The accounting industry is heavily regulated in the United States, and CPA firms must stay up to date with the latest laws and regulations to avoid penalties and liability.
According to AICPA’s 2022 PCPS CPA firm top issues survey, “Keeping up with changes and complexity of tax laws” is one of the top 5 issues faced by CPAs with fewer than 50 employees. The same accounting regulatory issue is also faced by firms with more than 50 employees, however, it’s relatively low-ranked since they can spend significant staff time and other firm resources.
As per the survey, not only is this issue today, it will remain one of the top 5 issues over the next 5 years for all firms irrespective of the size of the firm. Hence, regulatory woes keep giving CPA firms sleepless nights.
Challenge is not just to stay up-to-date with the accounting regulatory landscape but also to be compliant. CPA firms also have to maintain their reputation by providing accurate and reliable services, which requires a good understanding of current US accounting regulations. Inaccurate financial reporting can lead to negative consequences, including loss of client trust and potential legal action.
It won’t be a walk in the park, but finding a solution is feasible with a proactive approach. AccountingSeat by Finsmart Accounting has supported many CPA firms to navigate the accounting regulatory landscape.
Accounting Regulatory and Compliance Best Practices
Here are the best practices that CPA firms can use as maps to navigate the accounting regulatory landscape:
Stay informed through industry publications and associations:
CPA partners need to regularly read industry publications, attend webinars, and participate in their events. Becoming a member of the American Institute of Certified Public Accountants (AICPA) and subscribing to industry publications such as the Journal of Accountancy can help CPA firms stay informed about changes in the industry and new accounting regulatory requirements.
Maintain regular communication with regulatory bodies:
This may include participating in surveys or working groups, attending meetings and conferences, or seeking guidance on specific regulatory issues.
For example, CPA firms can use the AICPA’s Audit & Assurance resources, which provide a forum for communication between the AICPA and its members on matters related to accounting regulatory compliance.
Attend professional development courses and conferences:
This will help CPA firms stay informed about changes in the industry, and may also provide opportunities to network with other professionals in their field. Attending conferences and workshops can provide them with the opportunity to hear from industry experts and learn about the latest developments in the field.
For example, the WOODARD provides best-in-class business practice advancement, client advisory courses, opportunities to engage with practice coaches, and also attend in-depth training events, webinars, and conferences that cover a variety of topics related to accounting and compliance.
Utilising technology:
CPA firms can use technology, such as software solutions and databases, to track changes in regulations and ensure compliance. CPA Firms can also use technology to automate manual processes and streamline workflows, freeing up time to focus on other tasks, such as staying up to date with bookkeeping regulations.
For example,
- Taxation software: Most CPA firms use accounting software that automatically calculates taxes and generates financial reports in compliance with GAAP. This helps them to ensure that they are in compliance with regulations and save time by automating routine tasks
- Compliance management software: Firms can use compliance management software to automate the process of tracking, setting reminders for important deadlines, and reporting on regulatory changes, reducing the risk of non-compliance.
- Legal research databases: CPA firms can use legal research databases to access information on current laws, regulations, and court cases related to tax compliance.
Recommended: 6 accounting and tax software used by tax practitioners in the USA
Conduct internal audits:
Regular self-assessment can help identify areas for improvement, and can also help demonstrate your CPA firm’s commitment to accounting compliance and good governance.
For example, a CPA firm has noticed a trend in which some of its clients have been underreporting their taxable income. To address this, the firm could conduct an internal audit to evaluate its processes for identifying and addressing this type of issue. During the audit, the firm might review its client files, interview staff members, and review the training programs it offers to ensure that its professionals are equipped to identify and address potential tax compliance issues.
The results of the audit could then be used to improve its policies and procedures or to provide additional training to its staff members. Accounting regulatory audits can benefit in the same way.
Have a contingency plan in place:
Having a well-planned and documented response strategy in case of a compliance issue can help minimise the potential impact of a violation and ensure that CPA firms are prepared to respond quickly and effectively, be prepared for unexpected events, and minimise the risk of compliance issues or other problems.
For example, if a natural disaster occurs, the firm’s data centre might be inaccessible, preventing it from accessing critical client information. In this scenario, having a contingency plan in place, such as data backup and recovery, could help the CPA firm quickly resume its operations and minimise the impact on its clients.
Working with regulatory experts:
CPA firms can partner with US accounting regulatory experts, such as lawyers and consultants, to stay up to date with the latest regulations and ensure compliance. These experts can provide guidance on the interpretation of regulations and help firms navigate the complex regulatory landscape. Working with regulatory experts can also provide peace of mind and reduce the risk of penalties or legal action for non-compliance.
Encouraging a culture of compliance:
CPA firms can create a culture of compliance by making it a priority and setting expectations for their staff to stay informed and follow US accounting regulations. This can include setting aside time for staff to attend training and education programs, regularly communicating updates on regulations, and rewarding staff who demonstrate a commitment to compliance.
For example, creating internal email newsletters for staff on the new rules and compliance & ethics programs. Making training on compliance & ethics part of the annual KPIs for every staff member of the CPA firms.
Offshore:
For CPA firms with fewer than 20 employees, managing all of the above points can be a challenge, especially spending time on them.
Fortunately, CPA firms can spend their valuable time on points 1 to 3 while the rest of the points can be supported by offshoring them.
Accounting offshoring provides a reliable solution that can help businesses to get their accounting work done according to the latest US accounting regulatory compliances and stay up to date.
Watch how the leading accounting firm of Chicago has to say about offshore bookkeeping
Connect for Accounting Offshoring Support
By partnering with an experienced offshoring provider, a firm like AccountingSeat by Finsmart Accounting, CPA firms can access a team of professionals who are knowledgeable about the latest regulations and can help ensure their processes are compliant.
In addition, offshoring can also help to streamline operations, reduce costs, and improve the overall quality of services provided to clients. Whether it’s tax compliance, financial reporting, or any other aspect of accounting, offshoring is a valuable tool for CPA firms looking to stay ahead of the game in an ever-changing regulatory landscape
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Would you like to know more about utilising technology or have you or your company worked with offshore accountants? What was the experience like? Join the conversation below or check out our recent blogs on offshore accounting:
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Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
