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.

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Private Equity Leading to Corporate-style CPA Firms

pawns and stacks of coins, each with an arrow leading to several coin stacks in the center

Long-term incentives remain a challenge.

By CPA Trendlines Research

For some reason the advent of private equity and other alternative investment in CPA partnerships isn’t receiving much media attention though it is quickly setting in motion an extensive overhaul of the traditional partnership structure.

MORE: PE, Consolidations to Keep Impacting Accounting Profession | A 40-Hour Workweek Is Feasible | Five Ways Staff Shortages Are Changing Firms Forever | Soft Skills Are Front and Center | It’s Time for a New Business Model | Rosenberg MAP: Partner Incomes Surge 11.4%
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Asked what they expect to see in the next 12 months, several experts opining in the Rosenberg National Survey of CPA Firms Statistics identify increasing outside investment in CPA firms and consequent new business models.
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OUTLOOK: It’s Time for a New Business Model

three people looking at charts on laptop and papers

How about a chief growth officer?

By Gale Crosley
The Rosenberg MAP Survey

EDITOR’S NOTE: Every year, the Rosenberg MAP Survey asks the industry’s top consultants to share their observations from CPA firms across the country. How do you think the next 12 months will unfold? Also, how would you assess the last 12 months?

Our homogenous profession consists of firms with similar ownership and governance structures and business models. Looking forward we’ll see an increased variety of approaches.

MORE: Rosenberg MAP: Partner Incomes Surge 11.4%
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Many will look more like the corporate world, where ownership is not just in the hands of equity partners. Governance structures will include a C-suite of non-CPA players. Business models will include the melting away of geographic borders, value-based pricing and a variety of career paths.
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New Partners Must Be Impact Players

Man explaining something to three office colleagues around table

Seven reasons why.

By Marc Rosenberg
How to Bring in New Partners

An impact player in sports is more than just a productive, loyal member of the team. The team relies on this player to be a consistent winner.

MORE: Why Partners Can’t Shirk Performance Reviews | Twelve Questions That Prospective Partners Should Ask | Six Systems Used to Determine Partners’ Goodwill Payments | Fifteen Steps to New Partner Buy-in | Four Philosophies for Managing a CPA Firm | Public Accounting as a Business, 101 | 16 Steps to Creating a Partnership Path
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I’ve always liked this term to describe what a partner in a CPA firm should be. I like it so much that I inserted the term “impact” in the name of the partner self-evaluation form I offer.
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Accountants vs. Lawyers: Who Wins the Marketing Battle?

Does one size fit all? A slate of experts weighs in.

By Bruce Marcus
Professional Services Marketing 3.0

EDITOR’S NOTE: CPA Trendlines was privileged to have a long relationship with Bruce W. Marcus, who was ahead of his time in his thinking and practice in marketing for accounting. We are publishing some of the late expert’s evergreen work, which retains wisdom for the present.

It’s not a race, nor are there prizes for the winner. But it has been suggested that the lawyers are light years ahead of the accounting profession in marketing.

MORE: The Risk In Not Understanding Risk | How to Build a Marketing Culture | Have You Planned How to Service Your New Revenue? | Why Is Change So Hard for Firms? | Why Value Pricing Works | Why Competition Matters Most
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It’s nonsense, of course. Is one profession indeed better at marketing than the other? Well, no. Each profession is different, and to try to make the comparison would be an apples and oranges game. But silly as the idea may be, it opens a vast and intriguing question. Are there significant differences between the professions that affect marketing? Indeed there are.
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The 12 Big Questions for 2023

Accounting leaders say these are the issues firms must face.

By CPA Trendlines Research

As Gale Crosley of Crosley+Consulting notes in the 2022 Rosenberg Survey, we are in the midst of “an unusual year of high uncertainty, unpredictability and sapped energy among our profession’s leaders.”

MORE TRENDS & OUTLOOK for 2023: The Biggest Change in Accounting? Personnel | Look Who’s Making Money Now | Merger Minded? Go Out on Top! |  Capacity Strategies Drive Change | Who Wants to Be Partner? Not Enough | Private Equity Heats Up M&A | Top Five Trends |  Compensation Gets Creative | CPA Partners Rejoice on Surging Fee Growth | The Office Is Over | Accounting Firms Face Up to Private Equity | IRS Hires Will Add Pressures | Consolidation Brings Challenges, Opportunities |

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Yes, indeed. The profession, once characterized as staid and stable, has been hit by a confluence of what Crosley calls “four major thunderbolts,” to wit:

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The 12 Big Questions for 2023

The questions aren’t new, but the answers should direct your strategy.

By CPA Trendlines Research
The Rosenberg MAP Survey: National Study of CPA Firm Statistics

As Gale Crosley, of Crosley+Consulting, notes in the 2022 Rosenberg Survey, we are in the midst of “an unusual year of high uncertainty, unpredictability and sapped energy among our profession’s leaders.”

MORE OUTLOOK 2023: The 12 Winning Traits of a Great CPA Firm | What Accounting Firm Start-Ups Are Doing RightWorkflow Is a Problem. So Why Aren’t Firms Buying Solutions?Top Five TrendsCompensation Gets CreativeCPA Partners Rejoice on Surging Fee GrowthThe Office Is OverThe Great Resignation or a Reshuffling?Accounting Firms Face Down Private Equity |

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Gale Crosley
Crosley

The profession, once characterized as staid and stable, has been hit by a confluence of what Crosley calls “major thunderbolts,” to wit:

  • disruptive technologies
  • shifting economic conditions
  • non-traditional competition
  • fast-moving regulation
  • extensive talent constraints
  • work-from-anywhere options
  • unexpected market demand
  • private equities investing in firms
  • baby boomer retirements

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OUTLOOK 2023: Top Five Trends

Strategic thinking is at a premium.

By Gale Crosley
The Rosenberg MAP Survey: National Study of CPA Firm Statistics

I suspect the next 12 months will bring four sizable developments.

MORE OUTLOOK: Compensation Gets CreativeThe Office Is Over | Private Equity Comes for Accounting Firms
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This has been an unusual year of high uncertainty, unpredictability and sapped energy among our profession’s leaders. Many are facing the most significant business issues and opportunities of their careers. The profession has experienced nearly a century of relative business model certainty and predictability in market conditions, punctuated by occasional disruptive blips.

However, it’s not just one dynamic, such as the dot-com bust, the events leading up to Sarbanes-Oxley or the Great Recession. Rather we are seeing a confluence of four major thunderbolts – disruptive technologies, shifting economic conditions, non-traditional competition and fast-moving regulations. Add to this extensive talent constraint, work-from-anywhere options, unexpected market demand and the relatively new enthusiasm of private equities to invest in our firms. And don’t forget continuing baby-boomer retirements. Wow! I’m exhausted just writing about it.

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