PrimeGlobal Insights for the Profession in 2022
Business OpportunitiesMarch 16, 2022
PrimeGlobal CEO, Stephen Heathcote, provides International Accounting Bulletin (IAB) with his insights for the accounting and advisory industry in 2022.
Due to increased scrutiny on audit quality and perceived conflicts of interest between audit and non-audit work, how should your/ member firms develop their audit practice going forward? Also, in terms of staffing and training of the audit unit to become a specialist service function? What’s your organization doing to this end?
Our firms are still finding that audit is very much in demand. Around 35% of our firm’s service lines are focused on audit. With more uncertainty, there is more demand for assurance that financial statements present a true and fair view of the position of organizations. The larger networks do face conflict challenges; however, this creates opportunities for our firms to win new assignments. The biggest challenge is securing sufficiently qualified staff to complete the audits.
To develop audit practises, firms need to ensure that their staff have a clear career path. There needs to be regular conversations about progression. In a hybrid environment firms need to plan opportunities to coach and mentor staff. Moving to cloud-based AI audit software is vital. Our firms who have done this are able to generate efficiencies and focus the team on the highest risks and business insights. This makes the audit more impactful to the client and is engaging for the team. It also improves the firms brand making it more likely new talent will join the firm. Investing in technology expertise is vital to address increasing risk from cyber security.
Regarding training, firms are investing in a clear path to obtain professional accounting qualifications. Progression is celebrated across firms to help motivate team members. PrimeGlobal has partnered with the ACCA to provide data analytic qualifications to help teams identify relevant insights.
Which advisory services have been most in demand by clients globally? What are contributing factors for this growth?
Technology services continue to increase rapidly covering areas such as cyber security, developing dashboards to provide business insights, exception reporting and introducing Robotic Process Automation (RPA).
Increased use of ransomware has led to more demand to reduce exposure. Talent shortages are also increasing the demand to seek efficiencies in processes. The pandemic has seen a big jump to the cloud, so businesses now wish to fully utilise data to help them make informed decisions. Businesses are also looking for help to improve digital marketing.
Businesses are having to consider if they are resilient for the future. Our firms are increasingly helping them with these assessments; both in terms of assessing their control environment and providing insight around strategies. Rising inflation and costs are increasing opportunities to help firms drive efficiencies.
There continues to be significant demand for advice to help with government support throughout the pandemic. Firms help navigate their clients through the choices they need to make to ensure they receive maximum financial assistance.
We are also seeing an increase in advice regarding HR and finance functions. Many firms are helping their clients with HR policies and development approaches. This helps provide additional resource to business at a time when staff recruitment is challenging.
What are regional variances in advisory demand? Which industry segments/clients do these pertain to?
In North America there is an increasing move away from audit to advisory. This reflects increased concerns about the profitability of audit and the burden of regulation. There is also a significant market for Client Advisory Services and continued demand for RPA. This is across industries.
In Europe, we are seeing increasing demand for clients looking for support to improve their environmental impact, across companies of all sizes. Firms are well placed to advise on how to drive efficiencies. In North America, Environmental Social Governance (ESG) reporting is increasing; however, it tends to be the largest companies which focus on this at present.
In Asia Pacific, there is increased demand to advise clients on Initial Public Offering (IPOs) and establishing new businesses. This partly reflects the flow of Chinese investment away from the west back to China.
How can firms offer differentiated services in these jurisdictions?
Firms must demonstrate that they understand their clients’ total business better than others. Using data to create insights can help with this. One PrimeGlobal firm in the Netherlands has developed a data warehouse which enables them to take a 360-degree view of their clients. If the Government introduces new requirements in the Budget, within 24 hours clients receive a customised email explaining the specific impact on them. It is very difficult for other firms to compete with this. Taking a complete view of a client’s business and helping support their wider needs creates differentiation – it demonstrates the firm is a trusted advisor. Firms should help clients find the right support even if that means referring them to a different firm for specialist advice.
Collaborating between firms can also create a differentiator. For example, several PrimeGlobal firms work together to support clients across borders – demonstrating trust between firms and an ability to serve across a range of markets helps to create differentiation.
