Accounting
Accounting firm MPs and AI: ‘A smart intern on their first day’
The marketing department of Cincinnati-based Barnes Dennig uses artificial intelligence for creating summaries, generating ideas for headlines and social media posts, and developing bios from resumes — but all of those are then evaluated and edited by a human marketer.
“In marketing, we leverage AI using the great description of ‘thinking of AI as a smart intern on their first day,'” explained firm managing director Jay Rammes, who was just named to Accounting Today’s 2024 Managing Partner Elite. (See the
Marketing isn’t the only area where Barnes Dennig is applying AI — its assurance department uses AI to review thousands of leases to highlight key provisions in seconds, for instance — but it applies the same caution to reviewing the technology’s outputs.
“We’re utilizing AI across multiple practices within the firm, piloting new tools in a controlled ‘sandbox’ approach, evaluating outputs, and planning strategic steps forward,” explained Rammes.
Many of the other members of the MP Elite were similarly excited to explore AI — and similarly cautious.
Speaking specifically of generative AI tools like ChatGPT, Carla McCall, the MP of AAFCPAs (and chair of the American Institute of CPAs), said, “Yes, it has a lot of power and it can do a lot of good, but it also can be used by bad actors. So we have to be careful. We need responsible policies, and we also need to then think about what that new technology also does for risk within our firms and how are we managing that risk.”
“When I sat in on CPA.com’s and the AICPA’s AI symposium in December, what really stood out to me was the speaker that talked about developing a responsible AI policy,” she continued. “So not just, ‘Yes, you can use it.’ … It’s really about how do we create cultures where we’re all aligned on the definition of it, when we use it, how do we implement it, how do we govern it? How do we have accountability and monitoring and all of this? The bigger the firm, the more effort that it’s going to take to have us all aligned around that, so we’re using it in a responsible way.”
Having strong policies in place is important, because AAFCPAs is deeply engaged with AI. The Massachusetts-based firm is leveraging it as part of its Automation Center of Excellence, and has teams trying out Microsoft Copilot for a number of tasks, using GPT to query for Excel codes, using an AI large language model tool for tax research, and much more.
On the opposite coast, California-based Bartlett, Pringle & Wolf is exploring a similarly broad range of applications for AI, according to MP Eileen Sheridan — including using the same LLM tool, Ask Blue J, for tax research.
“Our firm is dedicated to leveraging AI to improve efficiency, gain deeper client insights, and provide top-notch services,” said Sheridan. “Spearheaded by our tax partner-in-charge, our team is currently exploring AI’s potential and future opportunities, along with using gen AI in our tax research.”
Making the investment
All that exploration requires investment, and the members of this year’s MP Elite are not shying away from that. For instance, Christopher Geier, the CEO of Sikich, greenlit a “substantial” budget for research and development around generative AI as soon as it became clear how much of a disruptor it was going to be (an investment made easier, no doubt, by the $250 million the firm recently brought on from Bain Capital). Among other things, the Chicago-based firm is piloting an AI-based human resources chatbot to give personalized support to staff while easing the workload of the HR team.
Vancouver, Washington-based Opsahl Dawson is getting a leg up on AI thanks to having joined private equity-backed accounting firm platform Ascend at the start of 2023.
(See what the MP Elite think about
“We are beginning the work to become a regional leader in AI thanks to the investment of powerful resources by Ascend, which is something that would have been too much to tackle by ourselves,” said Opsahl Dawson MP Aaron Dawson. “As AI’s muscle trickles down from the large national firms and gets to the large local firms, I think there’s going to be a lot of challenges with how you implement it and how you harness it. So because of Ascend, we’re going to be ahead of the game.”
“We’re going to have a special operations team that really understands and knows how to deploy different AI offerings,” he explained. “We will have a very well-thought-through strategy that will be able to be efficiently implemented at our firm and at the other firms at every level of Ascend’s platform.”
To be clear, AI is not the exclusive preserve of large firms or those with major outside backing. Al-Nesha Jones’ ASE Group, for instance, which has just four employees, is just as active with artificial intelligence as any of the larger firms of her peers in the MP Elite.
