The accounting career has confronted a profound shift in recent times: from vital regulatory adjustments to an inflow of revolutionary applied sciences, to reimagined enterprise fashions, to a rise in consumer expectations. This has given rise to new development alternatives for corporations, however that’s to not say that accounting points don’t stay of their day by day workflows. 

Corporations are being requested to do greater than ever earlier than, which might current a difficult balancing act, particularly given the staffing constraints dealing with many corporations. Ironing out the frequent issues that accountants face may also help corporations stay aggressive, higher entice and retain expertise, and in the end drive better profitability. The query then turns into: how?   

To help at present’s corporations, this text will present an outline of a few of the prime accounting points corporations face and the options that may assist them tip the size of their favor. 

What are the present points in accounting?

A few of the points range by agency — relying on the dimensions of the agency, the sources a agency presently has in place, and so forth. — however there are a number of widespread hurdles that usually run business vast. These embrace: 

• Regulatory compliance 
• Accounting requirements 
• Strained bandwidth and capabilities 
• Shift to distant or hybrid work environments 
• Synthetic intelligence and up-skilling 
• Payroll errors 
• Accounting fraud 
• Misapplication of GAAP requirements
• Monetary reporting errors
• Money circulate assertion errors
• Outdated accounting know-how 

Regulatory compliance

Maintaining with the revolving door of regulatory and legislative adjustments isn’t any small feat. That’s why it’s no shock that the AICPA’s most up-to-date “High Agency Points Survey” discovered that “maintaining with adjustments and complexity of tax legal guidelines” is among the many prime points for corporations giant and small. 

Moreover, Thomson Reuters analysis discovered that adjustments to tax guidelines is a significant space of focus for worker coaching at corporations in 2023, as 66 p.c of agency leaders mentioned they may supply such coaching to everybody of their agency. 

Corporations should have the power to shortly and effectively conduct tax analysis and enhance tax reporting efficiencies to remain aggressive in at present’s complicated regulatory surroundings. 

Resolution: This implies corporations ought to take into account a software program resolution that may do the next:  

• Allow environment friendly analysis with a built-in, customizable tax regulation database that’s tailor-made to satisfy the particular wants of the agency. 
• Ship accounting and compliance information alerts so practitioners are often supplied important accounting, audit, and company finance developments, together with knowledgeable evaluation. 
• Ship steadily up to date information and articles about worker advantages regulation and compliance. 
• The flexibility to prioritize and monitor duties, monitor any regulatory adjustments, leverage customizable templates for schedules and tax work papers, and arrange guidelines and permissions for every consumer inside the agency. 

Accounting requirements

Lately, the accounting career has seen its share of adjustments in accounting requirements, together with the brand new income recognition customary and extra not too long ago, the new lease accounting customary (ASC 842). 

The lease accounting customary grew to become efficient in 2019 for public firms. For personal entities, it’s efficient for fiscal years beginning after Dec. 15, 2021, and for interim durations inside fiscal years beginning after Dec. 15, 2022. 

At present, many personal entities are within the midst of implementation and are, ideally, trying to public firms for greatest practices and classes discovered. It’s no secret that adopting the brand new lease accounting customary was a heavier raise than anticipated for a lot of public firms. And at present, many public firms are rethinking their processes and know-how to make sure long-term sustainability. 

Moreover, professionals should adhere to new auditing requirements SAS 134-140. These requirements revised the way in which the audit report is introduced, referred to as for enhanced communications between auditors and managers charged with governance, and prescribed extra audit procedures for associated celebration transactions. 

SAS 134 could possibly be thought of essentially the most impactful of the seven requirements because it adjustments the shape and content material for all auditor’s studies below Typically Accepted Auditing Requirements (GAAS). 

Resolution: To remain on prime of related information, accounting and tax professionals should have easy accessibility to correct, dependable sources and CPE courses which are obtainable in codecs for each studying fashion and schedule. 

Strained bandwidth and capabilities

Attracting and retaining expertise has lengthy been a priority for the accounting career, however there’s little doubt that the pandemic, and what has turn into often called the “Nice Resignation,” additional fueled staffing issues. 

In keeping with the newest “High Agency Points Survey” by the AICPA, discovering certified workers was a prime concern for corporations of all sizes. 

