Accounting | Technology

Accounting SMPs investing in digital transformation, global survey says

A study by the International Federation of Accountants shows that advancing technological expertise is being invested in along with advisory services

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group of young people brainstorming around different digital devicesTo adapt to the new technological environment, 40 per cent of Canadian respondents will adopt and use cloud options to serve their clients and 24 per cent will develop technology skills in house (Shutterstock/SFIO CRACHO)

Almost one-third—28 per cent—of small- and medium-sized practices (SMPs) will spend more than 10 per cent of their revenue over the next year advancing their technological expertise, a recent survey shows. 

The International Federation of Accountants (IFAC) survey* of 6,258 SMPs globally also found that more than a third of respondents found technology to be a significant challenge in 2018. 

In Canada, where 152 SMPs participated in  the survey, about 40 per cent say they will spend between one and five per cent of revenues on technology in the coming year, while about 34 per cent will spend between six and 10 per cent. To adapt to the new technological environment, 40 per cent of Canadian respondents will adopt and use cloud options to serve their clients and 24 per cent will develop technology skills in house. 

But despite SMPs’ willingness to spend on technology, staffing for the shift presents an obstacle. In Canada, about 40 per cent of the survey participants say they’ve had difficulty attracting and retaining qualified staff. And as the demographic shifts lead to an aging workforce, recruiting new graduates is proving to be a particular challenge with 47 per cent of Canadian respondents saying they had difficulty attracting and retaining next-generation talent in 2018. The top reasons cited included a lack of candidates with the right mix of skills, competition from larger practices and increased opportunity in other fields.

HIRING MARKET MORE COMPETITIVE

Acquiring qualified talent is a particularly intense challenge for smaller operations, says Donna L. Street, professor and chair of the accounting department at the University of Dayton in Ohio. 

“Young people entering the job market today are attracted to technology and working for a big brand-name company,” says Street, who helped IFAC design the survey questions and analyze the results, along with Sarah Webber, an associate professor of accounting at the university. “In our profession, of course, that would be the Big Four accounting firms. But even the Big Four now are competing with technology companies—such as Google—for qualified staff.”

According to the survey, Canadian SMPs have already introduced—or plan to introduce—these strategies to attract qualified staff:

  • Flexible working hours or days.
  • Mentoring and career coaching programs.
  • Virtual work arrangements and training programs.
  • Direct incentive and reward programs.
  • Enhanced work environment. 
  • Technical training programs. 

ADVISORY SERVICES ON THE RISE

The survey also revealed how the role of the accountant has changed. Advances in technology over the past decade have allowed SMPs to operate more efficiently, reduce costs and offer additional services. Eighty-five per cent of Canadian respondents say they now provide business advisory services, with 50 per cent predicting moderate or substantial revenue growth in this area over the next 12 months.

Services most commonly offered include succession planning and business transfers, corporate advisory, management accounting, wealth management and retirement planning.

“If you’re going to have an advisory service practice,” says Webber, “the skills that are necessary for entering the workforce are broader than the traditional accounting skills.”

HOW SMPs CAN BRIDGE THE GAP

There a variety of ways for small- and medium-sized practices to broaden their horizons, according to Street: 

  • Develop the skills of a current staff member. 
  • Hire someone who already has the skills away from another company. 
  • Develop alliances with other businesses who offer the services their clients need. “Advisory is a growth area, and it’s what they need to do,” Street says.

For the many urban, small town and rural accountants who operate with a skeleton staff, IFAC’s survey of SMPs can be a source of practical ideas. 

“They can learn what others are doing well and then emulate it,” says Street. “It’s important for [small- and medium-sized practices] to study these surveys and to be aware of what’s going on, learning best practices from what others are doing and getting ideas of how to be successful.”

*The survey, which was published in October 2018, elicited a large number of responses from very small practices. Sixty-four per cent of respondents had five or fewer partners and staff, a factor which may have influenced the survey’s results.

ADAPTING FOR THE FUTURE

Technological advances like cloud computing have changed the way SMPs operate. Download CPA Canada’s publication SMPs and the Cloud: Key benefits and risks to discover whether it’s the right solution for your business. 

The results of the 2018 IFAC Global SMP Survey, published by the International Federation of Accountants (IFAC) in October 2018 is used by CPA Canada with permission of IFAC. Such use of IFAC’s copyrighted material in no way represents an endorsement or promotion by IFAC. Any views or opinions that may be included in this article are solely those of CPA Canada, and do not express the views and opinions of IFAC.