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NextGen Magazine

 
 

NextGen Conference Speakers Urge CPAs to Embrace Technology

By:
Chris Gaetano
Published Date:
Jul 30, 2020
NextGen Tech Session photo
Eric Cohen (top) served as the moderator of the panel with Zachary Gordon (middle) and Mark DiMichael (bottom).

The future of the CPA profession lies in technology, and firms would be wise to adopt it, according to two panelists at the Foundation for Accounting Education's NextGen Conference on July 29. The panel was moderated by Eric Cohen of Cohen Computer Consulting, one of the original founders of XBRL, a platform for business reporting that is used for Securities and Exchange Commission filings.

Zachary Gordon, a Janover senior manager, said that technology might take a while for the CPA profession to embrace fully, observing that "accounting, as an industry, is relatively slow to change and adapt," as it is "relatively set in a slow-moving infrastructure." He added, however, that some things are changing fast, and firms cannot afford to ignore new developments, as they hold vast potential for profitability. 

One example is cloud computing, which, he said, offers the benefit of freeing up firms from maintaining all their data themselves,  But, in addition, he said, "You're also really growing your team," as "you have a third party responsible for each of these programs, each of these functions, you have in the cloud." While he noted that filing deadline concerns have made some accountants hesitant to embrace the cloud, he said, "That would be a concern if you were operating locally too."

Dashboards using data analytics are another vital area, which Gordon called "the wave of the future." While much of the work CPAs do is generally backwards-looking, from tax returns to financial statements, effective data analytics and a dashboard to interpret the results allow the profession to report in real time and to become forward-looking by identifying trends and patterns. With the right skill set and functionality, he said, a CPA could tell clients how they're doing at that exact moment, as well as where they need to be, looking in the future.

"One, that's really cool, and two, it's a great new revenue stream," he said.

Finally, Gordon said that it is important that firms familiarize themselves with robotic process automation (RPA), which can free up resources in a wide variety of areas, such as accounts receivable and payable, bookkeeping, calendar invites and other simple, repetitive tasks. Such tools can also be great assets in engagements, especially where they concern audit.

Before, he said, an audit of 1,000 widgets would be conducted by physically sending someone in and sampling about 10 percent of them. But now, he said, "Instead of spending the time to do that, let the bot do it for you," adding that bots are now capable of sampling 30, 40, or even 100 percent of the entire population, and, unlike people, can work 24/7 with no need for breaks.

Another major trend that CPA firms need to keep abreast of is the rise of cryptocurrencies. The other speaker, Mark DiMichael, a Citrin Cooperman partner who specializes in digital assets, noted that virtual currencies and blockchains have come a long way since the early days of Bitcoin, and this holds important implications for virtually all fields of the CPA profession.

Take audit. Many cryptocurrencies, including Bitcoin, are more or less anonymous, since they rely on private keys, rather than owner names, to operate. That, he said, is a challenge for auditors who need to verify just how much money a company has, "and looking at the blockchain alone won't help us until we can confirm this company controls these keys."

This issue becomes even more relevant when it comes to fraud and forensic accounting. One reason is that digital currencies remain the number one asset of choice for criminals, whether they're buying guns online or locking down a computer with ransomware. However, even in more mundane engagements, digital currencies can still play a decisive factor, as DiMichael himself knows.

"I actually have dealt with a number of cases where spouses got divorced and the husband, in this case, was buying Bitcoin and trying to hide it, so it was my job to try and find it," he said.

Tax is another area where cryptocurrencies can complicate matters. In 2014, he said, the IRS declared that they counted as property and should be taxed as such. This means that cryptocurrency purchases create basis, and sales require valuation at the time of the sale. Such valuation, he said, is "not as simple as it was in the old days when your broker would just send a 1099-B. Crypto exchanges do not send those out."

Valuation itself, though, can have its own complications. With some cryptocurrencies, it's simply a matter of going online to check current prices. But if a cryptocurrency is more thinly traded, the tokens may not have a margin price. Further, companies can create their own digital assets, which may call for business valuation expertise as well. Taking advantage of these facts can add good value to a practice.

He said it's an exciting time to be in the cryptocurrency area because the industry is still so new, and a lot of rules are still forming.

"The rules are not fully established yet, so it's very exciting to try to build the plane as we're flying it," he said.