2021: How the accounting industry has adapted to change and uncertainty
Looking back to 12 months ago, 2021 offered the prospect of a return to business and a return to normalcy, with government support for a pandemic ending and the assumption that vaccination would gain the upper hand against Covid-19.
In truth, the year was largely a continuation of 2020, made more difficult with a no-deal Brexit, supply chain issues, unique cash flow challenges, rising costs and staff shortages.
As the year draws to a close, there is a growing expectation that many of these temporary adaptations will now be incorporated into long-term business operations. This has resulted in many business practices changing the face and a pivoting of services in order to survive.
Despite these unprecedented hurdles, 2021 has sparked optimism. The increased demand for the industry’s unique and solution-focused consulting services has encouraged further growth.
Accountants have thrived, embracing increasingly complex legislative changes and helping businesses survive and thrive during tough times.
An interesting development has been the strengthening of international relationships as accountants abroad attempt to learn from UK best practices, and UK accountants and practices establish international offices or partnerships for the very first time.
Obviously, the UK’s exit from the EU created a demand and necessary opportunities for the practice beyond its borders.
The digital transformation has continued, as the industry seeks ways to further embrace the digital shift and seize the opportunities presented by emerging technologies.
Only a few years ago, new technologies were predicted by some to be the beginning of the end of the industry, but more and more companies are understanding how to harness the potential of digital tools and seeing how technology will support them rather than replace or limit them. accountants. This is especially true with technologies such as cloud-based data management, process automation, and advanced analytics, which only add value. For example, automation improves efficiency, freeing agents to focus on strategic tasks that require creativity and collaboration.
This digital shift is not only manifesting through more and more online services, but also through knowledge sharing through conferences, board meetings and local gatherings. There is an ever-growing appetite for smaller, more manageable pieces of practical advice and training, reflecting an increased need for up-to-date, real-world advice.
As expected, 2021 has been a year of extensive consultations and legislative changes. The Institute of Financial Accountants (IFA) responded to 11 government consultations, covering everything from economic crime and fraud to the role and effectiveness of the Companies House, the role and effectiveness of the HMRC, the simplification of tax system, reform of the base period, and timely payments.
The IFA also challenged the government on the assumption that professional liability insurance would in any way raise the standards of unqualified accountants.
Simultaneously, new legislation also came into force, so accountants had to tackle: Making Tax Digital 2, IR35 changes, post-Brexit sanctions and trade changes, and VAT reverse charges to name a few. some.
Money laundering and fraud
One area the IFA consulted on was emerging threats to the industry, with money laundering reaching hundreds of billions of pounds each year.
The strategies of criminals are constantly evolving, according to the National Crime Agency (NCA), with the National Risk Assessment (NRA) of money laundering and terrorist financing warning that the risk that accounting service providers could be used to facilitate money laundering money is considered high.
The pandemic has only exacerbated the growing problem of fraud, and since it has shown no signs of slowing down through 2021, the efforts of fraudsters to find new ways to operate have also failed. , Furlough fraud being an example of a permanent risk factor.
The pandemic has resulted in an increase in the provision of services through remote methods such as cloud-based accounting platforms, potentially exposing the practices to higher risk. There’s also the growing threat brought by China’s underground banking, with the IFA urging accountants to regularly review the risk assessments of their clients and the business.
As the door to 2021 closes and the door to 2022 opens, one thing now high on everyone’s agenda is tackling climate change, as businesses focus more on their impact on society. and the environment, and that the accounting profession is facing new demands to play its role. This also presents another opportunity for the industry, as accountants may be in a good position to help SMEs perform complex calculations and identify the climate impact of their business.