Small accounting practices face staffing and tech challenges
Accountants in small and midsize practices around the world are increasingly coping with a talent shortage, according to a new survey by the International Federation of Accountants.
Attracting new staff and retaining existing staff ranked among the top four challenges this year for the first time in IFAC’s annual Global SMP Survey. The other three top challenges frequently rank high on the survey: attracting new clients, keeping up with new regulations and standards, and pressure to lower fees.
Technology challenges have climbed in importance in the rankings. The anticipated impact of technology developments over the next five years increased substantially in 2016 compared to 2015. Staying current with new hardware and software, along with moving to the cloud, were at the top of the list of tech challenges for small and medium practices.
“The ever-increasing pace of technological change represents both a challenge and opportunity for SMPs,” said IFAC CEO Fayez Choudhury in a statement. “As trusted business advisors to small- and medium-sized entities or SMEs, a sector critical to global economic stability and growth, SMPs need to consider how they can best leverage technological advances to reduce costs and offer value-added services to meet clients’ changing demands and expectations. In addition, SMPs that keep pace with developments in technology are likely to do better in attracting, retaining, and nurturing talent.”
Despite these challenges, the SMPs’ future expectations of performance grew slightly from a year ago in most service areas, apart from tax. They anticipate growth will be driven by advisory and consulting services, along with accounting, compilation and other non-assurance related services. Around 44 to 45 percent predict fee and revenue increases in these areas this year. A significant majority of the small and midsize practices surveyed indicated they provide some form of advisory services, with corporate advisory (48 percent), management accounting (46 percent), and human resource/employment regulations (30 percent) being the most prevalent.
As in 2015, the top challenges facing small and midsize business clients in 2016 were economic uncertainty and rising costs. Sixty-one percent of the accountants surveyed rated economic uncertainty as a high or very high challenge, and 59 percent rating rising costs that way.
Last year, 30 percent or more of the small and medium practices surveyed reported moderate or substantial increases in fee revenue across services areas, compared to 27 percent or more in 2015. For the survey, IFAC polled 5,060 survey respondents from 163 countries.