The current economic recession and the pandemic disruptions will leave long-lasting impacts on the financial service industry. The responsibilities and role of accounting firms and CPAs will change in an unprecedented way. Adapting to the remote working style and producing effective results is the foremost challenge for CPAs around the world.
CPAs have been the strategic partners for businesses for a long, the roles evolved over the years. The traditional role of financial advisory would not hold in the current challenges and future scenarios either. It’s time for CPAs to challenge their limits further; they can lead the change the business world needs.
The first point, if you think the pandemic crisis is over, think again. The economic recovery will take time, so will the normalization of accounting and auditing tasks.
CPAs can drive change management during the current pandemic crisis and embrace future challenges for sustainable recovery.
Assessing the New Customer Focus
CPAs and finance function need to realize the changing impacts of the pandemic on businesses quickly. The way pandemic made us realize how unready we were, the need for clear communication on future dangers is pertinent.
A better understanding of the stakeholder expectations will be to effectively communicate the new customer focus. Likewise, the need for change in internal controls, risk assessment, and financial reporting will change significantly.
CPAs can evaluate the financial impacts of the changing business dynamics. The stakeholders including the management will have to quickly adapt to the new challenges of capital requirements, contingency planning, and reduced revenues.
Assessing the Impact of Pandemic
CPAs and finance functions will have to assess the financial and non-financial impacts of a pandemic for the businesses. Financial reporting standard guidelines and revenue recognition practices wouldn’t hold during the pandemic period.
Regulatory authorities offer provisional changes that would impact the financial reporting and taxation methodologies.
A few key points to remember:
- Treatment for intangible assets needs to be adjusted; amortization and depreciation regulations for idle assets shouldn’t be treated as normal.
- Assessing the adjustments for non-current assets’ impairment effects
- Defining the fair value of assets reasonably and accordingly
- Cost of borrowed capital for emergencies
There is no easy of assessing the total financial and non-financial impacts of a pandemic on any business. CPAs need to cater to the business financial reporting and risk assessment accordingly.
Evaluating the New Risks and Controls
Coronavirus pandemic has changed the business working and created new risks. Health and safety risks are base levels, to begin with, the impacts.
How do businesses keep the work-place healthy and risk-free? Will they meet the standard requirements of avoiding the new virus attack?
Remote working and digitization will increase Cybersecurity challenges. Cybercriminals will find newer ways of challenging security for increased online financial data.
How could the physical safety standard be adjusted with remote working?
Internal controls on remote financial reporting, digital data management, and remote working will evolve too. These are all the challenges that organizations of all types and sizes will face. CPAs need to embrace the challenges and lead the strategic change required to assess the new risks.
The challenge of Upskilling in the wake of the Covid-19 pandemic and the future doesn’t limit to the CPAs only. Cloud-based and AI-empowered technologies will change the way financial data is stored and processed. Analyzing the all-digital data and perhaps remotely with newly embedded technologies will pose new challenges.
The role of CPAs evolved from financial advisors to strategists in the past. The evolution of the role isn’t going to halt anytime sooner. In fact, the cost of falling behind the new dynamics and agility will be too heavy to bear.
Call it an opportunity to change or competitive edge, or compulsion to follow. The pandemic has induced change for every business in many ways. Finance function and CPAs are in the perfect place to lead the changing dynamics of the new business world. For both internal and external changes required, CPAs will have to play an active role in the change management.
The change management would include a renewed focus on:
- permanent remote working style
- new business partnerships
- Digital data and cloud computing
- Cybersecurity challenges
- Communication and collaboration
- Remote financial reporting and auditing
Scenario Planning For a Future Pandemic
If there is a lesson with recessions to remember, it is to prepare for the next one. Economic recessions inevitably repeat. The pandemic and health crises aren’t the last ones, unfortunately.
One of the key role CPAs will have to play is to prepare the businesses for future scenarios. The scenario planning must embed the current risks and challenges as the new business normal.
CPAs are dynamically proactive professionals. The current challenges offer a great opportunity for them to lead the change. The changing business paradigm will require embracing a new skillset and adopting a proactive approach.
We, at Pransform, have been fortunate in helping CPAs deliver greater value to their clients, even more so during the pandemic. Talk to our team to learn how your CPA practice can make adjustments to the ‘New Normal’.