Embracing the Future with CAS

By Brenda Jordan

At last years CPA / CGMA conference in Las Vegas, the largest accountancy bodies in the world encouraged their members to shift their focus from traditional accountancy services to the delivery of CAS (Client Advisory Services). There are a number of reasons for this seismic shift in strategy for this organization;

1. The market has changed. Clients are demanding more support from their trusted advisors. They want operational and strategic advice, in a proactive rather than a reactive manner, to help them to solve critical business challenges as they arise. In this environment, firms need to be able to consistently deliver forward-thinking, big-picture insights to clients that will help position them better for the future.

2. A number of traditional accountancy services have now been commoditized by technology solutions, bringing efficiencies, but also reducing the billing potential for these services. A lot of firms are feeling the pinch, and are looking for more lucrative revenue streams.

Providing this level of service to clients takes time. So as firms pursue this transition, they are looking to automation and other technology advances to take on the more routine, time-consuming work that is the foundation of most CAS practices, so they can spend time utilizing their professional skill sets by focusing on delivering value added services to their clients.

More and more firms are seeking technology to not only save them time, effort and money in the delivery of CAS, but also to help them to deliver more sophisticated insights to clients. These insights are currently difficult to access using spreadsheets, so, now is the time to undergo digital transformation in response to industry demands. This type of transition does not happen overnight. Instead, firm leaders should approach this evolution as a phased journey, targeting one milestone before moving on to the next.

Here , we take a closer look at each phase of this journey for firms looking to address growing client needs for Business Insights.

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Descriptive Analytics: “What Happened in the past?

Traditional bookkeeping and accounting activities reveal what happened in a business – that’s hindsight.

CAS providers who are producing financial statements and sending them to clients without additional analysis are at this stage. Most will agree that there is a limited value to looking backwards. However, the proper analysis of historical data can be used very effectively to propel a business forward.

1. When discussing insights, it is essential that data analysis includes non-financial, or operational data, as well as financial.

2. Best in practice formulae should be used to calculate appropriate metrics for client companies.

3. Use Machine Learning to understand the trends (or behaviors) of historical data, and how they might impact on future performance.

Diagnostic Analytics: “Why Did It Happen?”

In order to understand how to change future performance results, we must understand the reasons behind historical results.

1. What are the activities that impacted those results?

2. Which delivered positive results, and how can we replicate them?

3. And which delivered negative results, and how can we rectify them?

Understanding that a company's performance results (usually shown starkly in the Income and Expenditure Statement) is the result of activity from right across the business is key to finding the answers to ‘Why did it happen?’.

Predictive Analytics: “What Will Happen in the future?”

This is where the delivery of CAS really gets interesting. Historical results are in the past.

How can we make the future better?

With the advisors' intimate knowledge of their clients and their businesses, it is now easier, using predictive analytic technology, to help them to determine what kind of future they want to experience for themselves and their businesses.

The analysis of trends and behaviors of historical data allows the generation of a baseline of expected future outcomes (should all things remain unchanged within the client company).

However, the application of client-specific expected outcomes (or targets) allows the focus to move to improved results going forward.

Prescriptive Analytics: “How Can We Make It Happen?”

Having access to expected future results undoubtedly has value. However, its value is limited without the understanding and insights into how all the parts of the business are contributing to the end result.

What is working, and what is not? If you improve one area of the business, what impact does it have on other areas?

If one area is not meeting its performance targets, how does that impact on others? Insights into the key performance indicators from right across the business is key to truly understanding ‘how’ to successfully achieve the goals. And that’s where you, the professional advisor, brings the biggest value of all. Experience, expertise and the ability to interpret the results correctly.