IFA: A reflection on 2023’s challenges and successes

Looking back on the past year, while some trends endured there were some new ones that threw fresh challenges at accountants, but which also opened the door for opportunity. Jonathan Barber, Executive Director – UK, of the Institute of Financial Accountants (IFA), reviews some of the key issues that shaped the sector this year.

AI adoption

Automation and AI technologies have continued to play an increasingly bigger role in shaping the accounting landscape. Advances over the past 12 months alone in generative AI have demonstrated how it can assist in overcoming current challenges through the adoption of cognitive and predictive analytics to support a range of accounting activities.

It seems that more firms are integrating AI into their practices and actively embracing the technology, with indications showing that AI tools are augmenting, not automating, corporate tax and accounting jobs. The technology is allowing accountants to concentrate on more important and strategic areas of their work, with efficiency and productivity growing as a result.

This year has undoubtedly triggered the upward trend for AI, with its advantages being seized by more accountants as we head into 2024.  These include finding patterns and trends in financial data, enabling accountants to make deft decisions based on insights gained in real time, thus improving forecasting and financial analysis accuracy.

For AI systems to be successfully implemented, however, and for there to be full confidence in them, accounting firms must address ongoing concerns around work quality, fiscal costs, undetected bias, and ethical issues. The consequences of not doing so could compromise returns on AI investment and foster mistrust among stakeholders, clients, and staff.

The green market revolution

The prospect of long-term turbulence due to the energy crisis has the potential not only to provide cost controls and stability, but also ESG gains. Sustainability and environmental awareness will continue to remain high for some time to come, as both are emerging as an integral part of businesses.

Net zero is an almost mandatory consideration, and in 2024 and beyond it is predicted that more and more companies will be held accountable for their carbon emissions. Stakeholders and customers alike are now demanding full sustainability disclosure and the measures organisations have been taking to tackle wasteful practices within the business.

This is just one area where accountants are starting to deploy their ESG know-how and where they can begin to capitalise on their established reporting and data analysis skillset. Indeed, many are delivering refreshed financial reporting that aligns financial KPIs and ESG measurements side by side to intrinsically link the two.

Supply chain diversification

The ongoing impact from a weakened supply chain, caused by a multitude of factors – the invasion of Ukraine, the pandemic, Brexit and so forth – unsurprisingly rumbled on in 2023, calling for agile financial leadership amid diversification. Traditional supply chains became a thing of the past as businesses instead focused on locality and independence to help regain control and restore a sense of certainty.

This has created an opportunity for accountants who can support with supply chain diversification. Trying to strike a balance of cost management, consistency, and quality when grappling with supply chain instability might be a tall order for many businesses, which lack access to a pool of resource and expertise required to instil quality change.

Accountants’ unique insight into the risk and reward of moving supplier has proved their value in offering a quantified business case, strengthening their proposition to SMEs and larger organisations.

Increased offshoring activity

Driven by a severe skills shortage, firms adopted a more “global” approach to what services they offered, progressively dipping into an international talent pool for additional resource. This triggered a trend for ‘offshoring’, something the IFA witnessed with a number of approaches from outsourcing providers looking to accredit and align their agencies with UK law.

The international growth rate in the offshore industry has accelerated and the future is bright, with many businesses now offering an affordable, reliable resource with immediate capacity, which can free up UK accountants to focus on strategic guidance rather than day-to-day delivery.

When aligned with continued digitisation and expansion of cloud technology, offshoring is shaping up to be the new way of doing business globally, offering benefits including increased efficiency and flexibility and access to a more diverse range of skills.

Value orientated services

The threat of a recession still remains and has continued to drive further focus on cost control and efficiencies, where value will inevitably underpin the client-provider relationship. Value based pricing, as seen during the last financial crisis, has the benefit of connecting cost to outcome, providing clients with reassurance.

Alternatively, some accountancy firms are finding it more appropriate to focus on communication and advisory services to deliver additional value rather than directly linking pricing to value.

There seems to be a gap between what services clients buy and the ones that they value, as well as the effectiveness with which accountants communicate their services, reflected in a study by the Hinge Research Institute. 64% of accountants believe that they offer tailored services to their clients, yet this viewpoint is shared by less than 40% of clients.

Could accountants’ efforts to better align with the demands and expectations of their clients serve as a spark for greater innovation and sector change as we head into the new year?