Future shock – what next for accountancy?

Ted Awty audit partner, KPMG

Common reporting internationally will drive consistent global approaches. IT developments are key. We shall see comprehensive embedded audit tools highlighting control compliance and exceptions, running irrespective of year ends. These could extend along the entire supply chain in many industries and will deal with all of the information at the core of reporting. Beyond this the use of judgment in many areas will remain and the auditor will need to be equipped to identify, test and confirm these judgments. With common international reporting and a global IT infrastructure, the profile of an auditor should be more consistent across the world leading to a global qualification and an auditor population that has shifted towards the main global economic centres of the day.

Colin Howe president, UK200Group

I believe there will still be the Big Four, unless an ‘Andersens’ type catastrophe strikes one of them down, while there will be further consolidation amongst the second-tier firms as they try to compete with them and shift their focus to larger clients.

This will leave ‘smaller’ practices, such as those in the UK200Group to service traditional owner-managed business (OMB) clients. There will always be a market for good-quality, personalised advice, which firms such as the group’s are perfectly suited to provide.

Will these OMBs still need an audit? I hope not! I would rather they spent their money with us on something useful! Audit should only be compulsory for those businesses which have stakeholders outside of the management.

Les Clifford audit partner and CFO programme leader, Ernst & Young

Like technology, the pace of change accelerates at a compound rate over time. To envisage what change may look like over the next 40 years, we should review how the relationship between corporates and the accountancy profession has evolved over the last 100 years – a marriage that has spanned a period almost as long as many of today’s accountancy firms have been in existence. We have moved from being bookkeepers and historical reporters to one of today’s key business advisers to the corporate world.

However in the next 40 years a greater emphasis will be placed on peer-to-peer relationships providing prospective advice and interpretive commercial and financial analysis.

And in a future corporate world where finance has been totally automated and assurance and analytical software has been embedded into standard operating systems, we may see IT companies providing some of the accountancy profession’s traditional services, or accountancy firms with significant global IT operations as a core offering.

Bob Willott first editor of Accountancy Age

Audit will have been segregated from all other services as legislators pamper to those advocating the purist intellectual argument about independence. Respect for “accountancy” as a broad-based profession will have diminished further and be seen entirely as a regulatory profession. Bright young graduates who are seeking intellectual and/or commercial challenges in the financial and tax arenas will look elsewhere - (i) in the legal profession or possibly investment banking if they favour an advisory role or (ii) via business school with or without commercial accountancy qualifications, if they favour the commercial environment.

Gavin Hinks current editor of Accountancy Age

Advances in technology will mean news about accountancy will be radically transformed with the print edition of Accountancy Age replaced with an electronic version delivered to a handheld computer. This could come in the form of a holographic presenter who will deliver yours news. If print does continue it will also contain video on paper thin screens.

The news will be different – highly personalised, not only in your sector but also about your specialism. News will be highly integrated offering a digest of content that is both vertical and horizontal in nature. But be warned: the more news is tailored, the more advertising content will be too – especially jobs. In 40 years, job ads will be highly targeted and presented only to those qualified to do them – whatever the format. The days of general advertising will disappear.

Tony Murphy partner, Bridge Business Recovery

One of the reasons the UK market has fared so well in the last five years is the availability of cheap credit and the ability of its recovery processes to quickly resurrect businesses. We have been able to preserve enterprise value. There have been enormous drives in recent years to make insolvency a core process and increasingly over the next few decades, I believe we’ll see growing levels of regulation potentially resulting in a completely court-driven, totally formulaic approach much like that seen in France and Germany today. This may result in transparency and neutrality of appointments but will probably not reduce costs and will not allow for innovation or any flair.

Peter Wyman global leader, public policy and regulation, PwC

40 years ago a regulator was just the mechanism that made clocks keep time accurately. Professions self-regulated, although self-regulation was not a term that resonated then. Today, almost every aspect of the profession is regulated, and the world-wide trend is for more not less. Not all regulation is bad, but equally not all ills can be cured by regulation. It may be that the pendulum will swing back to a better equilibrium, although there is no chance the clock will be turned all the way back. Let’s hope that in 2049 the strength of professional ethos and universally expected behaviours will allow a more balanced environment.

