The Accountancy Profession In The New Normal

How The Pandemic Is Affecting The Accounting Industry

As far back as 2014, about 77% of accountants already use social media as part of their marketing and branding strategy . This is reinforced by a more recent report, illustrating that accounting firms of all sizes are using different social media platforms for their business. This figure is sure to grow in the coming years, especially with a whopping 4.20 billion active social media users as of 2021 . As such, about 67% of accountants now believe that cloud technology can make their roles easier .

  • During this time, Charles spent more than eight years working at Price Waterhouse and Arthur Andersen where he began his career as an auditor before transitioning into a strategic planning and marketing role.
  • The software comes with an intuitive dashboard that visualizes financial performance and helps professionals stay on top of invoicing, payment reminders, and billable hours tracking.
  • Some six months later, to ascertain further insights, including the views of CAPA members for 2021 and beyond, CAPA undertook a live polling session at a Member Forum organized in December 2020.
  • The AICPA’s FAQs — Audit Matters and Auditor Reporting Issues Related to COVID‐19is an excellent resource.
  • Whether you’re providing services for someone or whether you’re providing the service yourself, it is all about “How can I use analytics better to provide whatever service it was?

Group auditors need to consider how they plan to review component auditors’ work to meet the standards’ requirements. This should include considering whether alternative procedures should be used, for example, where travel is restricted. Some businesses might cease operations or operate at reduced capacity, which could affect How The Pandemic Is Affecting The Accounting Industry the probability that performance targets for share-based payments with performance conditions are met. In addition, the changing economic environment could affect the assumptions used when valuing such awards. Modifications of share-based payment awards might result in the recognition of incremental compensation cost.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities.

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To understand the temporary and long-term changes to the accounting profession that resulted from the crisis, the authors reached out to CPAs working in public accounting and industry, and asked them about their experiences. We focused on understanding how the pandemic and its economic consequences have changed our profession, both in the short term and the long term. Our survey comprised a list of open-ended questions, covering topics including challenges identified by staff and customers, hiring and layoffs, pay cuts or furlough, technologies related to working-from-home, work-life balance, and office set-up. We received responses from owners of local public accounting firms, managers working in accounting departments of large corporations, and senior-level employees of large national and international CPA firms—including the Big Four. Ultimately, robotic accounting results in reduced labor costs, shorter cycle times, increased accuracy, and simplified workflows. Although RPA is changing the face of accounting firms, it is important to remember that it will not eliminate human accountants.

Pursuing mergers and acquisitions, filing for bankruptcy protection, building a new production facility or restructuring from the ground up are major changes, albeit ones that many companies might need to strongly consider as markets expand or contract . All of these changes require accountants and corporate finance professionals with strong technical skills and knowledge as well as the communications and leadership savvy required to collaborate with those across their organizations. The changes to the business environment, the introduction of new legislation and programs, and the expansion of existing ones have been swift. Clients face complex and confusing choices that may have long-term (and short-term) consequences. To add clarity to the chaos, many are turning to their CPAs as they grapple with these challenging times and attempt to navigate available incentives. While this creates new opportunities for CPA firms, it also introduces new, corresponding risk.

Still, with technological advancements and the emergence of computerized accounting systems, accountants working from home are able to produce excellent results in their work as those in office settings. The use of social media in various industries helps improve brand awareness, increases sales, and drive website traffic. For accountants, it is quickly becoming a powerful branding and sales tool that boosts their exposure, demonstrates their expertise, and provides many opportunities to learn more about the industry. Many accounting leaders and accountants are feeling the business impact of automation and high-tech systems .

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COVID-19 has caused PE firms to adjust their valuation practices – postponing valuations to avoid reset triggers, exploring new approaches to valuations or diversifying existing ones. This is alyx™ – our streamlined concierge-enabled platform that connects real problems with the right resources and real solutions. Whether you are looking to improve the performance of your tax functions or streamline and automate your data collection, we understand your challenges. Together with PitchBook, we give you the focused insights to take advantage of the trends.

We’ve gone the extra mile so students in our program obtain the skills necessary to be successful. Businesses need to operate sustainably, measure the results and then report those results. This is just one example of the very practical applications in our curriculum, so students can experience how a subject works and how it is applied.

How The Pandemic Is Affecting The Accounting Industry

“You can’t control the economy, but you can control how you react to it,” he said. The insurance industry can profit from an unprecedented opportunity for growth through employing an ecosystem strategy. Understanding how data is used in your system can enhance your energy firm’s cybersecurity and help it become more efficient and cost-effective.

