The CommBank Accounting Market Pulse attempted to gauge the general consensus of the profession regarding their economic outlook, and the future of the industry as a whole, identifying the greatest challenge as “significant difficulty in passing on cost increases to clients and charging for compliance work”.
According to the research and the majority of respondents across large, mid-tier and restructuring firms, business advisory and management consulting services are undoubtedly the key service lines to enter and grow over the next 12 to 18 months.
Marc Totaro, national manager of professional services for CBA, noted that 2015 has been a “year of heightened awareness” regarding the future of compliance.
“Firms are really taking notice now and having to really look at their business models and ask ‘Can we keep doing what we’re doing? Where will the revenue and margin uplifts come from?’”
According to Mr Totaro, a boost to revenue and profit margin is “not going to be from traditional accounting compliance work”.
“A lot of firms are looking at the lower-level compliance or commodity type work as just something they need to offer their clients, with a view that hopefully you’ll be able to deliver more services to that client,” he added.
Figures provided as part of the Market Pulse indicated the past financial year has shown a dramatic increase in revenue from non-accounting services, particularly amongst restructuring firms as they re-evaluate their business models and service offerings, with a third of those firms stating that more than 10 per cent of revenue can be attributed to non-accounting services.
The presence of the business advisory model is set to thrive according to respondents, with 100 per cent of large firms and 100 per cent of mid-tier firms in agreement that revenue from non-accounting services will continue not only in the short term, but for the foreseeable future.
“I think firms really need to decide where they want to play, smaller firms probably don’t have the breadth to be able to compete in all advisory services,” said Mr Totaro.
“I think a lot of firms will decide they need to specialise in either advisory or wealth management and really become a specialist in that area rather than trying to cover all bases,” he concluded.