Last month, I ended 2018 by reflecting on the highlights of the year. While “reflection” is important, the success of any organization is predicated on anticipating the challenges and opportunities it faces. In December’s memo, I mentioned the challenge of “gaining universal acknowledgement of the key changes [technology advances] that are occurring.” That continues to be a challenge for the new year.
I read recently that Chevrolet will discontinue the Impala, and Ford will discontinue the Taurus in 2019. Interestingly, just a few years ago the Impala was the first American car to be named “Car of the Year” by Consumer Reports in over 20 years. Less than a decade ago, the Taurus was the best-selling car in the United States for five years running. General Motors and Ford invested millions to update and modernize these profitable family sedans and did not recognize that consumer choice had changed. Ironically, Chevrolet also announced that the highly acclaimed Volt, the first plug-in hybrid car made in the United States, will also be discontinued in 2019. The cause was not the economy, nor energy consumption, but the increase in popularity of the SUV. The lesson is the critical importance of recognition and then acknowledgement of change.
For the last couple of years, we have continued to put a bright light on the inevitability of changes in and consumer expectations of the accounting profession, including the reliance on data analytics, artificial intelligence and blockchain. In 2019 we will witness the increased momentum of this transition. Recently, the State of Ohio announced that it will accept cryptocurrency for the payment of some taxes and fees. In late 2018, Ohio State Treasurer Josh Mandell said that Ohio is looking to attract businesses using blockchain. Treasurer Mandell told CNBC: “We’re doing this to plant the flag in Ohio as the national and international leader in blockchain technology.” Since Ohio’s action, several other states have announced they are considering the acceptance of cryptocurrency and some states, including Georgia and Arizona, have seen legislation introduced. There have also been discussions about federal acceptance in the future.
The question to State Boards, and to the profession, is whether small firms and sole practitioners, who provide the vast majority of business and individual accounting and tax services, have the skills and knowledge needed to work with blockchain accounting and cryptocurrency? Will they be ready for attestation of place and time valuation of currency that was designed to be anonymous? In 2019, CPAs in Ohio and other places will be asked to meet that challenge.
These changes are occurring at a time when the lack of meaningful regulation of cryptocurrency is becoming evident. According to the Wall Street Journal, more than 90 cases have been brought to the SEC over the past two years, and investors have lost billions as cryptocurrency values have dropped. Because of the anonymity and international nature of cryptocurrency, the best that federal and state regulators can do is try and manage how the digital coins are offered. SEC Chairman Jay Clayton warned that his agency “may not be able to effectively pursue bad actors or recover funds” lost through investments in cryptocurrency.
I have no doubt that the U.S. accounting profession will ultimately rise to the challenge and will become the world’s experts in dealing with these technology-driven changes. With the acceptance of cryptocurrency by governments and the determination of the IRS that gains made in cryptocurrency investments are taxable, consumer losses will inevitably generate complaints and questions about what is the responsibility of regulators, including State Boards of Accountancy? NASBA, with our mission to “enhance the effectiveness of State Boards of Accountancy,” will do all we can to provide the necessary resources to meet these challenges.
Let me end by wishing each of you a safe, prosperous and happy new year, with its new -and continuing – challenges and opportunities.
Semper ad meliora (Always toward better things).
— Ken L. Bishop
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