Accounting

The accounting industry is in a constant state of flux as a result of government legislation, evolving business trends, globalization, and many other factors. Many accounting firms have gone "paperless" and interact with clients via cloud computing, collaborative software, mobile technologies, and social media. Personal skill requirements are also changing. The industry is requiring accountants to have technical knowledge, but also communication, problem-solving, and other skills. New health-care and environmental laws and regulations (especially at the state level) are creating demand for accountants with experience and specialized training in these areas. These are only a few of the developments and trends that will shape the future of the industry.

Technology

Technology is changing the way accountants do their jobs. Cloud computing, for example, gives accountants the option to work anytime/anywhere and to work in real time with clients. Content and document management software is allowing firms to digitize content and documents and to more easily access them and disseminate them to clients or regulators. New more powerful and less expensive software and analytical tools are expected to reduce demand for lower-value accounting services such as bookkeeping, data entry, and the preparation of simple tax returns. Technology "will shift the focus of accounting from computation to consulting, as clients increasingly rely on their accounting professionals to analyze business information, support decisions, and provide strategic advice," according to the Intuit 2020 Report: Future of the Accounting Profession.

Technology continues to transform the accounting industry. Robert Half Finance and Accounting reports that accounting professional need to master the following technical skills to be successful in the field:

• Advanced Excel
• Enterprise resource planning (ERP) (e.g., SAP, Oracle)
• Big data analysis, advanced modeling techniques, and SQL
• Business intelligence software (e.g., IBM Cognos)
• Microsoft Visual Basic
• Hyperion (for analyst and financial reporting roles)
• Microsoft Visual Basic skills
• QuickBooks (for positions with small and midsize firms)

Technology is also changing the way people communicate. Zoom and other video conferencing technologies have become popular tools for job interviews and client meetings. Many accounting firms are using social media to market their services to potential clients and to communicate with current clients. Accountants are raising their industry profiles (and increasing their chances of landing a job or getting promoted) by participating in blogs, Web forums, and other online activities. Some have popular podcasts. Mobile computing devices are expected to "become the main tools for managing the accounting professional’s complex choreography of work and life," according to the Intuit 2020 Report: Future of the Accounting Profession. "These technologies will reinvent work and the workplace, allowing greater flexibility around when, where, and how work is done."

Generative artificial intelligence (AI) is one of the newest technologies being used in the accounting industry. It is a form of machine learning algorithms that can be used to create new content, including text, simulations, videos, images, audio, and computer code. One of the best-known examples of generative AI is ChatGPT, which was released in late 2022 by the San Francisco-based company OpenAI. In the accounting industry, generative AI can be used to complete repetitive tasks such as inputting and matching data, preparing and sending invoices, creating expense reports, account reconciliation, data recording and reporting, and writing and sending basic client correspondence. Its use will reduce the need for many types of administrative workers (such as accounting clerks) and allow accountants to work on more demanding tasks. Humans will still be needed to handle higher-level accounting functions such as financial reporting, taxation issues, and internal controls. The use of generative AI sounds great, but it’s important to understand that this technology is in the early stages of development and it is only as good as the information that it receives (or that is available online or through other sources) before it creates new content. And since the field of accounting is based on trustworthy information, human-to-human interaction, and the importance of data security, accounting firms must be careful in their use of generative AI until all of the operational and ethical issues are addressed and studied. “It’s fantastic that so many accountants are willing to wield the AI sword in their attempts to cut through the forest of work besetting the profession, but they’d do well to remember—that double-edged sword is sharp,” advises Tom Herbert, the technology editor in an article on the use of generative AI in the accounting industry at AccountingWEB.co.uk.

Accounting in the Cloud

Cloud computing enables workers to use the Internet to access software, data, and other computer services that in the past they could only use from a desktop workstation or local network. It is becoming increasingly popular in the accounting industry. Organizations worldwide spent $247.1 billion on cloud computing infrastructure services in 2022, according to a report from Canalys, a global technology market analysis firm, up from $191.7 billion in 2021. Cloud-computing technology allows accountants to work anytime/anywhere and to work in real time with clients (using programs such as Xero). The use of cloud computing is expected to help accounting firms and businesses save time and money. Nearly 60 percent of accounting professionals surveyed by Caseware International in late 2022 said they were using cloud platforms in their practices to some degree. Slightly more than 50 percent of respondents said they were using a hybrid approach of both cloud and traditional desktop solutions. (Caseware International is a provider of accounting, auditing, financial, risk, and governance software). Seventy-four percent of survey respondents planned to adopt some form of cloud technology over the next two years.

