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Digital CPA Update
ERIK ASGEIRSSON
President and CEO of CPA.com
Thank You
Exiting
Members
Jen Wilson
ConvergenceCoaching, LLC
Serving since 2012
Maribel
Torres-Pinero
CPA
Lumix CPA’s & A...
Kevin Stephens
CPA
Hinton Burdick
Serving since 2014
Thank You
To Our Chairman
Innovative Practitioners of the Year 2016
Rachael Higginbotham
Marketing Manager
Postlethwaite & Netterville
Caitlin Lache...
Move to Relevancy
has Never Been
More Critical
Entering the Digital Business Phase
2000 2005 2015 2020
Autonomous
Business
People
Business
Things,
Smart Machines
Digital...
Source: Gartner (2016)
Hype Cycle for Emerging Technologies, 2016
Blockchain, Cognitive Expert Advisors,
and Machine Learn...
Innova&on	
Trigger	
Peak	of	
Inflated	
Expecta&ons	
Trough	of	
Disillusionment	
Slope	of	
Enlightenment	
Plateau	of	
Produc...
Tax
WORKFLOW
ADVISORY
FINANCIAL PLANNING
Advisory
VIRTUAL CFO
REAL TIME REPORTING
BUDGETING/FORECASTING
Audit
ELECTRONIC C...
Auditing in the
Future
Data
Extraction
Automation
Analytics
Data Standards
Continuous
Audit
New Audit
Services
Evolution of Financial Statement A...
•  Auditing is a manual form
completion process
•  Planning forms are over 120
pages and can take over 25 hours
to complet...
Phases of the Audit Where Firms Believe
Technology Can Have Greatest Impact
TOP TWO AREAS IN EACH PHASE
Percent	Hours/Phas...
Dynamic Audit Solution
Methodology
Risk
Dashboard
Transactional
Data
Client
Big Data
Structured and
Unstructured
External
...
Dynamic Audit
Solution at Work
Trial Balance
Transactional
Data
Dynamic Audit Solution
Methodology
Client
Big Data
Unstruc...
REPOSITORY OF INTELLIGENT VALIDATED INPUTS & OUTPUTS
Clearinghouse
CPA firm
validationCPA firm
Financial statements
Other ...
Addressing the Marketplace Need for a Private
Company Clearinghouse
CPA Firm
Validation
Source
Confirmation
& Document
Aut...
Evolution of
Tax Area
US Individual Tax Return Market*
	
	
Category		
	
Market	
Share	
	
Total	
Returns	
Five	
Year	
Trend	
	
Average	
Price	
To...
Brokerage
Accounts
Client CPA Firm
Aggregated	
Digital		
Dashboard	
	
Expense
Mgt
Online
Banking
Lending
Tax
Return
401k,
...
Value Proposition
Value	
Automa&on	
Today Tomorrow
Trusted	
Advisor	
Trusted	
Advisor	
Growth	
Specialization
Business & I...
How the Stock Market Sees Value
Transaction services (H&R Block) down by 35% while software
services (Intuit) and advisory...
Professionalization
of Client Accounting
Services
Professionalization
of Client Accounting
Services
Firm
Strategy
Market
Demands
Training &
Certificate
Growth of
Practice
S...
Deloitte 2016 Global Outsourcing Survey:
Key Findings
No	Longer	Viewed	as	Just	Cost	Arbitrage	
•  Solves	capacity	issues	
...
2016 MAP Survey Now Includes CAS
  Cloud adoption grew by 17% (to 56%)
  CAS Now Key Component of Survey
o  Nearly 10% of ...
A Growing Number of Firms Have Formalized
CAS Practice
Building Blocks of Strategic Advisory Services
Strategic Value
Transactional,
Compliance
Automated
Processes and
Workflows...
Expansion of CAS Ecosystem
Pre-Accounting
GROWING FOCUS
Real time inputs
outside of finance
(expenses, transactions,
etc.)...
Standards &
Guidance
Standards – SSARS21 Implementation
Look Back On Year Of Implementation
•  Focus has been on education of standard,
brandin...
Professional
Development &
Education
Client Accounting Advisory Certificate
Available in January
Digital Badge
Getting Certified In
Client Accounting Advisory Services
Defining
CAAS
Client
Interaction
Technology
Roadmap
Client
Assess...
Education Through Case Studies & Best Practices
Building a Community
for YOU and with YOU
2016 Digital CPA Update
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2016 Digital CPA Update

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CPA.com CEO, Erik Asgeirsson, will provide his annual update on the state of today’s digital firm. Specifically, Asgeirsson will share his perspective on what firms need to do in order to remain relevant in the coming year. He will also provide insight on the key innovations he sees occurring across the different practice areas from new business models, to advances in regulation, to growth strategies driving success. Aligning with this year’s conference theme, Asgeirsson will also introduce ways that firms can truly take the lead while transforming into a Digital CPA.

