Calvetti Ferguson Admits New Dallas Partner

John Jamison

Houston-based Calvetti Ferguson (FY18 net revenue of $15.3 million) has admitted John Jamison as PIC of the technology risk services practice in the Dallas office.

“We have been growing dramatically for the past couple of years, especially in the Dallas/Fort Worth metroplex. We have known of this need in the market for a while, and knew we needed someone skilled in this area and very familiar with the local market,” states MP Jason Ferguson. “When we met John, we knew we had found the right leader for our new practice.”

He brings over 17 years of experience to the firm with expertise in SSAE 18 (SOC 1 and 2) readiness and examination; IT internal audit, risk assessment and general controls reviews; virtual CIO / IT leadership consulting; and Sarbanes-Oxley (SOX) and financial statement audit support.

More news from Calvetti Ferguson

Over 50% of Professional Service Firm Employees Criticize Employers’ Response to COVID-19

More than half the respondents to a recent survey say their firm had no plan to handle the COVID-19 pandemic, and 25% cited poor communication as part of their dissatisfaction.

“It took a while for the firm to comment on the situation internally,” one respondent says. “They were very slow to allow the work-from-home option until someone tested positive.”

The survey, by the Hinge Research Institute, drew responses from 217 employees from more than 200 professional services firms between March 20 and March 31.

Respondents rated their current employer’s response to COVID-19 on a scale of 1 to 10. Among respondents with positive sentiments toward their firm’s crisis response, 36% indicated their remote working capability prepared their firm for large-scale telework in response to stay-at-home orders; 23% lauded their firm’s proactive, decisive measures; and 15% said that their employers clearly communicated plans to team members.

“Our research over the last several years has consistently shown that a growing number of professional service firm employees want flextime and telework options to achieve better work-life balance,” says Hinge MP Lee Frederiksen. “The professional services are built on people marshalling their expertise wherever their clients are. Firms that offered telework perks before the pandemic have been quicker to scale up remote working in response to shutdowns. However, firms that haven’t prepared a crisis response plan are going to be slower to adapt to emergencies like this one, even if they already offer a telework option.”

The report, How Professional Services Firms are Responding to the COVID-19 Disruption, is available for download.

Research: AI Can Help Some Service Firms But May Not Work For Others

New research warns that AI may not be appropriate for businesses that rely on a substantial amount of human interaction or a variety of services. Alternatively, businesses with limited customer contact and choice will see more AI success.

A new study on replacing professionals with AI technologies says business owners should think strategically before succumbing to the temptation to use AI to lower labor costs and increase the bottom line. The research paper is titled “AI and Machine Learning in Service Management” and is published in the Journal of Service Management.

“AI has the potential to upend our ideas about what tasks are uniquely suited to humans, but poorly implemented or strategically inappropriate service automation can alienate customers, and that will hurt businesses in the long term,” says researcher Chris Meyer, a professor at the Lally School of Management at Rensselaer Polytechnic Institute in Troy, N.Y.

Meyer determined that in businesses where trust and reputation are critical to building and maintaining clients, people will be more likely to be effective than automated technologies. Conversely, in areas where human biases can harm offerings of services, AI will be a better tool for companies to employ.

Meyer also asserts that many businesses will ultimately be using a mix of people skills and automation to effectively compete. Even AI, which can handle very sophisticated tasks, works best alongside humans — and vice versa.

“Automation and human workers can and should be used together,” Meyer said. “But the extent of automation must fit with the business’s strategic approach to customers.”

Same-Old Professional Development Costing Firms In Talent War, Succession Progress

One of the ongoing challenges firms face is bringing in the right people with the right skills and keeping them engaged, rewarded and prepared to become partner. At the same time, firms need to ramp up technology – and fast – bringing even greater urgency to planning for the future.

Firms are taking various approaches. Some are hiring outside technology experts; some are merging in smaller tech, cybersecurity or consulting firms and some are stealing partners from other firms or seeking out free agents. The biggest firms have the resources to do all of these things while making sizable investments in up-and-coming technologies, but they are the exception not the rule.

Some observers fear the profession is too slow and too reliant on outside experts to shake up professional development. The result could be firms without the necessary next-generation skills and future partners.

Technology transformation is a huge challenge, says consultant Kris McMasters, formerly the co-CEO of CliftonLarsonAllen. While many firms are focusing on technology tools, and hiring tech talent into the firm, it’s critical that firms create a thoughtful strategy around upscaling the skills of the existing professionals. And that means more than improving technology skills, but analytical thinking and creativity as well. Lower-level tasks will be transformed by automation, she says, and the accounting firms of tomorrow will look far different than those of today.

