In March 2020, at the beginning of the COVID-19 crisis in the US and Latin America, IFAC held its first virtual discussion with professional accountancy organizations (PAOs) from Latin America and Europe (Ibero-American PAO Response to COVID-19).
At that time, PAOs were primarily focused on quickly making necessary changes to ensure their business continuity and financial viability by pivoting to virtual operations and greater digitalization of value-add services. Some were better prepared than others to face this challenge, while others needed to start almost from zero. In our second forum, almost one month later, PAOs discussed more of the impacts and effects of the COVID-19 crisis. In this second forum, 40 PAO representatives from over 18 countries, including Ibero-American and Portuguese-speaking African countries, shared their experiences.
Differing Capacities to Respond
- There is a range of capacity and development amongst PAOs, which has been exacerbated by the current environment. Regardless, most PAOs developed business continuity plans to ensure their operation during the crisis.
- Adaptability, flexibility, and reprioritization were recurring themes. Leaders are both adapting to a virtual operating environment and must also encourage staff and volunteers to be agile as well.
- A small number of PAOs, unfortunately, had to suspend their operations during mandatory lockdowns and furloughed their staff. Some boards were not ready to pivot and instead prioritized debt restructuring and cash flow.
It Takes More than Just Software
- Most PAOs had established plans to develop virtual training platforms before the crisis. Those that had advanced plans were able to push for faster implementation and service delivery. Others are using different media platforms, such as YouTube, to reach their members and stakeholders.
- However, just having a virtual platform does not guarantee maintaining revenue and member engagement. There are some PAOs that have not seen income from training activities for three main reasons: a rapid switch to something untraditional (virtual vs. in-person training); a lack of experienced online trainers; and financial limitations among attendees.
- In contrast, other PAOs that can financially do so have decided to provide all training for free for the remainder of the year.
- PAOs have also observed increased competition in the virtual learning space. There are now numerous offerings from other national and international PAOs, accounting and auditing firms, universities, and individuals. PAOs have started developing strategies to attract their members as well as other professionals to trainings by focusing on quality and brand recognition in their respective jurisdictions.
Cash Flow Pressures
- PAOs are not exempt from the current risk of corporate failures. Organizations with voluntary membership have been more impacted and are facing significant challenges in maintaining their cash flows. Some PAOs reported an abrupt membership decline of 30%, while others are postponing dues collection for 2–3 months or assessing a membership fee reduction.
- PAOs with mandatory membership are evaluating the impacts on their members, particularly small- and medium-sized practices, which are facing the greatest pressure and liquidity risks.
Keeping Pace with the Regulatory Landscape
- PAOs continue their essential public interest role of supporting governments, businesses, and members during this turbulent period. Forum participants noted the importance of being an actor in this area to avoid any regulatory fragmentation and miscommunication among stakeholders as some jurisdictions have issued over 100 new laws and regulations that affect the accountancy profession.
Some of the issues discussed during the virtual regional forum are not new or due to the current crisis. Rather, the issues have simply become more visible and urgent in this new context. It may be difficult to acknowledge but PAOs in Latin America, particularly, will only overcome the new obstacles by tackling the underlying, historical issues such as: aging membership; difficulties in attracting the next generation of talent and professionals; governance structures that resist innovation and open mindsets; and other operational and financial constraints.
Relevancy is a key pillar of IFAC’s PAO capacity building framework, which IFAC has written on previously in What Does a Future-Ready PAO Look Like? and Building a Future-Ready PAO. It is hard to anticipate what the end consequences of the pandemic will be on the profession. However, the crisis brings opportunities for PAOs to enhance their relevancy and societal value by creating new products, innovating their services, leveraging technology, improving communications, and developing new strategies to attract and retain members.
To be future-ready, PAOs must be prepared to think and act now. Success requires a systemic approach to change: a cycle of transformation whereby PAOs envision, plan, implement, and assess, continually learning as they go and keeping the central theme of relevancy in mind.
For additional resources, guidance, and advice from the IFAC community on adjusting and managing during this rapidly evolving situation, visit the IFAC COVID-19 web page, which is continually updated. For PAOs that may need support in offering CPD online, please see IFAC’s Online CPD Services for Professional Accountancy Organizations webpage, which lists several IFAC member organizations that are ready to assist PAOs with online CPD for members.