Mat Allen CA student, PKF

The next 40 years? I honestly couldn’t say exactly, and that’s the fantastic thing about a career as an accountant, it affords so much choice and opportunity. Ideally, well I quite fancy life as FD of Manchester United! Should they not need me perhaps a role in investment management, corporate recovery or I hear being an audit partner has its rewards. Of course, I’m under no illusion that such things take an incredible amount of hard work and a bit of luck, but the challenge is what makes it so much fun, and that you can make your own luck.

Mike Power professor of accounting, London School of Economics

Accountancy Age, December 2049, reports… A conference was held by the Chinese Sustainable Standards Board to celebrate 30 years since its landmark publication Carbon Accounting for Small and Medium-sized Businesses.

At the same event, speakers gathered to mark the 35th anniversary of the abolition of the IASB and the beginning of the highly successful deconvergence programme. The McDonalds professor of financial reporting diversity gave the plenary address. In the UK, the Accounting Standards Board announced the publication of a revised exposure draft on accounting for insurers.

Michael Izza chief executive, ICAEW

By 2049, there will be few, if any, barriers to individuals and companies working and trading across markets. Business will operate on a truly global basis and the accountancy profession will have evolved to reflect that. There will be a limited number of high quality accountancy qualifications which are recognised around the world and which will be held by the leaders of these companies operating globally. These qualifications will be delivered by a select few global professional accountancy bodies. They will continue to provide services and support to their membership which will be spread around the world with no focus on single individual country.

Helen Brand chief executive, ACCA

The next 40 years will see the rebalancing of the world’s economy from west to east, with further redistribution of wealth as G20 and beyond come of age, increasing the demand for more qualified accountants in the process. With resource shortages likely to become more widespread, the ‘old’ world economies will face a painful period of de-carbonisation as individual nation states seek energy independence, which will enable finance professionals with expertise on sustainability reporting to step out of the shadows in helping to save the world. Globalisation of the profession will be the order of the day as outdated protectionist and chauvinistic practices crumble. The profession will, at last, catch up with developments in technology leading to enhanced reporting and forecasting. International accounting standards will also have gone through a root and branch plain English process, triggered by the extensive usage of the IFRS for SMEs among the world’s many non-listed businesses.

Mark Lee chairman, TaxAdviceNetwork.co.uk

There will be only two remaining professional bodies for tax agents. Businesses will tend to seek tax advice from registered accountants but private clients will prefer registered tax advisers as tax is more important to them than accountancy. Registered tax advisers will typically work alone or be employed by registered accountants, by lawyers or by big brands such as RAAC, Tescobury, InsurancesDirect, The National Bank or The European Public Library and Computer Service. All registered tax advisers will have a revenue officer liaison opposite (ROLO) as their direct contact point in His Majesty’s Revenue Collection Service.

Dave Hartnett permanent secretary for tax, HMRC

I’d like to think that relations between tax authorities and practitioners will become less confrontational and more collaborative. If, by 2049, our tax system is fully founded on trust and openness there will have been real progress. I would like the tax system to be widely seen for what it is – the provider of vital funds for public services. The internet and software that powers financial services will become more intelligent, providing customers with more control and flexibility over how they engage with HMRC. Sadly, there will still be a need for compliance work and I think our systems will be driven by intelligent software that anticipates abuse, taking action without reference to human involvement. There will still be plenty for people to do because good tax administration will always require sensitivity and judgment – that’s one thing that won’t change.

Mark Sands national head of bankruptcy, Tenon Recovery

Today there are debtors and creditors – in decades to come there will, I am certain, still be debtors and creditors. Debtors will need advice on their options - at present in an increasingly complicated world; hopefully within a simpler legal framework offering flexible and fair solutions in the future. Creditors will want to know how best to recover their debt – at present in an increasingly litigious world; hopefully in a more constructive environment in the years ahead. Conflicts between debt recovery and the rehabilitation of the debtor will though remain. IPs may look more like mediators than today; they will still have a valuable role to play in advising all stakeholders on how to resolve those conflicts.