Client accounting services (CAS) is becoming an important revenue category for public accounting firms of all sizes, with larger firms seeing it gain a significant slice of their revenue pie during the past two years, according to a survey from the AICPA Private Companies Practice Section (PCPS) and CPA.com, the Institute's marketing and technology subsidiary.

The percentage of net client fees provided by CAS, which includes outsourced finance and accounting services and other back-office support for clients, more than doubled for firms in the largest revenue segment tracked by the 2016 National Management of an Accounting Practice (MAP) Survey, initial results of which were released earlier this fall and showed top-line revenue growth among firms of all sizes.

Among firms with revenue of at least $10 million that offer virtual CFO and other client accounting services, CAS accounted for 9% of net client fees, up from 3.9% in the 2014 MAP survey. The CAS category also produced double-digit percentage gains in the next two largest MAP segments—firms with annual revenue of $5 million to $10 million and those with annual revenue of $1.5 million to $5 million.

"It's safe to say that nearly 10% of revenues in the profession are focused on client accounting," said Mark Koziel, CPA, CGMA, the AICPA's executive vice president—Firm Services, who discussed the survey results at the 2016 Digital CPA Conference in Las Vegas. "And depending on the size of the firm, it may be more or slightly less, but overall it's a strong category on its own. Tax and audit continue to be the number one and number two revenue categories, but client accounting demonstrates growing significance to the profession."

Among firms that offer CAS, the percentage that the category contributes to the top line ranged from 20% for the smallest firms (those with revenue of less than $200,000) to 8.5% for firms in the second-largest revenue segment.

Asgeirsson Cites Coming Changes in Tax and Audit, Further Evolution of Client Accounting Services

LAS VEGAS (Dec. 7, 2016) – A significantly faster pace of innovation in tax and auditing will lead to the same kind of transformation that is occurring in client accounting services, spurring CPA firms to devise more refined advisory offerings and seek personnel with specialized skills, CPA.com President and CEO Erik Asgeirsson said in a final day keynote at the 2016 Digital CPA Conference.

Cloud computing has helped turn client accounting into a high margin, high growth line of business, Asgeirsson said. Research from the AICPA Private Companies Practice Section and CPA.com shows that client accounting services have become an important slice of revenue in all CPA firm segments, with increased penetration in larger firms. As more firms find success and build marketable brands around virtual CFO and controllership services, client awareness and expectations are also continuing to rise, he said.

“We need to meet these rising expectations with evolving levels of service, training and best practices,” Asgeirsson said. “In short, we need to continue raising the bar for professionalization in client accounting services – and from what we’ve all seen at Digital CPA this week, we’re moving in the right direction.”

Technology will have a similar impact on tax and audit, he said. On the tax side, practitioners will one day be able to review a client’s entire financial situation on a single dashboard, allowing them to spot patterns and opportunities and deliver higher-value planning and advisory services. The audit, meanwhile, will become more dynamic, complete and real-time in nature.

For client accounting services, Asgeirsson cited three broad areas where CPA.com is helping elevate firm elevate their performance:

Training – CPA.com and the AICPA are launching a Client Accounting Advisory Services Certificate early next year, which will demonstrate defined expertise in this area for practice leaders, key staff and partners. Professionals who earn the certificate can display a digital badge on their website or LinkedIn page.

Leadership Development – CPA.com is offering two virtual classroom programs to help firms develop their most valuable resource: leaders who can anticipate change and inspire top performance. They are:

• A seven-part, on-demand program with leadership training coach John Engels called “Owning Your Leadership,” which allows CPA firms to broaden leadership and interpersonal skills
• The “Anticipatory Organization: Accounting and Finance Edition” program by Daniel Burrus, an on-demand course designed to hone CPA practice leaders’ ability to spot trends and position their firms and clients to take advantage of change

Expanded Offerings – Asgeirsson said firm solutions are moving beyond core accounting and financial applications to “pre-accounting” categories (such as expense management and personal finance management) and “post-accounting” categories (budget and forecasting, among others). Earlier at Digital CPA, he noted, CPA.com introduced its new strategic alliance with leading expense management provider Expensify.

Asgeirsson also gave an update on RIVIO Clearinghouse, the online financial document exchange for private companies that CPA.com developed in partnership with Confirmation.com. RIVIO has drawn broad interest from CPA firms and other stakeholders in investing and lending since its launch in May, he said.

