The accounting industry is rapidly changing. While staying on top of new tax laws is already a feat, the introduction of new technology with AI is challenging the industry like never before. These issues, paired with difficulties communicating with the IRS and a downward trend in finding talent, has accountants pushing forward and hoping for the best. Recently, a group of accounting experts met at a roundtable sponsored by City National Bank and held in Las Vegas to discuss the outlook of their industry and the challenges they face.
Connie Brennan, publisher and CEO of Nevada Business Magazine, served as moderator for the event. These monthly roundtables bring together different industries to discuss issues and solutions.
What Challenges Does This Industry Face With the IRS?
Daniel Gerety: The IRS is not staffed and they are not responsive. Things are getting lost. We are filing returns electronically and they do not have a record of them [even though] we have the acceptance from them. Or [the IRS] gives us a notice, we respond to it and [yet] they are already trying to put liens on clients’ accounts. They already have the answer that no taxes [are] due, but it has taken them nine months to answer their mail. It is the worst it has ever been.
Bryan Keller: It is embarrassing because when the client gets that letter and you know it is taken care of, you get tired of saying it is already done and [the client] does not need to worry about it. It is backwards.
Zachary Tompkins: [The IRS] is still behind from 2020. I read a consumer survey [that evaluated] the perception of the IRS to treat tax matters fairly, [and the survey indicated decreasing numbers]. It is the worst [it has been] since 2014. [Their] ability to protect us against cyber invasions and protect our data that they have is [at] the lowest perception [and has been] for quite some time. I think the perception that everyone has about the IRS is going to play a critical role in how this organization develops over the next few years.
Mark Bailey: It is important to recognize that the IRS is not there to help. They are talking about hiring an additional 87,000 agents to supposedly take care of the high-wealth taxpayers. The statistics I have seen say that those 87,000 could do 100% audits on that high-wealth group that they are talking about in two weeks. I do not trust them.
Keller: They are investing a lot of their money in AI, and we do not see that yet. [Consequently] the agents will become less relevant for field audits and stuff like that. That scares me a lot. They say they are going to hire 87,000 agents and everybody in the profession [is asking] if we cannot hire people, how are they? There is no way. It is impossible.
Jacqueline Matthew: Government generally does not do better than industry.
Gerety: And then the people they are hiring need to be trained. They are not up to speed and the experienced people have retired.
Diane Conant: We had two tax audits where [the IRS] brought in one of the trainees and [within] six weeks of the audit [their supervisor] fired them, and they had to start all over with a new trainee. They can’t hire any better than we can.
Kyle Bybee: We have had issues too with taxpayer advocacy service. I get a call every three weeks [from a new IRS agent saying] they are assigned to help on this case now. I tell them I just spoke to my new person that is assigned and they are embarrassed. They understand the problem.
Keller: The IRS, depending on the agent, can be very abusive. Once you get up to the top, though, that is when you are dealing with smart people. They all came out of [the accounting] profession and they know what they are doing. But taxpayers have to spend a lot of money to get to that level.
Is This Industry Still Experiencing a Staffing Shortage?
Dan Martin: [Staffing] is a little better [than it was 12 months ago], but it is trending down. I just finished as the chair of the Nevada Society of CPAs and attended the American Institute CPA (AICPA) meetings, and overall college enrollment is down and overall accounting enrollment is down. UNLV is holding steady, but there are some warning signs of fewer people taking the competency exam. It is that temporary blip on a downward trend, and the AICPA is seeing it. They are trying to do a lot of things to reach further into community colleges and even into high schools to try to get people into the profession.
Keller: The numbers show that at least in most of our lifetimes, it is not going to get any better. This [downward] trend has been going on for a while, even before the pandemic. It has been a steady decline and nobody can figure it out. We can’t figure out why [students] do not want to take the [competency] exam. It is alarming.
Bybee: Our industry needs to figure out ways of attracting more talent in order to build that pipeline.
Conant: Succession is very difficult. That is the reason so many CPAs have not retired yet.
Tompkins: The staffing [challenge] is also forcing us to be more selective on our clients.
Matthew: We have had some success with differing skill sets and hiring them into the firm to serve various roles. We are not going to set someone who is not a CPA in a role that really needs that technical background. But we have achieved some great success and made some fantastic hires by fishing in ponds that others are not considering because the skill set they bring is so incredibly adaptable. It is not going to solve the over arching problem, but internally we found some success with that.
Keller: [CPAs working 90 hours a week] is a misconception and a stereotype of our profession. Kids are not going to do what our generation did to get where we are at, which was to put our heads down and work. [We were] career driven. That is how we all got where we are at. But this new generation thinks differently about it.
Matthew: I think that [the younger generation] has it right. And we are going to have to shift our paradigm and how we work [to attract them]. And quite frankly, we may have to shift our income levels.
Martin: Whether we like it or not, there is going to be a hit to income and those hits come from [doing extra things to attract and retain talent].
Keller: Culture is the biggest differentiator. Our philosophy is to give as many tools that a person needs to achieve whatever [it is that] they want in their career. And that is our job. To coach them, dual mentor them, and [provide] career mentorship. [Accounting] is a profession, not a job. And this generation looks at it like a job more than a career.
Matthew: These individuals [in the next generation] want to have a life outside of their profession. There is success to be had personally and professionally and that ebbs and flows. But when the expectation is that [they work] 50, 55, or 60 [hours in a week], that is too much for them. They do not want to do it. It is up to all of us to shift that.