We must achieve this progress collectively, with clear and measurable goals. Intellectual curiosity about the latest technologies and their potential application are critical for accounting firm executives to lead their teams, advise clients, and sustain a competitive advantage. Accounting firm leaders need to cultivate emotional intelligence, empathy, cross-cultural intelligence, and business savvy to help clients, colleagues, and employees navigate the ongoing disruption and transformation. Corporate managers, facing enormous market pressures to meet reporting deadlines, are unlikely to miss them this filing season, said Yelena Barychev, a partner with Blank Rome LLP who advises corporate boards.

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Employing organizations must become ever more diligent and innovative in transitioning back to in-person work. It is critical to consider architecting hybrid or virtual protocols that consider best practices, including for example, data hosting and management functions while faithfully abiding by ethical obligations. Professional accountants must apply a deeper understanding of data analytics and technology to their work while being fully attuned to the ethical risks in order to uphold the profession’s good reputation. In Australia alone, 79% of small and medium businesses say they are expanding software purchases for a more digital future, according to a Gartner study.

There is an ever-growing appetite for smaller, more manageable chunks of practical advice and training, reflecting an increased need for real-world, up-to-date advice. The disease has caused significant reduction in social interaction, with shutdown of public facilities and limit on physical interaction. Measures taken to contain the virus have significantly affected economic activities and global markets, with some industries more severely impacted than others. Amidst the global pandemic that has brought the whole world to its knees and by extension affected the global markets on all fronts, the Institute of Chartered Accountants of Nigeria is committed to maintaining Audit quality even in these uncertain times. Process automation software can help your firm meet the evolving challenges of modern accounting and provide a strong competitive advantage. Visit to learn more about exciting innovations revolutionizing the accounting industry.

The automation of accounting processes will further increase in the short- and long-term. Technology will broaden the audit function to garner more insight into data, allowing auditors to play a more active role.

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But it was unclear exactly what challenges are having the biggest impact, how firms like yours are adapting, and what the future might look like. In the best of times, companies with accountants who manage well-organized finances and audit-ready processes give shareholders and potential investors confidence as to its direction and fiscal health. Now, in a volatile economy where some industries are experiencing unprecedented hardship and others are poised to grow, the need to maintain this confidence is more critical than ever. Just as the pandemic increased risks of unethical behaviour, efforts to rebuild will equally increase opportunities to evolve for the better. The accountancy profession must be cognizant of the mindfulness required to act competently, with integrity and due care, and to be objective in exercising judgments without being compromised by bias. As such, professional accountants must be conscious of issues colleagues could be facing—and not talking about—that might impact judgments and ethical decision making. Agility will be a critical skillset in navigating the uncertain months and even years ahead.

How The Pandemic Is Affecting The Accounting Industry

Such changes have implications on employing organizations, the internal operations of firms, the clients they serve, as well as the nature of certain client interactions and relationships. For professional accountants to maintain the highest standards of ethical conduct, and where applicable, be independent, they must remain alert to new information and changes in facts and circumstances. For example, think about public companies that link the finance team’s compensation to the organization’s performance.

And few want to return to the office full-time when this is all over. Dining, they needed to address questions about the profitability and feasibility of the move, including analyses of employee compensation, car insurance, and handling tips, which are highly regulated in his state. He was able to do that with Excel, “setting up some advanced formulas so there are just a few key metrics” he needed to adjust to test possible outcomes for different scenarios, he said. The COVID-19 is having a huge impact on the global economy, with manufacturers and the travel industry bearing the initial brunt as the impact expands.

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We will be accustomed to digital processes we once thought impossible. How we anticipate the future will be informed by an experience many of us never imagined would happen. The rapid adoption of tax and accounting technology — Hood cites research suggesting that the use of artificial intelligence, robotic process automation, the cloud, and other technologies advanced five years during the pandemic. The CPA Journal is a publication of the New York State Society of CPAs, and is internationally recognized as an outstanding, technical-refereed publication for accounting practitioners, educators, and other financial professionals all over the globe. Edited by CPAs for CPAs, it aims to provide accounting and other financial professionals with the information and analysis they need to succeed in today’s business environment. When looking at the next busy season, accountants are worried about the communication with clients and within the companies since most will still be working remotely.

While the audit process was already evolving with the emergence of new technology and growing investor expectations, COVID-19 has significantly accelerated the evolution toward a “virtual” audit. They’re talking about the clerical positions; they’re not talking about a lot of the higher value work that’s being done by the accounting profession. That’s what we’re focusing on with our students here — teaching them what to do with the information, how to do the critical analysis and make a decision, because that is where the value-add is going to be. I don’t think the critical thinking skills are going to be replaced by technology in the foreseeable future.

