AICPA Tools for Today’s International Firm · By 2020. The easiest thing is to react. The second easiest is to respond. But the ... CaseWare Research RIA Checkpoint Accounting Research

AICPA Tools for Today’s International Firm

Association of International Certified Professional Accountants• World’s largest association for the accounting profession

– 650,000 members and students in 179 countries

• Our members work in all areas of the profession:

– Public Accounting

– Management Accounting

– Government

– Academia

“Disruption has many faces. Likeinnovation, it is both creative anddestructive. It can arrive at yourdoorstep at hyperspeed or creepin unseen in a glacial movement.”Source: Conference Board CEO Challenge 2017 – Leading through Risk,Disruption and Transformation

Technology driving transformation

Sources: Statista; Deloitte, Technology, Media, Telecommunications Predictions, 2016; Techcrunch, April 2016; DHL and Cisco Internet of Things Trend Report, 2015, IBM, September 2016

28.4 billion connected smart devices worldwide —twice the number in 2014

2017At least 66% of global population online

50 billion smart devices will be connected to the internet

AR/VR could be in use by hundreds of millions

Cloud projected to grow to $240 billion from $40.7 billion

in 2011

65% of banks will have blockchain solutions in production

By 2020

The easiest thing is to react. The second easiest is to respond. But the hardest is to

Seth Godin Author and Agent of Change

initiate.

Business models are transforming

Sources: KMPG CEO survey; Interbrand; AICPA

From search to driverless cars; consumer products

From ecosystem lock topartnerships

From soda to non-water-based beverages and snacks

From software to mobile and gaming

From hardware to software

From hardware to servicesand data

From shopping to deliveryservices and cloud

From direct entry to countrypartnerships

From products to digital and services

From unique platforms to cost-sharing platforms and components

Profession initiating change

Enhancing audit quality

Elevating role of finance around the world

Embracing technology

Redefining learning

Expanding our platform

Creating the new international Association

PCPS CPA Firm Top Issues Survey

• Conducted biannually

• Gathers information from practitioners across the country representing firms of different sizes

• Used to understand the critical challenges facing PCPS member firms

FIRMS WITH 6-10PROFESSIONALS

FIRMS WITH 11-20 PROFESSIONALS

FIRMS WITH 21+PROFESSIONALS

1 FINDING QUALIFIED STAFF 1 RETAINING QUALIFIED STAFF 1 RETAINING QUALIFIED STAFF

2 SUCCESSION PLANNING 2 FINDING QUALIFIED STAFF 2 FINDING QUALIFIED STAFF

3 SEASONALITY/WORKLOAD COMPRESSION 3 SUCCESSION PLANNING 3 OWNER/PARTNER

ACCOUNTABILITY & UNITY

4 RETAINING QUALIFIED STAFF 4 BRINGING IN NEW CLIENTS 4 SEASONALITY/WORKLOAD COMPRESSION

5 AGING OF OWNERS/PARTNERS 5 SEASONALITY/WORKLOAD COMPRESSION 5 BRINGING IN NEW CLIENTS;

SUCCESSION PLANNING (TIE)

SOLE PRACTITIONERS

1KEEPING UP WITH CHANGES AND COMPLEXITY OF TAX LAWS

2 SEASONALITY/WORKLOAD COMPRESSION

3THE EFFECT ON FIRMS CAUSED BY NEW REGULATIONS & STANDARDS

4 SUCCESSION PLANNING

5 RETENTION OF CURRENT CLIENTS

FIRMS WITH 2-5 PROFESSIONALS1 FINDING QUALIFIED STAFF

2KEEPING UP WITH CHANGES AND COMPLEXITY OF TAX LAWS




2015 PCPS

CPA Firm Top

Issues

Resources For Firms Around the Globe

Applyaccountingand financeskills...

in the context of the business...

to influencepeople...

