During these hot summer days when the Great Resignation marches on and the hybrid workplace continues to gain momentum, firms of all sizes face a wide range of challenges. Want to know if today’s practitioners are grappling with the same issues that are stumping you?
Recently released results from the 2022 PCPS CPA Firm Top Issues Survey reveal a telling story across the profession. Several narratives share common threads of concern, while others are notably different. Let’s dive into a handful of the discoveries to help you make sense of it all.
A closer look
The Top Issues Survey asks firms to identify both the top challenges they currently face and the concerns they believe will most impact their practices over the next five years. This dual focus is designed to provide a clear picture of the current landscape and emphasize important elements to consider when planning your firm’s future. To highlight the unique perspectives and experiences of different practices, the survey results are broken down by firm size, as determined by the number of professionals. The eight cohorts range from sole practitioners to firms that employ 101 or more professionals.
What’s causing the uneasiness? The top five issues for all firm sizes include:
Challenges in working with the IRS
Making its debut on last year’s survey, this challenge continues to be a top struggle, ranking high for all firms except for those with more than 100 professionals. Faced with mountains of COVID-19 relief work, a backlog of unprocessed returns, outdated technology and inadequate staffing, during busy season, the IRS did not answer most phone calls and sent erroneous automated messages. These ongoing failures prompted calls for change in congressional hearings and critical reports from theTreasury Inspector General for Tax Administration and the U.S. Government Accountability Office (GAO).
Keeping up with COVID relief programs
Another 2021 debutant remained among the top issues again in 2022. This one ranked third among the top issues for firms with 10 or fewer professionals and in the top 10 for firms with 11 to 100 professionals. As with IRS challenges, the largest firms gave a relatively low ranking (23rd) to the difficulties of dealing with COVID relief programs such as the Paycheck Protection Program (PPP), COVID-19 Economic Injury Disaster Loans (EIDL) and the Employee Retention Credit (ERC) which makes sense given their greater capacity.
Keeping up with changes and complexities of tax laws
Often a top issue among the smallest firms, keeping up with changes and complexities of tax laws trailed only the IRS challenges issue among firms with five or fewer professionals and ranked in the top five for firms with six to 50 professionals. Again, as expected, it failed to crack the top 25 for either of the two largest groups.
Finding qualified staff
With no end in sight to the Great Resignation, it is not surprising to see this challenge among the top issues keeping practitioners tossing at night. This familiar struggle made its presence known for all sized firms except sole practitioners and held the top spot for all the large firms. This year’s results revealed an interesting trend, the bigger the firm the greater the staffing need.
Seasonality/layering of deadlines
The compression of work to meet the layers of deadlines has been a longstanding struggle for practitioners across the profession. The 2022 results revealed that this seasonal and stacked challenge finished in the top 10 for all groups tracked by the survey and 11th for firms with 11-20 professionals.
Are these findings in line with the top concerns at your firm? If not, where are the differences? Are they significant?
On the fringe
With all the pressing issues they face, practitioners cannot make everything a top priority. In a recent episode of the Small Firm Philosophy podcast, AICPA Vice President of Small Firm Interests Carl Peterson, CPA, CGMA, noted that the firm concerns listed above kept succession and cybersecurity from reaching top of the rankings. But Peterson also emphasized that these issues need to stay top of mind for firms.
By the year 2030, every Baby Boomer will be age 65 or older, which means 1 in every 5 U.S. citizens will be of retirement age. In addition, according to the recent PCPS Succession Planning Survey, 94% of sole/solo practitioners do not have a written continuation agreement with another firm and 57% of multi-owner firms do not have a written, approved plan. Brushing these tough issues aside is human nature, especially when schedules are packed with other demands. Rather than feel guilty about not having a clear succession plan in place, know that it is not too late to get started. This recent PCPS article has some great ideas to get you going.
While cybersecurity did not crack the top five in any of the eight size categories tracked by the survey, it ranked among the top 10 in most of them. A logical explanation is that many practices are now in the cloud and are more reliant on service providers to monitor and provide cybersecurity. However, firms must remember that they retain responsibility for their data in the cloud. The threat from hackers and other cybercriminals continues to grow so firms must remain diligent on properly protecting their computer networks and data.
In addition, many firms were forced to move into the cloud very quickly during the pandemic. The transition was largely successful, but did your firm establish the right procedures and protocols to provide the proper protection against cyber criminals? For additional insight into your firm’s cybersecurity, check out these two articles: “Six tips to protect your firm against cybercrime”and “Hybrid work best practices.”
What concerns do practitioners believe will most affect their practices over the next five years? In fitting style for this new hybrid age, there was a mix of responses including some significant differences between the responses of small and large firms.
Staffing (including recruitment and retention)
finished as the top issues in three firm size bands (2-5 professionals, 11-20 (tie) and 100+) plus the cumulative 21+ category
Changes in the regulatory environment
took the top spot for sole practitioners and tied for the top for firms with 11-20 professionals
Capability to adapt to changing client needs
edged out “changes in the regulatory environment” and “emerging technologies” to take first place among firms with 6-10 professionals
Interestingly, each of the three large firm groups had a different top issue.
scored the highest with firms employing 21-50 professionals
Managing a hybrid (remote and in-person) workforce
scored highest among firms with 51-100 professionals
easily topped the list for the largest firms, well ahead of “managing a hybrid workforce” and “emerging technologies”
Putting new knowledge to work
Insight and perspective are among the most powerful takeaways from the results of the 2022 Top Issues Survey. Use this new information to strengthen your practice and better serve your clients as you look to the future. Take a little time before the school bells ring to discuss the findings and identify steps to reach your firm’s desired goals. A little work now can yield dividends in the future.
Schedule a working session with your colleagues
Engage in conversations on the findings
Zero in on issues faced by firms of your size
What are your firm’s top five concerns?
Were there issues of importance to you and your practice that didn’t make this list?
Were there additional challenges on the list that were not among your top five?
Explore issues of the next largest firms in preparation for challenges that your firm may experience as it grows
Is your firm currently facing any of the same challenges?
If not, have you considered how these could impact your practice in the future?
You can breathe a little easier knowing there are numerous resources to address these top issues. The good news is that you can easily tap into them and put them to work right away in your firm. PCPS has created a comprehensive list to get you started. Be on the lookout for the full commentary on the 2022 findings scheduled to be released in the coming weeks.