AICPA Business and Industry Economic Outlook Survey. Detailed Survey Results: 4Q 2018

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1 AICPA Business and Industry Economic Outlook Survey Detailed Survey Results: 4Q 2018

2 Survey Background Conducted between November 7-28, 2018 Quarterly Survey CPA decision makers (primarily CFO s, CEOs and Controllers) AICPA members in Business & Industry only 938 qualified responses

3 Survey Highlights 76 57% 67% Overall index drops from 79 to 1Q17 level of 76 All components show declines from Q3 levels US Economic Optimism leads the decline, dropping 8 points from Q3, down 13 points from Q Optimism about U.S. Economy eases 12% points Retail optimism improves. Manufacturing declines and technology improves. Construction optimism flat. Expansion and employment plans both soften Overall expansion plans decline from 70% to 67%. Employment plans also ease slightly, although availability of skilled personnel remains a challenge.

4 CPA Outlook Index (CPAOI) The CPA Outlook Index is the composite of the following nine indicators at equal weights: U.S. Economy Optimism - Respondent optimism about the U.S. economy Organization Optimism - Respondent optimism about prospects for their own organization Expansion Plans - Respondent expectations of whether their business will expand over the next 12 months Revenue - Expectations for increases or decreases in revenue over the next 12 months Profits - Expectations for increases or decreases in profits over the next 12 months Employment - Expectations for increases or decreases in headcount over the next 12 months IT Spending - Plans for IT spending over the next 12 months Other Capital Spending - Plans for capital spending over the next 12 months Training & Development - Plans for spending on employee training and development over the next 12 months The CPA Outlook Index is a robust measure of sentiment about the U.S. economy that is supported by the unique insight and knowledge that CEOs, CFOs, Controllers, and other CPA executives have about the prospects for their own organizations, their expectations for revenues and profits, and their plans for spending and employment.

5 CPA Outlook Index (CPAOI) A reading above 50 indicates a generally positive outlook with increasing activity. A reading below 50 indicates a generally negative outlook with decreasing activity. CPA Outlook Index 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q

6 CPA Outlook Index (CPAOI) Component 4Q17 1Q18 2Q18 3Q18 4Q18 Q to Q Y to Y U.S. Economic Optimism Organization Optimism Expansion Plans Revenue Profits Employment IT Spending Other Capital Spending Training & Development Total CPAOI

7 CPA Outlook Index (CPAOI) vs. GDP CPA Outlook Index Change in GDP CPA Outlook Index 3.5% GDP Growth 3Q17 4Q17 1Q18 2Q18 3Q18 4Q % 2.9% 2.2% 4.2% 3.5% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0%

8 U.S. Economy, Organization and Inflation 57% 68% 49% Optimism for U.S. economy gives back 12 points Optimists cite continued strength of broad range of economic indicators. Pessimists cite trade issues, interest rates, deficit and potential underlying issues, corporate and personal debt levels. Organization optimism eases a point Optimism for respondent s own organization eases another point from 69% to 68% optimistic. Expansion plans ease from 70% having plans to 67%. The percentage of companies expecting their businesses to contract also increased from 9% to 12%. Concern about inflation by 49% remains constant Concern about labor costs continues to be most significant, increasing from 36% to 41%. Raw materials cost concerns decreased from 32% to 28% Interest rate concerns eased from 20% to 19%. Energy cost concerns remained flat at 6%

9 Optimism & Expansion 100% 90% 80% 70% 60% 50% 40% 30% 20% The economic outlook for the U.S. economy, your organization, and the expansion plans over the next 12 months 10% 0% 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 U.S. 45% 28% 37% 38% 62% 69% 64% 64% 74% 79% 74% 69% 57% Organization 53% 44% 53% 53% 61% 66% 64% 66% 70% 71% 70% 69% 68% Expansion 57% 52% 58% 62% 62% 67% 64% 65% 71% 72% 70% 70% 67%

10 Inflation or Deflation 31% 29% 7% 8% 32% 38% 6% 5% 27% 10% 23% 23% 25% 23% 12% 10% 10% 11% 22% 14% 23% 12% 18% 11% 28% 33% 4% 3% 31% 26% 27% 5% 5% 5% 49% 49% 49% 49% 3% 3% 3% 3% For your business, over the next 6 months, which are you more concerned about? Inflation or deflation? 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Inflation Deflation

