Note to Editors: This article is available for IFAC member organizations to publish in their journals and/or websites. Email permissions@ifac.org for access and copyright information. 

The acquisition of new clients continues to be a dominant driver of profitability for small- and medium-sized practices (SMPs). Indeed, in the latest edition of the IFAC SMP Quick Poll, the largest portion of respondents identified acquisition of new clients as the main driver of practice profitability—by a wide margin (see chart below).

While SMPs understand the importance of improving operational leverage (doing more with less), improving productivity (e.g., changing work practices or introducing technology), reducing overheads, and better utilization of assets, these are not the main drivers of profitability for most SMPs. This is not surprising given the fact that practice overheads are relatively fixed.

The poll results seem to question the wisdom of many practice management “gurus” who say that the cost of acquiring a new client is far higher than the cost of retaining, or selling more services to, an existing client. What those “gurus” may be failing to recognize is the full potential and cost effectiveness of a marketing campaign that includes low-cost social media.

This article looks at promotion and marketing and, in particular, the role of social media in acquiring new clients and driving practice profitability. 

Branding

The first step of a marketing strategy is to identify your target customers and what they need. You then have to determine how you can satisfy those needs at a profit and, at the same time, differentiate yourself from your competitors. This becomes your brand. The aim of your marketing strategy is to have people associate your brand with their needs and desires, choose you over the competition, and, if you do it right, pay a premium for your services.

Promotion and Marketing

An organic growth strategy involves leveraging promotion and marketing activities to build brand and attract new clients or sell additional services to existing clients. Remember that most businesses in the market are likely to already have an accountant. In the majority of cases, that means for you to grow your practice you will need to win clients from rival practices. And, in order to do that, you must offer a compelling reason for them to switch. This makes promotion and marketing more important than ever—and demands that practices build the capability to proficiently promote and market their brand and service offerings. You will likely be faced with the classic “make-or-buy” dilemma, that of using (and training as needed) existing staff to do promotion and marketing, or else recruiting or outsourcing for the requisite skills.

Promotion and marketing efforts are most effective when a number of activities and channels are used simultaneously: this harnesses the momentum of such efforts and is likely to be more impactful. There are many “tried and true” strategies for marketing but the newest one, social media, has already broken the mold. Social media marketing has rapidly grown in prominence and gone from marginal to mainstream in the marketing space. Social media is a low-cost channel with a very wide reach into your target market.

Social Media Marketing

Social media essentially has taken traditional word-of-mouth marketing (historically the norm for accountants) and moved it to a digital space, exponentially increasing opportunities to influence. It is one of the most powerful tools to engage customers and drive revenue growth. But according to Steven D. Strauss, small business expert and author of The Small Business Bible, while small business owners recognize how important social media is to their success, they’re not taking advantage of social media’s full potential.¹ And, chances are, the same applies to SMPs: after all, SMPs are effectively small businesses in the accountancy sector.

Getting started in social media marketing and deciding whether it can benefit your practice can be quite overwhelming—even scary, at first. Here are some steps to take when building a social media presence:

1. Set aside preconceived notions—social media carries risks but the rewards are greater: it will take time and expense to plan and execute but there are many tools, resources, and articles to help.
2. Learn about the what, why, and how—take the time to read and educate yourself about social media, including Twitter (see Twitter’s Small Business Guide), LinkedIn, Facebook, and blogging, and see what your peers are doing.
3. Check out the tools and resources available to help—there is a growing suite of tools, resources, and guidance available, for example, the AICPA PCPS has developed a number of resources, many of which are available for free, including a social media toolkit and articles.
4. Create a strategy and action plan—define goals, decide how you will measure success and allocate responsibility, then start out small by, for example, pilot testing one of the tools. See “10 Questions to Ask When Creating a Social Media Marketing Plan.”
5. Implement the plan—aim to provide content that creates conversation rather than advertises and involve staff from the millennial generation as they often have the most experience.
6. Periodically evaluate, analyze, and update the plan—track your efforts and monitor the return on investment using common metrics including likes, shares, followers, traffic, and conversions.
7. Consider the need for a policy—this can help manage the risks and reap the rewards.

Resources

IFAC’s website hosts a range of resources and tools to help SMPs grow their practices, especially the Guide to Practice Management for Small- and Medium-Sized Practices).

My fellow board members and I are here for a meeting of the International Ethics Standards Board for Accountants, the Ethics Board for short. It is great to be in Sydney, for many of us for the first time.

