Returning to Our Roots: A Strategic Shift in the Accounting Profession

by Donny C. Shimamoto, CPA/CITP, CGMA

Returning to Our Roots: A Strategic Shift in the Accounting Profession

by Donny C. Shimamoto, CPA/CITP, CGMA

A fundamental shift is occurring in the accounting profession. In fact it’s been occurring for the last

few years as accounting firms have been returning to their roots and re-embracing bookkeeping as a

major service line. Even top tier CPA firms have launched “client accounting” practices recognizing the

value of providing controllership and chief financial officer (CFO) services for their clients. This is a

strategic shift in the accounting profession that provides great opportunities for accountants and their

clients alike.

Technology then…and technology now…

A major impetus for the return to popularity of bookkeeping services is the maturity of cloud-based

accounting software and its facilitation of the easier exchange of data between accountants and

their clients. This is an interesting reversal, as it was technology that originally affected the decline

of bookkeeping services. Technologies like QuickBooks, Peachtree Accounting, and higher end

accounting solutions made it easier for business owners to record and manage their own financial

recordsbookkeepers. Technology has now come full circle and re-enabled the efficient delivery of

bookkeeping services by accounting firms.

It’s not just easier bookkeeping that cloud technologies are enabling, but a more collaborative and

engaged relationship between accountant and client. Cloud-based accounting software combines

seamlessly with an ecosystem of supplementary software like, payroll, expense reporting, tax

compliance, time and attendance, business planning, project management, and many more. All this

creates a powerful suite of business solutions for small and mid-sized businesses that previously was

only available to large companies. For accountants, this back-office solution ecosystem can potentially

integrate back into the core accounting system, providing the accountant with a real-time view into a

client’s operations.

Be proactive today to enable a better tomorrow

Accountants often find themselves with heavy burdens at the end of the year. This is because

traditional accounting software doesn’t have all the embedded knowledge and expertise required to

address all of the financial reporting and tax implications a business owner may face. In addition, users

often aren’t well trained in the use of the software, resulting in workarounds and inadvertent errors

in the data.

Once the end of the year, or even the end of the month, is passed and “closed”, the accountant is then

faced with the issue of working with and reconciling all the transactions that were recorded. At this

point, all outcomes are set and the accountant is limited in their ability to correct issues and help the

business owner achieve their financial goals. This backwood-looking and compliance-focused service

model needs to be a thing of the past if accountants are to position themselves as trusted business

advisors for their clients. You can’t advise to change history; you can advise to create a better future.

That is why the value proposition of client accounting services over the course of the year, rather than

after year end, is so compelling. Accountants can now be more collaborative and engaged with their

clients, and more importantly be more proactive in helping their clients deal with accounting (and even

general business) issues before or as they occur, rather than after they’ve already materialized and

can’t be changed.

More Opportunities to Return to Our Roots

Other “traditional” services that accountants previously offered should be revisited to see if they

present an opportunity for the accountant to engage their client more closely and consistently.

The technology ecosystem around cloud-based accounting software continues to mature and

accountants can leverage this maturity to increase the number of services provided for their clients.

Consider the following types of software categories that are already posed for adoption:

Payroll and Payroll Tax Compliance – Historically these services were not very attractive to

accountants because they were cumbersome to provide and carried a high potential liability exposure.

This resulted in payroll often being referred out to third-party service providers that the client or

accountant then had to manage. Cloud-based payroll solutions have enabled the data entry burden

to be shouldered by the client, while enabling the accountant to oversee the work being done by the

third-party provider virtually. Some payroll service providers also take responsibility and liability for

accuracy of tax filings, virtually eliminating the liability exposure for the accountant.

Sales Tax Compliance – Most accounting solutions require that the accountant or business owner

configure the tax rates and manage the jurisdictions that sales tax is being collected for. Sales tax

returns are often prepared by printing reports or exporting data from the accounting solution, then

entering them onto the appropriate tax forms for each jurisdiction. Instead of doing this manually,

sales tax compliance solutions can be integrated into the accounting system, with the service provider

providing real-time sales tax rate updates and helping the accountant to complete and submit the

necessary forms electronically. With automated sales tax compliance solutions, much of the burden

and potential liability for the accountant can be mitigated.

Electronic Expense Reporting – Electronic expense reporting is often built into the accounting

software itself, but can also be available as a standalone solution for more complex workflow and

management needs. Common features include allowing a user to use their phone to take pictures

of receipts and code transactions, submit them for approval, and then syncing and recording the

approved transactions into the accounting solution. Since expenses incurred by employees often don’t

follow the internal control structure that business-driven purchases follow for authorizations and

recordation, expense reporting solutions allow the accountant to help clients reduce the risk of errors

and policy non-compliance.

Business Planning and Performance Management – An accountant may be consulted at the start of a

business or when a business is seeking financing to develop the financial aspects of a business plan.

Oftentimes, this means the accountant is providing assurance to a lender. However, once the plan is

complete, it then falls upon the business owner to keep their company in sync with the plan or adjust

the plan as the business environment changes. Business planning and performance management

software enables data to be drawn out directly from the accounting solution and used in conjunction

with assumptions and estimates to better monitor the business’ performance against its plan.

Previously, this was done in spreadsheets and updating it was a pain. With integration between cloud

and on-premise accounting solutions enabling the data exchange, software in this area enables the

accountant to really take on the role of trusted business advisor and without the data entry burden.

All of these solutions provide opportunities for accountants to “return to our roots” and engage clients

on a more real-time basis rather than just once a year. They also allow the accountant to be more

proactive over the course of the year, identifying and fixing issues before they are immutable in the

year-end financial reports of the company.

Shifting the Accountant-Client Relationship Paradigm

Sarbanes-Oxley and other auditing scandals in the recent past resulted in an increased focus on an

accountant’s independence. This forced many accountants to distance themselves from their clients

in an effort regain the trust of the pubic. This however ended up being a disservice to many small and

mid-size businesses who really need the guidance that their accountant can provide in managing and

growing their business.

As we seek to reengage our clients in a balanced relationship that enables clients to obtain the advice

they need without impairing our objectivity, returning to our roots will be a key foundation from which

to build a trusted business advisor relationship with our clients.

About the Author

Donny Shimamoto, CPA/CITP, CGMA, is the founder of IntrapriseTechKnowlogies LLC, a CPA

firm focused on organizational development and advisory services for the middle market and

nonprofits. An active CPA, Certified Information Technology Professional (CITP), and Chartered

Global Management Accountant (CGMA), Donny helps many organizations by bridging accounting

and IT to strengthen organizational governance and risk management, improve business processes

through IT, and increase the effectiveness of decision making through business intelligence. Donny

also serves as an outsourced IT Audit “Partner” and advisor for smaller regional/local firms and

internal audit departments who lack in-house IT management and IT audit expertise, helping with

IT risk assessments and enabling increased staff proficiency with IT tools supporting internal and

client engagements.

Donny was recognized from 2012 – 2014 as one of the Top Thought Leaders in Public Accounting

by CPA Practice Advisor and was named to Accounting Today’s Top 100 Most Influential People list

in 2013 and 2014. Donny is the immediate past chair of the AICPA’s Information Management and

Technology Assurance Executive Committee, and is a former member of its Governing Council and

Assurance Services Executive Committee (ASEC). He received the 2009-2010 President’s Award

from the Hawaii Society of CPAs, was named to CPA Practice Advisor’s 40 Under 40 list in 2007,

2009, and 2014.