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Jason BlumerI am very interested in changing the profession of public accounting. This task will probably mark the rest of my life’s work, in some form or other. How do we take on the big task of changing the profession of public accounting? 3 simple steps.

First, we have to transform how public accounting does its work. This is a big picture goal, but one that is being accomplished by many Thriveal firms across the planet. Firm owners are now believing that they run a strategic business, that they can have the kind of firm they want, and are starting the hard work of building the kind of company that can transform their customers. Public accounting firm owners are pricing for value, making mistakes, serving a niche, taking daily risks, pivoting their business models, operating as virtual firms, traveling while they serve their clients, working in their pajamas, saying no more often, coaching and consulting with their clients, fighting commoditization, leveraging technology, and enjoying the lives that their firms afford them. Firm owners are now acting like entrepreneurs.

How are public accountants transforming their work? Through communities! Communities are the 21st century’s platform to alignment and transformation with their strategic enterprises. Communities like Thriveal, Rootworks, The Boomer Technology Circles, RAN OneBMRG Advisory Group, and Sleeter (and others) are all making headway into creating communities where like-minded people can affect change in bigger ways. Communities bring mass power, and this mass power can be leveraged for greater (and faster) change.

Second, we have to transform how compliance and regulation affect our work. This is no small task, and I’m not sure this has been fully vetted out. But I believe we can change this area. In an attempt to protect the public, regulations have been put in place to govern the licenses of public accountants. I don’t think this is a bad thing, but as an entrepreneur, I’m not as fond of rules and regulations as most. I like less structure, and more freedom to create a future that I perceive to be of high value. This second step is affecting how the first step is changing. When regulations and compliance hem us in, then we are potentially prevented from adding real value and creating the firm we know should exist. Again, I’m not saying regulations are bad, I’m just recognizing that they limit us as entrepreneurs. Most public accountants still act fearful of change, are transaction-focused, and are now being considered a commodity. Compliance and regulation, though good, is starting to hurt us from evolving into what we need to become: entrepreneurial business owners.

How can we change how compliance affects our work? I’m not in for changing the CPA designation and what it means. But I am up for transforming it. The CPA designation was created around the turn of the 20th century (around 1896), and surely things have changed since then. I see a future where the CPA designation remains in tact, but with additional “side certifications” proposed by some of the communities above. The AICPA, part of our regulatory body, has attempted to create “side certifications” for some time. Some are more valuable than others. I believe the “side certifications” proposed by the communities above could be more valuable than the “side certifications” proposed by a regulatory body. Why? Because the communities think about building entities and delivering value to customers, while the regulatory body is meant to regulate and control behaviors for the purpose of protection. I believe we need some new “side certifications” created out of our communities that clearly spell out their value, with plans to support their value through branding and marketing. I think new “side certifications” should be so valuable that they turn into immediate income for the public CPA obtaining these certifications. Can the “side certifications” from regulatory bodies make the claim that any new certification obtained (besides the CPA designation) leads to an immediate increase in their income?
 

What is a “side certification”? A “side certification” is one where you first have to obtain the CPA license, and then you can add to that license with an additional certification of newer and greater value.

Third, we have to transform accounting education. This, too, is a monumental task. But I still believe we can do it. This third step is affecting how the second step is changing. Regulators often use “more education” as a requirement to further substantiate the value of the CPA certification. They place the responsibility on the education system to prove the value of the CPA designation. The ‘150 hour rule’ is an example of this. But “more education” in a world of broken higher education won’t deliver any additional value. We’re seeking to affirm our certifications with the wrong thing. Therefore, we have to create a new type of education that brings real life experiences into the classroom. I’ve begun speaking at universities and accounting classrooms and it’s scary what I’m seeing. My presentation helps the students know exactly what running an accounting firm is really like. Fearful, they come up to me after my talk and say, “this is not what we are being taught!” They wonder if they will be prepared for the real world. Probably not. Not if they want to become an entrepreneur in the world of public accounting.