11 Inflationary Risk Factors 2% 2% 2% 1% 3% Food costs 6% 8% 7% 6% 6% Energy costs 32% 31% 28% 25% 24% Raw material costs 41% 41% 39% 38% 36% Labor costs 21% 22% 20% 18% 19% Interest rates 5% 5% 4% 5% 5% 4Q17 2% 6% 24% 41% 21% 5% 1Q18 2% 8% 25% 38% 22% 5% 2Q18 2% 7% 31% 39% 18% 4% 3Q18 1% 6% 32% 36% 20% 5% 4Q18 3% 6% 28% 41% 19% 5% Other Which of the following potential inflationary factors represents the most significant risk to your business?

12 Key Performance Indicators Revenues and Profits Revenue and Profit projections continue strong but both show declines Expected revenue increase for coming twelve months fell from a high in Q3 of 5% to 4.3% in Q4 Profit projections also fall from 4.3% in Q3 to 3.4% in Q4 Hiring and Employment Headcount plans ease from the Q3 post-recession high; healthcare cost projections decline to new low Anticipated rate of headcount eased from the Q3 high of 2.3% to an expected rate of 2.0% Salary and benefit also eased slightly from 2.8% to 2.6% Healthcare cost projections dropped 4 tenths to 5.3%, the lowest expected rate of increase since Q Spending Plans Spending plans ease for most components Expected rate for IT spending down from 3.6% to 3.3% Other capital spending from 3.5% to 3.0% Expected rate of increase for training spend eases from 2.3% to 2.0% Marketing spending plans remain constant at 1.9% R&D spending plans ease another three tenths from 2.0% to a 1.7% rate of increase

13 Key Performance Indicators Expected Growth in Revenue and Profits 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Revenue 3.6% 3.6% 3.8% 4.4% 4.7% 3.6% 3.2% 3.3% 2.9% 1.7% 3.0% 2.9% 3.6% 4.3% 3.9% 4.3% 4.8% 5.0% 4.8% 5.0% 4.3% Profit 2.7% 2.9% 2.9% 3.6% 3.9% 2.8% 2.4% 2.6% 2.0% 0.7% 1.5% 2.3% 3.1% 3.5% 3.2% 3.5% 3.8% 4.4% 4.0% 4.3% 3.4% Thinking about the coming 12 months, please comment on the probable change for your organization for each of the following key performance indicators: please select one growth rate for each item, from increasing by more than 10% to decreasing by more than 10%.

14 Key Performance Indicators Employees, Salary & Benefits, and Healthcare Costs 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Employees 1.2% 1.5% 1.3% 1.8% 2.1% 1.6% 1.5% 1.3% 1.0% 0.5% 1.1% 1.3% 1.6% 1.8% 1.8% 1.9% 1.8% 2.1% 2.1% 2.3% 2.0% Salary & Benefits 2.2% 2.2% 2.1% 2.4% 2.5% 2.0% 2.1% 2.0% 1.8% 1.4% 1.8% 2.1% 2.3% 2.3% 2.2% 2.4% 2.5% 2.7% 2.8% 2.8% 2.6% Healthcare 6.6% 6.2% 5.7% 6.6% 5.9% 5.8% 5.8% 5.8% 5.4% 5.4% 5.7% 5.6% 6.1% 5.6% 5.5% 6.3% 5.9% 5.6% 5.9% 5.7% 5.3% Thinking about the coming 12 months, please comment on the probable change for your organization for each of the following key performance indicators: please select one growth rate for each item, from increasing by more than 8% to decreasing by more than 8%.

15 Key Performance Indicators Pricing & Other Costs Average Change Expected 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Prices Charged 1.3% 1.3% 1.8% 1.7% 1.7% 1.4% 1.4% 1.6% 1.5% 0.8% 1.3% 1.5% 1.8% 1.9% 1.9% 1.9% 2.1% 2.1% 2.5% 2.5% 2.2% Input Prices 1.8% 1.8% 2.4% 2.3% 2.1% 2.1% 2.0% 2.2% 2.1% 1.5% 2.1% 1.9% 2.4% 2.4% 2.5% 2.4% 2.5% 2.7% 3.2% 3.2% 3.0% Thinking about the coming 12 months, please comment on the probable change for your organization for each of the following key performance indicators: please select one growth rate for each item, from increasing by more than 80% to decreasing by more than 8%.

