Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

The future of the profession, part one

by
17th Jun 2009
Save content
Have you found this content useful? Use the button above to save it to your profile.

AccountingWEB.co.uk consultant practice editor Mark Lee recently gave a speech on the future of the accounting profession at the Mercia Partners’ conference. In the first of a two part special, he presents highlights from his presentation and outlines the opportunities available to practitioners in the current economic climate.

What will your practice be like in two years time? I’m not asking you to forecast five or ten years into the future, just two years. Will you have any more or fewer partners? More staff? More clients? Where will staff work? What technology will you be using? What services will you provide? What methods of communication will you be using?

I am assuming that many firms here today have ambitious growth plans. I’m well aware that this is not true across the board. Some one-man bands prefer the status quo so that they can avoid the need to take on staff, partners or additional office space. This is, to my mind, a perfectly valid strategy – even more so if accompanied by steps that lead to increased profits, less working time and reduced hassle.

Every aspect of traditional practice life is in a state of flux this year. Not only is the country gripped by recession, but HMRC has new powers, new procedures and the facility to levy new penalties. Traditional accounting and bookkeeping services are subject to greater competition than ever and auditing is about to suffer another major change with the introduction of clarity standards.

It's not all doom and gloom though. There are plenty of opportunities out there for forward thinking practices and I hope that these articles will open your eyes to what's going on, what you can do and what you could achieve if you take action.

Auditing and assurance

At a recent ICAEW conference on the future of auditing I realised how what was once a traditional service provided by most accountants is almost extinct. It won’t die out completely but it’s certainly becoming more specialised as the number of companies requiring audits has fallen dramatically in recent years, and that trend is set to continue.

Not only is the audit landscape shrinking, but the principles are changing. I won’t pretend to fully understand the new Clarity ISAs (International Standards on Auditing) but I understand that the UK will be an early adopter within the next two years. Audit firms will need to invest in new training and systems to comply, but there won’t be any additional fees so this is simply an additional cost to be covered. Earlier this year the Treasury Select committee asked the FRC to review the level of no-audit work that auditors should be permitted to undertake for audit clients.

The outlook on the financial reporting side is also changing. A recent EU proposal would exempt micro companies from the financial reporting obligations in the fourth and seventh directives. The current UK government sees this as deregulatory; just think about the implications for your practice if smaller companies were no longer required to produce formal annual accounts other than for the taxman.

How will these developments impact your firm? Have you undertaken any form of strategic review, perhaps comparing your current structure with that which you will need in two or three years time? How will you evolve over that period? Will your firm be one of those that offer alternative assurance products such as the assurance report? Will you be competing with other firms that do offer this service? While you may think you know what your current clients want in this regard, what about prospective clients?

Compliance services

Much has been said before about the productisation of compliance services. We’re told that fees are being forced down and that firms that focus only on such services face an uncertain future. I’m not sure I agree. If you have an established practice and know your clients well, you are not suddenly going to lose a swathe of clients who all decide to rush off at once.

About the only thing that could cause a speedy dissipation of your client base would be widespread publicity of your incompetence or negligence, but you’re accountants not MPs! Any other changes to your client base will be sufficiently gradual for you to take steps to stem the flow as and when it becomes necessary to do so.

Of course the better prepared and ready you are for such changes, the faster you will be able to adapt and evolve. I do think it will be evolution rather than revolution in this regard.

What will change first and fastest in my view is your ability to win and retain new clients if you and they are focused on compliance services. That means tax returns, bookkeeping and accounts preparation.

The issue will be the alternative ways in which these needs can be satisfied and the time and cost considerations of each option. Are you even aware of the alternatives to a traditional accountant? Again, many accountancy strategists have been predicting this development for years.

I do understand those views and I respect most of the commentators who encourage accountants to plan for the future. Indeed, I agree that’s a wise move, especially for larger firms where there is an inbuilt resistance to dramatic change. However, for most firms of accountants there needs to be something equivalent to a burning platform before there will be a consensus for fundamental changes. At the moment, few partners accept and believe that forthcoming developments will have such a big impact.

Strategy

I’m not here to predict massive failure, but I do hope I can open your eyes to the coming changes and that, if you accept my vision, you will also appreciate that you can manage the impact by taking action either alone or with an independent mentor/non exec. You may even provide such a service for some of your clients and so be aware of the value that follows from at least an annual review of the business’s position, competition, and future plans. However, reviews alone are of limited value unless they then lead to you taking and implementing key decisions each year.

Next week: Mark will set out his views on the competitive environment, revealing where he disagrees with other commentators and the alternative ways in which accountants can market themselves effectively dependent upon their plans and objectives. Read part two of the Future of the Profession.

Mark Lee is chairman of the Tax Advice Network and consultant practice editor for AccountingWEB.co.uk.

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.