Security Concerns

Technological innovations are saving accounting firms and their clients time and money, but these breakthroughs, according to the CPA Horizons 2025 Report, "Open the door to both potential errors and fraud in the creation of [financial] information. The history provided by paper documents is lost when electronic documents can be modified in a split second…and the security and privacy of information is at risk to those with malicious intent and technical skill." The accounting industry takes this issue very seriously, and it continues to devise strategies and technology that protect financial information from error, fraud, and access by unauthorized parties.

It’s No Longer Just About Accounting Skills

Strong technical accounting knowledge is no longer enough to be successful in the field. CPAs must also "develop problem-solving, communications, leadership, and other interpersonal skills," according to the CPA Horizons 2025 Report. The report also stresses the importance of developing fluency in a foreign language; increased knowledge of economics, finance, and technology; and expertise regarding the international marketplace and social, economic, and political trends.

The massive amount of data generated by companies is changing the skill sets required for less-experienced auditors, from a role focused on information gathering and routine tasks (e.g., testing cash receipts, confirming bank balances) to a more analytical and customer-focused position. “The volume of data that companies create is astounding,” according to “The Evolution of Auditors: How Skillsets are Changing,” from PwC. “This data is often in disparate systems, and the extent of the information captured may not be widely understood within the company. However, being able to effectively and efficiently capture and analyze this data is increasingly important to performing the audit, and being able to provide insight into operational effectiveness, business trends, and business and compliance risks. Leveraging technology to be able to identify, analyze, and interpret the data is therefore an increasingly important skillset for auditors.”

Globalization Brings Rewards and Challenges

Globalization offers "unprecedented opportunities for the [accounting] profession to expand into new markets," according to the CPA Horizons 2025 Report. But the Intuit 2020 Report: Future of the Accounting Profession reports that globalization will "require accounting professionals to master new skills, knowledge, and standards as a growing number of clients operate across borders."

Although technology is helping U.S.-based accounting firms expand and prosper abroad, globalization also has a downside. Technological innovations have also allowed foreign firms to gain access to the U.S. market. These firms may charge lower fees, but many of them lack the high practice standards of top U.S.-based firms. Many also employ accountants who have not earned the CPA designation, which is considered the "gold standard" in the accounting industry. Many industry experts believe that globalization will increase the outsourcing of U.S. accounting jobs to foreign companies that pay lower wages than those earned in the United States. Finally, U.S. firms doing business abroad will need to become familiar with International Financial Reporting Standards, which differ from the generally accepted accounting principles that are used in the United States.

Mergers and Consolidation

Mergers and acquisitions continue to be common in the accounting industry. In 2022, there were 119 mergers reported by the top 100 public accounting firms (as ranked by Accounting Today). They are being completed as a way for companies to expand their expertise, enter regions or markets where they did not have a high profile, obtain access to proprietary technology, and meet other goals. “The hunt for personnel has even become a significant driver of merger activity among the Top 100,” according to Accounting Today, as a way to complement or enhance a company’s capabilities and services.

What do all these mergers and acquisitions mean for you? Potentially shaky employment prospects, for one, if your firm is part of a merger—if the new company needs to eliminate redundant departments or positions. On the other hand, a merger or acquisition can also help your employer—increasing company revenue, which may translate into more job stability, more company perks, and higher pay.

Billing Changes

Changes in technology and other factors are prompting some CPA firms to move from billing by the hour to creating set prices with value pricing. CPA firms that are using value pricing believe that it will create stronger working relationships with customers, who can pick what level of value pricing is a good fit for their accounting needs. Firms also believe that value pricing will improve communication with clients and help accountants increase their value to businesses.

“Fit” is Becoming More Important

Demand is growing for accountants and auditors, which is creating a buyers’ market. Job applicants are becoming more concerned with how they might fit into a company’s corporate culture. Robert Half Accounting & Finance reports that more than 33 percent of job seekers it surveyed would reject a job “that was otherwise a perfect match if the corporate culture wasn’t right.” Managers are even choosier in this respect. Robert Half found that 90 percent of managers it surveyed said that a candidate’s perceived fit with company culture was either equal to or more important that their experience and skills.

