Caleb recently published a post posing the question, "What’s the Future of the CPA Brand?"
This question was prompted by some AICPA research showing that while the CPA brand still has a lot value, there’s a growing threat from non-CPA professionals who are providing specialized services outside the core services — tax, accounting, and audit — typically provided by CPAs.
According to the AICPA, these non-core services include:
strategic planning, performance management, risk management, sustainability assurance, and business integration systems — areas that could benefit from the added knowledge and expertise a CPA can bring to those services.
That’s not exactly what the research says — the AICPA post presents the threat as an opportunity — but you can read between the lines. That is, it’s an opportunity to those in the profession who are willing to change, and a threat to those who aren’t.
Anyway, Caleb points out that you don’t need a CPA license perform any of these consulting services. Large firms have already figured this out — they aren’t accounting firms anymore. They’re “professional services firms” now, and they’re hiring larger numbers of grads who have no plans to take the CPA exam or who didn’t even major in accounting. It’s just a matter of time before the smaller firms follow this trend.
As an unlicensed accountant, this is all of great interest to me. Also, I've been featured in a couple of articles (such as this one) about how I’m not a CPA, still built a moderately successful outsourced bookkeeping practice, and didn’t see a good reason to ever bother becoming a CPA.
Well, the situation has changed since early 2015. I’m taking a cue from the presidential election frontrunners and qualifying my position.
Ok, call it a flip-flop, if you want, but I’m changing my mind. I’ll be sitting for the CPA exams starting this summer. I’ve already ordered my exam prep materials, so there’s no turning back.
Here are four reasons why I’m going for the CPA:
1. The CPA still has a strong brand identity
There are a bunch of good stats in the AICPA research, but this one sticks out the most in my mind:
Investors and business decision-makers are more confident in a job done by a CPA -– 79 percent and 84 percent respectively -– than if it were done by an accountant who is not a CPA.
That’s a big confidence boost for having three letters after your name! And I’ll bet it doesn’t even matter if the work done is in the traditional CPA realm of tax, accounting, and audit.
This is important when you consider that most business decision-makers don’t have the technical knowledge to evaluate the actual work performed — they rely on reputation and other factors (such as credentials) for reassurance that the job was done well.
From a marketing perspective alone, it would be crazy for me to ignore the value of having the CPA license. My experience running Cloudsourced Accounting, an online bookkeeping company, is in line with this thinking.
Having bid against CPAs for outsourced accounting clients, I can tell you that it can be difficult to win when you’re not a CPA, most other things being equal — even if your marketing is significantly better.
That was part of the reason my partners and I decided to merge with HPC (formerly Harshman Phillips & Company). When we came up against HPC in proposals, they’d almost always win the most valuable clients, and for a higher fee than we’d quoted.
This is a harbinger of things to come. As more CPA firms realize the opportunity of providing a full range of outsourced accounting services, bookkeepers will start to see more competition for the best customers.
If you can’t beat ‘em, join ‘em.
2. The future of public accounting is the “one-stop shop.”
After integrating my bookkeeping company into an accounting firm, I’m convinced that the ideal situation for the client is to get all the accounting services they need in one place. They nearly always prefer to do that rather than be serviced by a separate bookkeeper, accountant, IT professional, tax preparer, and business coach.
The firm of the future will provide many services: bookkeeping, accounting, technology consulting, advisory services, and more, all under one roof. Or virtual roof, as it may be.
While some firms are opening up partner-track positions for non-CPAs, my bet is that having the CPA license will still give me a significant advantage over those who don’t.
3. Accounting classes I’ve taken have made me a much better advisor to my clients
As a bookkeeper and technology consultant, the classes I’ve had to take to qualify for the CPA exams have helped improve the service I’m delivering to my clients.
- Internal Audit taught me that implementing Bill.com1 is a big opportunity to review and improve internal controls for payments.
- Setting up systems that prevent fraud is something that clients value a lot, but wasn’t something I was aware of prior to my formal accounting education.
- The Management Accounting course I had to take has given me the knowledge to help clients understand what is going on with their cost of goods sold.
Before, I just told them the number. Now I can explain what it means and more importantly, how they might be able to improve it.
This isn’t to say that you have to go through a formal accounting education to be able to be a valuable advisor your clients. I’d already learned a lot of this on the job. But the classroom time filled in the gaps in the theory that I hadn’t picked up from self-study.
That brings me to one of my biggest complaints about the current state of accounting education:
Having started my career in accounting outside the usual system, it’s crazy to me that the standard accounting education curriculum is almost completely theoretical. Fresh accounting grads without work experience must be totally useless.
It’s my hope and belief that the CPA exam content will catch up to the changes happening now in the industry and expand to include what are now “non-core” services such as strategic planning and business integration systems. We have to remember that the changes in the industry are still very fresh, and this sort of thing takes time.
When that happens, colleges and universities will upgrade the curriculum to match the CPA exam content.
4. The profession will push for legislation to restrict the work of non-CPAs
Getting the CPA is good for all the reasons described above, but a great reason is future-proofing.
As independent, unlicensed accountants and bookkeepers eat into the profits of CPA firms, it’s inevitable that the CPAs in those firms will seek to protect their time-consuming and expensive investment in getting licensed.
My bet is that CPA professional bodies will push for legislation that restricts public accountancy to CPAs and their firms (use of the terms “accounting,” “accountant,” etc. to describe the work).
Right now, I think Texas is the only state that restricts the word accounting or accountant to CPAs or those working in their firms, but they don't appear to enforce it. At some point, I think states will pass similar restrictions and enforce them. First for accounting, and then perhaps for bookkeeping. After the terminology is set, restrictions will expand to the actual work being performed, which could include other services. After that we’ll probably see the rise of a certification/license for bookkeepers and related restrictions on the work of unlicensed bookkeepers.
I’m not saying that this is a good or bad thing — just that it’s likely given that it protects the interests of CPAs, and that other occupations that require much less-skilled work are already regulated in most states.
It’s ridiculous that my barber had to go to school to cut hair, but I can call myself a bookkeeper or accountant and file sales tax returns all day long in California without a license or education.
The worst you can expect from an unlicensed barber is a bad haircut. A bad bookkeeper can deliver financial ruin.
So there you have it. Those are my reasons for pursuing the CPA license. CPAs and non-CPAs — What are your thoughts?
If you already have your CPA, am I making the right decision? Or am I wasting my time?
1 Disclosure: HPC and I, individually, are Bill.com partners. We get discounts and sell their service to clients.