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In recent years there has been an enhanced focus on small- and medium-sized practices (SMPs) providing business advisory services and the opportunities available to expand such services. It is recognized that for many SMPs most of their revenue is generated by traditional compliance services, including accounting, audit, and taxation, but with advancements in technology and repetitive tasks being increasingly automated, there’s greater scope for firms to analyze data and offer strategic advice to clients.

The IFAC ‘Practice Transformation Action Plan – A Road Map to the Future’ highlighted the need for firms to be more proactive than reactive and shift from hindsight to foresight using data-driven insights. It also noted that higher value work is future focused based on analysis and interpretation.

A recent article (Small Firms Remain SMEs’ Most Trusted Advisers Through the Pandemic) provided context on how small firms have been critical in supporting their clients, including both providing emotional and practical support through the provision of different services, such as advice on COVID-19 government support programs, cashflow forecasts and utilizing visual dashboard reports for discussions based on real-time figures. These meetings have assisted clients in managing financial difficulties, making tough decisions and taking appropriate actions.

What Clients Want

In considering if, and how, a firm changes or expands its operating model and service line delivery, a critical factor is listening and understanding what the client base is looking for. A survey explored what role they would want their accounting firm to play if price was not an issue and found:

  • 68% strategic business consultancy/ advisory
  • 41% manage various finance operations
  • 31% implement and manage software/ technology
  • 8% Other

In addition, the top advisory services clients want today and going into the future are:

  • 65% Revenue growth and business modelling
  • 46% Budgeting
  • 38% Tax planning
  • 38% Risk management
  • 35% Advanced KPI reporting
  • 32% Cash flow
  • 32% Business valuation
  • 27% Financial dashboards

An Accounting Today Annual survey found that firms were providing (or planning to offer) a wide range of business advisory and consulting services:

  • 67% Coronavirus-related services (12% plan to add)
  • 43% Client Accounting Services (15% plan to add)
  • 40% Wealth management (9% plan to add)
  • 21% Technology/ cybersecurity (9% plan to add)
  • 19% Bankruptcy/ insolvency/ restructuring (6% plan to add)
  • 18% Forensic accounting (6% plan to add)

SMPAG Insights

The IFAC SMP Advisory Group recently discussed trends in this area, including the new market opportunities, how can small firms build the necessary skills, knowledge and expertise and facilitate a mindset shift to change the strategic direction of the firm to be proactive, rather than reactive, to client demands.

Some of the key themes and insights included:

  • SMPs have been struggling to survive due to the pandemic, there are many challenges including responding to increased client demands and keeping up with changes in standards and regulations.
  • Small firms have the benefit of agility, flexibility and being entrepreneurial, but SMPs need to move out of their comfort zone, to be proactive and find the time to be strategic in their approach and recognize the need for change. This may involve “re-inventing” the business model to offer new types of services to remain relevant, considering rebranding from an accounting/tax firm to a more holistic service provider, reviewing what technology should be implemented, and what type of clients should be focused on. There is also value in understanding what services competitors are offering and undertaking market research.
  • All partners and firm leadership need to be in alignment with the strategic direction in the short, medium and long-term, so there is a “united front”. Sufficient time and attention should be given to any changes in procedures and how these are planned, implemented and monitored. It is important that staff are involved throughout the whole process.
  • Client relationship management is vital to ensure the firm is listening to clients and the services being provided are what the market is asking for. It is necessary for firms to highlight to clients the benefits of their services and how they meet their specific needs. COVID has provided an opportunity for clients to realize and value the services that are available, which they may not have previously been aware of. It has also allowed SMPs to develop new skills and specializations.
  • SMPs, in their decision-making process, need to be selective in their choice of new services and specializations to avoid over-expansion within a short period of time and straining their resources, financial, manpower or otherwise.
  • Staff should be empowered to have candid discussions with clients and be open to accept negative feedback. The leadership and “tone at the top” should be open minded to hearing from staff, including how the firm could operate differently and what processes could be undertaken more efficiently.
  • Specific skills should be recruited when appropriate and strong informal networks built to enable firms to facilitate access to the technical expertise and specialists that are needed. It may also provide the opportunity for staff to train and learn so the firm can work towards closing its own experience and knowledge gap. This will also aid the firm with future succession planning.
  • New opportunities are emerging in providing non-financial information/ sustainability advisory, ESG reporting and assurance services. There has also been an enhanced focused on risk & financial management, strategic analysis and technology/ digitization support, including cybersecurity.

