By Kyriakos Iordanou, General Manager of ICPAC
The progress and evolution of the accountancy profession, together with the challenges of the surrounding business and operational environment, inevitably render the practicing of the profession costlier, riskier, more demanding, more complicated and, in short, more economically and procedurally onerous than it used to be.
Regulation and audit oversight are getting stricter, requirements for compliance are surging, adherence to anti-money laundering rules and directives is of growing importance, international business is harder to attract and transparency and public interest are on top of the agenda!
Let us also have in mind the global changes brought about by international initiatives such as the BEPS project, Country by Country Reporting, the Common Reporting Standard, FATCA, the 4th EU AML Directive, as well as the continual pressures for tax. The new global trend calls for enhanced transparency and substance, especially for tax matters, changing considerably our existing business norms and habits.
At the same time, in addition to the traditional accounting and auditing functions, the definition of the public practice of the accountancy profession expanded to include other functions, such as the provision of administrative services, insolvency, tax and business consulting, trustee services, fund administration, etc. It is thus evident that the role, scope and duties of a professional accountant have significantly increased in the recent years.
One must also take into consideration the overall economic environment in which we currently live. Cyprus is at the ambitious infant stages of exiting the recent crisis, but the casualties of this crisis are still there! Despite rising growth indicators for the years 2015 and 2016, the overall business activity and some heavyweight sectors remain at low levels of performance; the unemployment rate is remains high despite the noticeable decrease; and the notorious non-performing loans of individuals and firms stubbornly continue to trouble the banks. Hence, liquidity in the market is still rather on the low side.
Given the above, it should not slip our mind that professional accountant, apart from being multi-faceted professionals wearing many hats and with a moral duty to serve the public interest, are primarily businessmen trying their best to run a solvent business. Hence, they have to expedite for new clients (domestically and overseas), collect from debtors, promote the business, manage staff, invest in technology, facilitate efficiency, compete in the market, avail themselves for training and professional development, as well as keeping up to date with all new developments in the accounting, audit, tax, vat, legal, compliance and other regulatory matters. All of these add significantly to the cost of maintaining a business!
For a small practice or a sole practitioner, this can be described as “Mission Impossible”. It definitely puts a cap on how much one is able to do and there is always the dilemma of chasing business and staying compliant with all obligations. As a result of increased overheads and stagnant revenues, it would not be a surprise to observe a compromise in the quality of the work delivered.
As things stand today and are foreseen for the near future, it is increasingly evident that what will keep the professional accountant in public practice is the optimization of his/her practice. This can be done in either of two ways: by specializing on specific areas or by consolidating with other professionals in order to pool resources, reduce overheads and pursue synergies. Unfortunately, the era when a single practitioner could provide a wide range of services is over! Hence, serious thinking of the day after is essential for all professionals.
We are currently enduring the era where expertise and specialization are crucial in order to stay abreast of competition and attract new business. In addition, a competitive edge could be earned by keeping cost as low as possible and chasing synergies. Pooling of resources and talent should be pursued, either by setting up associations, networks, collaborations or any other form of cooperation with other fellow professionals.
Regulation and compliance are expected only to further increase as time passes. Hence, by failing to adapt, the only thing that will be eventually accomplished is to lag behind, place the quality of the work and competence at risk and put in jeopardy the current practicing licenses held.
Our professional development and commercial viability need to be carefully assessed and, as professionals, we should consider our business planning for the near future. The workload is becoming excessively heavy for a single pair of shoulders, hence my belief is that it is time to start thinking ahead, to decide what type of professionals we want to be and to consider the benefits of either cutting down on certain activities and specializing on areas that offer a comparative advantage, or merging/associating with other colleagues, rather striving as a “lone ranger” with all the risks being tied to one’s own horse.