Future Firms: evolving accounting practice

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The ecosystem of accounting firms was indispensable to 20th century business. Rooted deeply in the industrial age expansion of measurement, reporting, and assurance, accounting practices have enabled organisations and individuals to grow and prosper. While often invisible to the general public, accountancy firms have played a key role in fostering strong capital markets on Wall Street and have acted as the backbone of the High Street.

Today, the nature of the firms in many sectors is undergoing profound change and this brings a fresh challenge to the historical role of the profession in creating a reliable, trusted business environment. If professional services firms are not able to adapt and evolve, then they risk becoming less relevant, in contrast to emerging startups and new business types, as the existing structure, culture and practice might be out of sync with the way modern organisations operate.

How can we build on this to have a similar impact in a future of big data, fluid markets and the changing nature of the firm?

How can professional values and ethics act alongside regulation to ensure good behaviour in business?

How can firms add value to the work of individual professionals?

How can we improve public dialogue and awareness of the evolving role of professional services firms?

How can we reimagine the accounting practice of 21st century society?

These are the key questions that have emerged in our AuditFutures action-research programme. When ICAEW set up AuditFutures in collaboration with the Finance Innovation Lab, we established a systemic approach for looking at the future of the profession, thinking holistically in four dimensions – society, services, people and institutions. In the search for institutional changes that will enable us to do work better, we need to reflect on the business function and regulatory governance of the profession, the organisation of the firms and markets, the policy process and our regulatory framework. There is a need to move away from making the old cyclical arguments towards engaging in new discussions that actively question the status quo and prototype solutions.

Future Firms Framework

In December, we launched an exploratory project to build a framework that helps professional services firms – from international corporate networks to local accounting practices – to think about how the profession can evolve, given the changes in society, business, technology and culture. The idea for this project originated at the AuditJam two-day innovation hackaton that we hosted in April 2015.

This is a very practical project that can bring together existing ideas about the future of the firms and, working with a variety to ICAEW members, build up a solid framework that outlines the contours of the future firm and what this might mean for the profession as a whole. We have invited an influential thought-leader as a partner on the project, ShiftBase – a think-tank that brings a decade of research on the future of work, focusing on the impact of digital transformation and the societal case for upgrading our organisational models and institutions. Together, with input from a wide range of ICAEW member firms, we will undertake original research and will build a knowledge base of useful techniques and models.04.02.2016-Whole-framework-view-all-labels-showing_white-background

 

Searching for questions

The goal of AuditFutures is not necessary to provide the answers to the big questions the profession is facing. Instead, we want to catalyse discussions and build a platform to democratically engage with these big problems. Our goal with the Future Firms is to inspire collaborative action among the accountancy firms and to build a research framework as a practical tool for individual firms and a platform for dialogue between the firms and society.

A number of organisations are developing interesting work in this space and variety of strategic projects are underway internally within most accounting firms. ICAEW ran a very prolific quantitative and qualitative research – Tomorrow’s Practice – to identify what the forces of change were on practices and to understand what the current state of play was. Therefore, we are setting this project to consolidate the most interesting and thoughtful ideas and research and to explore how we can think about the accounting practice firm of 21st century.

Accepting challenges

Creating a practical tool for dialogue and innovation will bring some challenges but instead of navigating around them, we will turn them into cornerstones of the project. The most obvious one is about size and definition. Professional services firms are extremely diverse in size, structure and scope and there is still a big challenge to construct a way to think about the units of work that help the profession deliver services and proves to be valuable to a big 4 firm and a sole practitioner.

Another challenge is to build a framework that can help organisations evolve and/or plan for disruption but also can help professionals connect into new and disruptive organisations. This arises on the agenda of many large corporations as they try to embrace disruption as opportunity while also try to balance the adeptness of long-term strategic planning and traditional hierarchical approaches to innovation.

The most interesting challenge is how to build a precompetitive space for knowledge sharing and collaboration that plays in harmony with the commercial competitiveness of individual firms. I believe that while the Future Firms framework will prove to be very useful and valuable strategic toolkit for businesses, it will also help the accounting practices to come together. It will help to demonstrate that professional in professional services firms is about belonging to a profession. It will articulate an aspiration to contribute to a greater social purpose and to empower individuals as key to running a successful and profitable business.

We need your input

The project has begun with a research study to gather and synthesise existing publications and initiatives. If you want to suggest research or articles – from academia, practice or industry – please use the form on our website. We will welcome all views on the dimensions of a future firm and we encourage you to get in touch.

This will combine roundtable discussions and a web-based survey, which will inform an evolving issue map. Please contact us if you are interested in hosting a roundtable discussion at your firm or to sign up to the web-based survey.

A central output of this research study is the multi-dimensional Future Firm Framework, which is both a tool for dialogue and a method for capturing the outcome of the research. The framework will be represented by a dynamic, interactive issues map that we will update periodically based on participant input, and these can be shared and debated on our blog. We will host an Accountancy Salon to share the key findings of this exciting cross-professional collaboration.