What Do Accountants Think Of The US Economy Now?Accounting
During the busy season this year, accountants from across the United States were asked to participate in the CPA Trendlines annual survey. This is the latest in the annual survey that was started in 2002.
The survey took the responses from 13,793 people who work in the accounting profession, though there were differing job titles, responsibilities and experience among them. The findings from this report can help you determine how to best manage your accounting business and what the current state of the economy is.
So let's look at the findings of the survey and detail what they mean for you.
The important thing to look at is who is participating in the survey. From the data collected, we can see that the majority of the respondents worked in the public accounting or consulting sector, with 68% of people working in organizations with fewer than 51 employees. This figure does not include the 24.7% of respondents classified as a solo practitioner.
Only 6.6% of respondents worked in companies with 51 or more employees.
Most of the respondents held significant leadership positions within the business. 73.7% were the CEO/Managing Director/Managing Partner/COO/President of their respective company. Another 13.7% held the job title of CFO/Controller/Partner/Senior Executive.
This could have limited the results of the survey as these people would have a very top-down view of the organization and therefore might not know some of the underlying concerns of some of the staff. Only 1.1% of respondents were junior members of staff and 1.6% midlevel staff.
However, this trend for the respondents to be high ranking leaders within their organizations might also be a reflection of the staffing crisis that appears to have taken hold of the industry. According to the respondents, it is the level of staffing that is their biggest challenge. So perhaps junior members of staff were too busy to complete the survey?
The Busy Season Opinion
One of the leading questions of the survey was to analyze how respondents felt about the busy season of 2016. The perception of accountants during this period is critical for many reasons. It can help determine the domestic market strength and whether accounting firms can expect to see an increase in their revenues and profits over the next few years.
In 2014, there was some optimism. However, in 2015, there was a lot of negativity with more accountants believing that the year’s busy period was worse than it was in 2014. Many reasons have been blamed for this including the IRS, Affordable Care Act, Congress, computers, clients and the weather. Some have stated that 2015 was one of the toughest years to date for CPA professionals. For some, it was too much apparently, and there were many retirements.
This year, 2016, seems to have been a positive year for accountants. More than 50% of all accountants thought that the season was better than last year and only 6% thought it was much worse, with 16% thinking it was somewhat lower. These were lows compared to the previous two years.
One aspect that the study claims has contributed to this is that CPA professionals are using their offseason more effectively to prepare for the next busy period. According to the report, those that look at the people, processes and outcomes of the past busy season and seek improvements in the system and then apply them before the start of the next busy season, will find that they have a more productive busy season.
The Current Challenges
Despite 2016 being one of the best years for accountants, it wasn’t all smooth sailing. Some of the biggest challenges identified by CPA professionals included:
1. Clients being late or unprepared for the busy season.
2. Late or erroneous K1s, 1099s, etc.
3. Staffing issues.
4. Pricing and fee pressures.
5. Security, privacy and identity theft issues.
The latter of these was reported a challenge by so few accountants, that the report writers felt that it almost shouldn’t have been on the list. From the remaining four, none of these are new, but there are signs that these challenges are subsiding.
Clients being late or unprepared has dropped by 10%, and late or erroneous K1s and other documents were reported by 5% fewer respondents than last time.
One challenge that did see a significant increase was that 15% more CPA professionals reported problems with tax codes and other regulation problems (40.9%).
Profitability For CPA Professionals
An important metric for considering the successfulness of accounting firms is client traffic. Compared to 2015, which was considerably poor, client traffic increased at 62.3% of firms.
One of the next metrics demonstrated that there was an increase in the financial fortunes of CPA professionals. Revenues were reportedly up at 70.2% of firms with revenue per client up at 62.1% of respondents. Profits saw similar increases.
This is probably why CPA professionals think that their businesses are in a good financial state. However, there was a less positive view when they considered the financial outlook for their clients. Accountants also believe there is a negative outlook for the economy on the whole, which might worry government policymakers.
If CPA professionals are going to see the same results next year, then there needs to be more analysis of the mistakes made this year and a new impetus for improving business operations to meet challenges. This is best done during the offseason, and the results will be clear during the 2017 busy season.
Conclusions From The Report
Many conclusions can be surmised from the report. Firstly, when compared to last year, there is a significant improvement for both the outlook of accountants and the clients to which they serve. It is also important to note that accountants seem to have learnt their lessons from previous years when it comes to meeting challenges.
This has led to more revenue and profit for accountants.
One of the major issues to be concluded from the report is that accountants believe that while their firms are performing well, the economy, in general, is not. This could mean that there is financial instability in the future or that clients need more financial education to earn better profits from their revenue.