Mitigating The Top 5 Threats To Accounting Firms

Broad-based surveys consistently find the likes of firefighters, doctors and nurses the most trusted professions, but when businesses are surveyed, accountants emerge as trusted leaders.

But trust has to be built and nurtured day by day in every interaction and communication.

In this year's Top 30 Survey, conducted at a time of increased economic and business uncertainty, accounting firms nominated staff turnover and the threat of recession as the two top threats (see chart), followed by cyber-attack, internal culture and bad publicity.

Accountants, however, seem remarkably confident in their ability to maintain trust in the face of such challenges.

Godfrey Boyce, chief executive of KPMG, said trust is a fundamental attribute of the profession and every firm aspires to be the trusted adviser.

In the past, client relationships were mostly maintained by partners, but now there is a "wider dependency" because everyone in the firm is expected to nurture them.

"We are a business that relies on relationships, particularly for advisers," he said. "If you lose key people, there is no relationship."

Boyce was less certain why recession could have an effect. However, with automation shifting the emphasis from assurance services to advice, there is a danger.

"Inevitably, it might be that accountants will be held accountable for bad advice," he said. "You have to earn your right to be there and you are only as good as your last piece of work."

top 5
A snapshot of the top five concerns in terms of impact for accounting firms.

Without trust nothing else matters, said Lisa Martin, executive director of Wellington firm GoFi8ure.

"Trust is one of the fundamental elements that lays under the surface in just about every aspect of business."

It's all about "two ears and one mouth", she said. Accountants have to listen and respond authentically. They have to pick up the phone, "say it like it is" and follow through on their promises.

"We follow the OAR methodology – we take ownership, accountability and responsibility," Martin said.

As with many of the firms surveyed, she emphasised the need for constant contact.

"We travel to our client's place of business to offer the best service and work alongside the business owner and their team to achieve successful results.

When a client sees their accountant regularly they are more likely to trust them and involve them in other projects, thoughts and ideas.

"Trust is formed from the following elements: competence, experience and values," Martin said.

According to a Concerto Marketing Group and Research Now survey, when customers trust a company, 83 per cent will recommend that company to others and 82 percent will continue to use that company.

"Business owners need to know they are supported and have the best processes and systems in place to ensure their risk is reduced. It comes down to adding value and providing a solution, not just a service for that client," she said.

Leadership is also required, said Nigel McWilliam, director of Te Aroha-based Diprose Miller.

"Focus on community and being a leader in the community on local issues," he advised.

Staff take leading roles as school trustees, coaches, organising town events and as Chamber of Commerce board members.

"They have the skill-set to make a difference at the governance level, to make organisations effective, turn a profit and grow and assist with council submissions for example," McWilliam said.

This is especially important in a small community to ensure the prosperity and wellbeing of the district where otherwise there is a shortage of sponsors and volunteers.

"Business equals jobs, equals community," McWilliams said.

For accountants everywhere the pressure is on to remain current in the face of regulatory, technological and environmental changes, said EY managing partner Simon O'Connor. Otherwise, the quality of advice will drop and trust will erode.

Staff turnover is a challenge, but also an opportunity, O'Connor said. Staff will want to gain international and other experience, but hopefully will one day bring that back to the firm and to its clients.

Culture and emotional intelligence are key. EY undertakes a massive amount of work to develop its internal culture and diversity and provides clear messages to staff about behaviour.

"A large part of that is providing great client service, being empathetic and showing interest in the lives of the people you are interacting with," he said. "That's all crucial in building trust relationships."

Staples Rodway board member Mike Rudd represents its Auckland firm, one of seven in the federated practice. It has been servicing clients for 73 years.

"Some clients are the third generation of the family," he said.

That happens when relationships are nurtured, he said. Firms know their clients and are responsive to their needs. It's about being in it with clients for the long haul.

"Technology can help build trust by allowing accountants see what is happening in a client business and provide service in real time, but it cannot replace the relationship," he said.

"Staff turnover could be a threat and weaken relationships. It is therefore important those relationships are shared with enough depth by a few key people within the firm."

The federated model allows resources such as staff training to be developed and shared and for member firms to use each other for quality assurance. Professional bodies such as CA ANZ provide an extra level of external review.

"The self-regulatory role is one of their valuable functions, ensuring compliance with ethical guidelines and acceptable competition," Rudd said. "That helps preserve reputation and trust."

That's a view echoed by Warren Perriam, director of Christchurch-based Perriam & Partners. Trust is underpinned by the ethical responsibilities accountants are bound by when members of professional bodies such as CA ANZ.

The assurance services accounting firms provide are all about enabling trust between businesses and a wide variety of internal and external stakeholders.

"We need to demonstrate we are investing in audit quality and give people assurance," he said.

KPMG's Boyce said increased regulation by the Financial Markets Authority has been a positive development in that area.

However, being invested in the community is the final piece in the trust puzzle.

"We're there to achieve things and make a difference," he said. "It all goes to having a social licence to operate and it's becoming more important every year."

 

Source: No Author, 25 November 2018, "Trust is the glue of business" [Blog Post] Retrieved from https://www.stuff.co.nz/business/better-business/108443649/trust-is-the-glue-of-business