IFA insights into accounting 2024: Embracing change and innovation

As we embark on 2024, the accounting sector stands at the cusp of significant evolution, driven by technological advancements, legislative changes, and a growing emphasis on sustainability and flexibility in work practices. Jonathan Barber, executive director UK of the Institute of Financial Accountants (IFA), offers insights into these developments and their implications for the industry.

The digital revolution in accounting

The accounting sector is witnessing a paradigm shift with the integration of Artificial Intelligence (AI) and automation. Approximately 40% of accounting operations are now automated, enhancing both productivity and accuracy. AI, with its ability to process large datasets, identify patterns, and predict trends, is becoming indispensable. This technological leap is not without its challenges, as professionals must rapidly adapt to these changes to avoid being left behind.

Navigating legislative changes

2024 brings a wave of legislative changes, each with significant implications for accounting practices. The updated Economic Crime Plan addresses address issues like fraud, money laundering, and sanctions evasion. This includes the introduction of stronger anti-money laundering powers, such as the seizure of criminal cryptocurrency assets and reforms to limited partnerships. Additionally, Companies House is undergoing its most significant overhaul in 180 years, introducing new requirements and powers. The Basis Period Reforms, affecting self-employed individuals and partnerships, are another critical change requiring attention. Accountants must stay abreast of these developments to provide accurate guidance to their clients.

The growing importance of ESG

The role of Environment, Social, and Governance (ESG) factors in accounting is becoming increasingly prominent. The surge in UK businesses obtaining BCorp accreditation in 2023 reflects a shift towards more ethical and ecological business practices. The Global Reporting Initiative (GRI) reveals that 80% of major corporations are actively reporting on sustainability matters, incorporating compliance, risk management, and value generation aspects. This trend is echoed in the accounting sector, where firms are integrating ESG concerns into their reporting and advisory services. The belief that companies with strong ESG practices are more appealing to investors is driving this change. The pairing of management accounting and ESG becomes crucial, as they are uniquely positioned to guide businesses towards sustainable practices.

Outsourcing: A growing demand

The demand for outsourced accountancy services is expected to see a dramatic increase, with a projected compound annual growth rate of 9.1% from 2023 to 2030. This trend is particularly noticeable among SMEs, who are outsourcing their accounting needs to reduce costs while accessing expert knowledge. The digital transformation of the sector is facilitating this trend, allowing for seamless integration of outsourced services.

The rise of workplace flexibility

The transition to remote and hybrid working models has left an indelible mark on the accounting industry. The Employment Relations (Flexible Working) Act 2023 is set to enhance employees’ rights to request flexible working arrangements. A recent IFA survey sheds light on this trend, revealing that 29.4% of respondents have been affected by changes in personal circumstances, 42% by personal or family health issues, and 19.2% by mental health challenges. Additionally, 14.5% have faced a family crisis, influencing their work life. These figures highlight the increasing importance of flexible working options in the accounting sector.

The four-day work week experiment

A government-backed trial involving a four-day work week with 60 UK employers showed promising results. Businesses maintained stable revenue levels, while sick leave decreased by 65%, and 71% of employees reported lower levels of burnout. This suggests that flexible working models can improve employee well-being without compromising business performance.

Adapting to change

In 2024, accounting firms face the challenge of adapting to these evolving trends. Success in this dynamic industry requires staying informed and flexible. By embracing technological advancements, preparing for legislative changes, integrating ESG practices, and adopting flexible working models, firms can position themselves for continued success. Leveraging CSRD (Corporate Sustainability and Responsibility Disclosure) frameworks can further enhance firms’ ESG reporting capabilities, ensuring comprehensive disclosure of sustainability efforts and fostering trust among stakeholders.  

In summary, 2024 presents a dynamic landscape for the accounting sector. Firms that effectively adapt to these changes and leverage them as opportunities can ensure their long-term viability and success in a rapidly changing industry.

The editorial unit