The Choice: Buy Versus Build: Dom Esposito, who consults with small and mid-size CPA firms, says the No. 1 shortcoming of these firms is buying the next generation of partners instead of building them from within. Because some firms are only paying lip service to professional development, they look for lateral hires to fill the gaps.

For example, a firm may hire a professional with 10 or 12 years of experience in technology with the intention of making that person an important part of the firm’s growth as a partner. “Sometimes it works, and sometimes it doesn’t,” says Esposito, CEO of Esposito CEO2CEO LLC. “Often it doesn’t.”

Lateral hires are necessary sometimes, but they’re also risky. Do these hires come from a firm with a similar culture, work ethic and workload? Was the same level of quality expected? Ambitious professionals can view a lateral hire as “cutting in line” and taking a partner position that could have been theirs. Esposito says that in his experience, laterals often don’t make the impact anticipated, exit after a short time and leave the firm with morale problems, disruption, dissatisfied clients and an expensive lesson learned.

Small and mid-sized firms often fail to take care of their own, he says. “They don’t spend enough time developing that talent into a real client executive. They let them linger and pump out work every day but they’re not looking beyond the immediate benefits,” says Esposito. Slow and steady wins the race, and rigorous leadership development academies smooth out professionals’ weaknesses, strengthen their confidence, increase their ability to sell and create lasting business relationships, he says.

Finding the Right Fit: It’s not easy to find the right kind of professional development program, but Chuck Mullen says you start by asking for help rather than trying to figure it out on your own. “I think firms get pretty stale year after year conducting training the same way. It can very much become a pattern. All you have to do is listen to your staff and they’ll tell you if it’s any good or not.”

Mullen is chairman of Akron, Ohio-based Apple Growth Partners. He went through an MP boot camp about a year after taking the top spot at the firm. The experience taught him how to be innovative, how to think in the long term and how to question the status quo when it comes to training.

Director of Operations Erin McCafferty says that in 2019 and 2020 Apple Growth Partners will undergo a full assessment of the professional development offered now and where it should go in the future.

In the meantime, the firm has made a significant investment in the concept of intentional coaching, which takes the whole person into account and is championed by Erica Ishida, the new CEO of LEA Global. “If you focus solely on someone’s career and their performance, you never get to true growth and development,” she said in a recent podcast.

McCafferty says the firm works with three coaches, all with different styles, who work with firm professionals confidentially on professional or personal issues. It’s not counseling, it’s coaching, and the guidance helps professionals sort out where they stand on that blurry line between professional and personal.

“If people can bring their best self to work every day and work through challenges at home or at the office, it’ll make all the difference,” Mullen says. “Even a little improvement will have a ripple effect.”

What’s Our Purpose? Why Do I Work Here? Ishida says intentional development is a new way to think about coaching in the profession, and she is receiving inquiries from multiple firms on the topic. To start, each professional needs a sense of purpose, or a good answer to the question, “Why do I work here?” Organizations that operate at their best communicate a clear intention of purpose and make sure they have the culture and strategy to support it.

“Lots of CEOs think they have that,” Ishida says. “They have it in their heads, but if you ask people in the halls, they can’t answer. They have no idea.” Going through a holistic coaching process helps professionals define their core values and prioritize their activities.

A clear purpose, strong culture, an openness to new ideas and a forward-looking approach to professional development are some of the elements that keep professionals involved and interested in advancement.

Mullen recognizes that technology will be a bigger part of the firm’s future. “I just don’t think it’s going to be as fast and drastic a change as some of the fear mongers say it’s going to be.” A CIO was brought in about four months ago, and together with the IT director and a technology committee, the firm is evaluating what types of artificial intelligence and data analytics would make the best investments. Meanwhile, the firm is hiring the most tech-savvy professionals it can find.

Mullen says many firms have it backwards. Rather than focus internally, their “grow, grow, grow” mentality can result in a disgruntled workforce and a loss of clients who sense professionals don’t want to work there. Recruitment and retention are easy if you create a top-notch workplace, or a “workers’ paradise,” as Mullen puts it.

“This is an inside job. I’m not looking at the market all the time. I’m looking inside.”

