Small and midsized accounting practitioners and their small business clients are continuing to face challenges from regulations, but are nevertheless feeling more optimistic.
A recent poll by the International Federation of Accountants in the August-September timeframe found that overall optimism has increased since the last time IFAC conducted a similar poll in April. Nearly 40 percent of the practitioners surveyed said they expect business to be better this year than last year, compared to 23 percent in the earlier poll.
While more small practices are now offering business advisory services, the survey results indicated that traditional accountancy-based services continue to generate the largest portion of fee revenue for small and midsized practices. Accounting and compilation averaged 38 percent of total fee revenue, with audit and assurance following close behind with an average of 35 percent.
Accounting and compilation is the fastest-growing source of revenue for the largest group of respondents (34 percent), followed by audit and assurance (26 percent).
Only 23 percent of the poll respondents indicated that business advisory services are their fastest-growing source of revenue. Insufficient partner time (30 percent) and marketing services to clients (29 percent) were cited as the biggest challenges to expansion in this area. New advisory and consulting clients are attracted primarily by existing customer-client relationships (37 percent), followed by practitioners’ competence and expertise (21 percent).
When the survey respondents were asked to indicate how fee revenue is split among the various areas of advisory and consulting, tax consulting came out highest with an average of 45 percent of consulting fee revenue.
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