Accounting Firms Utilize New Technology for Growth

Traditional financial service providers have expanded beyond the realm of standard tax and audit roles. Removed from the stereotypical imagery of “bean counters,” today’s large accounting firms, and the CPAs who comprise their workforce, are finding that mission statements and roles are rapidly shifting to meet the needs of 21st century industries and their styles of working. Companies are evolving with new technology, and the changing nature of work requires advisors to understand a variety of business issues for both multi-national corporations and small businesses alike.

Those issues include new tax regulations that are being debated, technological advancements such as artificial intelligence (AI) that were implemented before being fully developed and supporting people in a hybrid work environment.

Many of these challenges are common in the diverse Southern California market where there is not one specific industry that dominates the region. Entertainment is a major sector, but there are also significant employers in aerospace, manufacturing, technology and life sciences.

“We have an important role as business advisors on a variety of issues in addition to their traditional tax and audit services,” said Ryan Smith, office managing partner for PwC in Irvine. “It’s about understanding how to position a client for their next phase of growth,” he said.

On the tax side, Smith cited Pillar Two compliance as a major issue for which companies are planning, even as the regulations are still being developed and implemented. Pillar Two is a set of regulations that impact the tax requirements for large international businesses and require advanced data tracking, calculations and reporting. “Regulation is slow, but the speed of business is fast. Companies need to know how to plan appropriately,” said Smith.

Another issue is uncertainty created during an election year where there can be impacts to local, state and federal policies. It can be hard for large organizations to respond to sudden changes that are beyond their control. Nevertheless, despite ebbs and flows to the economy, the Southern California region benefits from a strong middlemarket environment to buoy the downswings while supporting opportunities for growth.

Technological Advancement
One area of rapid change is the implementation of AI and large language models. There are applications for companies on both the front end and the back end to support a wide range of applications. At PwC, there is a firmwide goal to upskill current employees to utilize the new technology. It has invested in OpenAI software at a firmwide level and trained staff on how to use it.

In May, PwC announced a partnership with OpenAI that provided licenses on an enterprise level to 100,000 PwC employees in the United States and United Kingdom, making it the largest corporate partnership for OpenAI’s ChatGPT technology. PwC also became the first reseller for ChatGPT Enterprise. That deal built upon a $1 billion, three-year commitment that the firm made in 2023 to implement the technology. It now claims that it has actively engaged ChatGPT with 950 of its top 1,000 consulting clients. Other “Big 4” firms have responded. In June, KPMG announced plans to add capabilities to its internal, proprietary AI tool with help from Microsoft using Microsoft’s OpenAI Service and Azure AI Search. Currently, more than 15,000 KPMG advisory employees can access the technology, and the firm expects to scale it to a broader swath of the company this summer. The internal tool works to complement the broader Advisory GPT tool and Microsoft 365 Copilot this summer. It will also utilize Microsoft Copilot for all of its U.S. partners and professionals this year. Ernst & Young has also invested in AI technology for employees and customers. It plans to implement Microsoft Dynamics 365 Sales and Copilot for Sales to approximately 100,000 employees by January 2025. “There are new skill sets that can be utilized. You could be doing technology type roles or engineering type roles. It’s much broader than it was 20 years ago,” said Smith.

Future-Facing Accounting Roles
Smith has seen the evolution of the workforce firsthand. He was named office managing partner on July 1, 2024 after working for the company for the past 22 years in Orange County, aside from a rotation at an international office. His roots in Southern California are strong. Smith was born and raised in Orange County and attended Cal State Fullerton before joining PwC in Irvine after college. His personal experience is with clients in several industries that include technology, automotive, life sciences, consumer products and aerospace and defense.

“I’m looking forward to the role,” said Smith of his office management duties. “We have just over 500 people in Orange County. My focus is on how we interact with the community around us. That includes nonprofits, schools and executing on our client obligations. We will expand our overall footprint.” He was elevated to the role at a time when the workplace underwent a major transformation due to the hybrid nature of many companies.

PwC has adopted a hybrid environment in the office and tries to be deliberate about making connections when workers are together in the office. In an industry such as accounting, there’s a benefit for less tenured workers to gain experience from senior leadership, and many of the younger employees understand the benefit of those relationships built working side-by-side with their peers and mentors.

“We are educating today’s college students about the industry. As a young person, you can get a vast amount of experience in a short time. You get the breadth of the firm of our size but executed at a smaller level, which is the best of both worlds,” Smith said.

- David Nusbaum