16 Key Performance Indicators Spending Plans - IT, Other Capital & Training 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 IT 2.7% 2.9% 3.2% 3.1% 3.3% 3.3% 3.1% 3.1% 3.0% 2.8% 2.3% 2.6% 2.8% 2.9% 3.0% 3.2% 3.5% 3.6% 3.7% 3.7% 3.6% 3.3% Other Capital 2.2% 2.1% 2.3% 2.4% 2.9% 3.2% 2.4% 2.4% 2.5% 2.4% 1.5% 2.1% 2.4% 2.7% 2.6% 2.8% 3.3% 3.1% 3.9% 3.6% 3.5% 3.0% Training 1.3% 1.5% 1.7% 1.8% 2.0% 2.2% 1.6% 1.8% 1.4% 1.4% 1.1% 1.3% 1.6% 1.6% 1.8% 2.0% 2.1% 2.2% 2.4% 2.4% 2.3% 2.0% Thinking about the coming 12 months, please comment on the probable change for your organization for each of the following key performance indicators: please select one growth rate for each item, from increasing by more than 10% to decreasing by more than 10%.

17 Key Performance Indicators Spending Plans Marketing & R&D 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% -10.0% 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Marketing 1.5% 1.7% 1.6% 1.6% 1.8% 1.6% 1.8% 1.6% 1.6% 1.4% 1.4% 1.4% 1.5% 1.9% 1.8% 1.8% 2.0% 2.1% 1.9% 1.9% 1.9% R&D 1.0% 1.0% 1.0% 1.2% 1.3% 1.3% 1.2% 1.7% 1.2% 0.9% 1.1% 1.1% 1.5% 1.7% 1.5% 2.0% 2.0% 2.0% 2.2% 2.0% 1.7% Thinking about the coming 12 months, please comment on the probable change for your organization for each of the following key performance indicators: please select one growth rate for each item, from increasing by more than 10% to decreasing by more than 10%.

18 Hiring Plans Continue to Improve 50% 6% 14% 28% Have right number of employees Have an excess of employees Have too few, but hesitating to hire Have too few and planning to hire Up 4 points from Q3; back to same level as Q1, 2018 Maintained same since Q3, 2018 Up 2 points from Q3 Down another 4 points from Q3

19 Hiring Plans Overall staff situation relative to your needs 60% 50% 40% 30% 20% 10% 0% 8% 6% 5% 6% 6% We have an excess number of employees 52% 50% 48% 50% 46% We have approximately the appropriate number of employees 13% 14% 13% 14% 12% We have too few employees, but are hesitating to hire 32% 30% 27% 28% 25% We have too few employees and are planning to hire 2% 3% 3% 4% 2% Other 4Q17 8% 52% 13% 25% 2% 1Q18 6% 50% 14% 27% 3% 2Q18 5% 48% 13% 30% 3% 3Q18 6% 46% 12% 32% 4% 4Q18 6% 50% 14% 28% 2% Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)?

20 Top Challenges Facing Organizations Availability of skilled personnel continues as the top challenge Employee and benefit costs moves up 2 places to second place Domestic competition maintains its 3 rd spot Regulatory requirements moves down to 4 th Staff turnover rose to 5 th place, moving up from 7 th in Q3 Domestic economic conditions moves up two spots to 6 th Materials/supplies/equipment costs drops 2 places to 7th spot Developing new products/services/markets also dropped 2 spots from Q3 to 8th Changing customer preferences came back into the top ten in the 9 th spot; down from Q1-Q2 showing in the 8 th spot Financing (access/cost of capital) maintained the 10 th spot Please indicate the top three challenges for your organization

21 Top Challenges 1 4Q17 1Q18 2Q18 3Q18 4Q18 Availability of skilled personnel Availability of skilled personnel 2 Domestic competition Domestic competition 3 Regulatory requirements/changes 4 Employee and benefits costs Developing new products/services/markets Domestic economic conditions Changing customer preferences 8 Domestic political leadership 9 Staff Turnover 10 Materials/supplies/ equipment costs Availability of skilled personnel Regulatory requirements/changes Availability of skilled personnel Regulatory requirements/changes Availability of skilled personnel Employee and benefits costs Employee and benefits costs Employee and benefits costs Domestic competition Domestic competition Regulatory requirements/changes Developing new products/services/markets Domestic economic conditions Domestic competition Materials/supplies/ equipment costs Domestic economic conditions Employee and benefits costs Materials/supplies/ equipment costs Developing new products/services/markets Staff Turnover Staff Turnover Staff Turnover Changing customer preferences Financing (access/cost of capital) Materials/supplies/ equipment costs Changing customer preferences Developing new products/services/markets Domestic political leadership Domestic economic conditions Domestic political leadership Financing (access/cost of capital) Regulatory requirements/changes Staff Turnover Domestic economic conditions Materials/supplies/ equipment costs Developing new products/services/markets Changing customer preferences Financing (access/cost of capital)

