CPA Trendlines

Today's Features

Firms Culling Clients as Staffing Woes Persist

Others tap outsourcing, training clerical staff as solutions.

By CPA Trendlines Research

Early results from the CPA Trendlines 2024 Busy Season Barometer: Emerging Issues, Opportunities, and Trends are showing a painfully persistent problem with staff shortages, though it seems the hardship may have improved a bit since last year.

MORE: Revenue Up at 59% of Accounting Firms … and More Good News | Compensation’s Up, but Up Enough to Retain Staff? | Are Accountants Charging Too Little? | ChatGPT for the Reluctant Accountant | CPAs Needed to Help Small Biz Adopt AI | Revenue Growth Is Top Priority for Small Firms | Is the CPA Business Model the Clog in the Pipeline?
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This year, like last year, survey respondents are reporting staffing as the second most common concern. Last year, it was reported by 47 percent, almost tied with the main concern: late or unprepared clients.

This year, uncooperative clients still rank first, at 50 percent, but staffing concerns have dropped to 37 percent.
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PRICING, FEES & BILLING RATES

Three Critical Factors Drive the Value Pricing Trend

Embrace the value pricing perfect storm.

By Jody Padar
The Radical CPA

Ron Baker is known as the value pricing guru in the accounting space. He was way before his time in separating the price of labor from the value of a product. Labor-based pricing is based on the difficulty of doing a task. Value pricing looks at everything from the client’s viewpoint. His argument is as follows: the value you provide your customer, regardless of the deliverable, is worth way more than the hour.

MORE: Accounting Disruptors Are Heading Your Way … with Deep Pockets | The Convergence of Trends Makes Pricing Changes Imperative | Stop Looking for Talent that Does Not Exist | Advisory Work Must Be Priced by Value, Not Hours
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While value pricing isn’t new, automation has driven it to the forefront. Automation gives CPAs up to 90 percent more time to provide valuable services based on their expertise, knowledge base and experience.

Although it was clear the cloud was going to have a disruptive impact on our business model, Ron Baker would always explain: it’s not the technology that’s going to make value pricing the way to go, the value’s always been there.

CHARTS & GRAPHS

Tax Pros Gain Ground, and DIYers Maintain Lead

Refunds are up over 4 percent.

By Beth Bellor
CPA Trendlines Research

With about a month left in the 2024 tax season, the individual income tax returns keep pouring in, and the Internal Revenue Service keeps grinding them out.

The IRS had received 62.8 million returns, down 1.1 percent from the previous year, as of March 8, the latest data available. It had processed 61.9 million returns, down 2.1 percent.

MORE: Tax Pros Handle 46.4% of E-filing | Tax Refunds, Tax Pro Market Share Trending Up | Refunds Up as Tax Pros Tackle 41.5% of E-filings | Tax Pros Handle 37.7% of E-filings | Tax Pros File 33% of Early Returns
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E-filings

Electronic filings totaled 61.2 million, down 0.9 percent.
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OUTLOOK & ANALYSIS

Revenue Up at 59% of Accounting Firms … and More Good News

Technology is key for competitive advantage.

By CPA Trendlines Research

The 2024 Accounting Industry Report from Wolters Kluwer cuts through a lot of the underbrush of sentiments and anecdotal evidence about the state of the accounting business today. Backed by statistical data, the report presents a some significant truths about the state of the industry.

MORE: Compensation’s Up, but Up Enough to Retain Staff? | Are Accountants Charging Too Little? | Revenue Growth Is Top Priority for Small Firms | Is the CPA Business Model the Clog in the Pipeline? | Accountants Cozy Up to Clients with CAS | SURVEY: CPAs Culling Clients for Better Work-Life Balance | Women-Owned Businesses Upbeat but Need Help | Accountants to the Rescue as Startups Struggle | Looking for Recent Grads? Good Luck | What the Corporate Transparency Act Means for Accountants | Understanding the Full Cost of a Data Breach | Why the U.S. Must Act Now to Protect Our Online Privacy
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And the general state is good. Most firms are growing, profitability is up, new services are surging, and serious practices are making efforts to improve the quality of client experience.

Here are some of the most notable facts.
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BUSY SEASON MANAGEMENT

Even with Value Pricing, Time Tracking Matters and Here’s Why

Higher productivity equals higher capacity, which drives faster turnaround times. Faster turnaround times create happier clients.

