Accountancy is under review - how can you anticipate change?

Accountancy is a sector under review – under multiple reviews, for that matter. The competitiveness of the market is being investigated, as are the quality and effectiveness of the audit product, the ethicality of accountants’ working practices and how the sector is regulated.

Against this backdrop, firms are facing a great deal of uncertainty, but changes are already afoot which are shaping the sector’s future.

In the first instance, everything points towards the need to restore public trust – to repair the reputations both of accountants and the corporates they serve.

At the same time, the pace of computing growth has the potential to transform the way much accountancy work is carried out.

Preparing for change

Audit reform of some kind is inevitable, and wiping the slate clean may well mean that audit and consultancy functions will no longer be able to operate under the same roof.

If or when this split into independent divisions takes place, separate systems, controls and processes will be required, all of which will come at a cost.

Reduced economies of scale will mean higher prices for clients – and while the audit product will stay in demand through necessity, firms will look to increase efficiency in other areas so they can offer the most competitive rates.

Using Robotic Process Automation (RPA) is already – and will continue to be – a key area of focus, as clients expect accurate, reliable reports to be delivered within increasingly tight time-frames.  The efficiency benefits of using RPA mean firms can deliver a better service, while lowering costs.

Of course, whether the cost savings from RPA wipe out the increases caused by audit reform remains to be seen.

Strengthening teams

While arithmetic and linear processes can be automated to a growing extent, a human mind is needed to understand the context in which those processes are carried out.

Human interactions are fundamental to the strength of client relationships – and with an increasingly tech-driven audit product, the strength of accountancy firms’ people will be their biggest differentiator.

Bright, capable individuals are needed who can work with their clients’ management teams to understand their business, and to ensure that their audited accounts provide a true and fair reflection of the company’s financial position.

Being able to ask challenging questions at board level is core to the audit proposition, and is the best way for firms to deliver real value. Ultimately, it’s people that drive outcomes and productivity.

The employer-employee value exchange is a two way street – especially as the potential for audit practitioners to be ringfenced raises questions around attracting and retaining talent.

With opportunities to cross-pollinate teams across accounting and consulting becoming more limited, firms may need to find new ways to increase the appeal of an audit career.

Prioritising data security

The rapidly evolving information technology landscape undoubtedly presents opportunities for accountancy firms, but the threats must not be overlooked.

Accountancy and professional services organisations handle hugely sensitive data on their clients’ finances, which makes them an attractive target for cyber criminals.

Investing in cyber security requires a two-pronged approach – defence against external threats and mitigating risk internally.

Knowingly or unknowingly, an organisation’s employees can easily leave backdoors open to attack – especially when there are mobile taskforces that travel a lot for work, such as those being deployed into client premises for the duration of an audit or another intensive project.

Accountancy firms should prioritise rigorous training for staff on information security best practice – such as saving all data on the cloud rather than on their devices – which must be underpinned and enforced by an up-to-date data security policy.

Remaining agile

Decision makers in the accountancy sector can’t afford to put the brakes on investment, despite operating against a backdrop of widespread uncertainty.

The landscape is evolving rapidly, and firms need to attract and retain talent, while ensuring their IT infrastructure is as advanced, efficient and water-tight as possible.

I wouldn’t be surprised to see smaller firms look at merging to secure their futures, pooling investment through consolidation to stay relevant in an increasingly competitive market.

Best-practice working capital management is also key to giving firms of all sizes the flexibility and confidence to invest, especially when it comes to following up on accounts receivable.

At Lloyds Bank, we recognise the cash management challenges our clients are facing in such changing times, and have invested heavily in new technology to help them improve efficiency.  The aim is to provide clients with actionable business insight that they can use to improve their working capital cycle.

With the start of a new era on the horizon for the accountancy sector, now is the time for firms to tighten up – with a view to delivering a better quality service through more efficient working practices, fronted by talented, motivated teams.