How can we transform accounting education? First, I would love for the 150 hour rule to be done away with. Now that I know what entrepreneurs are like, I’m more certain than ever that ‘more education’ is not what they need. They need freedom to think and dream about what brings value to their precious customers, not taught more useless things by professors that don’t run their own firms. If the 150 hour rule can not be done away with, then any education beyond the basic Bachelors of Accounting degree needs to be done inside of an Incubator or Education Accelerator program run by firm owners. That is, students need to be receiving education inside of an operating entity that performs the work of public accounting firms. They need to work with real customers, real team members and real firm owners. And I’m not talking about the stodgy ‘suits’ down the road. They need to be in an exciting firm (like Thriveal firms), led by CPAs trying to add real value to the lives of real customers.

Here is my two-fold dream.

First part of my dream, a community like Thriveal begins a new Program << insert cool name here>> to fulfill the 150 hour education requirement (until it can be done away with), solely run by the members of Thriveal. This new program is meant to serve new graduates interested in going into the creative, entrepreneurial world of public accounting. This new educational program is supported by private communities like Thriveal, and not by any government or regulatory bodies. Real firm owners bring these students into their own firms (called ‘Sponsor Firms’) to apprentice them for one year, or we create a ‘Practice Firm’ to show how to operate a firm in the real world. After one year of study, the students have their education requirements met, and they actually know how to work in a creative firm. They can then stay at the Sponsoring Firm to obtain more experience, or go look for a job elsewhere. As they enter the marketplace, they have been through the <<insert cool name here>> program, and can claim this as higher value to any new firm willing to hire them.

Higher education universities would have to agree to count the learning in this new educational program towards the 150 hour rule. Since the <<insert cool name here>> program is not an educational institution, and the AICPA requires 150 hours from an educational institution, this dream of mine would possibly have to be done in partnership with a university.

I see this new educational experience as a higher value experience than typical universities, and one where the program would only take a certain number of students per year. Each class would be vetted tightly to make sure we are finding the entrepreneurs that want to transform our work. Which takes us back to Step 1 at the beginning of this article. Transforming our work is a huge task, but it is one that will be done not only with current CPA firm owners, but also those who are following in our footsteps to change firms for decades to come.

Second part of my dream, this same entity that is operating these new forms of education can also create, develop and support new “side certifications.” Again, these are real certifications of value that are constantly changing, bringing real value to customers, and certifications for which CPAs can increase their income. Whereas the first part of my dream above is meant to address the educational deficiencies in public accounting, this second part is centered around bringing greater value to CPAs already in public practice.

Fulfilling this second part of my dream would probably require constant research and development, market testing, and vetting from public accountants in practice. The “side certifications” would be constantly changing as the market changes, and as value propositions move within the world of our customers.

These are big dreams. But I’m starting to see that there is power to make these changes, if there is interest. Can you leave me comments as to how this could be done? What am I missing? Obviously, this idea is not fully thought out, and I need help to put some initial legs to how this could work. Any ideas?

 

Jason is the Founder of Thriveal and the Chief Innovative Officer of his CPA firm, Blumer & Associates. He is the co-host of the Thrivecast and The Businessology Show and speaks and writes frequently for CPAs and creatives, his firm’s chosen niche. Jason loves to watch documentaries on just about anything. He lives in Greenville, SC with his wife and their three children. Stay connected with Jason by signing up at JasonBlumer.com.

Category:
Innovation, Leadership, Other Thoughts
Comments:
21
  • On 09-22-2014 at 6:38 pm, Ron Baker said:

    Jason, thought-provoking piece, and I couldn’t agree more that the profession needs to change in the areas you cite. Here’s the issue: I don’t believe any of the changes you want will happen until the profession relinquishes its licensure by the state. Regulated industries are hardly bastions of innovation. At the least, we should lose our audit monopoly, opening up attest services to the free market, which would spur disruptive innovation, as we’ve seen in tax prep where there is more of a free market.

