The accounting industry is experiencing significant transformation due to regulatory changes, shifting client needs, and technological advancements like artificial intelligence.
Firms must adapt their business models to remain competitive, which involves leveraging technology for efficiency, expanding service offerings, and attracting top talent.
While these strategies can unlock new growth opportunities, firms must also address regulatory complexity, talent shortages, and technological disruption.
In this article, we will discuss the top challenges faced by accountants and CPA firms and how they can overcome these risks using the best solution.
Let’s find out what these are.
Top Issues CPA Firms and Accountants Facing
The difficulties that accounting and CPA firms encounter can vary based on the size, resources, and location of the business.
Based on the findings of the Journal of Accountancy, Spotlight Reporting, National Pipeline Advisory Group, and Thomson Reuters.
Here’s a comprehensive summary of the major issues CPA firms and accountants are confronting;
1. Top Priorities and Challenges
Efficiency and automation remain the top priorities for most firms.
Staffing issues are a major concern, including finding qualified staff, managing their retention, and developing future leaders.
For sole practitioners, keeping up with changes in tax laws is the primary challenge.
Technology adoption and utilization are significant concerns across firm sizes.
2. Talent Management
Finding and retaining qualified staff is a persistent challenge for most firms.
These accounting and CPA firms are focusing on hiring, training, and improving the work culture to attract and keep talent.
These firms rely on developing the next generation of firm leaders, which is a top concern for small to midsize firms.
3. Automation and Technology Must Work Together
Firms are increasingly investing in technology and automation to improve efficiency. 43% of firms automate 25% or less of their tax processes, indicating room for growth. 35% of firms plan to invest in AI over the next two years.
Being technologically advanced is seen as attractive to professionals and can help provide higher-value services.
4. Client Services and Revenue
Accounting and CPA firms are expanding their service offerings, particularly in advisory services like tax strategy and financial planning.
Pricing has become a strategic tool to boost revenue, with firms exploring alternatives to hourly billing.
72% of firms reported increased revenue over the past 12 months, averaging 24% growth.
5. Regulatory and Tax Law Challenges
Keeping up with changes in tax laws and working with the IRS remain significant challenges. These issues particularly affect smaller firms and sole practitioners.
6. Firm Growth and Strategy
38% of firms have a growth strategy in place. Strategies include expanding the client base, leveraging technology, and getting more work from existing clients. Firm size impacts growth strategies and priorities.
7. Future Perspectives of Accounting and CPA Firms
For the next five years, firms expect staffing, emerging technologies, and regulatory changes to have the greatest impact on their operations.
The industry is adapting to market changes by diversifying services, Outsourcing, embracing technology, and focusing on talent management.
Firms are generally well-positioned to face future uncertainties but must continue to evolve.
This combined analysis highlights the interconnected nature of challenges in staffing, technology adoption, outsourcing, service expansion, and regulatory compliance facing the accounting industry. It emphasizes the need for firms to adapt and innovate to remain competitive and meet evolving client needs.
After taking a deep look at the findings of the different journals, let’s find out the top challenges faced by these accounting and CPA firms and what options they have.
Challenge 1: Hiring and Retaining Accounting Staff
Staffing restraint is a persistent challenge in the accounting industry. Unfortunately, the shortage of accounting professionals has been exacerbated by several factors, including evolving employee expectations, a decline in new accounting graduates, and an increasing number of experienced accountants retiring.
However, according to the Spotlight Reporting findings:
More than two-fifths of accounting firms are considered to be hybrid firms, which affects their regular tasks.
Among accountants, one in two report difficulties with supervision, mentoring, and teamwork. But, they believe that if their accounting staff is skilled, they can accomplish more.
What to do?
These CPA and accounting companies are now able to save money by providing the same services at a lower cost by choosing a virtual CFO over an onsite CFO.
Challenge 2: Finding the Right Talent at Affordable Prices
Thomson Reuters research indicates that hiring and developing talent is a top priority for accounting firms, with recruitment being particularly challenging, especially at midsize firms.
Finding personnel with the necessary tax experience and technical skills is a significant hurdle. Many firms are struggling with training and development as well as employee retention.
