Home Accounting and Auditing Welcome to the accounting practice of the future

Welcome to the accounting practice of the future

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The accounting profession is experiencing seismic changes that will forever reshape the role and expectations on practitioners. This is according to a new study by the International Federation of Accountants (IFAC) entitled A Roadmap to the Future.

One study by Accenture predicted that advances in robotics would automate or eliminate 40% of basic accounting roles by 2020. “It is quite possible that within 10 years bots will have a deep enough knowledge of accounting and auditing standards to be able to answer all technical questions about them. Is the accountancy profession ready for such a change at such a pace?” says the IFAC study.

Small and medium-sized practices (SMPs) will not be exempt from these changes. These firms often “prioritise serving clients at the expense of planning for rapid changes impacting the profession,” according to IFAC.

SMPs continue to be the preferred advisors to small and medium-sized businesses, and that advice has been demonstrated to improve rates of business survival, growth, financial performance, and to improve decision-making procedures.

There is no single template for what successful small practices will look like in the future, but four key areas for practice transformation are:

  1. Embrace Change
  2. Leverage Technology
  3. Focus on Talent Management
  4. Evolve the Firm Operating Model and Build Advisory Services

Embrace change

A key competency in the future will be the ability to see and anticipate trends on the horizon and advise clients on the implications of those trends. The advantage of small practices is close client relationships; they are well-positioned to identify needs and customize services to meet demands and circumstances. Practitioners need to adapt to this new environment and evolve by gaining additional skills and deepening their knowledge of technological developments. Inaction will have worse long-term consequences than taking even small steps forward.

Leverage Technology

The first step is to look outwards, rather than inwards, to assess what technologies are available and how they can help improve efficiencies, productivity and quality, while reducing costs, attracting staff and maintaining and adding new clients.

This may involve attending vendor events to fully understand the breadth of technology that is arriving daily to the marketplace of the accounting practice.

Firms should identify which technologies align with their strategies (such as the ability to manage the practice in the cloud via remote access, while serving the needs of clients in as close to real-time as possible). There must be a strong business case for adopting any new technology. Proper due diligence – such as canvassing the opinions of others using the same technology – can assist in this process.

The successful accounting practice of the future will have a “technology champion” to drive the process forward, and it is important to involve clients in technology decisions – making it clear to them the advantages they will enjoy by embracing this change.

Talent Management

Technology developments are having an impact on how firms both recruit and retain talent. There is a new diversity in who firms hire: for example, some are now recruiting data scientists and broadening their reach beyond traditional academic subjects. Practices need to think about how they re-tool their staff and train accountants for the future through the development of new skills and competencies for the digital economy. In the period up to 2022, the World Economic Forum predicts that employees will need 101 days of retraining and upskilling.

Key talent management initiatives going forward include:

Offering ongoing learning and Continuous Professional Development, in particular with digital skills, will be crucial in attracting next generation job seekers and building the accounting practice of the future.

Empowering staff to innovate, engaging in transparent career progression conversations, operating flexi-time schedules and employing new recruitment techniques – such as building relationships with schools and colleges – will be part of the practice of the future.

Evolve the firm operating model and building advisory services

The majority of SMPs’ revenue is generated by traditional services, including compliance, audit and taxation, but there has been an increase and diversification in the provision of business advisory services—in some jurisdictions more than others. SMPs have in-depth knowledge and understanding of their SME clients and are therefore well-positioned to provide a range of services.

The traditional firm pyramid model is likely to change as outsourcing and automation create efficiencies. This may result in a firm hiring and retaining fewer junior staff, but also a rise in digitally-proficient mid-level staff. The result would be a flatter, more project based structure. The physical location of firms may also change as a rise in remote/virtual working results in less need for physical office space.

For more information, check out the IFAC website here.