  • The 25% of PAOs forecasting a deterioration in financial sustainability must not be overlooked.
  • With more than 20 years of professional experience, he is responsible for identifying and implementing cutting-edge innovation to transform and drive the future of audit.
  • But our survey demonstrates that we adapted quickly—and in the midst of last year’s tax season, when the pandemic hit us with full force.
  • During these challenging times, you might consider providing customers free goods or services that aren’t explicitly promised in the contract.
  • And these new ways of operating need to be done in a way that adheres to established standards and delivers assurance to stakeholders.

Regulators at the Public Company Accounting Oversight Board are watching. George Botic, the board’s director of inspections, said at a Jan. 21 academic conference that the turnover of experienced staff is an emerging audit risk, repeating a similar warning he delivered in December. Crowe may have to shuffle work around to meet the deadlines that publicly traded companies face.

The future of audit will involve real-time auditing, in which clients record transactions on a blockchain and the auditor is alerted if there are any unusual interactions — for on-the-spot auditing. Allowing the machine technology to perform routine, rule-based tasks also results in a much more efficient audit, and allows the auditing professionals to get razor-focused on outliers and anomalies. One of the comments we often get from recruiters about our students is that they’re some of the best prepared students to start at day one.

  • The general sense is that firms are worried about keeping clients, attracting clients, and their revenues in the near future, but they are not worried about having work to do; if anything, the crisis made the need for accountants more apparent.
  • However, as jurisdictions around the world progress toward a more hopeful future, the ethics challenges the accountancy profession and stakeholders face are far from over.
  • Firm leaders will continue to focus on RPA solutions that keep up with the changing accounting landscape and serve as practical tools to manage repetitive tasks that cause operational inefficiencies.
  • Evidently, the UK’s exit from the EU has created necessary demand and opportunities for practice outside of its borders.
  • Further guidance can be found in ISA 315 Identifying and assessing the risks of material misstatement.

The UK also has the lowest percentage of accounting professionals who want to return to the office—just 12% of all surveyed wish to return to the office permanently when it is suitable to do so. To grasp the full impact of COVID-19 on the industry, we surveyed almost 1,000 accountants across 20 countries. They told us how their firms have been affected, how they are adapting to working remotely, and what they want to see happen next. Accountants have always been in demand, serving an important function for successful companies. Now more than ever, the business community will look to accountants for their analytical insight and their stewardship of corporate finances.

For example, if tax compliance services are delivered, is the engagement letter strictly for tax compliance services? Or does it, for example, include “limited tax planning” or similarly vague language, which may be interpreted to include advising the client about tax planning or relief opportunities? In times of uncertainty, it is extremely important that clarity exists and is supported by a written communication between the client and the firm. Ensure clients understand that first- and second-quarter estimated tax payments are both due July 15, 2020. Timely communication on this matter is critical to allow clients time to determine the source of their tax payments. If clients are forced to sell assets at a loss in order to make payments, they may later assert that the CPA is responsible for the losses due to unclear instructions.

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As the current situation is very fluid, it will need to be constantly reconsidered during the audit. Further guidance can be found in ISA 315 Identifying and assessing the risks of material misstatement. The general requirement is that the balance sheet reflects the position at the end of the reporting period. Therefore, for companies in Europe with a 31 December 2019 year-end, the emergence of coronavirus is a non-adjusting event, since the outbreak occurred midst of January 2020.

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The COVID-19 pandemic has accelerated the adoption of robotics process automation within accounting firms. The ability to automate a wide range of activities without the need for complex programming can truly accelerate the journey to becoming a connected firm. When the COVID-19 pandemic shut down the global economy in early 2020, accountants were deemed essential workers because of their important role in sustaining business operations, tax collection, and the overall economy, Hood notes. In the months that followed, many accounting firms helped their business clients navigate unprecedented business challenges and leverage federal relief packages, including the Paycheck Protection Program and Economic Injury Disaster Loan program. As businesses transform the way they collect and process data, the accounting industry must remain a step ahead. That means continuing to invest in cognitive, machine learning and artificial intelligence capabilities to provide organizations with data-driven business insights as well as evolving reporting and regulatory requirements. This could require the use of both off-the-shelf and custom technologies.

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In contrast, 23% of respondents forecast only an online offering for examinations, and 16% mainly or only in-person. The latter may reflect the nature of the PAOs and countries involved, or current challenges, including the ability to manage the risks surrounding online examinations such as ensuring proper invigilation in remote settings. As an indicator of the resilience of the profession and PAOs, more than 50% of the PAOs are expecting their longer-term financial stability to remain the same, with the balance split evenly between those expecting improvements or deterioration. The positive outlook in student registrations and member retention rates discussed earlier will be a factor. Some PAOs have witnessed a noticeable uptake in professional development programs with amazing attendances at virtual conferences.