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2016 Digital CPA Update

  1. 1. Digital CPA Update ERIK ASGEIRSSON President and CEO of CPA.com
  2. 2. Thank You Exiting Members Jen Wilson ConvergenceCoaching, LLC Serving since 2012 Maribel Torres-Pinero CPA Lumix CPA’s & Advisors Serving since 2014 Matthew Talley Group 11 Advisors Serving since 2014 Tim Shortsleeve CPA TYS, LLP Serving since 2014 Jim Bourke CPA Withum+ Serving since 2012
  3. 3. Kevin Stephens CPA Hinton Burdick Serving since 2014 Thank You To Our Chairman
  4. 4. Innovative Practitioners of the Year 2016 Rachael Higginbotham Marketing Manager Postlethwaite & Netterville Caitlin Lacher Senior Marketing Coordinator Postlethwaite & Netterville
  5. 5. Move to Relevancy has Never Been More Critical
  6. 6. Entering the Digital Business Phase 2000 2005 2015 2020 Autonomous Business People Business Things, Smart Machines Digital Business People Business Things Digital Marketing People Business E-Business Business Web People Business competition has been marked by technology phases. DIGITAL BUSINESS: The creation of new business designs reached by blurring the digital and physical worlds.Source: Gartner
  7. 7. Source: Gartner (2016) Hype Cycle for Emerging Technologies, 2016 Blockchain, Cognitive Expert Advisors, and Machine Learning At Peak of Inflated Expectations
  8. 8. Innova&on Trigger Peak of Inflated Expecta&ons Trough of Disillusionment Slope of Enlightenment Plateau of Produc&vity Time Expecta&ons So#ware as a Service Blockchain Cogni4ve Expert Advisors & Machine Learning more than 10 years obsolete before plateau Years to mainstream adop&on: less than 2 years 5 to 10 years 2 to 5 years Big Data & Analy4cs* * Big data removed as a category by Gartner in 2015 Source: Gartner (2016) Key Technologies To Watch, 2016
  9. 9. Tax WORKFLOW ADVISORY FINANCIAL PLANNING Advisory VIRTUAL CFO REAL TIME REPORTING BUDGETING/FORECASTING Audit ELECTRONIC CONFIRMATIONS FIN STAT CLEARINGHOUSE AUDIT SOFTWARE Accounting VIRTUAL CONTROLLER CLOUD ACCOUNTING BILL MANAGEMENT FIRM TRAINING IMPLEMENTATION CONSULTING LMS PLATFORM BEST PRACTICES CASE STUDIES WHITEPAPERS COMMUNITY Supporting The Core Pillars Of The CPA Firm
  10. 10. Auditing in the Future
  11. 11. Data Extraction Automation Analytics Data Standards Continuous Audit New Audit Services Evolution of Financial Statement Audit SEC EDGAR RIVIO Clearinghouse USERS (Investors, Banks, Private Equity, etc) Public Company Audit Private Company Audit New Services: Business Analytics & Insights We are at an critical inflection point for profession around audit process and tools
  12. 12. •  Auditing is a manual form completion process •  Planning forms are over 120 pages and can take over 25 hours to complete •  Efficiency is defined as “rolling” the forms forward How Audit Works Today
  13. 13. Phases of the Audit Where Firms Believe Technology Can Have Greatest Impact TOP TWO AREAS IN EACH PHASE Percent Hours/Phase 15% 57% 14% 14% Planning Fieldwork Wrap Up Reporting
  14. 14. Dynamic Audit Solution Methodology Risk Dashboard Transactional Data Client Big Data Structured and Unstructured External Data Industry data, adverse news feeds, external client information Dynamic Audit Solution at Work EXAMPLE 1 1)  Automates “smart” grouping of trial balance accounts for financial statement 2)  Eliminates lead sheets with “Ledger Account Window” 3)  Reveals all account transactional detail in the “Transactional Detail Window” 4)  Among other things, pulls industry and company information from external sources to populate risk assessment dashboard Grouped Cash Ledger Accounts Window
  15. 15. Dynamic Audit Solution at Work Trial Balance Transactional Data Dynamic Audit Solution Methodology Client Big Data Unstructured Data Leases Financial Statements Lease Dashboard Client Big Data Structured and Unstructured EXAMPLE 2 Manual Process: Approximately 3 Hours Dynamic Integrated Process: Less Than 30 Minutes You might be interested in RESEARCH AND LEARNING. Click for Research Learning
  16. 16. REPOSITORY OF INTELLIGENT VALIDATED INPUTS & OUTPUTS Clearinghouse CPA firm validationCPA firm Financial statements Other financial Documents Financial document repository Clients Private businesses 3rd party recipients Banks Investors Other users
  17. 17. Addressing the Marketplace Need for a Private Company Clearinghouse CPA Firm Validation Source Confirmation & Document Authentication Reduced Risk & Liability Exposure Control Over Distribution & User Notification Document Requests & Tracking