To address these challenges, firms are planning to increase salaries and incentives, enhance training, and improve work-life balance.
Alternatively, they are looking at automation as a key strategy to alleviate bandwidth constraints and improve efficiency, with nearly half of respondents considering it as an option to fill vacant roles.
What to do?
However, the above-stated strategies will increase their budget without knowing the exact confirmation. Whatever the possibilities they have opted for, they will definitely work and can promote their business accordingly.
Second, a growing number of accounting and CPA firms are exploring the options of Invedus outsourcing, which includes both CPA staff augmentation and offshore outsourcing. They are offering their services to every size of business without increasing their budget.
Challenge 3: Staying Updating With the Current and Latest Tax Laws
It is not easy to stay on top of the constantly evolving tax laws and regulations, particularly in the fast-paced international market.
For this reason, businesses need to have the appropriate automated resources and tools to help ensure compliance and reduce risk. Failing to do so could result in a loss of clients in addition to damaging the reputation of the business. However, in many cases, apart from losing clients, businesses will also need to pay hefty fines and penalties.
It’s a common and expected experience for people to deal with frequent changes to tax laws and to find these changes complex and challenging to comprehend.
What to do?
Provide your accountants with a platform where they can exchange their knowledge and expertise on a particular topic of tax and related matters.
Organize or participate with your team members in industry-leading seminars and conferences to boost your tax law developments.
Mark your presence on live webinars and events hosted by leading tax, audit, and accounting whiz.
Make the most of the most recent technological advancements, including tools with artificial intelligence (AI).
These tools assist you to stay burgeoning in tax law-related matters.
Note: However, AI is booming nowadays, but you cannot solely rely on these tools as they can make mistakes too. Furthermore, the use of these automated tools and technologies required a high level of human technical expertise because precise and accurate commands were necessary to operate these sophisticated tools.
Challenge 4: Difficult to Keep the Data Safe
You are undoubtedly living in a world where everyone uses the cloud, and hackers and phishers target accounting data providers because that is where scammers can obtain the most accurate financial information to steal their financial information.
It poses a significant challenge, particularly for small and medium-sized enterprises. They find it difficult to protect their data because they cannot afford to buy expensive software or a separate storage device where they can store their data.
A slight mismanagement in this ecosystem can lead you to feel a huge loss, which could be unbearable for you.
What to do?
To avoid this mess, companies (especially SMEs) can opt for outsourcing accounting services. It becomes the service provider’s responsibility to keep your data safe and secure. You don’t have to worry about software handling capacity, cloud storage, and everything else.
Alternatively, you can also go with the offshoring accounting services, where you don’t need to establish your office but still, all your tasks are done by the skilled accounting team or accounting expert.
Challenge 5: Compliance with Changing International Regulations
CPA firms operating in the United States encounter the intricate task of managing a myriad of international regulations, including compliance with the US Sarbanes-Oxley Act. These regulations create a complex and demanding environment for CPA firms as they strive to ensure adherence to international standards while conducting business in a highly regulated landscape.
While the UK accountancy sector is subject to continuous regulatory changes, post-Brexit, accounting, and CPA firms are adjusting according to new rules and accounting standards, some of which vary significantly from EU regulations such as GDPR (General Data Protection Regulation).
What to do?
Regularly update compliance protocols by subscribing to industry newsletters and participating in regulatory workshops.
Increase your investment in advanced compliance management software that integrates with existing systems to ensure real-time updates and adherence.
Engage legal and compliance experts who specialize in international regulations to ensure robust compliance strategies.
Wrap Up the Words
These are a few latest challenges that most accountants and CPA firms are facing. The accounting industry is navigating a complex landscape of regulatory changes, technological advancements, and evolving client needs.
By understanding and addressing these challenges whether through talent management, technology adoption, or strategic outsourcing CPA firms can position themselves for success.
Embracing these strategies, including exploring options like Invedus outsourcing, can help firms and SMEs manage costs and improve efficiency while staying competitive in a dynamic market.
Contact Us Today to Outsource Seamlessly, Without Adding Overhead!
Finance & Accounting
Virtual Assistants
Custom Web Development
Mobile App Development
Custom Software Development
Sales & Customer Executives
3d Modeling