22 Industry, Region and Business-size Outlook 1 of 3 Retail trade improves; Wholesale trade constant Manufacturing declines; Technology rebounds Construction constant; Real Estate rebounds Retail trade improves from 61% to 69% optimistic Wholesale trade remains constant with Q3 at 63% optimistic Manufacturing optimism falls off from post-recession high of 78% in Q3 to 67% optimistic in Q4 Technology optimism rebounds after Q2 and Q3 declines to 82% optimistic Construction optimism remains constant with Q3 at 69% Real Estate and Property recovered much of its Q3 decline, now 75% optimistic Hiring for retail, however is expected to increase at a rate of only 0.8% in the coming 12 months, down from and expected rate of 2.8% in Q3, 2018 Manufacturing hiring also declined from a 3.6% expected rate of increase in Q3 to only a 2.2% increase in Q4. Technology hiring also rebounded from 1.9% to a 4.1% expected increase Construction hiring reflects optimism, up a tenth from a 3.5% to a 3.6% rate. Real Estate hiring expectations continued to decline, falling from 3.2% in Q2, to 2.8% in Q3, and 0.8% in Q4.

23 Industry, Region and Business-size Outlook 2 of 3 Finance & Insurance and Professional Services optimism and hiring strength continues Finance and Insurance optimism eased from 78% in Q3 to 72% optimistic Professional Services gave back 5 points from its Q3 high, but continues strong at 79% optimistic Finance and insurance hiring improved another two tenths from 2.5% to 2.7%. Professional services hiring tops the list this quarter with an expected rate of increase of 4.9%, up from 2.7% in Q3. Healthcare providers relatively constant Healthcare others continues decline Healthcare provider optimism eased only a point to 60% after rebounding in Q3 from a sharp decline in Q2 Healthcare other optimism eased another 2 points after falling sharply to only 67% optimistic in Q3, and down from 88% optimistic in Q2 Expected hiring by Healthcare providers improved four tenths from 1.9% in Q3 to 2.3% in the fourth quarter.

24 Industry, Region and Business-size Outlook 3 of 3 Regional optimism relatively constant Employment projections by business size and expansion plans by size also reflecting level of optimism Midwest optimism remained constant with Q3 at 73% West optimism also remained constant with its Q3 level at 65% South recovered 2% to 71% after to only 69% optimistic in Q3 Northeast optimism fell to 64%, giving back 5 of its 10 point Q3 gain For employers with > $1 billion in revenues, only 7% now have excess employees, while 47% have too few. Of those with too few employees, 17% remain hesitant while 27% are planning to hire. Of those in the $100 million to $1 billion category, 45% say they have too few employees; only 17% are hiring; while 28% are hesitant. In the $10 - $100 million range, 41% now have too few employees; of those with too few, 30% have plans to hire; only 11% are hesitant Of employers with revenues < $10 million 41% have too few employees, up from 33% in Q1; 25% are planning to hire; 16% are hesitant. Expectations for expansion by businesses with revenues < $10 million improved another point to 64%. Plans for companies in the $10 - $100 million category remained constant at 70%. Companies in the $100 million to $1 billion range improved fell of from 73% to only 62% with expansion plans; those with revenues in excess of $1 billion fell from 74% to 71%.