The SMPAG also covered the important role for Professional Accountancy Organizations (PAOs) in supporting SMPs in this space, including:

  • Providing platforms for small firms to connect, network and share stories with similar peers.
  • Promoting the range of materials, resources and guidance which are available (for example, the IFAC Guide to Practice Management). This could include a dedicated repository of templates, procedures and information on how to provide different services, examples/ case studies and details on who firms can contact if they encounter challenges or questions about a service, process or critical matter.
  • Facilitating reduced costs with software providers for micro practices to help manage the costs of adopting and implementing new technology.
  • Highlighting the opportunities in advisory services and change mindset in firm leadership that may be needed, including training about disruption, resilience and adaptation.
  • Providing continuing professional development and training opportunities to develop both technical knowledge as well as soft skills and different service offerings. These can be delivered in bite-sized webinar modules (e.g., one hour) that are interactive. There are also examples of PAOs introducing foundation courses and diplomas to enable firms to specialize in certain areas, which is formally recognized once the individual has met set practical experience requirements.
  • Exploring how the education curriculum can change to include more analytical skills for new students to enable them to “tell the story behind financial statements” which are increasingly being automatically generated. 
  • Undertaking research to involve the younger generation of accountants in their views on the profession, brainstorming how they can be best supported and what will be the SMP of the future.

Adhering to Ethical Standards When Providing Advisory Services

In providing business advisory services, SMPs are required to adhere to the highest ethical standards (e.g. those stated in the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA). The five fundamental principles include ‘Professional Competence and Due Care’ (e.g., attaining and maintaining professional knowledge and skill at the level required to ensure that a client or employing organization receives competent professional service). The IESBA Code also covers non-assurance services (NAS) provided to an audit client. The provisions were recently revised clarifying and addressing the circumstances in which firms may or may not provide a NAS to an audit or assurance client. These will be effective for audits and reviews of financial statements for periods beginning on or after December 15, 2022. For more information on recent changes to the IESBA Code for SMPs see here.

Practice Transformation

IFAC has a dedicated practice transformation webpage featuring articles, resources and examples of innovative practitioners. It is recognized that every firm will be different, and the level of action to “transform” will depend on a range of factors, including the lifecycle of the practice, partners’ motivation, the size and services provided, availability of resources, the firm’s location and the type and number of clients served. The actions taken by each firm will need to be tailored to its individual circumstances and objectives.

The future offers SMPs significant opportunities to grow and adapt to serve a rapidly changing world and the firms that will succeed will be focused on embracing change, leveraging technology and providing relevant and value-added services to their clients. 

Quick Poll

In order to help gauge the range of services being provided we are interested in learning what types of business advisory and consulting services SMPs are currently providing.


Want to Know More?

The SMPAG has discussed building advisory services in past meetings and there have been multiple articles and videos published on the Knowledge Gateway to assist SMPs, including:

Johnson Kong

Johnson Kong was appointed as a Member of the Small and Medium Practices Advisory Group in November 2017. He was nominated by the Hong Kong Institute of Certified Public Accountants ("HKICPA"). He is the Deputy Chair of the SMPAG and chairs the SMP Business Support Task Force.

Mr. Kong, a Past President of HKICPA and an appointed Accounting Advisor to the PRC Ministry of Finance, has over 35 years of professional accounting experience and specializes in restructuring, insolvency, forensic and litigation support works. He is the Managing Director of BDO Hong Kong, a Firm which he has been with for over 30 years, and responsible for all its non-Assurance services.

Christopher Arnold


Christopher Arnold is a Director at the International Federation of Accountants (IFAC). He leads activities on contributing to and promoting the development, adoption and implementation of high-quality international standards, including the Member Compliance Program, Intellectual Property and Translations. Christopher is also responsible for IFAC’s SME (small- and medium-sized entities), SMP (small- and medium-sized practices) and research initiatives, which include developing thought leadership, public policy and advocacy. He was previously an Audit Manager for Deloitte and qualified as a professional accountant in a mid-tier accountancy practice in London (now called PKF-Littlejohn LLP). Christopher started his career as a Small Business Policy Adviser at the Association of Chartered Certified Accountants (ACCA).


Carl Peterson

Vice President – Small Firm Interests, AICPA

Carl Peterson is Vice President of Small Firms at the Association of International Certified Professional Accountants. In this role, he serves as the small firm advocate and representative for the profession. In this capacity, he meets with firms regularly to understand their issues and represent these firms from an advocacy and firm development perspective. Peterson serves as the voice of small firms within the AICPA on standard-setting, regulatory and small business issues. He is responsible for ensuring AICPA initiatives continue to meet the needs of small firms. Carl has been identified as one of the Top 100 Influential People in Accounting by Accounting Today, 2014 thru 2021. Carl is also a technical advisor on the International Federation of Accountants Small Medium Practice Advisory Group.