Mark Koziel, CPA, CGMAExecutive Vice President, AICPA

January 2019

2,500,000,000,000,000,000 bytes of data are created every day.

Source: DOMO

Source: Accenture, 2018

S&P 500 CONSUMER-CENTRIC COMPANIES

have been acquired or gone out of business

41%Since 2000

Chart1

41

59

Column1

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41

59

Source: AICPA

TOP ACCOUNTING FIRMS

Major Firm Group member firms from 2000 no longer exist as

standalone firms

39%

Chart1

39

61

Column1

Sheet1

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39

61

Merger and Acquisition Activity – December 31, 2018Non-CPA

Firm Acquisition

Merge in MFG

Merge in G400

Merge in Smaller

Than G400

Merge in Piece of Practice

Total 2018

Total2017

Total2016

Total2015

Big 4 6 6 6 2 8

MFG 31 2 9 48 6 96 83 83 80

G400 11 2 40 4 57 65 40 46

12.31.2018 48 2 11 88 10 159 154 125 134

12.31.2017 35 1 22 92 4 154

* MFG activity up 15% over 2017

Top 10 declining roles by 2022

Data entry clerks

Accounting, bookkeeping and payroll clerks

Administrative and executive secretaries

Assembly and factory workers

Client information and customer service workers

Business services and administration managers

Accountants and auditors

Material-recording and stock-keeping clerks

General and operations managers

Postal service clerks

2

3

4

5

6

7

8

9

10

1

Source: World Economic Forum Future of Jobs, 2018

8

TRUSTBuild on your expertise.

TALENTThink broader.

TECHNOLOGYMaster it before it masters you.

TAKE A STEP.

TRUST

Increasing Firm Value Opportunity

CAS –Virtual CFO

BookkeepingWrite-Up

Integrated Services

TaxCompliance

AI Driven Audit with Insights

TraditionalAudit

CPA Profession Total Market: $110 billion *IBIS 2018 report

Investors:

Trust in auditors is strong

Source: Center for Audit Quality 2018 Main Street Investor Survey

80%confidence in independent audit committees

81%confidence in public company auditors

Accounting and auditDon’t forget the basics• Enhancing audit quality• Standards: Revenue recognition, leases, credit losses

Optimize processes and insights with technology• Audit data analytics• RIVIO Clearinghouse• OnPoint Preparation, Compilation & Review tool• Dynamic Audit Solution

Explore one adjacent opportunity• Expansion of SOC Reporting• Data integrity

aicpa.org/EAQ

Technology Standards New skillsMethodology

Innovating the audit

Vision for Auditing in the Future

• Efficient, effective, high-quality audits.• Scalable applicability of standards and technology.

• Continued evolution of audit to continue to meet enhanced business needs and client expectations.

• Retain trust and enhance relevance in audits

Emerging assurance areasCybersecurity Risk Management• Cybersecurity Risk Management Reporting Framework• Certificate programs• SOC for Supply Chain

Blockchain• SOC1 and SOC2 (including guidance on smart contracts)• A&A guide on cryptoassets• Certificate program

Integrated Reporting• Certificate program

Sustainability• Attestation guide

Tax & Integrated Services

Source: 2018 HR Block presentation based on IRS Data

How Americans file their taxes

aicpa.org/growadvisoryservices

Market demand is soaring

Client needs are changing

Tax reform presents opportunity

New online resource center &planning certificates

Planning & tax advisory services

Continued evolution of client accounting services

Firm Value Chain

Input Data

Assemble & Verify Report

Analyze & Interpret

Advise & Consult

Higher Value & Future Focus

Lower Value & Historical Focus

CGMA Business Model Framework

CGMA Business Model Consultation Framework21

TALENT

Source: World Economic Forum Future of Jobs, 2018

By 2022, everyone will need an extra

101 DAYS OF LEARNING

Analytical thinking and innovation

Active learning and learning strategies

Creativity, originality and initiative

Technology design and programming

Critical thinking and analysis

Complex problem-solving

Leadership and social influence

Emotional intelligence

Reasoning, problem-solving and ideation

Systems analysis and evaluation

2

3

4

5

6

7

8

9

10

1

Growing skills demand

Technical skills

Business skills

Leadership skills

People skills

Digital skills and mindset

Ethics, integrity and professionalism

Learn.

Unlearn.

Relearn.

Steps AICPA resources to help:

Learn fundamentals.

Become an expert.

Free learning: • Facebook Lives• Blogs• Podcasts• Watchlist

• Guidance• Frameworks• Checklists• Toolkits

• Conferences and webcasts• Certificate programs• Learning labs

Apply topractice.

CPA PIPELINE

Influence• New Accounting Accreditation Practitioner Engagement Program

‒ Prepares CPAs to serve in a consultative role on accreditation peer review teams

Attraction• Honors program• Dual Student Recruitment program• CPA Academic Champions pilot program• Firm CPA Culture Toolkit

Accountingand Financerated top 10 college degrees with best job prospects

Source: CareerCast

Uniform CPA Exam

0K

50K

100K

150K

200K

250K

300K

2011 2012 2013 2014 2015 2016 2017 2018

CPAs

Other client service professionals

7yr CAGR: 10.4%

7yr CAGR: 4.9%

262K

76K

Source: Accounting Today Top 100 Accounting Firm Survey 2018; AICPA

TALENT INCLUSION STRATEGY: MAINTAINING A CPA CULTURE

Top 100 CPA firms

CAGR=Compound Annual Growth Rate

# of

Pro

fess

iona

ls a

nd P

artn

ers

CPA Evolution

CPA core services

Changing hiring practices

Technological innovation

New client demands

Progress thus far

Preliminary concept shared

with stakeholders

Feedback received• Understanding and

support for taking action• Skepticism and questions

regarding approach

Next steps• Evolve concept• Gather more

input throughout 2019

MAKE THE MOST OF YOUR PEOPLE

Embrace diversity and inclusion• CEO Action for Diversity• Recruitment and Retention toolkit• D&I Communications toolkit

