By Amelia Hart, CPA, and Steve Sledge, CPA
If change is the only constant, then we understand the current dynamic economic environment will introduce challenges and opportunities. As a profession, we are learning how to better respond to the challenges and leverage the opportunities of the future. The discussion that follows provides some thoughts on some of the challenges and opportunities that are coming in 2023 and beyond.
What might we expect to see more of during 2023 (and beyond)?
There will be new and known opportunities that the profession will continue to respond to during 2023. The demand for real-time information, for example, fueled by global competition, growth of the service sector, advances in digital technology, swifter communication and faster transportation, create opportunities. Firms may experience an increased demand for advisory services that can help clients increase revenues, execute new ideas, adopt new methodology or improve operational processes. These opportunities will continue to challenge the profession to grow beyond more traditional service lines.
Guidance from standard setters through 2022 should stay on the radar.
Standard setters employ due process to determine new or updated guidelines. For example, the Financial Accounting Standards Board (FASB) issued four updates in 2022 related to topics of fair value hedges, credit losses, fair value measurement and liabilities.1The American Institute of Certified Public Accountants (AICPA) issued significant guidance on four new quality management standards requirements for firms, auditors, reviewers and other users to adopt a risk-based approach to achieving quality management standards2 and issued clarified peer review standards for peer reviews issued as of May 1, 2022. Standard setters are consistent in the process of listening to stakeholders and responding with high-quality standards. The SEC issued its climate proposal exposure draft, The Enhancement and Standardization of Climate-Related Disclosure for Investors, in early 2022.3
A more detailed listing of final and proposed changes in accounting guidance can be found in the Appendix to KPMG’s Financial Reporting View at https://frv.kpmg.us/reference-library/2022/q3-2022-quarterly-outlook.html.4
Standard setters continue to support the accounting, assurance and information needs of public and nonpublic entities.
The SEC is an independent federal government oversight agency. The mission of the SEC is to protect investors; maintain fair, orderly and efficient markets; and facilitate capital formation.
The FASB establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). It is recognized by the SEC as the designated accounting standard setter for public companies.
The PCAOB oversees the audit of public companies and SEC-registered brokers and dealers to protect investors and further the public interest in the preparation of informative, accurate and independent audit reports.
The GASB is an independent, private-sector organization that establishes accounting and financial reporting standards for U.S. state and local governments that follow Generally Accepted Accounting Principles (GAAP).
The AICPA develops standards for audits of private companies and other services by CPAs.
Some Specific Challenges and Opportunities for the Accounting Profession in 2023
The challenges and opportunities for the new year may include recruiting and retaining talent, integrating technological advances and innovations, deploying data analytic tools in client services, using cloud-based solutions, and reimagining the remote workplace and office space to preserve corporate culture and a climate of togetherness.
Attracting Talent, Retaining Professionals and the New CPA Examination
The need for diverse talent in the human resource composition of professional service firms remains an area of significant importance as the focus on diversity, equity, inclusion and belonging supports the development and progression of a stronger and smarter workplace. Firms may continue to encounter great competition in the pursuit of new talent.
Colleges and universities will be challenged to attract accounting majors. College students have many options across the spectrum of competing career paths with competitive benefits, including salaries and work-life balance. We might expect to see stronger collaborations (e.g., further education about the profession in high schools) to help increase the supply and enrollment of accounting majors. Professionals and college professors will be challenged to more eloquently relay our experiences and the opportunities that an accounting degree can provide.
Future professionals (i.e., on campus) and current employees value flexibility and work-life balance in a career that offers competitive salaries and opportunities for career advancement and professional development. Recruits and current employees are interested in various topics related to employment opportunities including, among others: training, mentorship programs, employee engagement initiatives, and career and work-balance flexibilities.
The skill sets and desired competencies of the future professional continue to evolve today. One area that recognizes and responds to this change is the developers of the Uniform Certified Public Accountant (CPA) Examination. This change has integrated feedback from stakeholders on expectations of the knowledge and skill sets of future CPAs. As of January 2024, the new CPA exam will be administered to candidates under a Core + Discipline model. The exam core will include AUD, FAR and REG and offer the choice of one of three disciplines: Information Systems & Controls, Tax Compliance & Planning, or Business Analysis & Reporting.