Is Rapidly Changing Technology an Issue for Accountants?
Dan Bowman: Figuring out how to leverage technology [is a challenge]. And then rolling that out to our relative practices and leveraging it appropriately based on our client or our specific needs is also a challenge.
Gerety: Keeping up to speed [on changing technology] is always our goal and using the tools that are available. But [we have to ensure we are not] wasting our time [on technology] until it is ready. [We are asking ourselves,] should we be letting [AI] draft our first tax letters to the IRS and then having the tax manager review that? Maybe that could help.
Keller: We are making big investments in AI. The next wave of technology coming is not like what we have known at this point. It is going to make or break [accounting firms] when you consider the investment and how to leverage it.
Bybee: Technology is huge for us right now. We have implemented a lot of different technologies the last few years. [The challenge is] building on that and figuring out ways that we can use that to compensate for not having as many good people.
Keller: I am worried about the next generation. How can they become us if they never went through [what we have?] You cannot short step what we do. It does not matter about the size of the firm. You must go through that funnel [of experience] and if a big chunk of work is now done by technology, I do not know how you become a manager if you have never worked in every possible situation.
Tompkins: Technology and cybersecurity go hand in hand. We have been taking an aggressive approach to leveling up every type of security measure we can. For a smaller, mid-sized firm like ours, the cloud-based hosting the server is allowing us to implement soft two-level security [and] bank-level security, to protect a lot of that data. It also allows us to implement technology a lot faster with a team of IT professionals in these cloud environments. So that has been a big thing that has really helped us out.
Gerety: Cybersecurity is an issue for everybody. It is not a question of how [you prevent your firm from] getting hacked, it is a matter of when [it will be hacked]. [The threat] is very severe for accounting firms because we have so much personal data.
Keller: Anyone could be hit [by a cyber-attack] at any time, but professional service firms [including] finance and accounting, probably have some of the tightest security around because of all the proprietary information we have. [A breach] would be devastating.
Gerety: We are a target. We stay on top of it to make sure that we have the best security that is available and hope for the best because [if] somebody wants to get into your system, they are going to get into it.
Conant: It [feels] like you cannot [electronically] open anything. You have to be so careful. [Cybersecurity] is one of our major costs because we have to get professional [help]. We are too small to do it in house, and so we hire and pay a lot of money to be that secure, but nobody is totally secure.
Matthew: We educate our employees [about cybersecurity]. It is a constant discussion of the two most important things in our firm, which are people and our data security. Beyond that, we do not even have a business. We invest heavily [in cybersecurity]. Our people are required to undergo trainings weekly on different frauds and scams and they test us. We are all going to be targeted 100%, but I think the education coupled with the [right] staffing is your best bet.
Is There a Concern That AI Will Replace People in This Industry?
Keller: Accounting finance is the number one profession that could be completely eliminated by AI. I tell our young people that they have to figure out how to add value because otherwise they are not going to be around very long.
Bowman: This is a people business more than it is a numbers business. We are paid to not get things wrong, but a lot of people can [do that]. And a lot of proposals are won with the technology, but most of our proposals are won because I have established a relationship and built it over the years. This person trusts me more than the other guy, or the other gal, who is proposing and is leveraging very similar technology, has a great team and [is] very professional. I just have a better relationship.
Bybee: People are using AI for asking questions and getting responses. We tell our staff all the time that they do not have to be perfect answer-givers. [They have to be able to] identify the issues. Because that is going to lead to all the questions and [our clients] trust us. I do not see AI doing that yet. We already use a lot of software and it gets stuff wrong all the time and we have been building on that for years. We are going to see that evolution with AI as well.
Matthew: I imagine that the feeling of [introducing] AI is probably similar to what those of us who have been in the profession longer felt when QuickBooks and [similar] software came out.
Keller: [AI] will help us more than replace us. It will be the best tool we have ever had access to.
Bailey: AI is a tremendous opportunity, but the risk of exposure is huge as well.
Tompkins: There is a lot of oversight [when using AI] that still needs to be done because we have a profession where we are paid not to be wrong and AI can still be wrong. Using it as a tool to get to from point A to point B more quickly and more efficiently makes sense. But everything still needs to be upheld to the quality and standards that we all know.
Conant: [AI] is not going to be right all the time. They do not have enough information.
Matthew: [Most CPAs and accountants] are conservative by nature and when we see [a new piece of technology] that is suddenly going to draft out a letter or a footnote, [it is a] little suspect. And I can tell when AI writes something like that. It sounds so similar. I do think it will become a tool for all of us regardless of firm size and we choose to use that technology in our firms. And for us who are smaller [firms] and do not have the resources of some of the larger firms, [we have to ask] is it really going to save us time? And if we have a manager reviewing it, is it then really saving us time? We will have to cross those bridges too.
Keller: In less than eight years from now, the way we are doing [audits] and tax returns will be totally different. [AI] is the biggest technology change [in my career]. Preparing manual returns to actual computer-based returns [was a major change before]. Nobody trusted that. But [the regular use of AI] is coming and we have to adapt. In our profession we can add value and if you add value, you will be fine because we still need to interpret material. The rules are complicated and a lot of [the job] is interpretation versus rule. [AI] is a tool and it is something we will adapt to and use.