    I believe the model we should study is that of Actuaries. They have the own certification, and they are not licensed by the states! It’s true autonomy, and a real profession. CPAs are a pseudo-profession since we are not self-governed. This is a much deeper topic than can be explored in a comment, but I’ve thought hard on this topic for many years, and have reached conclusions that are not popular, but are the only hope for driving change.

    Reply
    • On 09-25-2014 at 5:10 pm, Jason Blumer said:

      Ron, I like what you are saying. In fact, you are pushing even further than I am.

      It sounds like you are saying that to make these dreams come true would mean we would need to take licensure and governance into our own hands. Is that right? Wow, that is a big move.

      But if we did this, then the 150 rule (or any other stupid rule) would no longer mean anything, right?

      Then, the next step would be to prove, brand, and continue to support the value of our ‘self-regulated’ license to the world at large. Correct?

      Please, I need to vet this out even more.

      Reply
      • On 09-29-2014 at 7:35 pm, Ed Kless said:

        It means giving up on the illusion of control and the understanding that government regulations do not make anything from cars to CPAs safer.

        Reply
        • Jason Blumer

          On 09-30-2014 at 1:54 pm, Jason Blumer said:

          Ed, great point. It seems that you are saying ‘control’, (from regulators) seem to protect us, when really they are inhibiting our growth. True?

          Reply
  • On 09-23-2014 at 1:34 am, Mike Bark said:

    I recently wrote an article: http://www.biztimes.com/article/20140203/BLOGS/140139961/Shrinking-accounting-industry-limits-options

    that touches on many of these things, so it’s good to see some like minds out there. I think the Universities are a huge problem right now. The 150 credit requirement is a disaster and most professors tell students that they have to go to a huge firm or they are wasting their time.

    Consequently, we’ve seen a ton of consolidation in the industry because no one took the time to train the next generation of partners. It’s scary that at the age of 40 that I’m still significantly younger than most of my competition and peers. Thats because so many have washed out of public accounting or have been trapped far too long as a manager.

    Keep up the good work.

    Reply
    • On 09-25-2014 at 5:12 pm, Jason Blumer said:

      Mike, it’s good to meet another like mind. I’m going to read your post and I’ll comment further.

      Reply
  • On 09-23-2014 at 12:27 pm, Philip Campbell said:

    Fantastic post Jason . Lots of really cool ideas and a logic path in there.

    Since I have a pet peeve about stupid (I mean student) loans, I especially like the idea of killing the “150 hour rule”. Or at least providing other ways to get the hours/credits. Forcing a person to stay in school oftentimes means they take on more student loans.

    Young CPAs are coming out of school with a nasty looking personal balance sheet (with a big NOT worth on it). Then they are called on to advise business owners on making wise business and personal financial decisions. That disconnect can’t help a young CPAs confidence as they begin their career as a trusted advisor to business and individuals.

    Carry the torch brother. More and more people are beginning to see that there really is a better way and a brighter future ahead for our profession. Public accounting really is changing because thought leaders like you are leading the way.

    Reply
    • On 09-23-2014 at 7:11 pm, Jason Blumer said:

      Thanks Philip! I often wonder if crazy ideas like this could actually work? This is going to be an ‘all hands on deck’ movement to pull this off.

      Reply
  • On 09-23-2014 at 12:54 pm, Barrett said:

    Good stuff. Jason. I really liked this: “more education” in a world of broken higher education won’t deliver any additional value.

    Did you already have this post written before our call on Friday? It’s along the exact lines I envision when I said I want to be a first firm for future entrepreneurs. Never thought about the extra 30 credits (I don’t think in higher education terms), but this would be a good temporary solution.

    Maryland now lets you sit at 120 hours. They finally got a clue after a whole decade of reduced applicants since you could no longer take the test during college (while the material was fresh in your mind) and then immediately had to jump into a masters.

    Personally, I actually read the requirements (and used all my history, polisci and PE classes to meet my 150).