The Ethics Board is an independent board that sets the ethical standards for all accountants who are affiliated with the International Federation of Accountants, or IFAC. That is 2.5 million accountants in 129 countries around the world and in different lines of work. Virtually all auditors are covered by our ethics standards, but also many other accountants in public practices—such as tax advisors, corporate finance specialists, and IT systems advisors—and many accountants in business.

Twenty-three of the largest international accounting networks, including the Big 4, have also committed to following our ethics standards on transnational audits. This means that virtually all listed companies around the world are audited by a firm that has made the commitment to follow our ethics standards with respect to such audits.

The very first sentence in our Ethics code is: “A distinguishing mark of the accountancy profession is its acceptance of the responsibility to act in the public interest.” This is not a new idea. When a number of men got together in Edinburgh in 1864 to create the world’s first institute of professional accountants, they had the same idea.

They phrased it slightly differently:

…the Petitioners were induced to form themselves into a Society called the Institute of Accountants in Edinburgh, with a view to unite into one body those at present practicing the profession and to promote the objects which they entertain in common; and that the Petitioners conceive that it would tend to secure in the members of the profession the qualifications which are essential to the proper performance of its duties, and would consequently conduce much to the benefit of the public….. [1]

Their brethren in England were a little bit behind, but in the Charter of the Institute of Chartered Accountants in England and Wales, it was stated that:

That the said societies were not established for the purposes of gain nor do the members thereof derive or seek any pecuniary profit from their membership but the societies aim at the elevation of the profession of public accountants as a whole and the promotion of their efficiency and usefulness by compelling the observance of strict rules of conduct as a condition of membership and by setting up a high standard of professional and general education and knowledge … [and it] would be for the public benefit if the members thereof were incorporated as one body… [which] would … tend to gradually raise [the profession’s] character and thus to secure for the community the existence of a class of persons well qualified to be employed in the responsible and difficult duties often devolving on Public Accountants. [2]

This commitment to serve the public interest is like a strong red thread, running throughout the profession’s history and connecting the past to the present. The public interest is as important today as it was 160 years ago in Edinburgh. Today, it is of course phrased slightly differently.

The Institute of Certified Public Accountants of Rwanda became as associate member of IFAC last year. And the institute’s mission statement starts: “To empower our members and partner with stakeholders to serve the public interest….”

Few other professions have voluntarily and formally taken on such a strong commitment to serve the public interest. Physicians have, obviously, but no other professions really, at least not to the same degree.

This is a very big strength for the accountancy profession, its most important attribute for building goodwill. The general public has the sense—probably very vague and unarticulated—that accountants, and especially auditors, act in the public interest.

This, in my view, helps to explain in large part why auditors and accountants have fared much better than bankers, rating agencies, corporate CEOs, or politicians during and after the financial crisis of the last six years.

Our Code of Ethics is a very robust code:

• It covers all the main ethics issues.
• It is demanding.
• It is regularly updated to address new concerns.
• It is enforced.
• And accountants abide by it—at least the vast majority of them.

But can it really be true that almost all accountants abide by our Code? If so, why didn’t the auditors and the accountants warn about the impending financial crisis? The answer, I believe, is that many people were caught flat-footed—bankers, regulators, policy-makers, and also auditors and accountants.

They were not skeptical enough. They hadn’t experienced anything like it before. They were swept away by the euphoria of the pre-2007 boom. They were in the same situation as most everyone else.

When you informally talk to audit regulators about why auditors failed to see and warn about the financial crisis, these are the kind of explanations they often put forward. The view is that cases of unethical behavior were very few. The failings were of a different kind.

Still there is a problem. The goodwill created by the profession’s commitment to act in the public interest has to be continually reinforced. My personal view is that the profession is currently slowly depleting its long-standing goodwill, not by design but by not forcefully and publicly enough making the case that it is committed to acting in the public interest.

The accountancy profession should much more actively make the case that:

• it has a strict Code of Ethics;
• it is adhering to it;
• this code is set by an independent body; and
• it welcomes that those accountants who do not comply with the Code are disciplined.

Surely, this is not an easy road to take. On the other hand, not making the case that the profession is committed to acting in the public interest will most likely slowly reduce the public trust in the profession and thus the profession’s standing. It will be weaker when facing problems and criticism.

So I believe that the Ethics Board and the profession should make the case more strongly than we do today that:

• the profession’s Ethics Code is strong; and
• the profession does act in the public interest.

