CPAs Need to Pay Attention to the News
CPAs are used to watching the news to see when tax laws change, or when new audit standards hit. However, in recent months other stories have gripped the national headlines. Whether those stories were Coronavirus in 2020, the explosion of Ransomware attacks in early 2021, or recently the collapse of the Champlain towers in Miami, there are elements that affect the accounting profession that CPAs need to be ready to address.
By now most accountants are aware of how the Coronavirus pandemic changed the industry. Whether it was the changes to business that forced much of the work force to work from home, or the move to help clients prepare PPP loans or restaurant revitalization fund applications, the industry had to move quickly. Some of these changes might have some staying power, like the issues surrounding the move to a virtual environment, but others will be temporary. The critical lesson to take away is that non-accounting related news can affect the industry quickly. What does that have to do with other stories in the news like Ransomware or the Champlain tower collapse?
Ransomware stories have dominated the news over the last year. It seems like every week there is a new breach. Some of these have large reaching affects, like the Colonial Pipeline attack, and others are more localized, like the attack on the Martha’s Vineyard ferry. However, CPAs can see that these are affecting all businesses, which means their clients are at risk. At the same time, data and digital assets for all businesses are growing at exponential rates. To effectively consult with their clients, accountants need to understand their risks. This means CPAs can no longer ignore the risk associated with their clients’ digital assets. Questions about cybersecurity, digital asset controls, and backup solutions need to be understood by not only businesses but also by their CPA firm. If these attacks continue, CPAs will need to be able to assess the potential risk for their clients to determine if they are adequately insured and protected for these events.
Another recent story is the Champlain Towers collapse. With the growing age of condo towers and neighborhoods with HOAs, CPAs that advise on these areas need to use this tragic story as a cautionary tale. It is required by the GASB Codification that financial statements disclose how much repair an HOA thinks it needs, but many HOAs rely on special assessments to pay for these repairs. In fact, when Champlain Towers collapsed, they were in the process of collecting a $15 million special assessment to pay for structural repairs noted in a 2018 report. Moving forward, CPAs that advise HOAs need to consider if they have the funding to pay for repairs and replacement of aging assets.
While COVID, Ransomware, and the Champlain Towers collapse seem to have little in common they demonstrate how many events affect the accounting profession on a regular basis. It is critical for CPAs to monitor the news and consider how news stories affect their industry so they can better serve their clients.