    Reply
    • On 09-23-2014 at 7:12 pm, Jason Blumer said:

      Thanks Barrett! Maryland is ahead of the curve in so many ways. Maybe the Maryland leaders would be part of curbing our appetite for compliance and regulation?

      Reply
  • On 09-23-2014 at 5:46 pm, James Johnson said:

    Your plan for education sounds so much like how I perceive an apprenticeship program for labor unions and I don’t think that’s a bad thing. In fact, I love that your plan is to use education as a tool to create CPAs with forward thinking, problem solving, and community development instead of just having a criteria to weed out people.

    My university was geared toward one goal: get as many graduates into big four firms as possible. Beyond that, I just don’t think they cared.

    I think these ideas are powerful, but obviously radical. Too radical for big four’s or traditional regional firms. So, are the firms who embrace these ideas the wave of the future while we all become spectators for the decline of the big four into irrelevancy? Along with with the decline of those firms will we also see the AICPA adapt to embrace and encourage the mentioned communities?

    I’d guess that the future you’re presenting is very different than the future graduates are expecting.

    Reply
    • On 09-25-2014 at 5:16 pm, Jason Blumer said:

      Thanks James! I think your last sentence sums it all up, “I’d guess that the future you’re presenting is very different than the future graduates are expecting.”

      This is dangerous. Some go into accounting, and come out to find that they didn’t receive what they were sold. Not cool. And, the ones who are wise to what the accounting profession truly promises, are picking different majors and avoiding our profession all together. Not cool!

      Public accounting is where the entrepreneurs need to be. I want to see that happen! Can it happen?

      Reply
  • On 09-30-2014 at 12:05 am, Jamie Sutherland said:

    Great post. I am with you in changing the face of the profession and believe we are making strides. More and more firms are realizing that running a practice is not a compliance exercise. It is first and foremost about running a business. And agree with you that education is how to affect great change. I can tell you the best courses I took at University were taught by professors that had real-world experience. Academia can only take you so far. However, I wouldn’t limit it to small classrooms. If you want to make a big impact why not work with the likes of Khan Academy, Udacity, edX, or Coursera. These would also be a great place for side certifications. With great content, delivered by real firm owners and real-world problems, people will notice. These could potentially be feeder courses to the apprenticeship program you want to run.

    Reply
    • On 09-30-2014 at 6:26 pm, Jason Blumer said:

      Jamie, thanks for your input! And I appreciate your push to make this initiative bigger – why not take it to the masses? Good thinking. I guess I’m still fearful no one will want to participate in these bigger initiatives, so my thinking is small… too small? Perhaps! Thanks for the challenge.

      Reply
  • On 09-30-2014 at 12:23 pm, Melinda Guillemette said:

    Good, explosive thinking, Jason. Since you’re blowing stuff up, could you please add a fourth step? And could it be CPE requirements for effective communication? The ideas you are proposing will shift the foundation for CPA education and change the conversations surrounding it. But if CPAs don’t know how to communicate with clarity and civility, the profession will be far slower to evolve.

    Reply
    • On 09-30-2014 at 6:29 pm, Jason Blumer said:

      Wow, Melinda, I never thought about the importance of communication. So, it sounds like you are saying, not matter how big we make the change, if we can’t tell others of it’s value, then we’re screwed? (maybe you wouldn’t word it exactly that way!)

      I think the particulars of communication are as of yet unexplored.

      Reply
  • On 09-30-2014 at 10:43 pm, Joey Brannon said:

    The problem with regulation is that it is set up to pigeonhole CPAs into two areas. If you build a firm focused on anything other than tax compliance or attest services the regulations confound every effort to serve clients. Rather than shed light on traditional CPA services, these regulations keep the profession in the dark by discouraging innovation on the services front. Partners are afraid to green light new initiatives by young associates for fear of running into obscure state statutes governing the practice of public accounting or arcane AICPA professional guidelines drafted under the influence of the big 8/6/4. In order to change this we must address the issue of public perception.

