CPA Firms

Part
01
of three
Part
01

Traditional CPA Firms: New Services

Some examples of the types of services traditional CPA firms are adding to compete against non-traditional firms are the advanced digital solutions, the legal operation services, and the strategic transaction advisory services.

Traditional CPA Industry Service Overview

  • According to the IBIS Industry report on the "Accounting Services Industry in the US", including Certified Public Accountants (CPAs), which provides a variety of accounting services, including auditing accounting records, designing accounting systems and others are driven by the big four companies naming PwC, Deloitte, EY, and KPMG which hold the largest market share in the Industry.
  • The Industry reports state that by the new accounting entrants in the market have intensified the competition and in the attempt to boost the market share," the industry's largest players have increasingly acquired smaller companies strategically to heighten their service offering to include ancillary consulting services".
  • To beat the competition, traditional CPAs are turning smart and changing from offering low-margin compliance services to adding a professional services model, which includes advisory/consulting work such as transaction advisory, cybersecurity, and litigation support.

New Non-Traditional Services

Advanced Digital Solutions

Overview
  • There is a growing need for Artificial Intelligence (AI) Model to offer advanced digital solutions in all consulting and audit practices across the traditional CPA firms which currently offer tax preparation, auditing, and business consultation as the most common services.
  • These firms prefer to use AI systems to offer advanced digital solutions through systems such as NLP for extracting more consistent and efficient results such as in case of examining large databases and documents for clients to comply with the new laws.
Why Expanding To Include The Service
  • Due to the rising demand for AI, data analytics, and large scale tech training, most of the CPA firm such as the big four accounting and audit firm naming PwC, EY, Deloitte, and KPMG are including advanced digital solutions as part of their in-house offering and selling it as a consulting service to their clients.
  • The rising competition being faced by CPAs from non-traditional firms which includes large tech companies offering audit services through there AI-based software has been the other factor forcing the traditional CPA such as the big four to adapt AI-based advanced digital solution service model offering.

Legal Operation Services

Overview
  • Traditional CPA firms including the already mentioned firms are preparing to add legal operations services as their added service wherein they target to offer legal solutions related to business problems using technology.
Why Expanding To Include The Service
  • The CPAs have been facing a long time competition from alternative service providers, outsources and all manner of legal businesses in terms of offering legal services as part of accounting solutions. Hence, the new industry lexicon has influenced the traditional CPA firms including the big four accountancy firms to stretch the domain of their service to offer legal strategy solutions focused on business solutions.
  • Large traditional CPA firms such as the big four are planning to add legal practices as their added services with a "focus on using technology to make legal advice more efficient, and to capitalize in-house legal operations services."

Strategic Transaction Advisory Services

Overview
  • Strategic transaction advisory services are being one of the added non-traditional services being offered by the traditional CPA firms such as EY, PwC and others with are taking the path of acquisition to offer the service as a business solution and growing the breadth of their regular services.
Why Expanding To Include The Service
  • As a way to snap the competition from non-traditional firms such as specialist firms offering an array of highly specialized business services in the market, such as strategic transaction advisory services wherein mergers and acquisitions are increasing, and there is a growing demand for professional services consultancy and execution firms.
  • PwC through its ‘Transactions-Acquisitions Consulting Services" aims to increase its breadth and depth of service capabilities and cater to the mergers and acquisitions market targeting the private equity and strategic buyers looking for high complex transaction requirements.
  • EY through its unified transaction advisory services in the US is aiming to offer holistic services to public and private-sector clients who aim to develop the financing, operating, transforming, acquiring or divesting infrastructure in varied industries.

Your Research Team Applied The Following Strategy

To obtain the insights relating to the non-traditional services being added by the traditional CPA firms in US as a way to compete with non-traditional firms, we researched through industry reports from credible research firms including IBIS, Grandresearchview, MarketWatch and others which provided the overview of the Accounting Industry in the US a shared insight relating to the CPA market and the major share of the industry dominated by the big four firms KPMG, PwC, Deloitte and EY.
Further, by exploring the relevant news articles, press releases and company leaders blog posts from the accounting industry and the already mentioned firms through sources including Accounting Today, PWC and so on we could identify details on the above-listed services being added by traditional CPA firms as a way to compete with non-traditional firms such as tech companies, legal firms, and specialist agencies which are competing in the accounting space by offering non-traditional services such as AI solutions, legal solutions, and strategic transaction advisory services.
Part
02
of three
Part
02

CPA Branding

Four common ways that top CPA firms in the U.S. are referring to themselves are (1) Accountants & Advisors, (2) CPAs & Advisors/Consultants, (3) CPAs/Certified Public Accountants, and (4) Consultants. We identified those as common ways that firms refer to themselves after reviewing the websites of over 60 of the CPA firms included in "The 2019 Top 100 Firms" list from Accounting Today.