By Frank Stitely
The Relentless CPA

Employee productivity plays a huge factor in managing WIP (work in progress). Because capacity is the denominator in the Lean Six Sigma equation, and employee productivity is a big factor in capacity, employee productivity becomes a big factor in determining turnaround time.

MORE: End Tax Season Meetings with Clients…Seriously | Get Clients to Understand Firm Processes … or Say Goodbye | Train Now Before It Costs You Down the Road | Keep Clients from “Balance Due” Shock | It’s OK to Say No to Clients (Even the Large Ones) | You Train Your Clients, Whether You Mean To or Not | Business Owners Face One of Three Exits | How Small Firms Can Win the Talent Wars | Do You Know Your Turnaround Time?
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First, let’s dismiss all the consultants from the room who tell us that time tracking and productivity metrics don’t matter. Mostly, these consultants have never managed or owned CPA firms. Rarely have they worked in firms for any length of time. They have never known the struggles of meeting payroll during the first pay period in February when employee hours are up, but the tax season money is not rolling in yet. Goodbye. Don’t let the door hit you in the butt on the way out, or do let it hit you. That’s up to you. I hope it’s a heavy door.

Here’s an example that shows why time tracking and productivity metrics matter:

PRO Member Exclusive

Breakthrough Implant Uses Excess Blood Sugar to Generate Electricity

A medical breakthrough in one area could translate into ground-breaking solutions in others.

By Rick Richardson
Technology This Week

Scientists at the Department of Biosystems Science and Engineering at ETH Zurich in Basel have created a unique implantable fuel cell. It produces electrical energy by utilizing extra blood sugar, or glucose, from tissue.

MORE: One State is Now America’s Clean Energy Paradise | Microsoft Moves Further into Nuclear Development with New Director | Nuclear Battery Could Keep Your Future Phone Running for 50 Years | MIT Tests New Ingestible Vital Signs Sensor | Major Websites Blocking Content from AI Crawlers | Electronic Skin That Can Sense Touch Will Transform Robotics | Four of Today’s New Technologies That Will Be Tomorrow’s ‘Norm’
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This achievement could usher in a new era of self-powered implantable medical devices and help people with type 1 diabetes and other chronic ailments that need constant monitoring and care.

OUTLOOK & ANALYSIS

Compensation’s Up, but Up Enough to Retain Staff?

People are leaving the profession. More money is one solution.

By CPA Trendlines Research

The AICPA’s 2023 National Management of an Accounting Practice (MAP) Survey came up with an odd statistic. Kind of hard to believe until you get the context.

The finding: the median employee turnover rate across all CPA firms is … 0 percent.

Yes, that’s a zero.

MORE: Are Accountants Charging Too Little? | ChatGPT for the Reluctant Accountant | Survey Shows Challenges, Priorities Shifting | Can Big Data Spot Financial Fraud? | Accountants Torn Over 2024 Economy, Offer Advice | SURVEY: Are You Offering the Right Services? | SURVEY: 42% of Accountants Turn Away Work Over Staff Shortages | Talent Gap Widening: Be Very Scared | CPA Biz Is Booming, But for How Long? | The 7 Categories of Cybersecurity Solutions Firms Need
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But wait. A median, as they say, is only half the story.

The bigger story – the broader context – is that more than half the responding practices had zero turnover, so the median fell at zero percent. But that goose egg doesn’t reflect the reality of firms at the other side of the spectrum.
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AUDIT & ASSURANCE

Lack of Relevance Drives Audit Commoditization

Premium service providers collect premium fees.

By Alan Anderson, CPA
Transforming Audit for the Future

We are all willing to pay more for something that has been custom-created just for us or when we see that the service provider has gone above and beyond to deliver additional value for us. But without relevance, there is little chance that your clients will see any additional value in the audit. For the client, the only reason to get an audit is to meet a regulatory or banking requirement.

MORE: Five Crucial Attributes for Successful Audit Leadership | Traditional Audits Don’t Deserve Premium Billing | Put the Ethics Code to Work for Your Clients and Your Firm | Turning Audit & Accounting into Assurance & Advisory | Is Audit in Crisis Because of Definitions? | Stop Sending the Wrong Message to Audit Teams | Closing the Audit Expectations Gap
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As a profession, our actions have contributed to commoditization, but every CPA firm I talk to complains about how audit is becoming commoditized. When someone complains to me about commoditization, the first thing I ask is, what do you do when you’re under a little fee pressure from your client? Oh, lower my fee. So, why are you lowering your fee? Because quite often, whether you’re thinking about it or not, you probably haven’t delivered anything more than 24 pages with an audit report on it.