Digital CPA Update ERIK ASGEIRSSON President and CEO of CPA.com

Thank You Exiting Members

Jen Wilson ConvergenceCoaching, LLC Serving since 2012

Maribel Torres-Pinero CPA Lumix CPA’s & Advisors Serving since 2014

Matthew Talley Group 11 Advisors Serving since 2014

Tim Shortsleeve CPA TYS, LLP Serving since 2014

Jim Bourke CPA Withum+ Serving since 2012

Kevin Stephens CPA Hinton Burdick Serving since 2014

Thank You To Our Chairman

Innovative Practitioners of the Year 2016 Rachael Higginbotham Marketing Manager Postlethwaite & Netterville

Caitlin Lacher Senior Marketing Coordinator Postlethwaite & Netterville

Move to Relevancy has Never Been More Critical

Entering the Digital Business Phase

2000 2005 2015 2020

Autonomous Business

People Business Things,

Smart Machines

Digital Business

People Business Things

Digital Marketing

People Business

E-Business

Business

Web

People

Business competition has been marked by technology phases.

DIGITAL BUSINESS: The creation of new business designs reached by

blurring the digital and physical worlds. Source: Gartner

Source: Gartner (2016)

Hype Cycle for Emerging Technologies, 2016 Blockchain, Cognitive Expert Advisors, and Machine Learning At Peak of Inflated Expectations

Innova&onTrigger

PeakofInflated

Expecta&onsTroughof

DisillusionmentSlopeof

EnlightenmentPlateauofProduc&vity

Time

Expecta&ons

So#wareasaService

Blockchain

Cogni4veExpertAdvisors&MachineLearning

morethan10yearsobsoletebeforeplateau

Yearstomainstreamadop&on:

lessthan2years

5to10years2to5years

BigData&Analy4cs*

*BigdataremovedasacategorybyGartnerin2015Source: Gartner (2016)

Key Technologies To Watch, 2016

Tax WORKFLOW ADVISORY

FINANCIAL PLANNING

Advisory VIRTUAL CFO

REAL TIME REPORTING BUDGETING/FORECASTING

Audit ELECTRONIC CONFIRMATIONS

FIN STAT CLEARINGHOUSE AUDIT SOFTWARE

Accounting VIRTUAL CONTROLLER CLOUD ACCOUNTING BILL MANAGEMENT

FIRM TRAINING IMPLEMENTATION CONSULTING LMS PLATFORM

BEST PRACTICES CASE STUDIES WHITEPAPERS

COMMUNITY

Supporting The Core Pillars Of The CPA Firm

Auditing in the Future

Data Extraction

Automation Analytics

Data Standards

Continuous Audit

New Audit Services

Evolution of Financial Statement Audit

SEC EDGAR

RIVIO Clearinghouse

USERS (Investors,

Banks, Private

Equity, etc)

Public Company Audit

Private Company Audit

New Services: Business Analytics & Insights

We are at an critical inflection point for profession around audit process and tools

•  Auditing is a manual form completion process

•  Planning forms are over 120 pages and can take over 25 hours to complete

•  Efficiency is defined as “rolling” the forms forward

How Audit Works Today

Phases of the Audit Where Firms Believe Technology Can Have Greatest Impact

TOP TWO AREAS IN EACH PHASE

PercentHours/Phase

15% 57% 14% 14%

Planning Fieldwork Wrap Up Reporting

Dynamic Audit Solution Methodology

Risk Dashboard

Transactional Data

Client Big Data Structured and Unstructured

External Data Industry data, adverse news feeds, external client information

Dynamic Audit Solution at Work EXAMPLE 1

1)  Automates “smart” grouping of trial balance accounts for financial statement

2)  Eliminates lead sheets with “Ledger Account Window”

3)  Reveals all account transactional detail in the “Transactional Detail Window”

4)  Among other things, pulls industry and company information from external sources to populate risk assessment dashboard

GroupedCashLedgerAccountsWindow

Dynamic Audit Solution at Work

Trial Balance Transactional

Data

Dynamic Audit Solution Methodology

Client Big Data Unstructured Data Leases

Financial Statements

Lease Dashboard

Client Big Data Structured and

Unstructured

EXAMPLE 2 Manual Process: Approximately 3 Hours Dynamic Integrated Process: Less Than 30 Minutes You might be interested in

RESEARCH AND LEARNING. Click for Research Learning

REPOSITORY OF INTELLIGENT VALIDATED INPUTS & OUTPUTS

Clearinghouse CPA firm validation CPA firm

Financial statements Other financial

Documents

Financial document repository

Clients

Private businesses

3rd party recipients Banks

Investors Other users

Addressing the Marketplace Need for a Private Company Clearinghouse

CPA Firm Validation

Source Confirmation & Document

Authentication

Reduced Risk &

Liability Exposure

Control Over Distribution

& User Notification

Document Requests &

Tracking

Evolution of Tax Area

US Individual Tax Return Market*

Category

MarketShare

Total

Returns

FiveYearTrend

AveragePrice

TotalMarketValue

CommentsManual 3% 5M -9% N/A N/A Steadydeclineoverpastdecade

DIYSo#ware(TurboTax,etc.)

