The Evolution of the Accounting Industry: Part 1
The way in which accounting and tax practices conduct business has undergone significant change. With businesses expanding and shifting towards a global community and the advancements in technology, the role of the traditional tax agent is evolving.
In Australia, with the state of the current tax system and ongoing legislative reforms, it seems like careers in accounting or related fields would be plentiful, but this is not necessarily the case. Not unless you are willing to adapt and embrace the change.
3 Key factors affecting accounting professionals
1. Outsourcing and ‘Offshoring’: an opportunity to review your core competencies
Initially, offshoring gained traction with traditional ‘back-office’ roles such as information technology and call centres being sourced to overseas shared services centres. Now in tax practice, some areas of compliance, particularly tax return preparation are joining the outsourcing and/or offshoring trend.
Murray Wyatt of Morrows stated that outsourcing in some form, driven by cloud-based accounting and payroll technologies and cheap communication facilities is affecting the total spectrum of the accounting world from the big four to the smaller sole practitioners.
Outsourcing and off-shoring is increasingly utilised and the key benefits of adopting this kind of structure include:
- standardisation and centralisation of procedures
- cost competitiveness
- productivity improvements
- better utilisation of resources, and
I don’t believe this has to be a threat to the accounting profession. There is viability in this model. Utilising outsourcing/offshoring will minimise the cost of tax return preparation means that a tax practice can maintain cost competitiveness in the market and can offer further value-added services.
Standardisation and centralisation providing for the ability to greater manage and review process with, in theory, less human error and a benchmark quality in the output.
2. Advancements in technologies: digital by default is coming
With cloud and other internet based technologies advancing at such a radical rate, obtaining data is virtually instantaneous and a real shift is being made towards paperless or “virtual” offices.
Now we are seeing off-the-shelf accounting and tax software suppliers upgrading their software to enable customers the ability to lodge returns (including Fringe Benefits Tax returns) electronically via their servers.
With initiatives such as online tax calculators, MyGov, MyTax and etax, Government Agencies such as the Taxation Office, are making it increasingly easier for taxpayers with relatively simple tax affairs to meet their own tax compliance obligations.
The Australian Government has a vision of being ‘digital by default’ which where initiatives such as MyGov, SuperStream and Single Touch Payroll (STP) have stemmed from.
It is a shift to all interactions with Government being digital and the ‘whole of Government’ sharing of information, which in all honesty, I am excited about because I can see the efficiencies of having a centralised and streamlined approach. I also don’t think I am alone in my thinking.
One thing is for sure is that this isn’t going away. The Tax Office reported as at 31 July 2014, that they had approximately 1.23million accounts linked to the ATO via MyGov and approximately 360,000 lodgements already processed via MyTax. For the first year of implementation, that was an impressive take-up rate.
Where some taxpayers may have traditionally sought the assistance of a tax agent to complete and lodge their returns, we will start to see more of a shift towards DIY tax preparation. To support the ‘digital by default’ thinking, the Taxation Office now only offers concessional lodgement due dates to tax agents who lodge electronically via the Electronic Lodgement Service (ELS) or the technologies now phasing in to replace the ELS.
Tax agents that do not embrace technological changes and offer a broader spectrum of electronic services may find themselves at a distinct disadvantage in both obtaining concessions from the ATO.
3. Over supply of graduates: are the economics of supply and demand being considered?
The Department of Employment has stated that there is no shortage of accountants in Australia and wants accounting taken off the Skilled Occupation List for migrant visas. In fact, studies undertaken by the Financial Review show that supply far outweighs demand for qualified accountants.
Contrary to this advice, the Government has recently decided to retain accounting on the Skilled Occupation List.
Types of accountancy professionals included on the list include:
- accountant (general)
- management accountant
- taxation accountant, and
- external auditor.
This has sparked debate about the future of the accounting profession as the majority of students now enrolling in accounting related courses at universities are international students who use these visas as a way to study in Australia and (in some cases) eventually, obtain permanent residence.
An oversupply of accounting graduates in the market could add to competition in the market and drive down revenue for professional practices.
What does this mean for the future of the accounting profession? How will businesses respond?
Be sure to read Part 2, released on Friday to see the impact of these factors on the accounting profession.
Author: Angela Lehmann