25 Organization Optimism by Industry 1 of 3 100% 80% 60% 40% 50% 38% Retail Trade 58% 52% 58% 66% 61% 61% 69% 100% 80% 60% 40% 48% 79% Wholesale Trade 81% 72% 76% 64% 63% 63% 57% 20% 20% 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 100% 80% 60% 55% Manufacturing 71% 66% 63% 72% 77% 75% 78% 67% 100% 80% 60% Technology 80% 67% 65% 72% 64% 56% 69% 60% 82% 40% 40% 20% 20% 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

26 Organization Optimism by Industry 2 of 3 100% 80% 75% 74% Construction 66% 70% 80% 77% 76% 69% 69% 100% 80% 69% 79% 63% Real Estate 78% 75% 76% 78% 66% 75% 60% 60% 40% 40% 20% 20% 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 100% 80% 66% Finance & Insurance 79% 73% 79% 69% 64% 65% 78% 72% 100% 80% Professional Service 72% 78% 82% 84% 79% 66% 62% 60% 60% 48% 50% 40% 40% 20% 20% 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

27 Organization Optimism by Industry 3 of 3 100% 80% 60% 40% Health Care Provider 69% 65% 52% 61% 56% 43% 44% 61% 60% 100% 80% 60% 40% 80% 70% Health Care - Other 79% 88% 76% 67% 60% 67% 65% 20% 20% 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

28 Expected Employment Change by Industry Professional Services Technology Construction Finance and Insurance Healthcare Provider Manufacturing Not for Profit Trans & Distribution Mining, Oil & Gas Banking Real Estate Property Retail Trade Thinking about the coming 12 months, please comment on the probable change for your organization for Number of Employees Q4 Q3

29 Organization Optimism by Region 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 4Q17 1Q18 2Q18 3Q18 4Q18 Midwest 74% 71% 70% 73% 73% West 73% 75% 68% 65% 65% South 69% 72% 74% 69% 71% Northeast 64% 65% 59% 69% 64% Please select the rating that best describes your view for the economic outlook for your own organization for the next 12 months.

30 Expansion Plans by Business Size 100% 90% 80% 70% 60% 50% 40% Please indicate whether you expect your business to expand or contract over the next 12 months 30% 20% 10% 54% of all businesses expect to expand a little in the next twelve months 13% expect to expand a lot 31% expect to contract a little or stay the same Only 2% expect to contract a lot 0% 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 < $10 million 52% 61% 55% 61% 63% 67% 62% 63% 64% $10 to <$100 million 63% 72% 53% 58% 70% 74% 69% 70% 70% $100 million to <$1 billion 67% 67% 73% 68% 78% 72% 71% 73% 62% > $1 billion 62% 66% 69% 65% 75% 76% 78% 74% 71%

31 Businesses in the >$1 billion range are most likely to have excess employees 4% 5% 4% 7% We have an excess number of employees 53% 52% 47% 47% We have approximately the appropriate number of employees We have too few employees, but are hesitating to hire We have too few employees and are planning to hire < $10 million 4% 53% 16% 25% 2% $10 to <$100 million 5% 52% 11% 30% 2% $100 million to <$1 billion 4% 47% 28% 17% 4% > $1 billion 7% 47% 17% 27% 2% 16% 11% 28% 17% 25% 30% 17% 27% 2% 2% Other 4% 2% Given current conditions, how would you characterize your overall staffing situation relative to your needs (i.e., do you have excess capacity or are employees stretched)?

32 Business response to labor market challenges AICPA Economic Outlook Survey 4Q 2018

33 Response to a tight labor Market Salary/wage/commission increases Improved benefits 18% 48% With the tight labor market, what tactics are you planning to use to help retention and recruitment over the next 12 months? One-time bonus 13% Additional time off 11% Other (please specify) 10% 0% 20% 40% 60%

34 Response to a tight labor Market Other Responses Developing staff "from scratch" Growth and development opportunities Improved training Telecommuting and flex time Work remotely Good work environment Referral bonuses Retention Bonuses Enhancing incentive comp program Equity stakes Profit share program With the tight labor market, what tactics are you planning to use to help retention and recruitment over the next 12 months?

35 Plans for wage increases Up to 2 percent 3 to 5 percent More than five percent 5% 20% 62% Are you planning on raising salaries/ wages for your employees and, if so, how much over the next 12 months? Not planning on raising salaries/wages 8% Not sure 5% 0% 10% 20% 30% 40% 50% 60% 70%

36 Approach to Emerging Technologies AICPA Economic Outlook Survey Survey within the Survey 4Q 2018

37 Emerging Technology It poses a disruptive threat It offers opportunities Neutral impact Not sure 3% 23% 31% 43% What is your company s perspective on the impact of emerging technologies such as robotic process automation (RPA), artificial intelligence (AI) and blockchain on business? 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