“We use AI-driven tools in our accounting and tax workflows to automate data entry, analyze information, identify trends, monitor KPIs, and create more robust reporting for our clients,” Jones explained. “This technology streamlines our processes, reduces errors, saves time and mental capacity, and enhances the accuracy and timeliness of our service delivery. … By embracing AI, we improve efficiency, accuracy, and client satisfaction.”
While all of the MP Elite are exploring AI, that doesn’t mean they’re all at the same stage of exploration. San Francisco’s Kruze Consulting has a bit of a head start, according to founder Vanessa Kruze, thanks to a client base of technology companies that includes many software-as-a-service and AI startups.
“We frequently beta test the latest AI tools for startups and serve on product advisory councils for the largest accounting and fintech software providers,” she said. “This helps us to not only better understand automation and AI tools, but also provide feedback to developers. This relationship also benefits our clients because of the inroads we have developed that lead us to be able to quickly address any issues [our clients] may face. We serve some of the top AI companies in the market, which gives us a unique keyhole in the latest AI trends and keeps us on top of new advancements.”
No matter where they are in their engagement with artificial intelligence, all the members of this year’s MP Elite recognize its importance, and how important a role it is going to play in the future of their firms, and of the accounting profession.
“AI will continue to evolve at an exponential rate, and we’re going to see many significant advances in the CPA profession as well as in virtually all other sectors of the business world,” said Barnes Dennig’s Rammes. “It’s been said that AI won’t replace professionals across a variety of industries, but professionals who don’t leverage AI may be replaced by those who do.”
The Internal Revenue Service said tax season will begin on Monday, Jan. 27, 2025, with newly expanded and improved tools available.
The IRS anticipates over 140 million individual tax returns for tax year 2024 will be filed ahead of the Tuesday, April 15 federal deadline. Over half of all tax returns are expected to be filed this year with the help of a tax professional, and the IRS is urging taxpayers to use a
The IRS is also planning to open its new Direct File program on Jan. 27, even though the program has come under attack from Republicans in Congress. On the first day of the filing season, Direct File will open to eligible taxpayers in 25 states to file their taxes directly with the IRS for free: 12 states that were part of the pilot last year, plus 13 new states where Direct File will be available in 2025. During last year’s pilot, Direct File was available in Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington State and Wyoming. For the 2025 tax filing season, Direct File will also be available in Alaska, Connecticut, Idaho, Illinois, Kansas, Maine, Maryland, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania and Wisconsin.
In addition to covering taxpayers claiming the standard deduction and deductions for student loan interest and educator expenses, this year, Direct File will support taxpayers claiming deductions for Health Savings Accounts. The Treasury Department estimates that more than 30 million taxpayers will be eligible to use Direct File across the 25 states.
The 2025 tax season will reflect continued IRS progress to modernize and add new tools and features to help taxpayers. Since last tax season, improvements include more access to tax account information from text and voice virtual assistants, expanded features on the IRS Individual Online Account, more access to dozens of tax forms through cell phones and tablets and expanded alerts for scams and schemes that threaten taxpayers.
Direct File will include new features this year. A data import tool will allow taxpayers to opt-in to automatically import data from their IRS account, including personal information, the taxpayer’s IP PIN and some information from the taxpayer’s W-2. Also, this year, Direct File will cover more tax situations. During the pilot, Direct File supported taxpayers claiming the Earned Income Tax Credit, Child Tax Credit and Credit for Other Dependents. This year, Direct File will also cover taxpayers claiming the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits.
“It’s important for everyone to realize that the filing season improvements we’re highlighting today, and many others, are all a reflection of our ongoing work to modernize our agency and the interactions that taxpayers have with us,” said IRS Commissioner Danny Werfel during a press conference Friday. “The multiyear funding provided by Congress continues to drive changes across the IRS, and taxpayers will continue to see this work in the months and years ahead.”
