The Institute of Financial Accountants’ (IFA) Executive Director – UK, Jonathan Barber, takes account of some of the key issues, challenges and opportunities that influenced the industry this year. He says “This is the first time I have looked back on the year in my new role as Executive Director. Taking a moment to reflect on the vibrancy and evolution our sector is an absolute privilege. I can’t wait to see what is yet to come.”
The impact of AI
Technological advancement is clearly emerging as the greatest opportunity for the profession — but we must leverage it further in order to evolve. This will come down to the readiness of the profession to accept and comprehend how AI will affect it. There is a sense that our industry underestimates the influential, even revolutionary role that artificial intelligence will have; the digital shift is moving faster than people perceive. It will only continue to dominate and evolve, so accountants need to take advantage of the opportunities afforded to them by these innovations.
What remains imperative is for firms to ensure the right training and support is in place to embrace the benefits of digitisation. A recent IFA member survey* showed that whilst the majority of respondents felt prepared to face the challenges ahead for our sector, a quarter did not. Furthermore, 35% of respondents indicated there were additional key areas of technology-related support and training needed to help them address these challenges – two of them being a better understanding of artificial intelligence and its impact on accountancy, and how to automate processes.
Moving into 2024, if the sector can address the tech skills gap it will enable more accountants to fully seize the benefits of increased efficiency and productivity enabling them to focus on more important and strategic areas of their work.
Sustainability in reporting
Another area of opportunity to emerge for the profession in 2023 has been in the combining of sustainability and environmental, social, and governance (ESG) standards in business.
It has become increasingly evident that companies and investors have had to manage the growing risk of ESG-related litigation, particularly with sustainability disclosure. As trusted advisers, used to grappling with the complexity of business reporting, accountants are gaining a significant advantage in becoming leading experts in sustainability standards. Digitisation of data and integrated reporting are making it simpler to access and evaluate the relevant statistics required to undertake the reporting. Accountants have started to show over the past 12 months that they will eventually become indispensable in undertaking new process which include establishing frameworks, monitoring data inputs, and ultimately reporting the findings.
Data security focus
As the world gets more digitally connected, data security becomes more and more crucial. We’re seeing the growing importance of accountants staying up to date on the latest cybersecurity threats and using extreme caution when safeguarding on-site IT systems and client information. A recent report forecasted that cybercriminals will steal over 33 billion records by the end of 2023, an increase of 175% from 2018.
More practices are discovering greater peace of mind in shifting their software to the cloud, since their data is protected by the most advanced and comprehensive security measures available from both their software and the cloud provider. For many accounting businesses, moving software online to leverage this security is an extremely effective and cost-effective option. Quality cloud-based solutions also offer other benefits, such as collaborative opportunity and real-time reporting, so that professionals can seamlessly and collectively work on financial data, leading to improved decision-making and more accurate financial reporting.
Data security remains an ongoing source of concern for all sectors, however, not least accounting. As more firms lean on cloud solutions for accounting, security, and cybersecurity, threats are going to remain a serious concern. This underlines the need for the industry to continue to be adaptive and agile by implementing the latest security measures to combat the rise in cybercrime and fraudulent activity. While this requires a fair share of resources, it should be regarded as an investment with long-term benefits for accounting practices.
Talent retention
One of the biggest issues faced by many sectors in 2023 has been finding and keeping talent, with talent retention a major concern for 82.4% of hiring managers for finance and accounting in public companies, according to Deloitte. This is forcing practices to adopt a shift in thinking to identify which areas they need to focus on and improve. Firstly, prioritising technology through embracing technological advancement is becoming even more crucial for acquiring and keeping talent.
Meaningful work for accounting teams entails more than just handling cumbersome spreadsheets and intensive data gathering on a daily basis. These types of manual tasks can be automated by technology, freeing up employees to work on more valuable tasks such as finding trends in data to assist the company to understand the “why” behind the figures. Investing in technologies that automate core processes and streamline user experience will be integral to building — and retaining — a skilled and agile team.
Secondly, practices are having to consider their long-term approach to flexible working. This comes as the updated Employment Relations (Flexible Working) Act 2023 is due to come into effect from summer 2024. Aimed at giving workers more rights to request flexible working, now is the time for businesses to consider their flexible working practices. A recent IFA survey*, asked members about the factors affecting their work in the last twelve months. 29.4% of respondents cited a change in personal circumstances; 14.5% cited a family crisis; 42% had been affected by personal or family health issues; and mental health challenges had affected 19.2%.
One potential solution is to have a four-day working week, with other conceivable options including compressed hours, annualised hours, home working, self-selection of hours within an extended working day, or in some cases, granting employees total control over their own working hours, including when, where, and how long.
While there have been many issues to navigate in the profession which will roar on into 2024, what the sector has shown is the urgent need for better adaptability and resilience to reap the benefits from the profound shifts underway. Whatever happens, it looks to be an exhilarating and impactful year ahead for accounting.
*Source: IPA Group Membership Survey 2023 Report of Findings (June 2023)