  18. 18. Evolution of Tax Area
  19. 19. US Individual Tax Return Market* Category Market Share Total Returns Five Year Trend Average Price Total Market Value Comments Manual 3% 5M -9% N/A N/A Steady decline over past decade DIY So#ware (TurboTax, etc.) 40% 60M 5% $0-100 $2 B Growth driven mainly by gaining share from manual and storefront categories Storefront (H&R Block, etc.) 11% 16M -4% $100-200 $3.5 B Majority of their clients make less than $50k a year. EITC key driver. Non CPA Prepared 36% 54M 0-1% $100-300 $6.5 B Non complex returns losing share. New CPA compe4tors emerging CPA Prepared 10% 15M 0-1% $300 – 800 $11 B Fundamentals solid. CPA firms primarily support upper 10% of US Market. US Return Market 100% 151M 1-2% $150 $23 B *2015-2016 Data from Intuit, H&R Block, IBIS, & IRSPrepared Returns: 57% , Software/Manual: 43%
  20. 20. Brokerage Accounts Client CPA Firm Aggregated Digital Dashboard Expense Mgt Online Banking Lending Tax Return 401k, 529 Client Document Vault Complete System of Record (tax returns, statements, insurance, key records) InsuranceFamily Accts & Planning Financial Aggregator Platform
  21. 21. Value Proposition Value Automa&on Today Tomorrow Trusted Advisor Trusted Advisor Growth Specialization Business & Individual Insights Software will win at low end Higher Margin & Value Low margin/fee pressures Automa4on Of Services Transac4onal Decline Transac4onal Tax & Bookkeeping 2016: H&R Block Exits Small Business Advisory Services
  22. 22. How the Stock Market Sees Value Transaction services (H&R Block) down by 35% while software services (Intuit) and advisory services (Accenture) up by 12-17% HRB INTU ACN
  23. 23. Professionalization of Client Accounting Services
  24. 24. Professionalization of Client Accounting Services Firm Strategy Market Demands Training & Certificate Growth of Practice Standards SSARS 21 Media Coverage Adoption Curve CAS is now a core practice area for firms
  25. 25. Deloitte 2016 Global Outsourcing Survey: Key Findings No Longer Viewed as Just Cost Arbitrage •  Solves capacity issues •  Creates scalability •  Provides access to intellectual capital Creates New Opportuni&es for Service Providers and Clients •  Improves quality •  Improves user experience •  Captures and enables innova4on Cloud Technology Can Be Used to Transform Processes •  Accelerate speed to value •  Reduces implementa4on 4mes •  Improves func4onality
  26. 26. 2016 MAP Survey Now Includes CAS   Cloud adoption grew by 17% (to 56%)   CAS Now Key Component of Survey o  Nearly 10% of firm revenue come from Client Accounting Services o  Higher growth in large firm segment
  27. 27. A Growing Number of Firms Have Formalized CAS Practice
  28. 28. Building Blocks of Strategic Advisory Services Strategic Value Transactional, Compliance Automated Processes and Workflows Business insights and Strategic Advisory Human Capital Management Sales and Use Tax Budgeting & Forecasting Tax & Financial Planning CFO Services Strategic Planning Bill Management Expense Management Cash Flow Management Financial Dashboards Account Reconciliations Payroll Write-up Financial Preparation Income Tax Compliance
  29. 29. Expansion of CAS Ecosystem Pre-Accounting GROWING FOCUS Real time inputs outside of finance (expenses, transactions, etc.) Accounting IN PLACE Cloud Accounting (G/L, Payables, Payroll, etc.) Post-Accounting GROWING FOCUS Business Intelligence (Budgeting & Forecasting, Planning, KPI Dashboards, etc.)
  30. 30. Standards & Guidance
  31. 31. Standards – SSARS21 Implementation Look Back On Year Of Implementation •  Focus has been on education of standard, branding option, client roll-out, etc. •  Lots of Questions & Internal Firm Debate •  Firm Branding •  Connection between client accounting and quality control of firm •  Additional reviews and potential cost “
  32. 32. Professional Development & Education
  33. 33. Client Accounting Advisory Certificate Available in January Digital Badge
  34. 34. Getting Certified In Client Accounting Advisory Services Defining CAAS Client Interaction Technology Roadmap Client Assessment Guidance On-Boarding Workflow Design KPIs
  35. 35. Education Through Case Studies & Best Practices
  36. 36. Building a Community for YOU and with YOU

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