Succession Planning/Aging of Owners & Partners

PCPS CPA Firm Top Issues




SOLE PRACTITIONERS

1 KEEPING UP WITH CHANGES AND COMPLEXITY OF TAX LAWS


3 THE EFFECT ON FIRMS CAUSED BY NEW REGULATIONS & STANDARDS




1 FINDING QUALIFIED STAFF

















5 AGING OF OWNERS/PARTNERS 5 SEASONALITY/WORKLOAD

COMPRESSION 5 BRINGING IN NEW CLIENTS; SUCCESSION PLANNING (TIE)

• 56% without written plan• Leadership development is

among the top challenges• 49% of firms in M&A talks• Few managing partners have ability to hold

partners accountable

Multi-Owner Firms

• 93% without practice continuation agreement• 40% of owners plan on retiring in the next 5 years• Majority of owners intend to merge or sell• 49% expect to sell $1 for $1 of billings, actual is

likely much less

Sole Owners

14

Succession PlanningPCPS Succession Survey

Succession Planning Succession Planning Resource Center (Centre)




www.aicpa.org/pcps/succession

https://aicpa.pcps.org/succession-planning-resource-centre

Succession Planning Succession Planning Guide & ToolsChapters include:1.Introduction2.Drivers of Change for the CPA Profession3.Positioning Your Firm4.Selling Your Firm5.Merging Your Firm6.Developing New Leaders7.Turning Out the Lights8.Transition Roles and Responsibilities9.What is the Value of Your Firm10.Due Diligence11.Key Elements to a Partnership Agreement

Transfer an Accounting

Practice Checklist

Due Diligence Checklist

Shareholder in Training Checklist

Template Practice

Continuation & Partnership AgreementsAvailable

toolsAvailable

tools

Succession Planning Best Practices




• 3-year written plan• Identify exit strategies• Practice continuation agreement• Evaluate rates and clients• Leverage technology

Sole Owners

• 3-year written plan• Improve operating policies and procedures• Develop people• Strong governance with robust compensation

framework• Define rules for retiring partners

Multi-Owner Firms

Human Capital Concerns

Finding and Retaining Qualified Staff





SOLE PRACTITIONERS


























Human Capital ConcernsWhat Are Other Firms Doing?

• Hiring veterans or parents returning to the workforce

• Connecting with local schools and beginning an internship process

• Getting involved and participating on college boards

• Providing flexible hours and telecommuting options

• Partnering with local firms and sharing CPAsand interns

Human Capital Concerns

• Team Recruitment

• Creating a Flexible Work Culture

• Team Development

• Mentoring Your People

• Employee Retention

• Strategy & Planning

• Performance Management

• Owner Development – Partner Accountability

Human Capital ConcernsHuman Capital Center (Centre)




www.aicpa.org/pcps/hcc https://aicpa.pcps.org/human-capital-centre

Human Capital ConcernsFirm Competency Model (Career Ladder)




ASSOCIATE

• Learns and develops technical competence by completing a degree qualification and working toward CPA certificate

• Applies self diligently to learn and understand technical skills and on the job practices and business processes

• Researches technical issues and participates in technical discussions relating to client assignments

• Develops an understanding of client businesses

Senior

• Has technical competence (degree qualification) and a relevant professional accreditation

• Has an identified area to specialize and refines skills, knowledge and expertise

• Applies technical knowledge and research in formulating client related recommendations

• Helps to solve complex business problems

Manager

• Has a general knowledge and application of relevant professional standards, emerging laws and regulations and corporate governance requirements

• Refines skills, knowledge and expertise as a specialist in an identified technical field and/or industry

• Applies technical expertise and interprets laws, regulations and standards to formulate client related recommendations

• Solves complex business problems

Senior Manager/Director

• Has a good understanding of the prevailing business environment, industry and business processes

• Has a thorough knowledge and application of relevant professional standards, emerging laws and regulations and corporate governance requirements

• Is a specialist in a particular technical field and/or industry

• Abreast of changes in laws, regulations and standards and provides advice on the impact and implications to clients

Partner

• Has a thorough understanding of the prevailing business environment, industry and business processes

• Has extensive knowledge and application of relevant professional standards, emerging laws and regulations and corporate governance requirements

