The 2023 Review and look forward to 2024.

In 2023 we returned in semi-normalcy in filing periods (except for a couple of states) after a couple of years of a moving target for filing deadlines. There are three main themes we saw become the headline for the industry in 2023: AI, talent shortage and offshoring, and increasing compliance. All three of these items have brought new challenges and opportunity to the industry. AI began to empower firms to spend more time providing actionable insights and away from mundane report creation. The talent shortage in accounting is not new but is really starting to have a meaningful impact on the industry. Technology will help bridge some of the gap but it can’t bridge it completely and the river only seems to be widening. The industry as a whole has to start making accounting “sexy” to those leaving high school and deciding on a career path. It isn’t easy but there is a lot of opportunity and the industry can make strides to make the accounting major similar to the computer science surge of the early 2000s. Offshoring will continue as the talent shortage continues and as a long as there is a substantial wage gap between the US and other players. Offshoring in smaller firms tends to be a harder transition but I believe we will see this trend continue downward in the company size scale. Compliance was a big story for accounting in the US last year with the addition of FTC Safeguards compliance requirements. Compliance will continue to be a larger part of what accounting firms are responsible for as reporting compliance continues (as we will discuss). These factors would traditionally put pressure on smaller firms because of increased costs that are more easily absorbed by larger firms. However, with the shortage of accounting resources these pressures are not contributing to any widespread demand issues in any sector of the industry. There is a huge population of baby boomer owned of lead companies that will be looking for a transition. This has lead to more consolidation as some owners simply don’t have a “home grown” transition opportunity. Smaller firms are turning towards specialization to carve out a unique audience. This specialization may be an industry, a size, a technology stack, or even just a unique approach but this specialization is seeing some firms grow faster than others. Last year brought new challenges but the industry is seeing continued growth and the robots haven’t taken over yet.

2024 will be the advent of the robot that does everyone’s taxes 100% perfectly every time so accountants should start looking for a new career path. Ok, I kid…just making sure you are paying attention. I do believe that we will see an expansion on the themes from last year. While AI had it’s coming out party in 2023, I believe 2024 will be a year that it gets refined and integrated into more of our daily lives. I believe we will see more AI integration from the larger players in the market to assist with the ability to have a conversation with our data (and our clients data). We will really move toward having to know how to ask for data and not needing to know how to create it. This increased integration of AI should also help different systems integrate better with each other with out as much manual mapping. Offshoring and the talent shortage won’t find a quick solution in 2024 but I am hoping with the industry putting a conscious effort on investing in solutions we can make progress. Making changes to certification/education policies will help but the industry needs better marketing to fix the image and the perceived image. Compliance will expand in 2024 with the addition of BOI reporting and many states are now considering their own compliance standards for certain industries which will make it harder for accounting firms to stay on top of compliance themselves. As a whole I would recommend that firms take a hard look at their pricing structure and ensure you are charging for “work” and not “time” all of these major story lines will have an effect on the “time” you spend and often negatively but your costs aren’t necessarily going down. Operational costs are going higher and new investments in AI and compliance will increase this even more. 2024 should be another year of continued success for the industry but there seems to be more and more that accountants must stay on top of consistently.