38 Emerging Technology We will require fewer workers We will require more workers We will need workers with different skill sets Our workforce needs will be unchanged 1% 13% 30% 40% How do you expect emerging technologies such as RPA, AI and blockchain will change your workforce needs over the next 3-5 years? Not sure 16% 0% 10% 20% 30% 40% 50%

39 Emerging Technology Recruiting Focus We are placing a greater emphasis on digital proficiency in job candidates We are placing a greater emphasis on critical thinking in job candidates We are placing a greater emphasis on communications skills in job candidates We have begun to evaluate changes in our recruiting process but have not yet implemented 3% 5% 6% 9% Has your recruiting focus changed with the rise of RPA, AI, blockchain and other emerging technologies? How so? We have not changed our recruiting process 67% Not sure 10% 0% 20% 40% 60% 80%

40 RPA Approach Business Analytical Tasks We have piloted RPA solutions in our business We have implemented RPA solutions to limited functions We have implemented RPA solutions across multiple parts We are looking into ways to fundamentally transform our We are not taking any steps in this area right now 4% 9% 3% 12% 65% How would you describe your company s approach to robotic process automation (RPA) to handle analytical tasks normally performed in its business operations? Not sure 7% 0% 10% 20% 30% 40% 50% 60% 70%

41 RPA Approach Operational accounting (A/R, A/P, etc.) General accounting (JEs, reconciliations, etc.) Customer-facing interactions Inventory and supply chain operations 13% 15% 18% 26% If you ve added or are in the process of implementing RPA solutions in your business which areas are you focusing on? Manufacturing applications 15% Other business processes (please specify) 11% 0% 5% 10% 15% 20% 25% 30%

42 Response to RPA Approach Accounting and Finance Applications Finance overall Fixed assets, sales & use tax Analytics AI for modeling Client reporting and report processing Document retention Scheduling & quality control New accounting & billing software Industry-specific Applications Credit decision engine Loan pricing automation Automatic input of market data Asset allocation models and investment research Healthcare claims admin Processing insurance information Farming technology International trade compliance If you ve added or are in the process of implementing RPA solutions in your business which areas are you focusing on?

43 AI Solutions Business intelligence (e.g. data analysis, predictive analytics) Customer service (e.g. chatbots, voice calls) Internet of Things (IOT) solutions (e.g. manufacturing, logistics, smart devices) Sales enablement (e.g. product recommendations) 4% 9% 8% 23% If you ve implemented or are in the process of implementing AI solutions in your business, which areas are you focusing on? None or not sure 55% Other (please specify) 1% 0% 10% 20% 30% 40% 50% 60%

44 Blockchain Technology We are studying potential uses We are piloting or preparing to launch blockchain projects in the next 12 months We are not focusing on the technology yet. Not sure If you answered yes, please specify uses 2% 1% 7% 18% 72% Is your business doing anything pertaining to blockchain technology, the term for distributed digital ledgers that operate over a peer-to-peer network? 0% 10% 20% 30% 40% 50% 60% 70% 80%

45 Response to Blockchain Technology Potential Blockchain Uses Authentication Contract/proposal management Contracts administration Cryptocollectibles Distributed ledger for application shared among financial institutions Sourcing Is your business doing anything pertaining to blockchain technology, the term for distributed digital ledgers that operate over a peer-to-peer network? Tracking of inventory within India We have looked at applications and use cases but will be fast followers not leaders

46 Demographics Type of Organization 1% Size of Organization Position 3% 3% 14% 16% 6% 7% 8% 15% 18% 32% 8% 9% Apply accounting and finance skills... 20% 6% 7% 5% in the context of the business... 40% 66% Publicly Listed Company Privately Owned Entity Government Not for Profit Other 15% $0 to under $10 million $10 million to under $50 million $50 million to under $100 million $100 million to under $250 million $250 million to under $500 million $500 million to under $1 billion $1 billion or more 1% President Vice President/SVP CEO/COO CFO Chief Officers (CAO/CAE/CIO/CTO/CRO/KMO) Controller/Comptroller Director/Managing Director Accounting, Audit, Tax or Technology Manager Other

47 AICPA Business and Industry Economic Outlook Survey 4Q 2018 For additional information contact: Kenneth W. Witt, CPA, CGMA Lead Manager Research & Member Engagement - Americas Ken.Witt@aicpa-cima.com Cary Jones Associate Manager Business, Industry & Government Cary.Jones@aicpa-cima.com