ADDING VALUE AT EVERY STAGE OF GROWTH:

REIMAGINING THE ACCOUNTING PROFESSION

GOOGLE, MICROSOFT, APPLE and AMAZON all share something that the accounting profession would do well to emulate. Besides being the top 4 companies in terms of market cap (see table below)

They are relevant to me, to virtually every business (big or small) and to virtually every consumer in this country[1]. Technology products are good – and getting better all the time. They are also getting better very quickly. Presumably that’s because they know who their users are.

Although I’m not an Apple fan boy, my wife is (OK – a fan girl) and I have to admit they have good hardware products. My wife and I use Amazon and Google (i.e. “Alphabet”) extensively. For my part I much prefer the Microsoft ecosystem to  Apple’s – but that’s beside the point. We are aware of and significant users of all 4 of the world’s largest companies by matket cap.

I have had an OFFICE 365 subscription for many years now and have been rewarded with a constantly improving feature set. It’s improving so quickly that I have trouble keeping up and often learn great tips from junior staff members. EXCEL™ – Microsoft’s flagship spreadsheet product is so powerful we have used it to replace our working paper software with our own CLOUDWARE© system. That system was developed in house over the

Let’s ignore the rest of the world for now, since we’re concerned with the accounting profession in this country.


Let’s ignore the rest of the world for now, since we’re concerned with the accounting profession in this country. [1] Over the last few years of use, our team has continued to

course of a long weekend[1] – by accountants and NOT programmers. We also use EXCEL to search and summarize data from non-accounting systems and create supportable bases for allocating time to our clients’ business activities in tax engagements. And we use it to summarize transaction data for small clients without bookkeeping staff or any kind of accounting software.

Over the last few years of use, our team has continued to enhance and improve the system.

We use cloud-based file management software to facilitate sharing with staff in the Philippines and staff – and clients – throughout BC and around the world. We don’t actually have a global presence, but our clients often do.

These tools are so good we don’t require IT support[1] either.

My point is that the world’s 4 largest companies do not ignore their smallest customers. They know who they are. In the same way the world’s 4 largest accounting firms shouldn’t ignore small business either.

Admittedly my clients won’t go to PwC tomorrow[2]. PwC is just too expensive. But if firms like mine help them grow, some of my clients will eventually need help from Big 4 firms. In other words, small and medium-sized CPA firms should function like farm teams to develop players (aka “clients”) for teams in the “Big Leagues”.

As CPAs we need to add value at every stage of growth. My firm and firms like mine should be seen as an important part of the public accounting ecosystem. As a profession we need to improve the ability of small firms to deliver better tax compliance and compilation services to small business.

It is simply foolish to think we can sell consulting or advisory services to small businesses. Small businesses can’t see the value and, they desperately need better tax compliance services anyway. The profession should not see us as less sophisticated versions of CPAs working in major firms. Rather they need to see us as specialists in small business, who can add value at an early stage and make a living while doing it.

Consider the origins of the “K.I.S.S.” principle in the US Navy.

In about 1960 Kelly Johnson – a design engineer with Lockheed Skunk Works – handed a team of designers a handful of tools. Their challenge was to design an aircraft that was repairable in the field, under combat conditions, by an average mechanic – with only those same tools.

Keeping It Simple, Stupid (hence “K.I.S.S.”) should be a key concept for all of us in the business world.

30 years ago I had a small practice in Oak Bay – a suburb of Victoria, BC. When my local area network stopped working, I called an “IT specialist” who removed all 4 network cards and ordered replacements. After a week of having my network out of commission, I re-inserted the “offending” network cards and got it up and running myself on a Friday afternoon. Since then then I have been less than impressed with the quality of IT support. As an alumni I do try and send them there, when appropriate.

Over the last few years of use, our team has continued to enhance and improve the system.

30 years ago I had a small practice in Oak Bay – a suburb of Victoria, BC. When my local area network stopped working, I called an “IT specialist” who removed all 4 network cards and ordered replacements. After a week of having my network out of commission, I re-inserted the “offending” network cards and got it up and running myself on a Friday afternoon. Since then then I have been less than impressed with the quality of IT support.

As an alumni I do try and send them there, when appropriate.

In the first article in this series we compared the approach of STATISTICS CANADA and BC STATS in terms of how they looked at small business. To summarize, 95% of businesses in BC (and in Canada) have fewer than 20 employees. What’s more, the average number of employees in Canada’s 1.2 million small businesses is 9.07 – excluding the self-employed. If you include the self-employed, the average number of employed and self-employed drops to 3.64 persons per business.

While ordinary consumers get good value from the world’s largest companies, we should ask whether the same is true for the accounting profession. Since amalgamation in 2014, it feels like control of the profession has increasingly been centralized. Effectively that has meant that leadership has applied their own, “large firm perspectives” to their guidance.

Re-imagining the accounting profession – the current mantra for leadership – should involve a serious dose of critical thinking. We need to separate ourselves from our biases. That is easier said than done.

VALUE PROPOSITION DESIGN FOR THE ACCOUNTING PROFESSION

For the Big 4 firms, advisory services is the single largest service line. However the CPA brand is built on tax and regulatory compliance (i.e. audit). While we have a monopoly in audit, our true value in the eyes of the public is in tax.

In 2014 – when the merger was announced – the following article appeared in the GLOBE and MAIL:

CRITCAL THINKING – NOT VANITY

It’s not an accident that the graphic highlighted TAX as an indicator of who we are in the public’s mind.

CPA Canada is revising the Competency Map as a first step in “Re-Imagining the Profession”. This initiative appears to be led by people like an advisory practice leader who serves on the ONTARIO PREMIER’S ADVISORY COUNCIL. As a practice leader he – and others like him – may be forgiven for taking pride in reaching the dizzying heights of the ‘top of the profession’.

But vanity has no place in strategic planning.

If the Board of CPA Canada wants to lead our profession in the right direction, that means looking at the data –

But strategic planning involves looking at the data for the industry – not the data for a particular service line within the Big 4 firms. Consulting and advisory services don’t even make the cut in terms of importance for small accounting practices. In fact, even the Big 4 firms have to buy that capability and resell it. It is not a core strength of our profession.

Small and medium-sized business perceives the accounting profession as invaluable, primarily for our tax expertise. Secondarily they see us as auditors. We need to build on those strengths.  

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