25th Annual Meeting Takeaways

This year’s annual meeting, held in Chicago, Illinois, was attended by over 30 attendees including members, prospects, and international guests. Below you will find a synopsis of the two-and-a-half-day conference.

State of the Profession and Disruptions for the Future
Lisa Simpson, Associate Director of Firm Service at the AICPA, presented a much-needed update into the state of the profession today and the disruptions that promise to transform accounting in the not-too-distant future.

Lisa addressed the new advances in technology that will radically change how accounting firms serve clients. Technology is projected to automate 49% of current activities such as data collection, data processing and predictable physical work. Cognitive technologies (artificial intelligence and machine learning), robots, data analytics and blockchain are the emerging technologies that will replace or eliminate mundane and predictable work.

Lisa emphasized that bitcoin and blockchain are not one in the same. Blockchain is the core technology. Bitcoin is an implementation of that technology.

While new technology will certainly disrupt the profession, it will also provide new opportunities for firms who embrace change. Lisa highlighted several resources available through the AICPA including OnPoint PCR, which is a prep, comp and review solution that launched in June 2018. For more information, visit cpa.com/onpoint

Lisa also spent time talking about the AICPA’s SOC Cybersecurity framework. With cyber security threats on the rise, organizations must demonstrate they are managing cybersecurity threats and have measures in place to prevent, detect and respond to security breaches. The AICPA has developed a framework that enables CPAs to examine and report on an organization’s cybersecurity risk management program. For more information, visit aicpa.org/cybersecurity

In sum, the major takeaway from Lisa’s session was that firms need to embrace new technologies and evolve to thrive in the future.

“The pace of change will never be as slow as it is today.”

Here are five things you can do now:

  1. Move from compliance to advisory
  2. Get others involved by forming a “future” committee
  3. Provide training for existing staff
  4. Recruit for new skills (consider buying those skills)
  5. Value Pricing

Blockchain’s Impact on the World of Financial Markets
We were excited to welcome Ron Quaranta, Founder of the Wall Street Blockchain Alliance, to talk to us about blockchain. In his session, Ron gave a high-level overview of what blockchain is, how it’s used in the global marketplace, and how it will impact the accounting profession. If you have not already done so, we recommend reviewing Ron’s slide deck.

Major takeaways:

  1. Blockchain greatly reduces the opportunity for both human error and the errors that arise when reconciling complex and disparate information from multiple sources.
  2. Once committed, accounting records are not alterable, even by the owners of the accounting system.
  3. Blockchain will allow digital documents & invoicing through smart contracts; automatically processing and recording payments in real time.
  4. There are utilities being developed to monitor on-chain transactions.
  5. There is still a lot that needs to be considered, including developing standards for cryptoassets, assurance of blockchain companies, taxation of cryptoassets, and cryptoasset management.
  6. Blockchain interoperability will accelerate adoption.
  7. Data management and value transfer will become cheaper and more efficient.
  8. Smart contracts will alter how commerce is conducted across the globe.
  9. Blockchain is evolving faster than the internet.
  10. Blockchain-based records will make things easier for auditors.

Accountants will not need to know how blockchain works; this is the realm of developer specialists. Accountants will, however, be expected to understand what blockchain is and what the technology offers.

Furthermore, it will be essential for accountants to know how to advise on blockchain adoption and cryptoassets. To do this, accountants need to consider the impact blockchain will have on their clients.

IRS Update: New Regulations Impacting U.S. Businesses

Steven Miller, former IRS acting Commissioner and alliantgroup National Director of Tax, provided Congressional and IRS updates. Steven highlighted the areas where advisors will be spending most of their time trying to understand and comply with the new tax bill.
Steve specifically addressed:

• the overview of business changes,
• corporate rate changes,
• qualified business income deduction,
• partnership change,
• depreciation,
• expensing and cost recovery provisions,
• bonus depreciation,
• accounting methods for small taxpayers,
• restrictions on interest deductions,
• changes to fringe benefits and entertainment expenses,
• net operating loss provisions,
• corporate international tax,
• repatriation tax,
• R&D tax credit,
• The Path Act of 2015, and
• the Research and Development Startup Provision.

Accounting Firm 2025 – Automation and Its Impact on Your Firm

Anton Donde, of MyWorkPapers, provided insight about automation, specifically what it means and how it will impact accounting firms. Anton highlighted several practice challenges:

  • Rapid advances in technology, especially regarding hardware and software
  • Changing client expectations, specifically the demand for fast, accurate and competitively priced goods.
  • Buzzwords such as portal, blockchain and artificial intelligence
  • Continuous improvement of systems and processes
  • Staffing

Throughout this session, Anton stressed the importance of being future-ready. It’s not a matter of if automation is going to replace mundane tasks, it is a matter of when. Anton provided a high-level overview of MyWorkPapers, a paperless platform that helps accountants prepare and manage their work. Anton reviewed the features and benefits MyWorkPapers software offers. If you are interested in learning more about this software, let us introduce you to Anton.