Hedge Fund Administrator Firms Need Accountants

The growth of the hedge fund industry has created demand for accountants. Hedge funds are privately offered, professionally managed investment vehicles that seek, like all financial investments, a positive annual return, limited variations in value, and the preservation of capital. In 2021, hedge funds worldwide managed more than $4.5 trillion in assets, according to Statista.com, up from only $2.9 trillion in managed assets in 2014. Today, there are more than 11,000 hedge funds in the United States alone. The rise of this industry has fueled the growth of administrator firms such as State Street and Citco, to name a few. These firms provide back-office and middle-office services (i.e., accounting, tax, operations, and compliance services) to hedge funds, and they are always in need of knowledgeable accountants. As a result, administrators offer generous compensation in order to recruit experienced workers.

Scandals Prompt Changes in the Accounting and Finance Industries

The accounting industry has been involved in several major financial scandals in the past 20 years. In 2002, the federal government indicted Arthur Andersen (a member of the accounting "Big Five") for obstruction of justice for its role in the bankruptcy of one of its clients, Enron Corporation. As a result, Andersen lost many major clients, fell from its Big Five position, and was prosecuted. In response, the federal government enacted the Sarbanes-Oxley Act (2002), which requires higher levels of financial accounting and disclosure from all publicly held companies. In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to financial scandals on Wall Street (in which the accounting industry played a role). The act increases regulation of the financial industry and offers improved protections to consumers. In 2018, Congress weakened some aspects of the Act, especially relating to financial oversight of small- and medium-sized banks. The Sarbanes-Oxley and Dodd-Frank Acts, which have caused accounting firms to tighten their accounting standards, have also created many new employment opportunities for accountants and auditors as companies seek to comply with government regulations, encourage investor confidence, and avoid financial scandals.

Baby Boomer Retirements

In 2020, the American Institute of CPAs estimated that nearly 75 percent of the CPA workforce met the retirement age. A large number of baby boomers (those born between 1946 and 1964) are retiring from the accounting profession, which is creating strong demand for new accountants and good advancement opportunities for current accountants. One caveat: The economic recession caused some baby boomers to stay on the job past retirement age, and many are continuing to work rather than retire.

Health-Care Accounting Specialists Wanted

Amidst great controversy, Congress passed the Patient Protection and Affordable Care Act in 2010 and the Health Care and Education Reconciliation Act in 2012. These acts aim to make health care more affordable and have increased the number of people with access to health care. The acts contain more than 500 provisions, including more than 40 that added to or amended the Internal Revenue Code. As a result, demand for accounting professionals who specialize in health-care accounting has increased as the Internal Revenue Service (IRS) has implemented provisions of the act and businesses deal with the ramifications of the laws. Expect the IRS to hire more accountants because it is tasked with overseeing a significant part of the legislation that, according to Accounting Today, "Includes, but is not limited to, administration of additional taxes, penalties, and fees on individuals and employers; determinations of various exemptions from those taxes; and oversight of new information reporting requirements."

Green Accounting

Green accounting is the "identification, prioritization, quantification or qualification, and incorporation of environmental costs into business decisions," according to the U.S. Environmental Protection Agency. Green accounting (which is also known as environmental management accounting or environmental accounting) is a fast-growing specialty for certified public accountants as more companies stress the importance of identifying the environmental costs of production processes and the construction of facilities, the public is becoming more concerned about companies’ environmental footprints, and more environmental laws are passed. Large companies frequently have green accountants on staff, and top public accounting firms often employ environmental consultants to provide services to companies or government agencies that do not have in-house staff. Green accountants also work at consulting firms that specialize in this field. Others start their own firms. Look for increasing demand for green accountants during the next five to 10 years.

Forensic Accounting

The news is filled with stories of financial fraud in the business, banking, government, nonprofit, and other sectors. This fraud adds up to billions of dollars of lost revenue, loss of investor confidence (when publicly held companies are involved), and a spate of criminal and civil investigations (that cost taxpayers, investors, and other stakeholders a lot of money). Corporations, government agencies, and nonprofits are increasingly hiring forensic accountants to identify and document financial wrongdoing and to prepare reports that may be used in criminal and civil trials. Revenue in the global forensic accounting market size is expected to grow from $5.13 billion in 2021 to $11.68 billion by 2031, according to Allied Market Research. The market research, consulting, and advisory firm says that “the forensic accounting market was positively affected by the COVID-19 pandemic and showcased a positive growth rate during the period, owing to a significant increase in financial fraud and tax-evasion cases across the world, which contributed towards the growth of the forensic accounting solutions market during the period.” Due to this demand, the overall outlook for forensic accountants should be very good in coming years.