LinkedIn: Blockchain Technical Skills In Demand for 2020

What’s the highest-demand skill for 2020? Blockchain, says LinkedIn in a recent article. Blockchain technical skills didn’t even make the top 10 list last year, LinkedIn says.

Here’s the list of most in-demand skills:

  • Blockchain
  • Cloud computing
  • Analytical reasoning
  • Artificial intelligence
  • UX design
  • Business analysis
  • Affiliate marketing
  • Sales
  • Scientific computing
  • Video production

LinkedIn also listed the top five soft skills:

  1. Creativity
  2. Persuasion
  3. Collaboration
  4. Adaptability
  5. Emotional intelligence

LinkedIn says blockchain has become a line of business for huge corporations such as IBM, Oracle, JPMorgan Chase, Microsoft, Amazon and American Express. Blockchain is now being used in shipping, health care, farming, food safety, entertainment and gaming.

LinkedIn’s methodology for determining in-demand skills was based on people getting hired for high-paying jobs. The skills were extracted from their LinkedIn profiles. Cities with 100,000 LinkedIn members were included in the evaluation.

More news on Blockchain

Big 4’s Massive Technology Investments May Reinvent Accounting

The Big 4 are investing billions of dollars into technology with the intention not only to streamline their operations but to transform their identities, according to Bloomberg Tax.

“We haven’t become a pure technology firm,” Christian Rast, KPMG’s global head of technology and knowledge said in a recent phone interview with Bloomberg Tax. “We are a professional services firm, but technology is core to our future.”

The firms are focusing on artificial intelligence and data analytics while re-training their work forces at a time when accounting leaders believe the profession is undergoing a fundamental change.

“Many of the routine jobs will go, as areas such as invoice processing are automated,” says Narayanan Vaidyanathan, head of business futures at the Association of Chartered Certified Accountants. “However, many more jobs will be created as accountants and auditors have a wealth of more information available to them. They can now check all of a company’s transactions in real time, with data analytics allowing them to spot trends and anomalies. That means accountants will be expected to become business advisers not just number checkers. They need to be on top of technology and train staff to use it.”

Some of the investments announced in 2018 and 2019:

KPMG – A $5 billion, five-year investment in automation and AI, new cloud-based technology, creating new products and training.

PwC – $3 billion over the next four years on technology and training.

Ernst & Young – A $1 billion, two-year technology investment in blockchain and automation projects.

Deloitte – Although the biggest firm in the nation hasn’t released an investment figure, it is building a niche providing automation services to law firms and legal offices.

Bruce Braude, hired in July as chief technology officer (CTO) at Deloitte Legal, says, “Each of our divisions has its own CTO so that we can work together to offer clients a technology-led solution – traditional lawyers would give a yes or no answer to whether an action was legal, whereas we can combine with other parts of the firm to offer an entire solution, as well as advising legal offices over areas such as automation.”

KPMG and EY are both looking to India to develop new technology.

Srinivasa Rao, EY’s global vice chair of global delivery services, tells Bloomberg Tax that the firm could increase staff in India by 50% over the next year, from around 50,000 today, to develop AI and analytics products in the country.

“Really this is aimed at emerging markets,” Rao says, “giving them access to things like machine learning that they can adapt for their own tax or audit products, which often have local requirements.” India will become the firm’s second largest office worldwide.

AICPA Gives Auditors Some Direction on Handling Digital Assets

The AICPA has issued guidance on how to account for digital assets.

Digital assets are defined as “digital records, made using cryptography for verification and security purposes, on a distributed ledger.” Blockchain is the distributed ledger used for crypocurrency transactions.

Because the business environment is changing so quickly and various types of crypto assets are being used more frequently, the AICPA is providing nonauthoritative guidance on how to account for these assets properly under GAAP rules. Digital assets are used for a variety of purposes, including “as a medium of exchange, as a representation to provide or access goods or services, or as a financing vehicle, such as a security, among other uses,” the AICPA says.

Ten questions and answers related to the issue are included in a free practice aid, which was developed by the AICPA’s the Digital Assets Working Group.

The AICPA notes that auditors should first think carefully about the risks and whether they have the skills needed before accepting or continuing audit engagements involving digital assets.

As additional topics are completed, the practice aid will be updated.

More news from the AICPA

Futurist, MACPA List CPA Profession’s Top Technology Trends

Daniel Burrus

Big data, artificial intelligence, robotic process automation (RPA) and cloud technologies top the list of technology trends that will impact the accounting and finance world over the next three years, according to research conducted by the Maryland Association of CPAs (MACPA), the Business Learning Institute and futurist Daniel Burrus.

