Savvy U.S. accountants are on the brink of huge new opportunities. Will you be one of them?
by Rick Telberg
The accounting profession — not just in the U.S., but worldwide — faces new opportunities for growth and success unlike few times in history, according to one of the industry’s world leaders. But it will require savvy strategy, swift action and hard work to profit from the trends.
Across the globe, small- and medium-sized enterprises (SMEs) are hungry for more than just tax preparation and financial statements, according to Bob Bunting, president of the International Federation of Accountants (IFAC) since November 2008. They want more. And Bunting can name half a dozen potentially winning strategies.
Small- and medium-sized accounting firms, Bunting told an international gathering in Venice, Italy, “can no longer rely strictly on compliance work to pay the bills. Their traditional clients, small- and medium-sized enterprises, increasingly need a broad range of competencies beyond the core skill set of the small practice. SMEs need advice that will help them generate business plans and financial forecasts, identify and manage risk, define and implement IT systems and value the business. Small- and medium-sized accounting firms must evolve to meet these growing needs or face dwindling clients and revenues.”
Bunting will be appearing at the Winning is Everything practice management conference at the Manadalay Bay Resport in Las Vegas, Jan. 19-21, 2011.
A stark warning. But it sounds familiar, doesn’t it? For what’s true in the U.S., is also true worldwide, according to Bunting. Bunting is one of the senior statesmen of the accounting profession. Still a partner at Moss Adams, he served the firm as chairman and chief executive officer from 1982 to 2004, a period of rapid growth. From 2004 to 2005, Bunting was chairman of the Board of Directors of the AICPA.
So how can local accounting firms, in Bunting’s words, “overcome the unavoidable resource constraints in-house and provide a range of services to their clients?”
His three-part answer:
The most common model is to expand the technical and soft skills of existing personnel. Some accountants can make the transition from “accounting expert” to management adviser through experience and self-development.
Another common model is to focus on a specific industry sector or specialty linked, for example, to the music industry or environmental legislation. This model usually works best in large cities or where a particular industry is highly concentrated. But there have been successful cases where local firms are willing to travel further to serve their clients.
A third model, which can be a standalone strategy or one that complements the first two, involves the firm participating in a high-quality referral network. Before using one, however, firm owners should analyze the different types of networks and carefully consider how they will monitor service quality and timelines for the clients they refer.
But of the all the niches and specialties, which are the hottest?
IFRS — As Canada, Mexico, China, India and others flip to the new system, “even if the SEC doesn’t mandate IFRS in the United States, there’s a ton of that kind of work going on with subsidiaries of foreign companies.”
Renewable energy — Wind, solar, biomass all represent an entire new industry. “Renewable energy is a very cool service for accountants, because it’s all driven by grants and tax credits. It’s made to order for public accounting because the feasibility of all renewable energy activities is based on grants monies and tax credits at the state and federal level. The geeky engineer who knows everything about renewable energy knows nothing about grants and tax credits.”
Sustainability reporting — Fortune 500 companies such as Wal-Mart, Costco, Starbucks and oil companies are leading the way on the triple bottom line: people, planet and profits. Wal-Mart alone has 140,000 suppliers that will need sustainability work to remain part of the Wal-Mart supply chain.
Moss Adams, for instance, has one major client with 10,000 suppliers, each of which will require a sustainability audit. Don’t be mistaken: Sustainability reporting is not a diabolical regulator’s scheme. “It’s market driven,” Bunting says. “It’s customer-driven capitalism.”
“Business consulting services represent a crucial growth area for local firms,” Bunting says. “The raising of the statutory audit threshold has diminished a key revenue stream for many firms and the market is increasingly competitive. As a result, if they are to thrive rather than merely survive, small and medium-size firms must diversify and focus on other advice requirements. They must develop their skills base beyond bookkeeping, tax preparation and audit. In short, they must move from being accounting technicians to knowledge professionals.”
And it’s as true in Seattle as it is in Singapore, Peoria and Paris, Baltimore and Bangalore. Welcome to the new, flat world of global opportunity and competition.