Immigration risks challenge business accountants
Managing the risks surrounding immigration is among the significant challenges facing businesses and their accountants, according to a recent survey.
The Institute of Management Accountants has been conducting research on both risk management and immigration. It found 43 percent of accountants identified risk analysis skills as a necessity. In its Immigration Pulse Survey, 75 percent of the management accountants who responded said they feel the presence of illegal immigrants in the U.S. contributes to employment challenges for the domestic U.S. workforce.
In addition, 32 percent of the respondents said they find the best candidate, regardless of citizenship status, but require applicants to have legal status to work in the U.S. Thirty-six percent of the respondents said the biggest challenge regarding hiring foreign nationals is work visa issues. In general, the biggest challenges companies face regarding employing non-U.S. citizens are issues with work visas, paying for immigration costs and cultural differences.
“What has happened with the worldwide economy and something like Brexit, combined with the elections in the U.S. and the rhetoric that goes along with it, is that people are looking at their supply chains and how currency fluctuations would affect them,” said Marc Palker, chair of the IMA’s global board. “They’re looking at alternatives as backups. I have a client whose main product comes from China. The VP of business development mentioned to me that he’s been speaking with manufacturers in the U.S. about the product should he lose his supply from China. People are looking for their finance professional to see and prepare for the unknown: what’s possible, how it could happen, and how to mitigate that risk, be it supply chain risk or even a political risk. At the end of the day companies need to make sure they can operate during these times. They may have to shift the region of the world where they operate in order to deliver their service to their customers. Risk management is not only mitigation, but what is or could be.”
Foreign exchange risk and foreign supply chain risk are also factors that businesses and their accountants need to consider. Planning for changes from the recent election in tax policy could also play a role as multinational companies look more closely at repatriating overseas profits if they are going to be taxed at a lower rate in the U.S.
“Let’s talk about a company that’s thinking of putting up a manufacturing plant,” said Palker. “If you’re convinced that Donald Trump is going to allow you to repatriate [funds], that might be the cheapest way to finance it without debt or equity.”
The immigration issue is another hot-button topic that is certain to come up next year, given Trump’s election promises. Businesses and their accountants will need to deal with the impact of whatever new rules come out from the incoming administration and Congress.
“We all know that the immigration issue is up in the air,” said Palker. “That’s going to change. In some industries that will affect your workforce and it will affect your costs and risks. If your workforce shrinks, that’s going to cost more, whether it be accountants, engineers, chemists. The less there are, the more expensive they’re going to be. That’s also a risk. If the people coming out of the university in a particular discipline are decreasing, the workforce comes from immigration.”