He predicted taxpayers would see a continuing improvement in the IRS in 2025 and beyond. “Brick by brick, or online tool by online tool, we are building a modern interface with taxpayers and tax professionals,” said Werfel. “We are moving steadily to accelerate these technology advancements for the benefit of everyone. These efforts are all about making the process of filing taxes easier and less stressful for taxpayers and also making it more cost efficient.”
Werfel made a case for continuing IRS funding as the agency faces the prospect of
“I spend every waking hour during the day and, quite frankly, at night, focused on one thing and one thing only, and that’s getting ready for this filing season,” said Werfel. “That has consumed all of my energy, and that is my sole focus.”
He stressed the need for Congress to provide continued funding for the IRS. “Thanks to the efforts of employees throughout the agency, we have a great deal of momentum right now on many improvements for taxpayers, more tools, more simplicity, less stress, less burden,” said Werfel. “That momentum is important because we still have a long way to go. Our ultimate goal is to have an IRS where all taxpayers can meet all of their responsibilities, including interactions with us, from questions to payments to resolutions in a completely digital manner if they prefer. For the IRS to continue to succeed, we must ensure we provide our employees with the right training and tools, as well as a modern technology infrastructure to help taxpayers. These are essential to allow the IRS to continue its modernization work to serve the nation today and in the future, and so our ability to continue making progress on all these fronts can only happen if the IRS receives a consistent, reliable funding stream. We also should not lose sight of the fact that we have accomplished so much on this journey to modernize our agency and improve service to taxpayers with the multiyear funding Congress has provided. The decision about whether to adequately fund the agency comes down to a fundamental choice, whether or not we can and should have an IRS that you can easily interact with to help meet your tax responsibilities, that can quickly and effectively address tax scams that exploit vulnerable populations, and that can deliver updated IT infrastructure and modern technology platforms capable of supporting our work to modernize the agency. For the IRS to be able to do all these things, adequate stable funding is essential, and we will continue making our case to Congress.”
Although the IRS won’t start accepting tax returns until Jan. 27,
Ericksen Krentel elects sixth MP; Yeo & Yeo, Grassi and BMSS move offices; IFRS Foundation appoints three new trustees; and more news from across the profession.
With the Trump administration in the midst of preparing to return to the White House, there is a range of issues and campaign promises that various stakeholders will be looking to see fulfilled. One notable item that has continued to gain momentum both in the media/social media spheres and policy circles, following a speech at Bitcoin 2024, is the idea of establishing a strategic Bitcoin reserve.
With the nomination of David Sacks to the AI and crypto “czar” role at the White House, as well as policymakers such as Senator Cynthia Lummis continuing to promote the BITCOIN Act, the likelihood of some policy action in this direction would appear to be significant. This is in addition to market actions by firms such as BlackRock and MicroStrategy, both of which continue to introduce new Bitcoin-affiliated products and/or purchase bitcoin, respectively. Lastly, with state-based Bitcoin reserves also a possibility following the submission of legislation by the statehouses in Pennsylvania and Texas, it would seem a distinct possibility that some government-level purchasing of Bitcoin is on the horizon.
The question facing CPAs and other financial advisors given these forces is two-fold. First, what are some of the topics and questions that financial professionals should be ready to respond to and advise on going forward? Secondly, with the accounting standard-setting process more deliberative and slower than either the executive order or state-based legislative processes, what accounting-adjacent changes might emerge from these policies? Let’s take a look at that as the calendar prepares to shift to 2025.
Is there a business case for a Bitcoin reserve?
The proposal to establish strategic Bitcoin reserves by President-elect Donald Trump and various state governments has sparked considerable debate, and it is worth discussing both the potential benefits as well as drawbacks of such proposals.
First, many proponents are advocating for a Bitcoin reserve given that any significant value appreciation could be used to mitigate the U.S. national debt. For instance, Senator Lummis introduced legislation proposing that the U.S. government acquire up to 1 million bitcoins over the next two decades, aiming to reduce the national debt without taxpayer dollars. However, Bitcoin’s price volatility itself poses a significant risk. Large-scale government investments could lead to substantial fluctuations in reserve valuations, potentially impacting overall financial stability. And while supporters note that over time and with greater liquidity, Bitcoin’s volatility could diminish, critics warn that taxpayer exposure to any such volatility could be detrimental and economically harmful.