Additional underscoring this level, 2023 analysis by human useful resource consulting agency Robert Half discovered that hiring challenges stay inside finance and accounting. In keeping with the findings, 62 p.c of finance and accounting managers mentioned they’re hiring for brand new roles, 34 p.c are hiring for vacated roles, and 89 p.c mentioned they’re dealing with challenges discovering expert expertise.  

Resolution: Corporations trying to liberate capability ought to start by taking a better have a look at the present processes and workflows to determine and deal with bottlenecks. Are there small changes that may be made to ease the pressure?  

Additionally it is essential to not overlook the energy of know-how to complement bandwidth issues. Weed out as many time-consuming, guide duties as attainable via better automation and be certain that programs are tightly built-in to streamline workflows. 

In keeping with latest Thomson Reuters analysis, rising automation is the choice most frequently talked about amongst corporations trying to fill gaps in expertise. The analysis discovered that 41 p.c of agency leaders mentioned they could make investments extra in automation know-how. Greater than half (56 p.c) of enormous corporations mentioned they might lean on know-how to fill sure gaps; whereas barely fewer midsize and small corporations (40 p.c and 34 p.c, respectively) mentioned they might take into account including extra know-how to their agency’s skilled toolkit if they will’t discover the fitting folks. 

There’s additionally outsourcing. A rising variety of corporations are taking a better have a look at outsourcing (each onshore and offshore) as one other method to assist ease staffing constraints. 

Shift to distant or hybrid work environments

Fueled partly by the impacts of the pandemic, many workers throughout many industries are rethinking their priorities, which incorporates how and the place they wish to work. The accounting career isn’t any exception. In consequence, a rising variety of corporations are embracing extra flexibility, like distant or hybrid work choices to raised entice and retain expertise. 

“At the beginning of the pandemic, we noticed lots of corporations who weren’t arrange for distant work and have been actually scrambling. And these corporations, a lot of them have been horrified on the thought of their workers working remotely. However when you quick ahead two years, these identical corporations at the moment are embracing distant work and discovering higher expertise by being open to it,” Nadine Weiskopf, Senior Inbound Product Advertising and marketing Supervisor at Thomson Reuters, defined throughout a latest webcast on scoring corporations on success after tax season. 

Corporations that don’t supply workers the pliability they need threat dropping expertise. In keeping with Robert Half’s latest survey, 41 p.c of finance and accounting professionals mentioned they’re wanting or plan to search for a brand new job within the first half of 2023. And the bulk (63 p.c) of these respondents are searching for a hybrid place, adopted by a distant place (47 p.c). Solely 25 p.c desire a absolutely in-office place. 

Moreover, corporations that embrace distant work environments are in a position to considerably increase their expertise pool since their hiring technique shouldn’t be restricted by geographic borders. They will rent prime expertise no matter the place they’re positioned, and if a present worker wishes to maneuver outdoors of the realm, they nonetheless can work for the agency remotely. 

Resolution: Corporations trying to stay aggressive within the warfare on expertise ought to guarantee they’ve the fitting instruments and sources to facilitate a distant or hybrid work surroundings.   

This includes setting expectations and leveraging options that drive automation, improve efficiencies, and enhance collaboration amongst each workers and purchasers. This allows workers to work extra effectively and supplies them with the power to realize the work/life stability they need. 

Synthetic intelligence and up-skilling

AI powers a lot of the know-how utilized by professionals around the globe. It’s embedded within the creation, enhancement, and supply of consumer data. And, going ahead, that momentum will proceed to realize steam. 

As a rising variety of corporations shift away from compliance-based work in favor of higher-value, strategic advisory companies, the necessity to proactively serve purchasers turns into more and more essential. AI may also help. What AI is sweet at: 

• Particular well-defined duties 
• Remodeling information from one format to a different 
• Automating repetitive duties 
• Computing at excessive pace and scale 
• Processing giant quantities of data shortly 

As corporations look to raised service purchasers and increase capability with revolutionary know-how, coaching associates to make sure they know the way to absolutely leverage the know-how is essential.  

In actual fact, Thomson Reuters analysis discovered that coaching is a significant focus space for corporations in 2023. Greater than half (52 p.c) of respondents mentioned they may supply tax know-how coaching to all workers, and 42 p.c will supply coaching on using non-tax particular applied sciences to all workers. 

