Accounting as a profession: Challenges faced and lessons learned

Moving into 2024, the accountancy sector is facing a unique set of challenges: regulatory changes, technological innovation and automation, and shifting market demands, to name but a few. Not only have the traditional boundaries of the accountant’s role evolved – from tax compliance and financial reporting to financial strategy, technology, mentoring and consultancy – but the profession as a whole has undergone widespread change.

For accounting firms and accounting professionals, this transformation demands both in-depth oversight of the numbers and regulations that govern them, and insight as to how these elements can help navigate volatile business environments, boost organisational sustainability, and drive strategy forward.

Let’s look in more detail at some of the current challenges facing modern-day accountancy, and how finance professionals are adapting to meet these transformational factors head on.

What are some challenges facing the accounting profession?

Recruitment and retention, cybersecurity threats, integration of cloud accounting, changing compliance regulations, burnout and low morale, the particulars of different client industries, cashflow, accurate financial forecasts, the rise of automation, and economic uncertainty – both for themselves and their clients – are all issues that accountancy firms are attempting to tackle head-on.

Here are a handful of further examples of current challenges experienced by accounting firms:

·   The shift towards hybrid and remote work. In the wake of the COVID-19 pandemic, remote working continues to influence the working lives and practices of accountants and the firms they work for. While offering greater flexibility, concerns about managing productivity, team culture, and collaboration beyond the coronavirus lockdown persist. These concerns can be alleviated by using effective strategies and tools to enhance communication and collaboration and re-embed company ethos and expectations across remote work environments.

·   Adopting, and adapting to, technological innovations. New technology means new opportunities – as well as new challenges. Artificial intelligence and software advancements have driven greater levels of accuracy and efficiency within accounting, however integration into existing workflows – together with investing in both the tech and the training it requires – can present obstacles. Accountancy firms should identify tech that aligns with their individual needs – such as cloud-based accounting practice solutions or Microsoft’s Dynamics 365 Business Central software – as well as prioritise training and development.

·   Environmental, social and governance (ESG) practices. More and more, ESG is a central aspect of corporate responsibility. As such, sustainable accounting practices are now an expectation of accounting firms, with clients demanding insights into the financial implications related to their ESG plans and decision-making processes. Expanding skillsets to meet evolving client expectations is a must for accountancy practices, for example understanding key reporting frameworks such as the International Sustainability Standards Board (ISSB).

The accountancy and tax landscape will continue to change in the light of new innovations, regulatory requirements, and sustainability demands – among many others. Firms must embrace the concept of continuous learning and growth, work to stay informed and abreast of changes, and utilise appropriate digital transformation to enhance their services and outputs.

Have there been lessons learned in the accounting industry after recent regulatory changes?

According to Thomson Reuters’ 2023 State of the Tax Professionals Report, 66% of accounting firm leaders say that ‘changes to tax rules or regulations are a major area of concern for them and it will be a big focus of their training programmes.’

The UK accountancy sector continues to be subject to post-Brexit regulatory changes, as organisations adjust to new rules and standards that vary from EU regulations. The Financial Reporting Council (FRC) released new accounting standards, designed to create better alignment with international standards. The most notable proposals are concerned with lease accounting and revenue recognition. While the proposals have been delayed following feedback, businesses should begin reviewing contracts and leases to identify how lease accounting and revenue timing changes might affect ratios, taxes, debt covenants, and exemption eligibility, proactively planning how to communicate any changes to stakeholders, and negotiating commercial agreements.

In the United States, the recent Inflation Reduction Act (IRA) reduced costs for small businesses and medium-sized businesses. An impactful piece of legislation, its roll-out aimed to support energy-saving investments, introduce a new, alternative minimum tax for corporations, and doubled research and development tax credit. In order to rise to this challenge, finance professionals have harnessed tax preparation software to simplify the filing of tax returns and do the ‘heavy lifting’.

In terms of lessons learned, planning for unintended consequences – where possible – is critical. Ahead of time, businesses, and the professional accountants they work with, should assess relevant processes, systems, and data needs to lay the foundations of efficient, seamless transition. They should invest in regular training so all staff are aware of changing regulations. Hopefully, this should ensure potential issues are minimised  -- including penalties and reputational damage – and that changes can be implemented effectively.

How can accountants earn and maintain the trust of stakeholders?

Findings shared by ICAEW report that, of a range of professions, 89% of respondents in England said that they trusted Chartered Accountants. During times of economic uncertainty and the ongoing cost-of-living crisis, seven in 10 organisations said that using Chartered Accountants and Certified Public Accountants (CPAs) had helped them to navigate this period – highlighting the trust many have in the role.

Adherence to professional standards and ethics in accountancy is as important as technical ability and proficiency. To ensure the highest levels of client service and satisfaction, financial professionals must conduct themselves with transparency, integrity, and accountability. Where these are lacking, stakeholders are likely to break trust with both the individuals – and, potentially, the wider profession. Communicating complex financial information and situations clearly, in a way that is accessible, is vital, as is demonstrating competence and professionalism more broadly. Accountants should be proactive in addressing risk management controls, as it highlights to clients and stakeholders that safeguarding the financial stability of the business is a top priority.

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