• Is a specialist and known leader in a particular technical field and/or industry

• Actively seeks ways to apply knowledge, interpret and anticipate changes in laws, regulations and standards to provide advice to clients on the impact and implications

Client Acquisition and Retention





SOLE PRACTITIONERS





5 BRINGING IN NEW CLIENTS





















Client Acquisition and RetentionPractice Growth

• Manage seasonal lows and revenue generation

• Know your value and how to articulate it

• Strengthenclient relationships

• Identify prospects and price appropriately

• Cross-sell and create new service mixes

Client Acquisition and RetentionYou Are The Value Online Workshop




Embracingnew services

Maintaining relevance of auditing in the future

Technology

Data analytics and big data

Standards changes

New skills

How will an audit be different 10 years from now?

Phases of the Audit Where Firms Believe Technology Can Have Greatest Impact

TOP TWO AREAS IN EACH PHASE

2016 AICPA Survey Results based on 261 median, not average, percentage of audit hours/phase

Current to Future State

Current Future

Methodology ToolsPPC

Knowledge Coach

Platform ToolsCCH Engagement

CaseWare

ResearchRIA Checkpoint

Accounting ResearchManager

Non-integrated manual process

Non-integrated manual process

Addressing cybersecurity risk management

70%of connected devices contain vulnerabilities

56%of business leaders: “wouldn’t be able to detect attack”

rate reputation risk among biggest strategic risks

87%

$4 million

Average total cost of data breach

Leading in cybersecurity risk management

Proposed criteria

CPA attestation guidance

Resources for finance executives

Cybersecurity Resource Center

PCPS toolkitaicpa.org/cybersecurity

aicpa.org/cybersecurityriskmanagement

Professionalization of Client Accounting Services

FirmStrategy

MarketDemands

Training & Certificate

Growth ofPractice

StandardsSSARS 21

MediaCoverage

AdoptionCurve

CAS is now a core practice area for firms

Deloitte 2016 Global Outsourcing Survey: Key Findings• No Longer Viewed as Just Cost

Arbitrage

• Solves capacity issues• Creates scalability• Provides access to intellectual

capital

• Creates New Opportunities for Service Providers and Clients

• Improves quality• Improves user experience• Captures and enables

innovation

• Cloud Technology Can Be Used to Transform Processes

• Accelerate speed to value• Reduces implementation times• Improves functionality

Expansion of CAS Ecosystem

Pre-AccountingGROWING FOCUS

Real time inputsoutside of finance

(expenses, transactions, etc.)

AccountingIN PLACE

Cloud Accounting(G/L, Payables, Payroll, etc.)

Post-AccountingGROWING FOCUS

Business Intelligence(Budgeting & Forecasting, Planning, KPI Dashboards,

etc.)

CGMA Business Model Framework

CGMA Business Model Consultation Framework

Define

• Re-define current bookkeeping service into CAS• Create focus on niche trends• Determine national/international capabilities• Revise partner agreements• Establish compensation system

Create

• Partners: Cloud based companies• Resources: Existing people and hiring strategy• Processes: Automation, Analysis and Review process• Activities: BPO, budget, forecast, profit growth• Outputs: Timely FS, dashboards and KPIs

Deliver

• Segments: Niches/Verticals, Firm specialties, Individual passion• Channels: Trade sources, social media, existing clients

Capture

• Cost: Saas fees, training, certification, staffing• Revenue: Value pricing (3 tier), monthly recurring• Surplus: Performance pay, profit share

40

Client Accounting Services Sample Business Model

Taking a holistic approach to financial planning

Integrated services for individuals

Estate planning

Retirement planning

Charitable planning

InvestmentsRisk management

Taxplanning

Tax compliance

Questions?

Thank you

Please Contact Us!

AICPA Private Companies Practice Section (PCPS)

[email protected] Firm Global Connection

[email protected] Discount Code: INTEGRAFGC10

AICPA Tools for Today’s International Firm · By 2020. The easiest thing is to react. The second easiest is to respond. But the ... CaseWare Research RIA Checkpoint Accounting Research

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