1. Accountants & Advisors

  • Accountants & Advisors was, by far, the most-common way that top CPA firms in the U.S. refer to themselves.
  • We identified that phrase as one of the most-common ways that firms are referring to themselves by reviewing the websites of over 60 of the firms included in "The 2019 Top 100 Firms" list by Accounting Today and noting which ones were used the most.
  • Examples of firms from "The 2019 Top 100 Firms" list that describe themselves in this way include Citrin Cooperman, PKF O'Connor Davies, Marks Paneth, and BDO USA.
  • A close derivative of the Accountants & Advisors phrase is Accounting Advisory Services, which is used by KPMG and Ernst & Young.

2. CPAs & Advisors/Consultants

  • Another very common way that top CPA firms in the U.S. refer to themselves is with the phrase CPAs and Advisors/Consultants (one or the other, not both).
  • We identified that phrase as one of the most-common ways that firms are referring to themselves by reviewing the websites of over 60 of the firms included in "The 2019 Top 100 Firms" list by Accounting Today and noting which ones were used the most.
  • Examples of firms from "The 2019 Top 100 Firms" list that describe themselves in this way include BKD ("CPAs & Advisors"), CRI ("CPAs & Advisors"), Wipfli ("CPAs and Consultants"), and MBAF ("Certified Public Accountants and Advisors").

3. CPAs/Certified Public Accountants

  • CPAs/Certified Public Accountants is a common way we noted that top CPA firms are referring to themselves.
  • We identified that phrase as one of the most-common ways that firms are referring to themselves by reviewing the websites of over 60 of the firms included in "The 2019 Top 100 Firms" list by Accounting Today and noting which ones were used the most.
  • Examples of firms from "The 2019 Top 100 Firms" list that describe themselves in this way include The Bonadio Group, RubinBrown, Frank, Rimerman + Co., and UHY Advisors.

4. Consultants

  • Consultants is another common way we noted in which top CPA firms in the U.S. are referring to themselves.
  • We identified that phrase as one of the most-common ways that firms are referring to themselves by reviewing the websites of over 60 of the firms included in "The 2019 Top 100 Firms" list by Accounting Today and noting which ones were used the most.
  • Examples of firms from "The 2019 Top 100 Firms" list that describe themselves in this way include Rehmann and Blue & Co.

Research Strategy

We identified four common ways that top CPA firms in the U.S. are referring to themselves by reviewing the websites of over 60 of the firms listed in "The 2019 Top 100 Firms" list by Accounting Today. Most of those firms provide multiple services, so we specifically looked at how they talk about their CPA/Accounting divisions by going to those sections of their websites. While reviewing those 60+ firms' websites, we noted the ways they were referring to themselves, such as by calling themselves CPAs, advisors, and the like. The four phrases provided above are the ones that were most-commonly used per our review of more than 60 firms' websites.
Part
03
of three
Part
03

AI and the Accounting Industry

PricewaterhouseCoopers (PwC), Deloitte, KPMG, and EY (Ernst & Young) are some accounting firms that are currently investing billions of dollars in artificial intelligence (AI).

AI Adoption in the Accounting Industry

  • AI and machine learning tools are becoming a reality for the accounting industry as many accounting software vendors, such as Xero, Intuit, Sage, and OneUp, provide the ability to automate data entry, as well as reconciliations, among others.
  • According to research, it is anticipated that during 2020, many accounting tasks will become completely automated by utilizing specific technologies that are AI-based.
  • Around 77% of respondents to a survey involving over 1,000 bankers and 100 CEOs said they expect to administer AI to automate tasks within the next three years "to a significant or very large extent."
  • According to predictions from Gartner, around 80% of smartphones could possess on-device abilities by the year 2022, which may have a remarkable effect on accounting's future.
  • PricewaterhouseCoopers (PwC), Deloitte, KPMG, and EY (Ernst & Young), commonly known as "the Big Four," are among the US accounting industry's biggest service suppliers, and they all maintain artificial intelligence projects.
  • The big four are investing a significant portion of their resources (i.e. billions of dollars) in artificial intelligence.

Tasks AI is Used for in the Accounting Industry

Accounting Firms' Plans to Adopt AI

  • PwC developed GL.AI, an AI tool, that assists with detecting irregularities within the general ledger of a company. GL.AI was trained by PwC to evaluate trillions of different data points in a few milliseconds.
  • Recently, Deloitte and IBM Watson entered a partnership to offer cognitive-technology-enhanced solutions to end users for their companies.
  • A proof-of-concept AI was introduced by EY that utilizes computer vision to allows drones to track inventories while auditing.
  • EY has also used AI technology to automate routine tasks, including auditing.
  • Additionally, EY deployed AI to examine lease contracts, insisting that AI utilization has simplified the ways to gather crucial data from contracts like the options for termination or extension, the amount payable, and the lease's date.
  • KPMG developed KPMG Ignite, a range of AI tools, which is aimed at processing through a digital platform and optimizing business decisions.
  • Deloitte has a network of startups called Deloitte Catalyst that links start-ups collaborating to transform "AI technology into practical business applications for client firms."
Sources
Sources

From Part 02