    Doctors and attorneys have dealt with both public perception and assured competency by creating board certifications. I think our profession should do the same. Board certification by one’s peers, not the regulators, would be a good first step toward expanding the boundaries of public perception beyond tax and audit work.

    Changing the education system to do away with the 150 hour requirement sounds a little premature. I think if you presuppose every accounting student should be a firm owner you can arrive at an argument for ditching 150 hours in favor of apprenticeship inside a creative firm incubator. But most clients working with a staff accountant place a higher priority on accounting chops than they do creative firm entrepreneurship.

    Within the ranks of firm owners I would love to see some type of program aspire to the cachet of Harvard’s Program for Leadership Development. A partnership between a University and a group of progressive communities could provide the right combination of education and incubator to seed the next generation of firm founders and managing partners with a vision that reaches beyond the binary world of tax or audit.

    Reply
    • On 10-02-2014 at 9:42 pm, Jason Blumer said:

      Joey, good stuff. I like what you are proposing, and people often remind me that not everyone wants to run a business. True. So my thoughts and initiatives would have to be centered around creating a platform and community where entrepreneurial firm owners could thrive.

      Joey, do you think there could be two routes for accountants to go after graduation? One route takes them to the 150 route and eventually work inside of a larger firm providing traditional services (which is fine), OR take the entrepreneurial route where the 150 rule may not be required, but would land someone running a firm of other CPAs? I’m not sure how to lay this out, but I’m seeing two paths (possibly more?) that accountants could take.

      Reply
  • On 10-01-2014 at 4:09 am, Rene Lacerte said:

    Extremely well laid out ideas, Jason.

    In addition to the above, I think it is really important for the thought leaders to provide the rationale for public accountants to look at their business differently.

    First and foremost, the centralization of software and data in the cloud is changing the game for everyone. It is changing the game for businesses and the people/public accountants that serve them. It is enabling the perfect flow of information so that everyone can do the job they want and they can do it better.

    In essence, businesses will come to expect expert advice from functional experts like public accountants in a matter of minutes. And they will pay for it. Businesses will pay for the value they receive. So when public accountants can leverage the pattern recognition from 10’s if not hundreds of clients in a matter of minutes, every one wins.

    The reason to change is to be in a position to serve your clients better, to make more fun and provide greater value. Oh and of course have more fun.

    Reply
    • On 10-02-2014 at 9:45 pm, Jason Blumer said:

      Thanks Rene! It sounds like you see a future where all data is in a huge repository where CPAs can access it quickly. Then, they can use cloud-based software to manipulate that data in a way that brings greater (and faster) value to the client.

      Cool. I’m glad software companies like Bill.com are leading the way on this!

      Reply
  • On 10-05-2014 at 1:13 pm, Rich Lockwood said:

    Thanks, Jason, for your leadership and thoughts re: not just what’s wrong, but three ways to start fixing what’s broken. In developing clarity around the solution, please consider this:

    Financial accounting and auditing is one of the next industries to be exploded (tired of hearing “disrupted”) by technology. Using data analytics and machine learning software, companies can prepare more timely financial reporting based on sophisticated estimates.

    Who cares? Name a CEO or institutional investor who doesn’t want to see the numbers sooner.

    How will it be done and audited? Accountants will need to be more knowledgable about rapidly evolving information systems.

    Why won’t it happen as soon as it should? Business is moving more quickly than regulators and participants can react. I fear that our profession has said, “This is how it is [adapting, but only slowly], and you will only take it from me when you pry it from my cold dead fingers.”

    The accounting industry is not alone. The last 10 years have changed the game for the music industry (iTunes, Spotify, Pandora, etc.) and publishing industry (blogging, self-publishing, and other digital content creation and curation) as well.

    We’re faced with a huge opportunity, but there are very tall barriers. Time will knock them down (i.e., people will retire or pass away). But I wonder how many would-be accounting pros will never enter the profession–and how many current accounting rockstars will leave it–because it’s dominated by a culture that moves way too slowly.

    Life is short–make it better!

    Reply

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