Technology Advances and Innovation
Advances in technology continue to create opportunities. Technological advancement extends the reach and capabilities of the profession and will continue to provide prospects with the ability to leverage technology and data in ways that can improve the depth, breadth and quality of services across the profession. Technological benefits may be as simple as optimizing time and saving costs by conducting virtual meetings with clients and engagement team members. It may involve conducting inventory counts with drones or smart glasses, or it may extend to the use of cloud computing and digital information-sharing platforms where parties can access and share information quickly. In other, more complex technological areas, advances may encompass integration of machine learning, blockchain, artificial intelligence and other advances that could expand the reach and scope of services in more efficient ways. Underlying blockchain technology, for example, may expand the capabilities for validating information because it is based on an immutable ledger that enables the validation of transactions or underlying assets.
As technology and systems evolve, the profession can benefit from considering how engagements and projects (including compliance with professional standards) are conducted. Pre-COVID-19 processes can serve as a benchmark for growth and performance measurement. As new tools and requirements evolve, the profession has opportunities to systematically consider engagement activities and provide for more robust risk assessment and engagement focus to help ensure time and resources are deployed in ways that support effective and efficient project execution (or scope) and quality.
AI, Automation, Big Data and Data Analytics
AI and automation create potential opportunities for added benefits by replacing or supplementing human-intensive activities. AI and automation can alleviate instances of human error, process information faster, consistently apply automated controls and authorize transactions based on predetermined criteria. AI and automation are particularly beneficial as massive amounts of data accumulated in business may be used to support decision making via data analytics.
Data analytics will continue to provide opportunities to uncover insights, reveal relationships, show correlations, identify trends and provide information not discernible through human examination. Efficiencies will continue to develop in areas such as auditing, forecasting and the development of predictive models using 100% of a population’s data rather than sampling. These capabilities offer opportunities in both substantive testing and developing a professional’s client and engagement understanding as part of a robust engagement risk assessment (i.e., enhancing the depth and quality of engagement risk assessment).
The challenges that accompany the increase in data remain a challenge. These include confidentiality, privacy, access controls and the ethics of how amassed data is used. As engagements or processes evolve through the implementation and leverage of new technologies, it will be important to consider effective and appropriate deployment. Professionals will need to consider the controls over the appropriate and effective use of such tools and the controls and procedures over the quality (completeness and accuracy) of data and assumptions.
With all of these potential impacts and changes, professionals might consider planning for continuing professional education (CPE) and professional growth in the coming years to expand the understanding and use of tools that complement the way data and new technologies are deployed.
The year ahead will have many opportunities and challenges that the profession can embrace. The more progress we make as a profession in advancing and deploying new and smart technology, the greater the probability that we will attract and retain smarter talent with a diverse set of skills to meet emerging needs. We look forward to all that the new year offers.
References
1ASU 2022-01 Derivatives and Hedging (Topic 815): Fair VALUE Hedging—Portfolio Layer Method; ASU 2022-02 Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures; ASU 2022-03 Fair Value Measurement (Topic 820): Fair VALUE Measurement of Equity Securities Subject to Contractual Sale Restrictions; ASU 2022-04 Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations
2Statement on Quality Management Standards (SQMS) No. 1, A Firm’s System of Quality Management; SQMS No. 2, Engagement Quality Reviews; Statement on Auditing Standards (SAS) No. 146, Quality Management for an Engagement Conducted in Accordance with Generally Accepted Auditing Standards; and Statement on Standards for Accounting and Review Services (SSARS) No. 26, Quality Management for an Engagement Conducted in Accordance with Statements on Standards for Accounting and Review Services.
3Securities and Exchange Committee, The Enhancement and Standardization of Climate-Related Disclosure for Investors.
4https://frv.kpmg.us/reference-library/2022/q3-2022-quarterly-outlook.html
About the Authors
Dr. Amelia Hart, CPA, serves on the faculty of the Haslam College of Business in the Department of Accounting and Information Management at the University of Tennessee, Knoxville. She can be reached at ihart@utk.edu.
Steve Sledge, CPA, is a partner at KPMG LLP in Nashville. He can be reached at ssledge@kpmg.com.
This article was originally published in the January/February 2023 Tennessee CPA Journal.
