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Protect the CPA profession as traditional firms fade away

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We’re witnessing the evolution of the “new firm.” 

First, these aren’t audit firms. They are their own unique beast and don’t fit into this new firm model. They are firms:

  1. Where professional services and technology have merged together with a significant investment from venture capital or other outside capital. 
  1. That are merging up into a firm with private equity. They will eventually become public companies when PE won’t be able to get their money out, forcing an IPO. 

What do these new firms have in common? They focus on those services that don’t really need a CPA credential. Things like general accounting and tax, controller services, CAS, etc., can be done by anyone; a CPA is only needed to conduct a public company audit.  

Sound scary? Not really — if we as CPAs are willing to own that space in the marketplace. The CPA brand is significant and something worth having. But what happens when this influx of capital is commonplace and things change? How do we focus on protecting the profession and not the firm? This is key to our future!

The CPA in this evolving industry

Yep, I said it. Industry. Not profession. As certified professionals, CPAs work in a profession. But the new firm is focused on the industry where work is done by a broader group of people who work for a company and not a professionally licensed firm. 

I recently conducted a poll on LinkedIn where I asked if CPA firms will still exist in 2030. With 400 responses, 24% of respondents said they will not. So, if public accounting is evolving into a new business model, then how do we protect the profession within that business model? 

Today, just as the American Institute of CPAs advocates for the CPAs working in professional services firms, they also advocate for those CPAs in industry, working to protect the CPA brand for CFOs, controllers, etc. This could evolve into another group of CPAs. 

Let’s say someone works as a CPA for a technology company, selling services or professional services attached to that technology. They don’t report to the CFO or CEO, right? So, that’s not really an internal CPA. They are public-serving, but not part of a firm either. What do you call this group of CPAs? And how do you make sure the people in this role meet the rigorous standards of their credentials? 

These are the questions we need to be asking. We should be thinking about what that looks like in the future, too. The question then becomes what training or education is needed for these professionals, and what are the requirements that protect the CPA within this new industry. 

The real-time disruption

I’m dating myself here, but when I grew up in firms after graduating in the early 1990s, automation was just starting with computerized tax returns. It wasn’t that much later when I was starting my firm that QuickBooks came onto the scene. When you think about how work was done then compared to how work is done today, you see the real-time aspect the cloud has had on our work — disrupting the way we get things done. 

And that’s the biggest reason why firms haven’t changed. They don’t think about the real-time disruption of cloud accounting. The focus is too often on how a CPA is trained in a firm, where one person does the work and someone else reviews it. It’s all after the fact, right? 

Most firms still have a hard time with the idea of real-time, but if it’s truly a disruptor, then how do you quantify and qualify it? How do you educate around it? How do you maintain professional standards? That’s ultimately the problem to solve to protect the profession. 

Asking the right questions

This might not make a difference if you’re working in a firm or in a company that sells accounting and tax services, but as private equity came into the profession, so did a new firm model and structure. It’s here and we need to adapt.  

We’ve struggled with real-time for the past 20 years, but in today’s day and age, CPAs and accounting professionals are working on things as they happen. When you’re working in real-time, especially with technology and bots, you have to make sure that your output is at a certain standard. What that looks like is something we need to determine. The focus should be on the human element and serving customers, too, as bots can’t deliver either. 

I don’t have all the answers, and I never claim to, but we’re asking the wrong questions. We need to think about protecting the profession and not necessarily the firm. What questions should we be asking? 

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Accounting

Is gen AI really a SOX gamechanger?

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By streamlining tasks such as risk assessment, control testing, and reporting, gen AI has the potential to increase efficiency across the entire SOX lifecycle.

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Accounting

FASB offers retainage guidance for construction contractors

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The Financial Accounting Standards Board released a staff educational paper Tuesday to answer questions about how to apply its revenue recognition standard to presentation and disclosures to construction contracts that contain retainage (or retention) provisions. 

The paper pointed out that construction businesses are often subject to contracts that contain retainage (or retention) provisions. 

Companies that operate in the construction industry are frequently subject to contracts that include retainage provisions. Those provisions generally offer a kind of security to the customer by permitting the customer to withhold a portion of the consideration billed by the company until certain project milestones are met or the project is finished.

The revenue recognition standard, also known as Topic 606 or ASC 606 in FASB’s Accounting Standards Codification, offers guidance on the presentation of a contract with a customer on the balance sheet as a contract asset or a contract liability and related disclosures, but lacks specific guidance on retainage. 

The educational paper explains the presentation and disclosure requirements in GAAP about retainage for construction contractors and provides some examples of voluntary disclosures of retainage that would provide more detailed information about contract asset and contract liability balances.

The FASB staff received feedback from private company stakeholders in the construction industry, as well as the FASB-affiliated Private Company Council,  questioning the proper application of Topic 606 guidance to retainage. Some users of private company financial statements, including sureties, provided feedback that information about retainage is important to their analysis. 

The educational paper aims to clarify the presentation and disclosure requirements in GAAP about retainage for construction contractors and provide example voluntary disclosures of retainage that would currently be permissible under GAAP and would provide users with more detailed information about contract asset and contract liability balances. 

The educational paper doesn’t change or modify current GAAP and isn’t intended to be a comprehensive assessment of the accounting for retainage in accordance with Topic 606. The exhibits included in the paper are for illustrative purposes and don’t create additional requirements beyond those in current GAAP. Entities should refer to current GAAP and consider entity-specific facts and circumstances when preparing financial statements.

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Accounting

Small business wage and job growth stayed flat in March

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Hourly earnings and job growth for workers in small businesses remained mostly unchanged last month, according to payroll provider Paychex.

The Paychex Small Business Employment Watch, which includes the Paychex Small Business Jobs Index, showed job growth continued at levels seen over the last several quarters at 99.75 in March for U.S. businesses with fewer than 50 employees. Paychex wage data found the hourly earnings growth rate (2.91%) for workers in U.S. small businesses remained essentially similar in March compared to February.

The national Small Business Jobs Index dipped 0.29 percentage points to 99.75 in March, slightly less than the pace set at the end of the past two quarters. At 2.91%, hourly earnings growth stayed below 3% for the fifth month in a row in March, while one-month annualized hourly earnings growth (3.51%) outpaced annual growth (2.91%) for the fourth consecutive month.

“We don’t see any signs of recession,” said Frank Fiorille, vice president of risk, compliance and data analytics at Paychex. “It looks like they’re still doing OK, not gangbusters, but still keeping up with the range that they have done the past few months.”

The Midwest remained the top region for the 10th consecutive month on small business job growth, despite slowing 0.58 percentage points in March. Texas continued to lead the other states on small business job growth in March, while Minneapolis gained 1.87 percentage points to move into first place in March among metropolitan areas. The manufacturing industry gained 1.05 percentage points during the first quarter of 2025 to perform best among the industry sectors on job growth.

On the wage front, Tampa topped the other metro areas in March in terms of both hourly earnings growth (4.20%) and weekly earnings growth (4.00%).

Fiorille doesn’t see much impact on small businesses yet from the tariffs that President Trump administration has threatened to impose on Wednesday. “My handicapping of this is that it will obviously impact them, but not as much as you’d think,” he said. “I do think a lot of them are service related, but even in the service-related ones, they’ll have some issues if they import stuff as well. Then there might be some indirect inflation costs on them.”

He advises accountants to keep an eye on further developments on tariffs, tax changes and the steady stream of executive orders from the White House.

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