Optimistic about 2015 Growth
Small- and medium-sized accountancy practices (SMPs) around the world are generally optimistic about the year ahead, according to the results of the 2014 IFAC Global SMP Survey. Out of four areas—audit and assurance; accounting, compilation, and other non-assurance/related services; tax; and advisory/consulting services—tax and business advisory were nearly tied in terms of pace of expected growth, with about half of respondents expecting at least moderate growth in each area.
While SMPs have long engaged in compliance-driven tax engagements for their clients, business advisory is emerging as an area of increasing importance to SMPs’ growth. In 2013, advisory ranked third out of the four service areas in terms of pace of projected growth, while in 2014, advisory (13%) edged out tax (11%) as the area most likely to drive substantial revenue increases in the coming year.
The results also indicate that advisory is now commonly offered by SMPs, as 93% of respondents provided some form of advisory in 2014. Tax planning is the most common type of advisory service by a wide margin, suggesting that tax services—whether in the realm of compliance or advisory—are driving revenues overall.
“The findings from the 2014 Survey are critical to increasing, and acting on, our understanding of this critical sector,” said IFAC SMP Committee Chair Giancarlo Attolini. “Over 60 IFAC member organizations and regional bodies participated in the survey, allowing us to collect an even broader sample of responses than in previous years, while contributing to our mission of collaborating with our member organizations in building and supporting a global community of SMPs.”
Additional findings from the survey included:
- The regulatory environment and competition topped the list of environmental factors most likely to impact SMPs over the next five years;
- Business intelligence/data analysis software and customer relationship management/document management are the two types of technology most likely to impact SMPs in the next five years; and
- While only 27% of SMPs are currently part of a network, association, or alliance, another quarter are considering joining one.
The survey also included a number of questions about SMPs’ clients—typically small- and medium-sized entities (SMEs). Key findings included:
- While the majority of respondents (87%) reported that at least some of their SME clients seeking financing experienced difficulty in 2014, for most respondents, a relatively small portion (less than 25% of total clients) experienced difficulty;
- Over half (54%) of respondents reported that at least one of their SME clients experienced some type of financial crime, but volume of crimes overall was low, with most respondents indicating that less than 5% of their total clients experienced a crime; and
- Many SMPs are part of the globalization trend; 44% of total respondents have at least 5% of clients that operate internationally, while 69% of the largest SMPs (those with 21+ partners and staff) have at least 5% international clients.
The 2014 IFAC Global SMP Survey was conducted in 21 languages between November 3 and December 29, 2014 and received 5,083 responses from 135 countries. The survey was undertaken in collaboration with lead researchers from the University of Dayton (US), and the report was authored by professors Timothy and Marsha Keune. IFAC wishes to thank the many member and regional organizations that helped with translation and distribution of the survey. See the full results and subscribe to SMP updates on the IFAC website: www.ifac.org/SMP.
Some regions, countries, and larger SMPs were not well represented in the survey results; caution should be exercised when attempting to generalize survey results to specific countries, specific regions, or SMPs of all sizes.
About the SMP Committee
The SMP Committee of the International Federation of Accountants® (IFAC®) represents the interests of professional accountants operating in small- and medium-sized practices (SMPs). The committee develops guidance and tools and works to ensure the needs of the SMPs are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.
IFAC® is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of more than 175 members and associates in 130 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.