40% 60M 5% $0-100 $2B Growthdrivenmainlybygainingsharefrommanualandstorefrontcategories

Storefront(H&RBlock,etc.)

11% 16M -4% $100-200 $3.5B Majorityoftheirclientsmakelessthan$50kayear.EITCkeydriver.

NonCPAPrepared 36% 54M 0-1% $100-300 $6.5B Noncomplexreturnslosingshare.NewCPAcompe4torsemerging

CPAPrepared 10% 15M 0-1% $300–800 $11B Fundamentalssolid.CPAfirmsprimarilysupportupper10%ofUSMarket.

USReturnMarket 100% 151M 1-2% $150 $23B

*2015-2016 Data from Intuit, H&R Block, IBIS, & IRS Prepared Returns: 57% , Software/Manual: 43%

Brokerage Accounts

Client CPA Firm

AggregatedDigital

Dashboard

Expense Mgt

Online Banking Lending

Tax Return

401k, 529

Client Document Vault Complete System of Record

(tax returns, statements, insurance, key records)

Insurance Family Accts & Planning

Financial Aggregator Platform

Value Proposition

Value

Automa&on

Today Tomorrow

Trusted

Advisor Tr

usted

Advisor

Growth Specialization

Business & Individual Insights

Software will win at low end

Higher Margin & Value

Low margin/fee pressures

Automa4onOfServices

Transac4onalDecline

Transac4onalTax&Bookkeeping

2016: H&R Block

Exits Small Business Advisory Services

How the Stock Market Sees Value

Transaction services (H&R Block) down by 35% while software services (Intuit) and advisory services (Accenture) up by 12-17%

HRB

INTU

ACN

Professionalization of Client Accounting Services

Professionalization of Client Accounting Services

Firm Strategy

Market Demands

Training & Certificate

Growth of Practice

Standards SSARS 21

Media Coverage

Adoption Curve

CAS is now a core practice area for firms

Deloitte 2016 Global Outsourcing Survey: Key Findings NoLongerViewedasJustCostArbitrage•  Solvescapacityissues•  Createsscalability•  Providesaccesstointellectualcapital

CreatesNewOpportuni&esforServiceProvidersandClients

•  Improvesquality•  Improvesuserexperience•  Capturesandenablesinnova4on

CloudTechnologyCanBeUsedtoTransformProcesses•  Acceleratespeedtovalue•  Reducesimplementa4on4mes•  Improvesfunc4onality

2016 MAP Survey Now Includes CAS   Cloud adoption grew by 17% (to 56%)   CAS Now Key Component of Survey o  Nearly 10% of firm revenue come

from Client Accounting Services o  Higher growth in large firm segment

A Growing Number of Firms Have Formalized CAS Practice

Building Blocks of Strategic Advisory Services

Strategic Value

Transactional, Compliance

Automated Processes and Workflows

Business insights and Strategic Advisory

Human Capital Management

Sales and Use Tax

Budgeting & Forecasting

Tax & Financial Planning

CFO Services

Strategic Planning

Bill Management

Expense Management

Cash Flow Management

Financial Dashboards

Account Reconciliations

Payroll Write-up Financial

Preparation Income Tax Compliance

Expansion of CAS Ecosystem

Pre-Accounting

GROWING FOCUS

Real time inputs outside of finance

(expenses, transactions, etc.)

Accounting

IN PLACE

Cloud Accounting (G/L, Payables, Payroll, etc.)

Post-Accounting

GROWING FOCUS

Business Intelligence (Budgeting & Forecasting, Planning, KPI Dashboards,

etc.)

Standards & Guidance

Standards – SSARS21 Implementation Look Back On Year Of Implementation

•  Focus has been on education of standard, branding option, client roll-out, etc.

•  Lots of Questions & Internal Firm Debate

•  Firm Branding •  Connection between client accounting and

quality control of firm •  Additional reviews and potential cost

“

Professional Development & Education

Client Accounting Advisory Certificate

Available in January Digital Badge

Getting Certified In Client Accounting Advisory Services

Defining CAAS

Client Interaction

Technology Roadmap

Client Assessment

Guidance

On-Boarding

Workflow Design

KPIs

Education Through Case Studies & Best Practices

Building a Community for YOU and with YOU