Payroll errors

For accounting professionals, payroll companies have lengthy been seen as a time-consuming, high-risk loss chief. There’s little doubt that with out the fitting applied sciences in place, payroll errors generally is a actual concern. Payroll is complicated and probably the most regulated features in a company. Navigating federal, state, and native jurisdiction necessities might be daunting.    

In actual fact, one research by the Inner Income Service (IRS) discovered that 33 p.c of employers make payroll errors every year, leading to pricey amendments and penalties. Widespread payroll errors embrace, however are usually not restricted to: 

• Misclassifying workers 
• Lacking deadlines 
• Wage garnishment noncompliance 
• Incomplete data 
• Overlooking fringe advantages 

What’s essential for accounting professionals to bear in mind is that, regardless of the complexities, payroll can maintain a wealth of insightful information that may assist corporations unlock better strategic development alternatives. The secret’s having the fitting applied sciences in place to drive effectivity and mitigate the danger of errors. 

Resolution: To assist be certain that a agency’s group can work extra carefully, constantly, and precisely with purchasers, take into account a full-service payroll resolution that delivers such options as: 

• Quicker new consumer setup. 
• Agency-level safety so the agency can simply handle permissions. 
• Batch-style information entry. 
• An in-depth library of federal, state, and native varieties to facilitate payroll tax processing. 
• Expanded reporting and billing capabilities. 
• The flexibility to simply carry out complicated calculations.  
• Multi-user capabilities for better effectivity.  

Accounting fraud

Accounting fraud is at all times a priority, however accounting professionals needs to be particularly alert as at present’s financial uncertainties and fear over a recession may elevate the danger of accounting fraud amongst some public firms. 

When firms commit accounting fraud, they’re intentionally manipulating accounting data to make the corporate’s monetary efficiency seem higher than it’s in actuality. Examples of accounting fraud could possibly be an overstatement of revenues or property, or an understatement of liabilities or bills.  

This could result in probably damaging financial penalties, in addition to legal prosecution. 

Matt Glendening and Ken Shaw, accounting professors on the Faculty of Enterprise at College of Missouri, wrote in a latest article that they “are observing an elevated degree of mixture misreporting and the chance of recession in 2023 is increased than it was for 2022.”

Resolution: To measure whether or not an organization has manipulated its monetary reporting, Glendening and Shaw urged the M-Rating. “The measure we use is named the M-Rating, which is a firm-level measure of the chance of misreporting devised by our co-author, Professor Messod D. Beneish at Indiana College, within the late Nineties. It’s based mostly on eight predictors of misreporting, together with whether or not earnings are supported by money flows. The M-Rating is extensively utilized in capital markets and predicted the well-known Enron fraud; we assemble a quarterly common M-Rating throughout corporations and use it to foretell financial outcomes,” they wrote. 

Resolution #2: To help purchasers design and implement packages and controls to forestall, deter, and detect fraud, practitioners ought to take into account the Thomson Reuters PPC’s Information to Inner Management and Fraud Prevention. The Information supplies important data, totally up to date steerage, and present insights affecting inner management and fraud prevention. Extra particularly, it contains: 

• A step-by-step course of for evaluating inner management. 

• An entire set of varieties and apply aids to carry out an inner management analysis. 
• Steerage and apply aids for helping your public firm non-audit purchasers’ administration in performing and documenting their assessments of inner management in accordance with Part 404(a) of the Sarbanes-Oxley Act. 
• Steerage and apply aids for serving to your nonpublic firm purchasers consider and enhance their system of inner management. 
• Detailed steerage on evaluating and testing IT controls. 
• Person-friendly matrixes designed that can assist you determine particular controls for detecting and stopping widespread fraud schemes, and to correlate signs of fraud with the potential fraud schemes they might point out. 

Misapplication of GAAP requirements

For at present’s accounting professionals, and all of these concerned in monetary reporting, preparing monetary statements which are in compliance with usually accepted accounting rules (GAAP) is crucial. 

GAAP violations, comparable to errors or omissions, might be pricey and may harm credibility. Nonetheless, in at present’s complicated enterprise surroundings, compliance with GAAP requirements might be difficult. Some widespread GAAP violations embrace, however are usually not restricted to: 

Unsure tax positions: Widespread tax uncertainties that want evaluation embrace switch pricing between overseas associated events, enterprise bills like means and leisure, and valuation of deferred tax property. 

Capitalization of overhead prices: Giant stock valuation errors can seem on the stability sheet and associated value of products bought on the earnings assertion by not making use of overhead calculations. 

