The Future of the Profession: Medium Sized Firms

The Future of the Profession: Medium Sized Firms

I believe that the profession is set for twice as much change in the next five years as it has seen in the last ten years

It is easy to write those words. Yet it is my deep conviction that we are already seeing those changes unfold. So what does tomorrow look like? My answer is that it almost certainly looks very different from today.

For over a century accountancy Institutes have led the profession so that accountants today enjoy a reputation that is second to none. Yes, there have been challenges along the way – of that there is no doubt. But the fact is that we should all be grateful for the work done by staff in our Institutes and those members who volunteer to serve on Institute committees.

It’s time to catch up and move on

However the 21st century has already seen the combined impact of a number of key changes. And the effect has been for us all to witness a rapidly changing landscape for accountants. The rollback of statutory audits in many countries has reduced the automatic right to perform an audit. The impact of the global financial crisis has focussed people on reducing costs. Technology continues to advance – seemingly daily! Think about this – our core services have remained unchanged for centuries! Accounts are pretty much presented in the same format using the double entry technology codified by Luca Pacioli over 500 years ago, tax returns have been required since the first Taxes Act over 200 years ago while the first audits were signed off in Scotland just over 100 years ago.

So for decades we have hardly been impacted by change – other than that brought about by regulations, some introduced as a consequence of the apparent misdemeanours of some of the global firms. Take Enron and Arthur Anderson as an example and I will say no more.

I was in charge of the audit of the Clarks (founded and still UK based) shoes retail company when the directors took the decision in the 1970s to import shoes from Poland. Today, Clarks manufactures no shoes in the UK.

Technology and the internet are at the forefront of globalisation. Tomorrow’s clients, if not today’s, are accustomed to communicating through social media and doing business on the internet is second nature. As efiling becomes compulsory and cloud technologies allow global accessibility questions should be asked such as, “what services will accountants offer?” and “where will future service providers be based?”


Here is my point. Other industries have had to change as a result of technology, globalisation and the pressure to drive down costs. Changes in the accounting industry have thus far been relatively minimal. That is now changing. It is, in my opinion, no longer going to be Institutes that lead change – it is going to be technology companies empowered by the internet and social media. And who knows how rapidly changing technology will impact our tomorrows? What will be commonly used in 2020 that isn’t available today? What changes in behaviour will they drive?

Where will your future competitors be based? Possibly not just ‘down the road.’

Chartered Accountants, Chartered Certified Accountants and CPAs are found in every continent. They can already access customers in any country anywhere and at anytime. Services will increasingly be available via the cloud while personal service will be conducted via mobile and VOIP contact. We now have to deal with processes, systems, technologies, threats and challenges that were unthinkable even a decade ago.

Having read thus far are you thinking that I am describing a doomsday scenario? No, I am not. But there is no question that it is a challenging one. As in many other industries I see the number of people directly employed by accountants reducing and the likelihood of greater fluidity in where accountants are located. The trading base (if one still exists) of the service provider may well not be in the country where the customer is based. I also see the customer continuing to have the empowerment and capability to do more work for themselves.

In other words, an accounting world with NO boundaries.

All of this technology is accompanied not just by threats but also opportunities. However, I prefer to use the word ‘oppothreat,’ i.e. on the flip side of an opportunity there is a threat and conversely there is an opportunity that is accompanied by a threat. To me one of the threats posed by all of these technologies is the issue of security. Recent years have seen the annoyance of computer hackers, which range from troublesome amateurs to state and commercially sponsored thieves of corporate secrets and intellectual property.

Take a sideways look at the legal profession where in the UK there has been the impact of the Jackson reforms on civil litigation. The legal profession sees these as their own ‘big bang’ as these changes dramatically change the litigation landscape. The legal profession is also seeing the emergence of such IT-related concepts as technology assisted review, predictive coding and eDiscovery which help litigants and the courts cope with the rise of electronically stored information.

The legal profession is seeing changes as a consequence of advancing technologies including a rise in alternative ways of providing legal services, such as legal process outsourcing that are set to radically and permanently change the way the UK legal industry and corporate clients interact commercially.

The good news in all of this from a service viewpoint is that as business regulation continues to be tightened, compliance and risk management are becoming increasingly important. As cybercrime escalates everyone will need to better manage risk in order to avoid cybercrime, fraud, identity theft and so on.

We all have issues with security

Does this sound as though this is the domain of big business? Absolutely not! These threats face us all. Let me demonstrate this by sharing a story from one of my clients who is one of three partners.

“We act for a client where the accountant had an authorisation to make online payments up to the value of £120,000 in any one month. This facility was used to pay staff their wages directly into their bank accounts and for payment to creditors.

The managing director (MD) was accustomed to sending the accountant payment instructions by email of creditors he wished to be paid. His emails were brief, “I need xyz to be paid, here are the bank details.”

Here is the sequence of events starting on a Monday. The accountant received an email from the MD instructing him to pay supplier X £5,000 and was given the relevant bank details which the accountant duly paid.

Tuesday: the accountant received a further email from the MD to pay supplier X £15,000 again providing bank details.

Wednesday: the accountant got a third email from the MD to pay supplier X £45,000 and, as before provided bank details.

On the Friday: the MD was informed by the bank that the salary transfer could not be effected because there were insufficient funds in the company bank account.

The MD then contacted the accountant to ask “why is there no money in the company bank account?” The accountant replied “this is as a result of the £65,000 you asked me to pay to supplier X this week.” To which the MD responded “I never made any such requests.” The accountant replied “but you sent me emails with instructions to make payments.” The MD starting to become agitated. “No I did not,” he said.

My client continued…. It transpires there was no firewall on the MD’s computer. His computer had been hacked and the hackers had read his emails and had discovered the pattern of payment instructions by email from the MD to the accountant. They then sent fictitious emails from the MD’s computer to the accountant with payment instructions for the amounts stated above.

On the accountant’s role in this – he assumed the MD required these payments made and did not phone to check the payment details.

Because of the time it takes for international bank payments to go though the banking system, the last payment of £45,000 was stopped before being paid, but as the first two payments had been processed and been correctly authorised by the accountant, there is now £20,000 sitting in a hacker’s bank account somewhere in the Far East and the company’s bank will not make a refund as the payments were properly authorised.”

True story.

You will no doubt have your own perspective on this but in a profession where staff costs are approaching 50 per cent of revenue, technology costs are increasing and clients are becoming more cost-conscious. There is no question in my mind that we hold the baton in a profession that is different from when it was passed to us and will be different when you hand the baton on.

My question is, what will that look like?