How have geo-political, regulatory trends and the pandemic affected advisory services over the past year? Do you see growth or decline in revenue over certain geographies?
Chinese companies have moved stock listings back to Hong Kong from western exchanges creating significant advisory opportunities in Hong Kong and China. Vietnam is also growing in terms of advisory opportunities as supply chains diversify.
In the West, supply chains have localised creating opportunities for firms to review end-to-end processes and assess business risk and resilience.
The pandemic has created significant opportunities for firms to help companies obtain financial assistance, digitalize, and restructure. Demand for Corporate Finance advice has risen considerably as investment opportunities increase post pandemic.
Consultancy temporarily declined as business focused on survival; however, mergers and acquisition are now very much on the agenda.
In developing countries with little government support, advisory services declined.
Which tax services are most in demand by clients of networks and associations globally? What are contributing factors for this growth?
Compliance and preparation of tax returns is still the largest service offered by our firms. However, this is increasingly complemented with tax planning and advisory services.
Changing tax requirements are the biggest contributor to the areas continued growth.
What are the challenges to an organization with regards to implementing tech and software to its tax practice when it’s a global organization, which operates across a multitude of jurisdictions and that all have their own tax regimes?
Our firms find that software is often more relevant in certain jurisdictions, even when it is positioned as being global. There is often a bias to the country where the software was developed and where most users are based.
This make it difficult to adopt software which is relevant across multiple jurisdictions. Often, work arounds are needed – particularly to support different sales tax requirements.
How much investment and into which software/platforms has been made by your organization into tech for tax advisory to support member firms?
Our firm have invested across a range of products. We have supported them through our partnership with organizations such as Avalara and diligence.
In terms of recruitment, what have been the biggest challenges for the industry globally through the pandemic?
For our firms, building trust virtually is challenging. Digital business development extends reach and provide more opportunities to grow. However, in person meetings provide a better basis to really understand a potential client’s operations and develop deeper relationships. A great deal of new business has therefore come from our firms existing clients as it has proven more difficult to develop new relationships.
PrimeGlobal has grown at record levels during the pandemic – with 34 firms joining in 12 months over 20/21. However, as firms have started to face capacity challenges and are managing the move to hybrid ways of working it has become more challenging to engage in conversations about joining the association. Decision making tends to be slower and meetings may be delayed. This can make it harder to assess whether to continue with recruitment conversations or consider alternatives.
What’s your view on how digital investment is changing and replacing roles via automation and AI?
Our firms are seeing roles change significantly. Routine tasks are being automated and moved to the cloud. This is impacting all roles across the firm – not just professional staff. In support functions such as IT or payroll, firms are investing more in development of staff to improve retention and develop higher level analytics and insight skills.
Professional staff now need to develop higher level skills such as communication, empathy, innovation, and business acumen. To develop these skills, our firms create professional development programmes which are often structured to provide work experience and access to mentors.
RPA is helping take away routine tasks providing staff with more time to add value using data to provide insights to clients. Continuing Professional Development is more critical than ever. PrimeGlobal provides a range of learning to help professionals share experiences, benefit from good practices, and obtain certifications which demonstrate they have the required skills for the future.
Outside of those recruited via a traditional accountancy background, what other key academic and other technical skills are networks looking for in a candidate search? Why is this?
Our firms are often looking for the following characteristics:
- Experience – does the candidate have a knowledge of the industry or sector? Are they able to provide the insights which clients will find valuable?
- Digital native - Are they able to use analytics which will provide additional insights? Are they aware of different software packages so they can provide value quickly?
- Communication – Will they be able to communicate effectively with clients – both virtually and in person? Can they use visualisation software – which clients increasingly expect?
- Team player – Delivering services increasingly requires a range of skills. Are they collaborative? Will they fit with the team?
- Empathy – they need to see other perspectives to deliver the right solutions and obtain the right support.
- Entrepreneurial – With limited resources, professionals need to be able to be creative and champion change.