To stimulate a global debate on preparing accountants for finance leadership, IFAC, the global organization for the accountancy profession, today released a new Discussion Paper, The Role and Expectations of a CFO. The paper features five principles that highlight the changing expectations, scope, and mandate of the chief financial officer (CFO) and finance leadership roles and recommends actions professional accountancy organizations and employers can take to prepare professional accountants for career progression to finance leadership.

These principles and recommended actions raise awareness of the implications for the education, training, and development of professional accountants. The Discussion Paper will be used as a basis to engage professional accountancy organizations, employers, and other stakeholders to share and enhance approaches to preparing professional accountants for finance leadership.

The Discussion Paper is also important to the regulatory community, which strives for well-governed and managed organizations. The CFO is a critical part of a chain of actors—including the governing body, chief executive officer, audit committee, and auditor—that share responsibility for ensuring sustainable value creation, as well as relevant organizational reporting. The advantages that professional accountants’ training, expertise, and experience bring to the CFO role are not always recognized, especially professional accountants’ combination of ethical and technical mindsets with business acumen and organizational awareness.

“In these tough economic times, the objectivity and values of the professional accountant can be of enormous value to finance leadership positions in organizations in every economic sector,” said Roger Tabor, chair of IFAC’s Professional Accountants in Business (PAIB) Committee. “But professional accountants in finance leadership roles aren’t universal and, in some parts of the world, their numbers are declining. So it is more important than ever for the profession to develop outstanding professionals who are well equipped to work in business and government, and to take on finance leadership roles.”

“Working closely with employers to understand their needs and requirements helps the accountancy profession to deliver business-ready accountants,” according to Susanna Chiu, chair of the PAIB Committee’s Role, Domain, and Competency Advisory Group, president of the Hong Kong Institute of Certified Public Accountants, and director of Li & Fung Development (China) Ltd. “The education and training of professional accountants should incorporate broader managerial capabilities and skills. Professional accountancy organizations should foster a commitment to lifelong learning and become more innovative in how they engage and serve professional accountants in business.”

A panel of finance leaders from China and the PAIB Committee will debate the key requirements and expectations of finance leadership and highlight what professional accountants need to do to prepare for leadership roles at the Global PAIB Forum, hosted by the Chinese Institute of Certified Public Accountants in Beijing, China, on October 16, 2013. The Forum will facilitate discussion and encourage closer relationships between professional accountants, professional accountancy organizations, employers, and other stakeholders.

An At a Glance publication is also available to provide an overview of the Discussion Paper, key discussion questions, and additional details relating to this initiative.

How to Participate
IFAC will use the Discussion Paper in conjunction with outreach to initiate a global debate among professional accountancy organizations, professional accountants, and other stakeholders. Respondents can also submit their comments electronically through the IFAC website, using the “Submit a Comment” button on the Discussion Paper page.

About the PAIB Committee
The PAIB Committee serves IFAC member bodies and professional accountants worldwide who work in commerce, industry, financial services, education, and the public and the not-for-profit sectors. Its aim is to promote and contribute to the value of professional accountants in business by increasing awareness of the important roles professional accountants play, supporting member bodies in enhancing the competence of their members, and facilitating the communication and sharing of good practices and ideas.

About IFAC
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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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IFAC Chief Executive Officer Fayez Choudhury and International Public Sector Accounting Standards Board (IPSASB) Deputy Chair Ron Salole recently participated in a World Bank Group-International Monetary Fund (IMF) seminar, “Strengthening Fiscal Transparency and Government Accounting,” held Tuesday, October 8 in Washington, DC.

The seminar was part of the World Bank Group-IMF 2013 Annual Meeting, bringing together central bankers, ministers of finance and development, private sector executives, and academics to discuss issues of global concern, including the world economic outlook, poverty eradication, economic development, and aid effectiveness.

Bertrand Badré, Managing Director and World Bank Group Chief Financial Officer, delivered a welcome address to the seminar participants, followed by a keynote speech from Gerd Schwartz, Deputy Director, IMF Fiscal Affairs Department.

Messrs. Choudhury and Salole were panelists for “Improving Government Accounting,” chaired by Charles McDonough, Vice President and Controller of the World Bank. The panel explored the importance of accrual accounting, opportunities and challenges with its implementation, and the role that the International Public Sector Accounting Standards (IPSASs) play for transparency and quality of government accounting.

"Sound government finances directly contribute to the efforts to restore or gain confidence in the public sector,” Mr. Badré said. “It is an important step in building trust in governments as the transparency, reliability, and accountability that result from such practices support value for taxpayer’s money.”

“IFAC’s support of high-quality international standards for the public sector will be instrumental in promoting more comprehensive and reliable fiscal reporting by governments around the world,” said Mr. Schwartz.

