How Auditors Can Beat AI

Ignore the coming tsunami of change at your own peril.

By Alan Anderson, CPA
Transforming Audit for the Future

Instant download:
The New Manifesto for Accountants.

The other day, I picked up a college textbook on auditing from 2001.

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Even back then, that book listed these as “critical forces on the profession:”

  • Increasing market saturation with relatively little opportunity for growth
  • Perceptions that financial statement audits have become a commodity
  • Price competition and continual pressure to reduce fees
  • Cost pressures that have resulted in the reduction of time devoted to engagements
  • Perceptions that the incidence and severity of alleged audit failures have increased

In the 20-plus years since that book was published, not much has changed. Today many of the college students who learned auditing from that textbook are in leadership positions at audit firms. They were warned about what we were up against.

That we are still facing those same “critical forces,” which have only exacerbated since then, is an indicator of the ossified state of leadership in the audit profession.

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Business Owners Face One of Three Exits

Businessman putting a card with text "Don't resist change, embrace it" in suit pocketExpect to sell your practice? Not if you resist change.

By Frank Stitely
The Relentless CPA

In talking to firms from around the country, I realized there are three types of firms out there:

  1. Firms and practitioners that are sliding into retirement, whether they know it or not
  2. Firms that see the need for change, but don’t know where to start
  3. Firms that see a clear path to the future through better practice management

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Since publishing my first book and launching my firm’s workflow and collaboration application, I have talked to practitioners from firms of all types and sizes. My CPA firm pursued a few acquisition opportunities. During the process, I learned there are a lot of practitioners who are either incapable of adapting to our profession’s 21st-century changes or unwilling to adapt. That’s okay, if you are making an informed choice to retire and don’t care about realizing much in value by selling your firm.

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Center Your Firm Around Your Client

Two businesswomen shaking handsThere are three ways to change the product-market fit. Only one works.

By Jody Padar
The Radical CPA

It’s hard to look at your firm from a customer’s perspective. That’s why we gravitate to a firmcentric point of view. This point of view asks questions like: What do we sell customers? How can we reach customers? What do we need to establish with our customers? And how can we make money from our customers?

MORE: Commit to Change | Your Client Base Is Global | Ready for Change, So Now What?
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We’re thinking about ourselves internally. Nobody wants to hang out with someone who only thinks of themselves, yet that is the way we run our firms.

Instead, I’m going to ask you to look at your business from your customer’s point of view. Design thinking asks the following:

  • What jobs do our customers need to get done and how can we help?
  • What are our customers’ dreams and aspirations?

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Commit to Change

Post with two signs, "same" and "change"Be sure to document every stage.

By Jody Padar
The Radical CPA

Before you consider adopting the cloud or any of the “New Firm” mindset, you have to ask yourself if you are willing to be the change.

Once you decide, first thing, first. Own it! You have to commit. If you teeter it will be harder. Jump in feet first and feel the shock of the cold water.

MORE: Your Client Base Is Global | Ready for Change, So Now What?
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I’m not saying it won’t work if you wade in, I’m just saying it’ll be more of a challenge. When you change all your processes, it’s a lot of hard work but part of what will get you there is commitment. If you are seriously considering uprooting your firm’s foundation, you need to ask the following questions:
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Join the Radical Movement

Who defines innovation? You.

By Jody Padar
From Success to Significance: The Radical CPA Guide

It’s time to get going!

You’ve read my Beyond Radical approach.

MORE ON RADICALISM: Quick Tip: 7 Ways to Add Value and Charge for It | Profits: New Firms, New Measures | When Staffers Meet Clients | Selling Product, not Hours | Maximizing Social Media: The Importance of People | What Are AI and Bots? | True Diversity Means Creating Equity
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Are you exhausted or energized? If you know me, you know that I can’t wait to help you get started on your journey.
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Why Time and Billing Is Over

Young businessman punching and breaking clock with fistMeasure outputs, not hours.

By Jody Padar
From Success to Significance: The Radical CPA Guide

I know you must be tired of me saying this.

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But the real reason why I’m able to take on more and focus my energy on expansion is because utilization isn’t relevant to my firm.
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7 Ways to Add Value and Charge for It

Hand turning a knob up to the maximum with a dial where it is written "value added"“This is the hardest for CPAs…”

By Jody Padar
From Success to Significance: The Radical CPA Guide

First: Create accountability. Follow up. Ask a question to a business owner, give them a deadline and then call them out on the follow-through.

MORE ON RADICALISM: Profits: New Firms, New Measures | DeLeon & Stang Launches ‘Anticipatory Organization’ Model | How Timesheets Kill Teamwork | Top 20 Social Media Hacks to Build Your Business
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This is Coaching 101. Did they do what they said they were going to do? Most small business owners have no one to report to, and they appreciate you taking an interest.

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Profits: New Firms, New Measures

Businessman carrying elephant on his backEasing the power struggle between succession and partner compensation.

By Jody Padar
From Success to Significance: The Radical CPA Guide

I’m going to address the elephant in the room. Ready? It’s succession and how it relates to partner compensation.

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I can give you many reasons why time and billing is no longer relevant. I can give you the reasons why customers want fixed or value-based prices.
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