- Problem solver – Increasingly firms are valued for their advice. They need to provide solutions which clients most value.
What is your recruitment and retention strategy in 2022? What do you need to balance going forward in terms of new required specialists in management and in member firms staffing requirements globally?
Firms are taking a holistic approach to recruitment and retention of their teams. Increasingly firms are focused on employee experience above customer experience, as they know if they have the right people they will successfully deliver to their clients. This requires ensuring that:
- Individual professional development is supported in a structured way
- Staff are listened to, and action is taken to address concerns.
- Well-being is a top priority – including support with mental health.
- There is clear sense of purpose. The firm is known for making a difference in the wider community and reducing environmental impact. The next generation want to work for organizations who have a positive purpose. Several of our firms, have become, or are becoming B Corps. Firms are exploring new service lines around environmental impact.
- Outsourcing, and moving to cloud managed services, is being used to reduce the pressure on existing staff. For example, tax returns being prepared offshore.
PrimeGlobal is investing to automate services provided by the association by introducing a cloud-based Association Management System (AMS). This will provide more capacity for team members to focus on providing added value through providing targeted insights to firms. Team members will increase their knowledge of best practices and industry advice.
What have been the biggest industry issues that are keeping CEOs up at night?
Undoubtedly for our firms, retaining and recruiting staff has been the top challenge over the year. The pandemic has led to some people changing careers and hybrid working enables an increased ability to move roles. At the same time, clients need more help and there are more business opportunities than ever. Firms have had to take a holistic view to motivate and keep their teams.
Technology adoption is also a priority. As data becomes a major asset there is increasing concern about cyber security. Some firms have been targeted. It is vital that clients trust firms with their data. Having adequate protection is a top priority.
Continued automation of compliance is reducing profitability of more traditional accounting services. Leaders of firms need to anticipate and make sufficient investment to reposition firms as business advisors.
Clearly continued uncertainty is very damaging for certain industries particularly casual dining, tourism, and the service sector. This can impact cash collection and over the longer term could see a reduction in clients.
What are your predictions for emergent tech impact within the industry in 2022?
Access to powerful integrated data platforms will continue with these being offered through standard platforms. This will provide the opportunity for firms to provide entity wide insights. It will also further support AI enabling firms to get closer to their clients' businesses.
Cloud based services will also enable the use of more benchmarking to provide added value services to clients. Firms will begin to use a range of apps to provide a more joined up focused service to specific client groups.
I also expect that more tech and data will become available to help with environmental impact audits. Several firms are developing products in this area. As governments introduce more reporting requirements and incentives, firms are well placed to support this emerging area.
RPA will advance even further with the increased use of Optical Character Recognition to automate a wider range of activities.
What’s your opinion on Blockchain for Audit over the next few years? What frameworks are needed?
Blockchain will be increasingly used over the next few years as concerns about the integrity of supply chains increase. It will also be driven by concerns about fraud and cyber risk.
Auditors will need to be ready to audit the integrity of the blockchain, and blockchain itself can be used by auditors to help share and protect confidential data.
Frameworks will be required to create consistency in how blockchains are certified. These are likely to be created by the International Accounting Standards Board.
Cryptocurrency is also being more widely adopted which will need to be accounted for and verified.
What are new initiatives ready for roll out in 2022 to streamline operations, business referral and lead generation across your organization?
PrimeGlobal is making a significant six figure investment in a new Association Management System (AMS). This will create efficiency in the way members are supported with core activities such as event management, knowledge sharing, referral support, and invoicing all being integrated and automated.
An advanced search function will enable professionals to find each other based on their sector, service line, geography, and experience. This will enable a much wider group of professionals to connect with each other.
The AMS also supports a collaboration platform where members can meet, share ideas, ask questions, and work together on opportunities. This will be integrated with referral support. Members will therefore have enhanced ways to connect and collaborate to win business.
What have you learnt of your own approach to risk management approach over the past 18 months through the pandemic? What have you done to prepare yourself for business continuity planning, cybersecurity conflicts and contingency and forecast planning?
