Lessons for the accounting profession from the coronavirus
These findings fit within a broader literature on the complicated effects new technology has on employment. Particularly with the resurfaced angst over artificial intelligence, the story of the accounting profession over the last five years provides a glimpse of how the market responds to labor-saving innovations. Rather than being a simplistic story of people being put out of jobs — and, it would seem, producing a glut of accountants — in some cases the dynamic can be a good deal more complicated than that and actually result in a shortage of workers.
- The plodding pace of change in the decade preceding 2020 shifted from evolution to revolution, bringing with it unique challenges, pressures, and questions.
- Working remotely wasn’t an option, he said, because there was no electricity and only sporadic cellphone service across a large area.
- Charles Hylan, CPA, MBA, joined The Growth Partnership as a Shareholder after dedicating 12 years consulting with, and working in, accounting firms ranging from sole-practitioners to National and Big 5 firms.
- “We utilized Microsoft Teams and VPN prior to COVID,” one spokesman reported, “and our Teams usage has skyrocketed during COVID for both video calls and document sharing.” Zoom and Skype are also popular choices for video conferencing.
- While unstable market conditions brought about by the COVID-19 pandemic may justify a change in valuation techniques and inputs, the rationale behind the change must be explained and disclosed.
- The pandemic has accelerated technological investment in continuous auditing.
- In addition, the AICPA has created a State Due Dates Chart Updated for COVID-19 Relief that summarizes state filing deadlines (available at aicpa.org; member login required).
COVID-19 has propelled many professionals and firms further into advisory services, and this need will continue – offering a great opportunity for the industry. Accounting firms, known for brick-and-mortar offices and in-person client experiences, have encountered new challenges during the past several months. But experts how has covid affected the accounting profession say those challenges — and the lessons learned from them — could lead to major long-term changes in the accounting profession, from new office setups and remote audits to a migration to cloud-based technology systems. Many accounting firms are dealing with more change now than they were six to twelve months ago.
How COVID-19 taught new ways to work
“We learned real quick that to be totally productive, we needed to try to replicate that office environment as much as possible,” Bourke said. “It really took a pandemic to, I believe, get the profession to embrace this remote-work concept,” Bourke said. Even before beginning the audit, it is essential for the auditor to take a holistic approach to examining the overall mechanism and operations of the interconnected business environment. Dorothy may not be going back to Kansas anytime soon, but BooksTime can take any small business to a better place and a brighter future.
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. Firms that already had at least one cloud system in place prior to the COVID-19 pandemic fared far better than firms that did not have any cloud systems in place.
The Auditor’s New Role
The crisis has only crystallized the necessity for firms to embrace advisory services. Clearly outline that the client is responsible for making all decisions, whether it’s addressing the advice and recommendations provided by the CPA or selecting the tax return position to be taken on an amended return. Be sure to include a statement that the client is responsible for providing complete and accurate information to the CPA.
- Rather than raising starting salaries to encourage students to major in accounting and become accountants, the industry in effect responded that it would prefer to continue relying on technology instead of paying better wages.
- In times of uncertainty, it is extremely important that clarity exists and is supported by a written communication between the client and the firm.
- We asked a collection of accounting’s thought leaders to share what knowledge they are seeing practitioners glean — and what they should be learning — from this unprecedented time.
- Students who may have been considering accounting majors switched to related majors such as finance in numbers large enough to contribute to the current shortage.
- This is an extraordinary time for the world, our country, and the profession.
- The road ahead may be long, but with concerted efforts to ignite early interest, expand educational opportunities, and address structural challenges, the way can be paved for a more diverse, equitable, and vibrant future in the accounting profession.
When reporting credit losses, ask yourself which accounting method is being used (e.g., discounted cash flows, loss rate, roll rate, or probability of default). Does any pool of assets need to be readjusted to reflect changes in the risk characteristics of the assets? Are there any Purchased Financial Assets with Credit Deterioration (PCD assets) on the books?
Key elements for successful remote auditing
Although remote services were relatively uncommon until the pandemic tsunami, the pattern of offshore accounting has been caught up in the surge, and the entire market is being swept by the current to distant shores—and fast. No matter what technical solutions are in play, to maintain credibility with their clients, CPAs must groom their soft skills to see their clients through these challenging times, according to an article on CPAPracticeAdvisor.com. Small businesses in particular found themselves thrust into the vortex of a cyclone that threatened to rip them from their foundations and tear them apart. According to Akhter, drones have already been used on occasion, particularly to assist in counting inventory.
That’s not to say the transition to 100% remote work went off without a hitch. At the firm’s offices, Bourke said, workers have two or three monitors and docking stations for their laptops. So the management team allowed staffers “to raid the offices” or get reimbursed for equipment purchases. Policymakers must develop suitable audit standards and appropriate analytic tools for big data. They must combine and clarify practical demands in light of business trends to further smart audit practices that increase audit assurance and audit quality.