The research began with Burrus’ Top 20 Technology-Driven Hard Trends Shaping 2018 and Beyond. Using his annual list as a starting point, MACPA Executive Director Tom Hood asked more than 3,000 CPAs and finance and accounting professionals which of those trends will have the greatest impact on the profession over the next three years. Their answers in rank order are:

  1. Big data analytics
  2. Artificial intelligence and cognitive computing in audit and tax
  3. Advanced cloud computing
  4. Virtualization and automation of processes and services
  5. Mobile apps for business processes
  6. Adaptive and predictive cybersecurity
  7. Mobile banking and payments
  8. Smarter smartphones and tablets
  9. Blockchains and cryptocurrency
  10. Virtualization of desktop and storage

“This year’s list saw some major changes as big data analytics rose to the top of the list, replacing artificial intelligence and cognitive computing,” says Hood in a statement. “Advanced cloud computing and mobile applications rose a few slots, indicating the increasing number of cloud applications and adoption by the accounting and finance profession.”

Tom Hood

“Keep in mind that these are hard trends, or future facts, that will happen whether we like them or not,” Hood adds. “Dan Burrus distinguishes these from the ‘soft trends’ that may happen. These core concepts are being used by accounting and finance professionals to see the visible future and identify opportunities before we get disrupted by the exponential pace of these technologies.”

Burrus says, “These trends highlight enormous, game-changing opportunities in a broad array of applications and industries. As you read through them, look for opportunities for you to leverage them and become a positive disruptor.”

Hood adds a word of advice. “Don’t stop at the trends impacting your firm or company. Stop and think about how these trends are impacting your clients and customers, both internally and externally. Think about the hard trends facing your industry and your customers’ industries.”

These seemingly individual technologies are joining forces to disrupt the accounting and finance profession exponentially. The impact of artificial intelligence is huge, but when combined with blockchain, for instance, its impact increases tenfold … at least. This “10x mindset” will be vital going forward, Hood says.

The MACPA says the hard trends can be turned into opportunities through its Business Learning Institute’s curriculum, The Anticipatory Organization: Accounting and Finance Edition.

Baker Tilly Launches New Practice to Help Clients with Digital Disruption

Chicago-based Baker Tilly (FY19 net revenue of $754.8 million) has launched Baker Tilly Digital, which brings together the firm’s analytic and advanced technology services.

Baker Digital is designed to help clients stay ahead of digital disruption. Baker Tilly CEO Alan Whitman says, “Keeping pace with new technology and making decisions today to shape tomorrow is never easy. We lean into and guide our clients through the complexities of digital disruption and the possibilities it brings.”

Baker Tilly Digital encompasses analytics, cloud strategies, connected devices, emerging technologies, intelligent automation, digital enterprise and Digital | Labs – an incubator for development of next-generation tools and services. The team includes data scientists, intelligent

Baker Tilly helped an aerospace and defense equipment manufacturer use advanced analytics, the firm says. “Before, I was watching 52 planes manually, which took me all day,” the fleet analytics manager of the company said. “After implementing the solution, I’m able to actively monitor the health of more than 400 planes using only 50% of my day. That extra time frees me up to tackle other critical issues that need my attention.”

More news from Baker Tilly

Freelance-accounting Startup Paro Raises $10 Million

Paro, considered a matchmaker for freelance accountants and mid-market companies, has raised $10 million, led by a Silicon Valley venture fund called Sierra Ventures.

The Chicago-based company plans to double staff in the next year to provide corporate clients with on-demand experts across a range of financial functions. The company, which started three years ago, has grown to 65 employees from about 25 a year ago, according to Crain’s Chicago Business.

Founder Michael Burdick, a former Deloitte consultant, says the company has thousands of freelancers and hundreds of clients, mostly middle-market companies looking for particular expertise. Paro handles billing for the freelancers and provides software to help them manage their businesses.

“Professionals want flexibility, but it really sucks to freelance,” says Burdick, according to Crain’s Chicago Business. “You spend 40% to 60% of your time doing business development, invoicing clients.”

Tech Crunch reports that Burdick calls Paro “a freelancer operating system.” Burdick says that Paro focuses on elite financial talent, leading to higher margins.

Online labor marketplaces targeting business functions have grown dramatically in popularity in recent years, observers say.