Engagement Letter Trends for New Service Lines

A well-written engagement letter is important for many reasons. In this session, Stan Sterna, the Vice President of Aon, shared how to tailor an engagement letter to accurately reflect the objectives, scope and limitations of the engagement and responsibilities of the CPA and client. Stan also addressed limiting risk by including specific terms and conditions.

Stan covered the key components of an engagement letter, as well as best practices for formatting and finalizing the engagement letter. Stan concluded his presentation with two relevant case studies. A copy of Stan’s slides can be found here.

Trends in Partner Agreements – Reaching Expanding Horizons
In this session, Peter Fontaine, Managing Partner of Newgate Law, explored the fundamentals of partnership agreements and how to build a lasting and flexible document that will guide your firm through succession. Peter has more than twenty years’ experience as a lawyer exclusively serving the accounting profession.

Peter began by covering the importance of a having a partnership agreement and gave an overview of what is wrong with today’s partnership agreements. Here are some best practices for an effective partnership agreement:

  1. Avoid over complicated and out-of-date documents
  2. Ensure your managing partner and executive committee have a clear line of authority
  3. Firm governance should not be weighted in favor of the founders
  4. Partner duties and obligations should be well defined
  5. Mitigate a lack of accountability and effective performance management
  6. Define the requirements of effectively transition clients
  7. Be sure new partner admission/criteria and buy-in is clear
  8. Consider keeping regulated and higher risk businesses separate
  9. Consider moving to a shorter name or acronym. Factitious/network names are also becoming more popular.

Peter also talked about the five forms of partners (Equity, Class C, Class B, Income and Principals). The most common, according to Peter, is income partners. He concluded his session with coverage of new partner admission. Specifically, criteria, timing and buy-in. Six compensation models were addressed:

  1. Compensation by ownership interest/equal
  2. Compensation based on the book of business
  3. Compensation based on performance and contribution
  4. Base compensation
  5. Variable compensation
  6. Discretionary compensation

Peter is happy to speak with our member firms that have questions about their partnership agreements. We will gladly provide an introduction.

Using Technology to Create an Experience for Your 1040 Clients

Tom Schlichting of SurePrep, a preferred CPAsNET partner, talked about using technology to create a better client experience. The goal should be to create an experience your clients want and one that will make you more productive.

Tom provided a high-level overview of TaxCaddy and how it will reduce costs while improving client service. If you missed Tom’s session but would like more information, click here to watch a demo.

Growth Ideas to Help Firms Leverage Tax Reform

The 2017 Tax Cuts and Jobs Act, the largest tax reform in several decades, presents many firms with substantial opportunities. In her session, Sarah Dobek, President of CPAsNET, shared ideas for firms to leverage tax reform to grow their tax and consulting practice.

Major takeaways:

  1. Each service line and industry group should define their ideal target client.
  2. Develop a client rating system to assess current clients, as well as a clear plan for any clients you need to release.
  3. Identify tax reform service opportunities – there are myriad opportunities to do more for your clients. As you brainstorm, think about service ideas, what your clients are most concerned about, and trends among certain client groups.
  4. Be strategic when packaging and presenting your opportunities. Consider the psychology of pricing. When you provide options, the result is often a higher spend. When you present pricing, it must be easy to understand the options and be clearly articulated in the scope. Also, consider packaging based on wants, or structuring the customer’s most valued service in the highest package.
  5. Reach new prospects through content development, social media and educational events.
  6. Create new opportunities with existing clients by holding non-engagement related meetings where the focus is on the client relationship and not the services you provide.

Selling strategically will allow you to focus your resources on opportunities that will make a positive difference for your firm. When you sell with intention, you will be more efficient and productive.

Preparing Your Firm for the General Data Protection Regulation (GDPR)

In an increasingly data-driven world, it has become common practice for companies to collect and store personal data. Recognizing that the rules and regulations surrounding data privacy needed updating, the European Union decided to evolve and strengthen previous directives. The result is the most important change in data privacy regulation in 20 years: The General Data Protection Regulation (GDPR). Effective May 25, 2018, failure to comply with the regulation will result in heavy fines; up to 4 percent of annual income or 20 million Euro.

In this session, Sarah Dobek, President of CPAsNET, provided an overview of what GDPR is, what it requires and why it should be on your radar.

Major takeaway: accounting firms need to:

  1. Understand the need for compliance
  2. Update their privacy policies
  3. Begin obtaining content for non-clients for marketing purposes
  4. Evaluate third-party agreements for GDPR compliance
  5. Talk to an attorney if deeper guidance is needed

If you would like more information or if you would like to submit a question to one of our speakers, please let us know. Our 25th Mid Year Meeting will be held November  7-9, 2018 in Scottsdale, Arizona. More details and registration coming soon!

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