Key challenges facing small- and medium-sized practices in the accounting industry worldwide have been identified as attracting new clients and complying with regulations and standards, according to a new survey by the International Federation of Accountants.

The 2014 IFAC Global SMP Survey also revealed promising economic gains for small and midsize practices, with almost three-quarters of SMPs globally reporting that fee revenues were greater or equal to the previous year.

IFAC conducts the Global SMP Survey each year to elicit insights into the challenges and opportunities facing small and midsize accounting practices around the world.

“IFAC is committed to building the capacity of SMPs worldwide, and the findings from our SMP Survey are critical to that mission,” IFAC CEO Fayezul Choudhury said in a statement. “Understanding the challenges that SMPs and their clients face, both on a regional and global scale, helps IFAC and our member organizations better serve this important constituency and accurately represent them in our interactions with regulators, standard setters, and policy makers.”

Keeping up with regulations and standards (57 percent) and attracting new clients (58 percent) were cited as the two biggest challenges facing SMPs worldwide, according to the survey. Pressure to lower fees (51 percent), rising costs (50 percent) and differentiating from the competition (50 percent) nearly tied as the next biggest challenges.

Attracting new clients was the major concern among accountants in the Middle East (80 percent), but much less of a concern in North America (33 percent) and the Australasia/Oceania part of the world (36 percent). Meanwhile, regulatory concerns ranked highest at firms in Central and South America (68 percent), the Middle East (65 percent), and Europe (63 percent).

Small and midsize accounting practices show promising economic growth, with 72 percent of firms saying they are either maintaining or growing the previous year’s practice fee revenues (31 percent reported that practice fee revenues stayed the same, while 37 percent reported a moderate increase, and 4 percent reported a substantial increase).

The top three regions reporting moderate to substantial growth in practice fee revenues were Australia/Oceania (63 percent), North America (56 percent) and Africa (55 percent).

In the year ahead, the two biggest sources of revenue growth predicted by the survey respondents were tax (48 percent) and advisory/consulting services (50 percent). The percentages represent respondents who rated these services as either “increase moderately” or “increase substantially.”

“It is encouraging to see SMPs maintaining or growing their revenues as they are a crucial part of the global economy,” said SMP Committee chair Giancarlo Attolini. “With solid performance this past year, and optimism regarding revenue growth in the coming year, SMPs reflect the current state of the global economy and the spectrum of opportunities for small businesses.”

The survey also asked accountants about the challenges facing their small and midsize business clients. Rising costs (67 percent) and economic uncertainty (66 percent) were identified as the top two challenges facing small and midsize clients. This finding was particularly apparent in the Middle East and Africa, where these challenges ranked higher than in any other region.

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