We know that we cannot anticipate all risks, particularly when planning in person member meetings. Associations and networks have been hit by a perfect storm with the pandemic making forward planning challenging and the great resignation meaning its hard to secure speakers for events.
Risk management has been important as we completed scenario plans to consider the impact of major disruption to our plans. It has been particularly important to maintain a balance of keeping sufficient reserves to manage risk and investing to make the association more agile. We have learnt that it is best to be very open with members about our position and decisions. We issued an annual report with full transparency about reserves levels, cash, and planned investment. We invited members to ask questions at regional events. We also asked members to share some risk – so if an event is cancelled due to Covid, the member may have to accept some of the costs. Being transparent helped to increase member support and understanding.
We moved our cloud platform to Microsoft Azure to ensure we have the best possible protection against a cyber incident. We also carefully reviewed all insurance policies – including putting in place cyber security insurance. If we are subject to an attack, we know we have access to the best possible support to ensure services are not disrupted for a long period.
We have also ensured we are ready to pivot and be agile if we face significant disruption. We have extended our services to focus on virtual support around referrals and sharing thought leadership. This means we can be ready to shift our focus to provide services which are most relevant if we face unexpected events. We have also changed our governance, so the team is able to make decisions that support the entire membership – moving from five Boards to one. This ability to be agile is as, if not more, important than risk assessment – as many risks cannot be predicted in the current environment.
How favourable have virtual meetings /conferences been to business continuity, your day to day management and networking activities over the past year? Will you rely on virtual or prefer a hybrid meeting model in 2022?
Virtual meetings have been highly successful – we have doubled the level of engagement across our firms. Members have been able to share practices, learn and collaborate. It has also been easier to bring members together across borders. Member satisfaction has increased as the opportunity to connect has been more appreciated than ever. We have adapted to remain relevant to members. At the start of pandemic members would join large events to feel connected with others. As Zoom/Teams fatigue set in they have been more selective. We focused our webinars on target areas which are relevant to different groups of members; for example, technology transformation, emerging leaders, and implementing Diversity, Equity, and Inclusion practices.
During 2022, we will offer a mix of events. Hybrid events are effective to extend the reach of a conference to a wider range of professionals and they work particularly well for technical topics. They also make events more inclusive for firms who may struggle to travel, and they provide an alternative for those concerned about the risk of the pandemic. We will offer several hybrid options during 2022.
We will also have several in person only events, which are positioned to focus on topics or insights to ensure there is a takeaway. We believe the business case for an in-person meeting must be stronger than in the past – particularly when considering the environmental impact of holding the event. We have a goal to be carbon neutral in how our events are delivered.
We will also have some targeted virtual only events to increase accessibility. These are likely to focus on member introductions and sharing knowledge.
Our events plan for 2022 looks very different to anything we have done before. It provides more choice and aims to encourage continued engagement beyond the event.
What are you looking for in terms of ROI next year in terms of tech investment and training in 2021?
We set a balanced scorecard of targets covering connectivity between members, sharing good practice, quality, growth, and reputation. Targets have been set to reflect the benefits we expect to achieve from the investment in our Association Management System (AMS) and sharing of good practices.
We expect to see more connectivity between members through increasing engagement with our tools and attendance at events. The number of professionals using our services across firms is expected to increase considerably.
We expect firms to adopt good practices, extending new advisory services in data analytics and helping clients reduce their environmental impact.
What new hobbies activities will you take up in 2022 to keep work- life balance?
Climate change is now an existential threat impacting our entire lives and the lives of generations to come. The accountancy profession is needed more than ever to step up to ensure business is ready to create a new form of sustainable capitalism. PrimeGlobal will focus on helping our firms support their clients to have a positive environmental impact.
On a personal level, I will also continue to explore, with my family, steps we can take to reduce our carbon footprint. I have committed to move from dairy milk to oat milk for cereal, coffee, and tea. I will aim to move, almost fully, to plant-based alternatives to meat. And when I must travel, I will off-set the environmental impact. I will continue to support companies who are B Corp and are taking the steps necessary for our future.