At the conclusion of his remarks, Asgeirsson announced that next year’s Digital CPA Conference will be held in San Francisco on Dec. 4-6, 2017. For more information, visit digitalcpa.com.

About CPA.com

CPA.com offers a growing list of products and services for practice management, client advisory services and professional development. The company has established itself as a thought leader on cloud technology and has been a driving force around the reemergence of virtual CFO/controller services by firms.

The RIVIO Clearinghouse, a joint venture between CPA.com and Confirmation.com, is an online financial document clearinghouse that enables private businesses to exchange key financial information with lenders and investors.

CPA.com is a subsidiary of the American Institute of CPAs, the world’s largest member body representing the accounting profession. For more information, visit CPA.com.

If you find problems everywhere you go, you may be the problem, leadership coach John Engels told a gathering of accountants.

In a keynote address at CPA.com’s Digital CPA Conference and the Information Technology Alliance’s Fall Collaborative, “Owning Your Leadership: Taming Discomfort, Summoning Courage,” Engels warned attendees that they – like most people – need to start being “emotionally responsible” if they hope to succeed in the firms and their lives.

He described the natural human tendency to avoid conflict and discomfort, and how it plays out in accounting firms, with leadership ignoring interpersonal issues or difficult partners, failing to call for accountability, and neglecting the training and coaching of young leaders.

“What discussions on the home front are being avoided due to discomfort?” he asked. “We’re ‘dancing to the beat of discomfort’ – when we know others are unhappy, so we dance around their unhappiness,” rather than addressing it.

Interestingly, the right approach to these issues often isn’t to focus on the problems themselves, Engels suggested, but rather to focus on the response to the problem.

Generally, it’s not the problem that determines the outcome,” he said. “It’s the leader’s response to the problem.”

That’s where emotional responsibility comes into play. As Engels describes it, emotional responsibility is taking responsibility for your own wants, needs, actions, reactions, responses and so on, without blaming other people, the situation, or the circumstances.

Among other things, it means facing up to uncomfortable situations, rather than retreating into busy work that we’re comfortable with. “We often get busy with what we know because it’s more comfortable than dealing,” he explained. “We choose comfort over progress.”

Rather than coach or teaching young staff, for instance, people often simply solve their problems or provide answers for them. And firm leaders often put off dealing with troublesome partners or major governance issues, citing the pressure of day-to-day client work.

The emotionally responsible, however, move beyond discomfort. “Comfort and discomfort are poor barometers for decisions, Engels said. “The road to progress often passes through discomfort.”

One of the critical elements of how responsibly addressing uncomfortable situations is to be willing to address the role of their own response. If they’re dealing with an unproductive partner, for instance, have they enabled the partner by being unwilling to address his lack of performance? Or have they given the partner counterproductive incentives through a compensation system that rewards the minimum effort? Worse yet, have they encouraged dissension among the partner group by complaining about the unproductive partner, without actually addressing his lack of productivity?

Responsible leaders will start by modifying their own part in an emotional or uncomfortable situation, so that they don’t create more of a problem than there already is. Once they modify their behavior, Engels suggested, other people within the organization will often modify their behavior to suit.

Profiles in courage

All of this, Engels acknowledged, requires courage – specifically, what he called “the Four Faces of Courage:”

• Face 1: Wise helpfulness. “Not all helpfulness is wise,” Engels pointed out – much of what passes for help is actually micro-management, or providing answers instead of direction, which cuts other off from opportunities to grow and learn.
• Face 2: Strategic connecting. Quality one-on-one time is different from mere regular meetings, he said – it involves self-disclosure, and sharing your story so that employee can understand you more fully and feel comfortable trusting you. “Don’t make the other person do all the sharing, all the work, all the risking,” Engels said.
• Face 3: Asking versus telling. It’s natural to want to provide answers to questions, but Engels suggested asking your staff challenging questions instead, to get them to think independently.
• Face 4: Managing relationship triangles. Leaders often find themselves in these kinds of three-sided situations – where, say, Employee B comes to you to complain about Employee C. It’s easy to commiserate with B, but more responsible to focus on getting B out of the victim position and into a more active role where they can work with C to fix the problem, or change their own behavior to mitigate it. “In these triangles, 100 percent of the time, B is part of the problem,” Engels said.