More Firms Focusing on Niche Services to Gain Market Share

Growing revenue remains a challenge for many accounting firms—especially those outside of the Big Four—and many companies are pursuing a wide array of strategies to increase business. “By far the most commonly cited strategy [by the 100 firms with the highest revenue] is the pursuit of specialization, and deeper expertise and exposure in those areas of specialization,” according to Accounting Today. In 2022, the magazine asked the top 100 accounting firms to identify niche areas in which they increased business. Eighty-five firms replied. Here were the most popular niche services:

1. attest (an independent review of an audit conducted by an accountant)
2. client accounting services
3. state and local taxes
4. information technology and data security
5. business valuations
6. estate/trust/gift tax planning
7. industry specializations
8. mergers and acquisitions
9. tech consulting
10. international tax

High Turnover and Declining Interest in Accounting

Despite the fact that demand is very strong for accountants and that accounting professionals earn salaries that are much higher than the average for all workers, more than 300,000 U.S. accountants and auditors left their jobs in 2021 and 2022 (according to The Wall Street Journal). Additionally, total U.S. bachelor’s and master’s degree in accounting enrollments decreased from 79,854 in 2015–16 to 72,923 in 2019–20, according to the AICPA. So, current accountants want to leave the field and fewer young people want to enter the field. What gives? Many factors are fueling these parallel trends, which the Securities & Exchange Commission has said could increase the risk of serious reporting deficiencies across businesses of all sizes. Many current accountants are tired of the long hours that are required in public accounting and students, hearing horror stories of 70-hour weeks during tax time, are choosing to work in related fields such as data analytics, the insurance industry, or the financial sector. Other factors cited by The CPA Journal include “high-stress deadlines, high risks associated with the potential for reporting errors, and lower wages compared to other jobs in finance” [as well as the] “extreme lack of diversity within the accounting profession,” which many young people view as an important feature of a good workplace.

Employers and professional associations are working hard to educate young people about the exciting and varied careers that are available in accounting, as well as stressing that artificial intelligence–powered technology will automate many of the most boring and repetitive accounting tasks. “Increased compensation, frequent and generous bonuses, better work-life balance, a host of new benefits and perks, and a greater reliance on recruiting professionals are just some of the most regularly cited ways the T100 [the top 100 accounting firms in the U.S. by revenue] are finding and keeping top talent,” according to Accounting Today. Many medium-size and smaller firms are also adopting these strategies.

More Firms Hiring Contract Workers

A growing number of companies are hiring contract accounting professionals as a result of increasing workloads, unexpected projects, and high turnover in the field. Seventy-eight percent of finance and accounting managers who were surveyed by Robert Half Accounting & Finance in early 2023 planned to hire more contract professionals. Top areas of demand for contract professionals include financial reporting, audit, and finance and financial planning and analysis. More companies are working with outside accounting firms that assist with or entirely manage a major project or business function.

Public Accounting Firms Improving Work-Life Balance and Benefits

Seventy-nine percent of workers surveyed by Robert Half for its 2023 Salary Guide said that they want better work-life balance in their lives. But some public accounting firms have not gotten the message and continue to require their employers to work excessive hours—especially during crunch times. As a result, many millennials are foregoing the long hours associated with public accounting and instead seeking out accounting careers at corporations—especially at companies that are considered “sexy” and “hip” such as Google, Amazon, Netflix, YouTube, Cisco, Nike, and Apple. A related issue cited by these executives was that millennials who were hired often stayed only two to three years before moving on.

Factors that are creating worker shortages and prompting high worker turnover include poor work-life balance, benefits packages that are not as attractive as those offered by corporations, a lack of career advancement paths (and/or too much time in lower-level positions without seeing any type of promotion), and a lack of leadership development and mentoring programs.

In recent years, public accounting firms have realized that in order to attract and retain talent, they need to make improvements in these areas. Robert Half Accounting & Finance reports that “firms are offering higher pay, along with improved benefits and perks. Skilled candidates commonly field multiple job offers, and entry-level professionals can command incentives they wouldn’t have been offered just a few years ago.” Some firms have started to introduce job-sharing and flexible work arrangements to attract top talent. Fifty percent of firms surveyed by Robert Half in 2019 offered flexible work schedules or telecommuting options.

“To improve retention, many organizations also are providing their best performers with bonuses, raises, promotions, increased vacation time, and mentoring and professional development programs,” according to Robert Half Accounting & Finance. Look for this trend to continue as competition for top graduates and experienced accounting professionals remains strong.

Each year, Accounting Today publishes a list of accounting firms that provide a good work/life balance. You can view its most recent list at https://www.accountingtoday.com/the-best-accounting-firms-to-work-for.