“Poor governmental reporting represents a threat to global financial stability and economic growth that must be addressed,” Mr. Choudhury said, citing the 2012 IMF paper Fiscal Transparency, Accountability and Risk, which highlighted the seriousness and extent of current inadequacies in governments’ fiscal reporting and accountability and underscored the risks associated with them.

“IFAC has long recognized that a fundamental way to protect the interests of the public and investors is to develop, promote, and enforce a common set of high-quality international financial reporting standards for the public sector,” he added. “That is why the IPSASB, an independent standard-setting board, was created to develop IPSASs.”

“We see the adoption of IPSASs as important to all economies around the world,” said Mr. Salole. “Additionally, there are some advanced economies that still follow cash accounting and we see this as inadequate in terms of governmental reporting.”

The event also featured regional briefings, press conferences, and other events focused on the global economy, international development, and the world's financial systems. The IMF also used the seminar to launch the new Fiscal Transparency Code, which will serve as a basis for a renewed push for greater fiscal transparency.

About the IPSASB
The IPSASB develops accounting standards and guidance for use by public sector entities. The structures and processes that support the operations of the IPSASB are facilitated by IFAC. The IPSASB receives support (both direct financial and in-kind) from the World Bank, the Asian Development Bank, the Chartered Professional Accountants of Canada, the South African Accounting Standards Board, and the governments of Canada, New Zealand, and Switzerland.

About IFAC
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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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Thank you for signing up to receive eNews from the International Ethics Standards Board for Accountants (IESBA, the Ethics Board). This edition provides a summary of decisions made at the Ethics Board’s meeting held September 16-18, 2013, in Sydney, Australia. See the Meeting Page for the meeting highlights, including a podcast summary and agenda papers

Highlights from the IESBA's September 16-18, 2013 meeting in Sydney, Australia.

00:32 Overview

1:04 Part C of the Code (Professional Accountants in Business)

2:52 Suspected Illegal Acts

6:54 Long Association

9:44 Structure of the Code

As part of the continuing effort to strengthen the accountancy profession globally, the Professional Accountancy Organization Global Development Report was released today. The report is an initiative of MOSAIC, the Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration.

The report was created to provide an assessment of professional accountancy organization (PAO) development at the global, regional, and national levels. Through its 10 key findings, the report establishes the success factors and challenges associated with building a strong, sustainable accountancy profession supported by an effective PAO.

“As an integral part of national financial infrastructures, PAOs can provide significant contributions to the financial, economic, and social development of nations,” said Deborah Williams, MOSAIC Steering Committee co-chair and chair of the IFAC PAO Development Committee. “Capacity-building efforts benefit the global economy since properly functioning PAOs support the production of high-quality financial information and contribute to public and private sector development, economic growth, and the aid-effectiveness agenda.”

The report’s key findings include the importance of undertaking PAO development comprehensively at the national level; strengthening legal and regulatory foundations; furthering implementation of international standards; and supporting internal strengthening of PAOs. The findings will provide direction for the MOSAIC Steering Committee in its future endeavors.

“This report will provide vital direction on where to focus efforts to increase PAO capacity and improve the quality of public and private sector accounting and financial management, goals that underpin MOSAIC,” said Jennifer Thompson, MOSAIC Steering Committee co-chair and chief financial management officer at the World Bank. “It allows us to further the principles of aid effectiveness—embodied in the Paris Declaration, Accra Agenda for Action, and the Busan Partnership for Effective Development Cooperation—to contribute to economic growth and a reduction in poverty.”

MOSAIC is a historic Memorandum of Understanding that sets out the basis for improving cooperation and collaboration between IFAC, international donors, and the international development community. With 13 signatories, it provides the foundation for an aligned approach to increase the capacity of PAOs and improve the quality of financial management systems in emerging economies. The PAO Global Development Report was co-financed by the African Development Bank, Asian Development Bank, Inter-American Development Bank, and World Bank.

About MOSAIC
MOSAIC (the Memorandum of Understanding to Strengthen Accountancy and Improve Collaboration) sets out the basis for improving cooperation and collaboration between IFAC, international donors, and the international development community. MOSAIC’s objective is to increase the capacity of PAOs in partner countries to improve the quality of public and private sector accountancy and financial management with a view toward enhancing the effectiveness and efficiency of donor assistance, contributing to economic growth, and reducing poverty. IFAC, the global organization for the accountancy profession, serves as the Secretariat for MOSAIC.

About IFAC
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 173 members and associates in 129 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.

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