Mentor … and be mentored• Online mentoring program

WIEC activities• Women’s Global Leadership Summit• Possible firm recognition process

aicpa.org/diversity

TECHNOLOGY

Blockchain

Source: Gartner, 2018

Digital Twin

Innovation Trigger

Peak ofInflated

ExpectationsTrough of

DisillusionmentSlope of

EnlightenmentPlateau of

Productivity

TIME

EXPECTATIONS

Gartner Hype Cycle

Deep learningBiochips

Smart WorkspaceBrain-Computer Interface

Autonomous Mobile Robots

Smart RobotsDeep Neural Network ASICs

AI PaaSQuantum Computing

5GVolumetric Displays

Conversational AI PlatformAutonomous Driving Level 5

Edge AIBlockchain for Data Security

Neuromorphic HardwareHuman Augmentation

Knowledge Graphs4D Printing

Artificial General Intelligence

Silicon Anode BatteriesVirtual AssistantsIoT Platform

Carbon Nanotube

Connected HomeAutonomous Driving Level 4Mixed Reality

Augmented Reality

Self-Healing System Technology

Software as a Service

Blockchain

Bots OCR

Source: 2019 CPA.com Identified Megatrends Plotted on the Gartner Hype Cycle Framework

Virtual Assistants

Innovation Trigger

Peak ofInflated

ExpectationsTrough of

DisillusionmentSlope of

EnlightenmentPlateau of

ProductivityTIME

EXPECTATIONS

Conversational AI

Predictive Analytics

Smart Robots

Big Data

Robotic Process Automation

Deep Learning

CPA.com Accounting Profession Megatrends, 2019

Cloud (SaaS)

Artificial intelligence (machine learning, virtual assistants) Blockchain

Client Accounting Services

Virtual CFO

Digital CPA

Dynamic Audit Solution

Thought leadership

Data analytics guide

Virtual CFO solutions

Wall Street Blockchain Alliance

Thought leadership

Cryptocurrency

SOC1 and SOC2

Big data and analytics

F O R G I N G T H E PAT H

aicpa.org/advocacy

Strong voicein advocacy

U.S. FEDERAL & STATE

Capital markets reform

Mobile workforce

Copyright

Beneficial ownership

Occupational licensing

Tax conformity

Marijuana

INTERNATIONAL

International auditing standards

Audit-only firms

Apprenticeships

Global survey

Tax reform implementation

IRS reform

IRS Commissioner

Regulation of tax preparers

U.S. TAX

• UK, South Africa, Hong Kong

• International auditing and ethics standards

• Taxation of Digital Economy

• Potential above the fold news

Advocacy - 2019 forward

2019 Political Environment

116th Congress: Major Turnover, Loss of Institutional Knowledge

93

105

69

104

0

20

40

60

80

100

120

1994 2010 2014 2018

Exiting house members during midterms

Chart1

1994

2010

2014

2018

Exiting House Members

Exiting house members during midterms

93

105

69

104

Sheet1

Exiting House Members% Turnover

19949313.6

201010523.5

20146915.5

201810423.3

© 2016 American Institute of CPAs. All rights reserved.

Thank You

Legislative activity 2016

TX

WA

OR

CA

NV

ID

MT ND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

MA

AK

NJDE

DC

MD

PA

NH

VT

WV

CNMIGU

USVI

PR

Introduced legislation

Passed legislation

Occupational Licensing Activity

© 2016 American Institute of CPAs. All rights reserved.

Thank You

Legislative activity 2016 - 2017

TX

WA

OR

CA

NV

ID

MT ND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

MA

AK

NJDE

DC

MD

PA

NH

VT

WV

CNMIGU

USVI

PR

Introduced legislation

Passed legislation

Occupational Licensing Activity

© 2016 American Institute of CPAs. All rights reserved.

Thank You

Legislative activity 2016 - 2018

TX

WA

OR

CA

NV

ID

MT ND

SDWY

UTCO

AZ NM

HI

OK

KS

NE

MN

IA

MO

AR

LA

MS AL GA

FL

WI

IL

MI

IN

KY

TN

SC

NC

VA

OH

NY

ME

CT RI

MA

AK

NJDE

DC

MD

PA

NH

VT

WV

CNMIGU

USVI

PR

Introduced legislation

Passed legislation

Occupational Licensing Activity

GO BEYOND

Optional photo

For additional information on

AICPA services or resources:Email: service@aicpa.orgPhone: +1 888.777.7077

CIMA services or resources:Email: cima.contact@cimaglobal.comPhone: +44 (0)20.8849.2251

Email: mark.Koziel@aicpa-cima.comPhone: 919.402.4808

Contact me:

Follow me on Twitter:@markkoziel

Thank You!!!

Slide Number 1Slide Number 2Slide Number 3Slide Number 4Slide Number 5Merger and Acquisition Activity – December 31, 2018Slide Number 7Slide Number 8Slide Number 9Increasing Firm Value Opportunity Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Tax & Integrated Services�Slide Number 17Slide Number 18Slide Number 19Firm Value ChainCGMA Business Model FrameworkSlide Number 22Slide Number 23Slide Number 24Slide Number 25Slide Number 26Slide Number 27CPA Evolution�Progress thus farSlide Number 30TECHNOLOGYGartner Hype CycleSlide Number 33Slide Number 34Slide Number 35Slide Number 36Slide Number 372019 Political Environment116th Congress: Major Turnover, Loss of Institutional Knowledge� Slide Number 40Slide Number 41Slide Number 42Slide Number 43Slide Number 44