In addition, proponents note that incorporating Bitcoin into national reserves could diversify assets beyond traditional holdings like gold and foreign currencies, potentially enhancing financial stability. Bitcoin’s decentralized nature offers a unique complement to traditional reserve assets. However, safeguarding substantial Bitcoin holdings requires robust security measures to prevent hacking or theft, and any breaches could result in significant financial losses and potentially economic damage.
Lastly, a Bitcoin reserve may position the U.S. as a leader in financial innovation, encouraging the development of cryptoasset technologies and related industries. This could attract investment and talent, fostering economic growth, but would require notable regulatory and legislative clarity progress before that could take place.
Stablecoin leadership will continue
Given the forays by multiple TradFi institutions into the crypto sector, accelerated via the announcement that PayPal will allow crypto transactions to be conducted by both merchants and individuals, the appetite for crypto transactions with lower volatility will continue to increase. Since these cryptoassets are purpose built to be used as a medium of exchange with little to no price volatility, this subset of crypto has proven to be an effective on-ramp for users seeking to gain exposure to crypto without the complications of higher volatility cryptoassets.
With the premise of a pro-crypto SEC, pro-crypto majority in Congress, and pro-crypto White House all but finalized, it stands to reason that crypto adoption will continue, with stablecoins playing a prominent role in this adoption. Even with talk and speculation about either a federal Bitcoin reserve or the possibility of Bitcoin reserves at the state level, the tokenization of the U.S. dollar will continue to gain supporters as TradFi institutions and policy advisors alike experience the benefits first-hand. With the vast majority of dollar transactions already virtual in nature, and competition from other currencies increasing, the technological upgrade that tokenization provides is reason enough to forecast an increasingly important role for stablecoins.
As the IRS continues to propagate and extend tax reporting rules originally applied to cash transactions and centralized broker dealers, and stablecoins continue to attract new users, CPAs will almost inevitably acquire new clients that are interacting with the crypto space for the first time. Remaining up to speed on both the specifics of stablecoins as well as the tax reporting and data collection changes will both be essential going into 2025.
Tax headaches are an opportunity
In the most directly accounting-focused changes in the crypto landscape, the IRS has continued to issue updates, pronouncements and guidance around crypto tax issues. The amending of both Sections 6045 and 6050 to include crypto transactions, the creation of an entirely new tax form with the launch of the 1099-DA document, the issuance of new guidance for both centralized and decentralized exchanges, and the potential delay of tax reporting changes are making the crypto tax landscape look even more uncertain. With interest and investment in crypto continuing to increase, propelled in no small part as a result of strong lobbying efforts by the crypto industry, the likelihood of CPAs with clients that are exposed to crypto will only increase.
While these tax changes and modifications remain the subject of debates and conversations, the fact remains that crypto tax reporting, data collection and payments are going to be substantially more complicated than in the past as these proposed changes are phased in over the next several years. To remain up to speed and able to provide effective tax services to clients, CPAs and other accounting professionals are going to need to remain proactive with regard to education and client engagement.
2025 looks to be a dynamic year for the wider cryptoasset marketplace, but with the dynamic changes there will also be opportunities for forward-looking and motivated accounting professionals.
IRS to start 2025 tax filing season on Jan. 27
2025 tax season starts Jan. 27. Here’s how to file for free
The unemployment rate for Black women fell in December
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Personal Finance1 week agoHow to rebalance your portfolio after lofty stock returns in 2024
-
Economics1 week agoJimmy Carter reshaped his home town
-
Accounting6 days agoDepreciation of Assets and Key Strategies for Accurate Valuation
-
Finance1 week agoKen Griffin’s flagship hedge fund at Citadel climbs 15.1% in 2024
-
Economics7 days agoRuss Vought: Donald Trump’s holy warrior
-
Economics1 week agoOverall, American states are becoming more democratic
-
Accounting1 week agoIn the blogs: Meltdown mode
-
Economics1 week agoAn attack in New Orleans raises fears about Islamic State