and RPA (robotic processing automation), which are now entering mainstream use for most firms.

We are also seeing common applications intelligently suggesting corrections as evidenced by word-processing corrections in grammar and spelling and within spreadsheets providing hints to correct formulas. But what kind of AI would you consider these examples?

I believe that for any automation technology, and in particular artificial intelligence, to make it into mainstream accounting practices, one of the key defining factors is that it has to be “consumer grade.” This means that it can be adopted by a broad audience with a minimal amount of effort and work as expected, the majority of the time.

Today, this is the case with ChatGPT and I believe that the capabilities of this application will make it into the mainstream of accounting firms when it is natively integrated into the tools we utilize regularly in our practices. Microsoft, as a major investor and builder of the ChatGPT platform and the network architecture on which it runs, has considerable influence

Roman H. Kepczyk, CPA.CITP, CGMA, is director of Firm Technology Strategy for Right Networks and partners exclusively with accounting firms on production automation, application optimization and practice transformation. He has been consistently listed as one of INSIDE Public Accounting’s Most Recommended Consultants, Accounting Today’s Top 100 Most Influential People, and CPA Practice Advisor’s Top Thought Leaders.

FROM OUR PARTNERS

Clients

BY CHRIS CROMER

How often do you think about your firm’s website? For leaders at many firms, the answer is “rarely.” Once your site is up and running, there are a million other priorities competing for your attention. This can be especially true for smaller firms. If you don’t have a dedicated web team or even an IT person, you may only think about your website when it goes down. But your website plays a central role in the relationship between your firm and your existing clients, as well as prospects who are looking for a CPA they can trust. It’s often their first point of contact. Who among us doesn’t visit a service provider’s website when we’re assessing whether we should work with them? In a matter of moments, potential clients will judge your firm based on what they find on your site. For existing clients, your firm’s website can serve as a hub for service delivery – the place where they download forms, upload data, check on the status of your work and more.

If your firm’s website isn’t a priority, it should be. Clients and prospects are paying closer attention than you might expect.

FOUR AT THE CORE

Entire books have been written about what makes a great website, but you probably don’t have time for that. So here are four fundamental features that make for a great firm website.

1. Short, memorable URL. Your URL is your web address – like CPA.com. The best ones are short, which makes them easy to remember and advertise. But as websites have proliferated over the years, it’s become more difficult to secure short URLs in familiar domains such as .com and .net.

2. Clean design, simple structure. How quickly can a visitor make sense of your site? The answer depends on the combination of simple, straightforward design elements, easy navigation and concise copywriting. Seasoned web developers know from experience that it’s usually quite difficult to achieve simplicity – but it’s worth it.

3. Strong call to action. You know what you want visitors to do, so say it clearly and prominently. Don’t make them hunt for your call to action.

4. Clear contact information. How many times have you tried to find a restaurant’s

phone number on their site, only to get lost deep in the “about us” section? Sometimes visitors just want to know how to call or email you. Make it easy.

A SIMPLE NEW TOOL FOR BUILDING YOUR FIRM’S SITE (AND IT’S FREE)

Maybe your firm hasn’t launched its website yet. Or maybe it has an outdated website, making it easier to start from scratch rather than overhaul it to embrace these principles.

If either describes your current situation, CPA.com has developed a simple, practical tool to help you get up and running with a basic site that embraces best practices in web design for accounting firms. Our free .cpa Starter Site is the simplest way to launch your own professional website. The Starter Site is:

• Easy to use: Just fill out a simple onepage template.

• Professionally designed: No need to find your own web designer.

• Commitment-free: You can turn it off at any time.

The Starter Site is only available to owners of a .cpa domain, the only secure, verified, top-level domain exclusive to the accounting profession.

There’s never been a better time to make a fresh start, building on the proven principles above to improve web traffic and conversions – and we’ve made it easy to get going. It’s just one more benefit of being a licensed CPA.

To learn more, visit domains.cpa

Chris Cromer is director of operations for CPA.com.

judge your firm by its website. Here are 4 ways to make it great

These domains have already been claimed, but there are plenty of unique, memorable URLs waiting for you at Domains.cpa

CLASSIFIEDS

job openings

BUSINESS AND TAX PROFESSIONALS NEEDED

High Quality Mid-size Towson CPA Firm seeks motivated professionals with experience in individual or business income tax preparation (or review). Flexible schedule, challenging work and excellent compensation.

Experience with ProSystem FX Tax is a plus.

Contact:

Kenneally & Company

660 Kenilworth Drive, Suite 104 Towson, MD 21204 410-321-9558

E-mail: dmiller@jlkcpas.com

ACCOUNTING BIZ BROKERS:

Practice for Sale: Chevy Chase CPA Firm Gross $1.075M

READY TO SELL YOUR FIRM? CONTACT US TODAY!

Selling your firm is complex. We make it simple! Our brokers are Certified Business Intermediaries (CBI) with the IBBA. We have been assisting sellers for over 17 years and can help you achieve the win-win deal you are seeking!

Contact:

Kathy Brents, CPA, CBI 866.260.2793

AccountingBizBrokers.com

E-mail: Kathy@AccountingBizBrokers.com

mergers & acquisitions

MARYLAND PRACTICES FOR SALE

Gross Revenues Shown:; Bethesda, Gaithersburg, and Frederick Area $90K; Essex MD, CPA $624K; For additional information or to see nationwide listings and register for free email updates visit us at www.APS.net

THINKING OF SELLING YOUR PRACTICE? Accounting

Practice Sales is the leading marketer of tax and accounting practices in North America. We have a large pool of buyers, both individuals and firms, looking for practices to purchase. We also have the experience to help you find the right fit for your firm, negotiate the best price and terms and get the deal done. We welcome the opportunity to talk to you about our risk-free and confidential services. For more information please call Bradley Holmes with the APS Holmes Group at 1-800-397-0249 or email Bradley@apsholmesgroup.com.

MEMBER NOTES

Kayla M. Alsahouri, CPA, has been promoted to supervisor in the Hagerstown office of SEK, CPAs & Advisors.

Kellie J. Flook, CPA, MBA, has been promoted to manager in the Hagerstown office of SEK, CPAs & Advisors.

Cindy Ash, CPA, has been promoted to senior accountant with Lanigan Ryan in Gaithersburg.

Kaitlyn Bohrer has been promoted to senior accountant with Lanigan Ryan in Gaithersburg.

Lexi Rose, CPA, has been promoted to senior accountant with Lanigan Ryan in Gaithersburg.

FIRM NOTES

Brown Schultz Sheridan & Fritz has been ranked as one of the largest audit firms in the United States on AM Best’s list of the “Top Audit and Actuarial Firms – 2022 Edition.” This marks the second consecutive year that BSSF has received this recognition.

HOW TO SUBMIT A CLASSIFIED AD

To submit a classified ad, contact Krislyn Suljak at krislyn@macpa.org, or 443-632-2307.

REPLIES TO ADS WITH FILE NUMBER: Email krislyn@macpa.org, or reply via mail:

MACPA, Classified Ads 901 Dulaney Valley Road, Suite 800, Towson, MD 21204