The new CPA exam points to a the future for the profession

A newly announced change to the CPA exam marks a big step in the right direction, and it’s coming just in time. The accounting profession needs to evolve in order to face a new reality. The updated test indicates that more and more people in our field are recognizing that.

As Accounting Today reported, for the first time, between 30% and 40% of the questions in one of the optional sections — the “tax compliance and planning” discipline — will focus on financial planning. It’s a strong sign to those entering the accounting field that the role of the CPA is expanding. Our work must no longer revolve so largely around an inundation of work in the lead-up to April and October filing deadlines. Instead, we should be seen as an integral part of the financial planning process.

For years as a CPA, I’ve seen that a huge portion of the population, perhaps even a majority, are especially underserved by the current system. Many Americans have relatively simple taxes (perhaps 41% of U.S. households, by one count). And uber-wealthy people often have accountants on staff who can focus full time on just their taxes alone.

But everyone else — those with multiple income streams and growing investments — generally face giant amounts of paperwork. Often, they dump all this into CPAs once or perhaps twice a year. Overworked CPAs do their best to handle all those returns in a rush. 

In the process, these filers lose the chance to make strategic plans around all their investments in order to maximize their savings and build wealth. Unaware of some of the accounts they may have or where the paperwork is, they can easily make mistakes.

And because their returns are so confusing, they end up signing their names to, and taking legal responsibility for, what looks like a pile of terminology that only we can understand.

This is already a big problem, but it’s about to become even bigger due to the “great wealth transfer.” By one estimate, a massive $84 trillion in assets will change hands over a 20 year period. Baby boomers are expected to leave most of that as inheritances, passing assets on to members of Generation X, millennials, and Gen Z.

So today’s single-income filer might soon join the ranks of the “emerging wealth” or “high net worth.” And the system doesn’t work for them.

It’s time for CPAs to present our offerings in a whole new light. We should be seen as a fundamental, necessary part of the financial planning process year round. We should show clients that if they consult us on their decisions, we can advise them on the best strategies to maximize tax savings and avoid sticker shock at tax time. Of course, most of us already  offer this. But tens of millions of Americans don’t take us up on it.

To change this, we need to revamp our operations. For example, we should embrace the right tech stacks that will allow us to avoid some of the grunt work and number-crunching that today’s AI tools can handle. Having worked at some big tax firms in the Bay Area, I found that even they, right in the heart of Silicon Valley, were often wary of digital tools. So it’s no surprise to me that a recent survey found 73% of accounting firms are not using AI.

I also support a flat fee system as a way of encouraging clients to contact us at any time. I want us to be more proactive in reaching out to clients even when we don’t hear from them, encouraging them to set up times to speak with us and make plans to cover their liabilities.

Some CPAs I know currently face a dearth of paid work during parts of the year. They try to supplement their income by offering other services. With a new system, they could spread their work out across the year, attract more clients, and avoid being stuck in a “feast or famine” phenomenon.

If we guide this change right, we can also help to address the CPA shortage. Young workers don’t want to put in 14-hour (or more) days for weeks at a time every year. They want much greater work-life balance. By following this new kind of system, we could do a much better job of offering that, and attracting the next generation.

Making such big changes to how we function may seem daunting. But it’s something our profession can achieve. If we can interpret and navigate the constantly changing federal and state tax codes, we can do just about anything. 

Just as many other industries are in flux due to “disruption,” we need to face the music. To succeed in a new era, those of us in the accounting profession must disrupt it ourselves. If we do, we’ll be prepared for an onslaught of new clients with new needs. And we’ll be able to do an even better job than ever.