How CPAs Can Deliver Value Via Non-Financial Reporting

by Dr. Sean Stein Smith, CPA, Lehman College – June 11, 2018
How CPAs Can Deliver Value Via Non-Financial Reporting

Tax reform, and the ripple effect of changes that are bound to be generated from the passing of this legislation, are already caus­ing numerous questions, challenges and opportunities for individuals and business owners. As if that was not enough, the twin forces of blockchain and artificial intelligence (AI) are headline topics at virtually every accounting conference, show and exposition. Both technology platforms, in­dependent of each other, have the potential to generate tremendous amounts of disrup­tion for CPAs and their businesses. Clearly, blockchain and AI are in the early stages of adoption, but these are trends that CPAs should keep an eye on in 2018.

Technology changes aside, there is also increased interest in attracting new talent to businesses, and the growing importance of sustainability information to different stakeholder groups. These converging trends represent both an opportunity and challenge for accounting professionals. Many of the skills and com­petencies CPAs bring to bear, namely the quantifying, reporting and explaining of data, are in demand due to the increased availability of information. The challenge of this exact situation is that, while finan­cial reporting and data attract most of the attention, non-financial and operational information are what create and drive those financial results.

Let’s take a look at a few of the things CPAs should keep in mind when reporting non-financial data:

  1. Figure out what matters to your stakeholders. Every business is different, and is driven by a unique set of operational information, so making sure to understand what stakeholders need is an important first step. Whether it is consumer information, compliance reporting, environmental issues or the return on business development projects, figuring out this first step is critical for making non-financial information understandable.
  2. Make it part of the conversation. Non-financial information is obviously important to every business, but it’s easy to lose focus when dealing with both the day-to-day operations and fi­nancial pressures of running a business. It is up to the CPA to keep this conver­sation going. Operations drive financial results, and if you help your company’s management team better run the busi­ness, that both helps the business and increases the value you deliver.
  3. Establish metrics and targets. One of the biggest challenges for non-finan­cial reporting is a lack of metrics and standards, which make it more diffi­cult to set a baseline or goals moving forward. Working with your colleagues to set goals means that everyone is more likely to stick to them and find ways to integrate them into financial decision making. While it may seem difficult to find a place to start this process, there are resources at your disposal. Don’t be afraid to use external sources at the AICPA or NJCPA level, and information at institutions like the Sustainability Accounting Standards Board (SASB).
  4. Communicate these findings to stakeholders. Non-financial reporting, and the findings that you are able to generate, can be used to differentiate your business in the marketplace. CPAs can leverage their background and expertise in creating non-financial reports to be a valuable member of the company’s management team.

Non-financial reporting is an area that may have not caught your attention in the past, but can differentiate you moving forward.

Sean D. Stein Smith

Sean D. Stein Smith

Sean Stein Smith is a professor at the City University of New York – Lehman College. Sean also is the chairperson of the NJCPA's Emerging Technologies Interest Group (#NJCPATech). He serves on the Advisory Board of the Wall Street Blockchain Alliance, where he co-chairs the Accounting Work Group. Sean is on the Advisory Board of Gilded, a TechStars ’19 company. He is also a Visiting Research Fellow at the American Institute of Economic Research.

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This article appeared in the May/June 2018 issue of New Jersey CPA magazine. Read the full issue.