“Hundred-year floods” are usually bad things; to the layman, it means the kind of flood that’s so extreme it only happens once a century, while to hydrologists and engineers, it means a type that only has a 1% chance of occurring (but definitely doesn’t have to wait a hundred years before it can happen again — you can have 10 in a row, or go for 500 years without one; every year the chance remains 1% that you’ll have another).
Either way, a real hundred-year flood means disaster.
In accounting, though, hundred-year floods have actually turned out pretty well. Just over a hundred years ago, in 1913, the introduction of the federal income tax created a huge demand for the tax preparation services that are practically synonymous with the modern profession. And just under a hundred years ago, laws passed in 1933 and 1934 in the aftermath of the stock market crash that launched the Great Depression mandated the second of the profession’s primary offerings — the public company audit.
Rather than rising waters and widespread devastation, both developments created floods of work that CPAs have been trying to stay abreast of ever since, and while the field has seen some inundations of new work in the hundred or so years since (the high waterline of Y2k work in the late 1990s, for instance, and the flash flood of implementing Sarbanes-Oxley after 2002), nothing that’s come along has come close to those two early 20th century deluges — until now.
jon anders wiken/Jon Anders Wiken – stock.adobe.com
We’re at the start of accounting’s next hundred-year flood, and it’s all about environmental, social and governance work. Recent explorations of ESG rules at the Securities and Exchange Commission, in California, and in the European Union are just the first tricklings of what’s going to become a flood of mandates for companies everywhere to report on the impact they have on the world around them — and they’re all going to need help setting up their reporting systems, and then proving that those systems are accurate going forward. Over the next decade, the scale of the need for these services will grow to at least match that for financial audits, and could potentially be much, much larger.
This is work accountants were practically born to do. Some will object that the profession has no experience in reporting environmental issues — but neither does anyone else. What accountants do have is expertise in creating reporting systems, and assessing the accuracy and reliability of the output of those systems. This market is the profession’s to lose — but other players have their eye on it, and it won’t wait for accountants to make up their mind.
It may seem odd to look forward to a massive flood, but now is the time for accountants to start channeling the growing streams their way, and to stake a claim to the rising waters. At the very least it’ll keep the profession occupied until whatever arises in the 2120s … .
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