Resolution: With the fitting instruments and sources in place, corporations may also help guarantee GAAP compliance. This contains leveraging a sturdy accounting and tax analysis device powered by synthetic intelligence (AI) and machine studying. When searching for an answer, some options to think about are: 

• A predictive search function that returns essentially the most focused outcomes based mostly on full-phrasal, pure language questions. 

• Idea markers to extend the analysis momentum with dialogue-based analysis for fast, on-point search outcomes. 

• Snapshots so customers can get fast solutions and be shortly oriented with unfamiliar matters. It will propel analysis ahead with out having to scan via search outcomes, open paperwork, and hunt for solutions. 

• Quick access to essentially the most up-to-date and intuitively organized collections of requirements, legal guidelines, rules, caselaw, and company steerage. 

• Plain language explanations, practitioner insights, and sensible examples assist customers reduce via the muddle to search out what actually issues. 

Monetary reporting errors

Monetary statements include important details about an organization’s monetary place, money flows, and outcomes of operations. The problem is that, regardless of how rigorously statements could also be ready, monetary reporting errors can occur.  

When errors do happen in monetary reporting, U.S. accounting requirements require prior statements to be corrected and the corrections to be disclosed. 

There are a number of causes of errors, however a few of the extra widespread monetary reporting errors and causes for restatements embrace: 

• Recognition errors: this might happen, as an illustration, when accounting for leases or reporting compensation expense from backdated inventory choices. 

• Earnings assertion and stability sheet misclassification: an organization might must shift money flows between investing, financing and working on the assertion of money flows. 

• Complicated guidelines associated to investments, acquisitions, tax accounting, and income recognition. 

Resolution: It’s supreme to forestall monetary reporting errors earlier than they happen. One of the vital efficient methods to make sure accuracy is to have the fitting instruments and sources in place, together with knowledgeable company accounting and monetary reporting software program and steerage. 

Money circulate assertion errors

Alongside earnings statements and stability sheets, money circulate statements are one of many three basic monetary statements utilized by companies. Inaccuracies can lead to misinformed determination making, which might be devastating to a enterprise. Due to this fact, money circulate statements have to be correct. 

Amid inflation and lasting financial impacts of the pandemic, firms are particularly involved concerning the monetary well being of their enterprise. In actual fact, one 2023 survey discovered that inflation stays the No. 1 concern (47.69 p.c) for small companies, because it impacts all facets of enterprise financials — materials prices, vendor bills, labor compensation. The survey additionally discovered that the most important distinguishing issue affecting companies at present is the shortage of money circulate and capital. 

Making certain that money circulate statements are correct is important to the monetary well being of an organization. Sadly, errors occur. Widespread money circulate assertion errors embrace, however are usually not restricted to: 

• Misclassifying money circulate as both working or investing 
• Lacking or improperly together with non-cash transactions within the assertion of money flows 
• Failure to reveal non-cash transactions 

Resolution: Accounting professionals may also help forestall errors in money circulate statements by automating the method with a sturdy accounting resolution. 

Outdated accounting know-how

To drive efficiencies and streamline workflows, it will be significant that corporations guarantee they’ve up to date accounting know-how. 36 p.c of tax leaders listed new accounting know-how options as an funding precedence in 2023.  

Corporations that proceed to function on siloed, legacy programs threat dropping money and time and improve the prospect of creating errors with guide entries. To assist decide in case your agency is in want of a know-how improve, take into account the next pink flags of gaps in your software program: 

• Little to no integration throughout programs and with many third-party functions.  
• Workers spending an excessive amount of time on tax analysis and retaining tempo with legislative adjustments.  
• Workers coping with time-consuming duties like repetitive information entry or information clear up. 
• The software program doesn’t robotically obtain and set up subsequent releases and updates.  

Resolution: Corporations trying to replace their accounting know-how ought to take into account a cloud-based software program resolution that’s designed to work seamlessly collectively as one system, sharing information and processes throughout the agency’s workflow. 

Remedy your accounting points with Thomson Reuters

Accounting professionals face a number of challenges in at present’s complicated enterprise surroundings. Maintaining can appear daunting, however the excellent news is that corporations don’t should go it alone. A complete software program resolution like CS Skilled Suite can deal with a number of areas of your agency, from payroll to agency administration to consumer portals. Take a look at our case research web page to be taught extra.