This article examines the business case for small- and medium-sized practices (SMPs) to develop a business advisory practice and offers tips for getting started.
(New York/October 26, 2011) – Burden of regulation continues to challenge both accountants and their small business clients, according to the small- and medium-sized accountancy practitioners polled by the International Federation of Accountants in August–September. Despite these challenges, overall optimism increased since the last SMP Quick Poll was conducted; nearly 40% of practitioners expect business to be better this year than it was last year, compared to just 23% in April.
While more small practices are now offering business advisory services, the poll results showed that traditional accountancy-based services continue to generate the largest portion of SMPs’ fee revenue: accounting and compilation averaged 38% of total fee revenue, with audit and assurance close behind with an average of 35%. Accounting and compilation is also the fastest growing source of revenue for the largest group of respondents (34%), followed by audit and assurance (26%).
There are challenges to expanding into business advisory, which may explain why only 23% of respondents indicated that this area is their fastest growing source of revenue. According to respondents, insufficient partner time (30%) and marketing services to clients (29%) are the biggest challenges to expansion in this area. New advisory/consulting clients are driven primarily by existing customer-client relationships (37%), followed by practitioners’ competence and expertise (21%). When asked to indicate how fee revenue is split among the various areas of advisory/consulting, tax consulting came out highest with an average of 45% of consulting fee revenue.
With the aim of taking a snapshot of the key issues confronted by SMPs and their SME clients, the IFAC SMP Quick Poll is being conducted quarterly throughout 2011 with distribution via the SMP eNews, IFAC’s free newsletter for SMPs, and support from our member bodies. The third SMP Quick Poll collected 798 responses from all regions of the world over a 32-day period (August 8, 2011 to September 9, 2011). To subscribe to the SMP eNews, and participate in our next poll, sign up here.
IFAC wishes to thank those member bodies and regional organizations that published the poll in their newsletters, or otherwise helped promote it. The full survey results are available here.
About the SMP Committee The SMP Committee of the International Federation of Accountants represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized entities (SMEs). The committee develops guidance and tools, and works to ensure the needs of the SMP and SME sectors are considered by standard setters, regulators, and policy makers. The committee also speaks out on behalf of SMPs to raise awareness of their role and value, especially in supporting SMEs, and the importance of the small business sector overall.
About IFAC IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. It is comprised of 164 members and associates in 125 countries and jurisdictions, representing approximately 2.5 million accountants in public practice, education, government service, industry, and commerce.
This article features seven practice management tips for SMPs and highlights a number of relevant resources that are available to download for free from the IFAC website.
IFAC and The Banker magazine conducted a global survey of banks on lending to small and medium-sized enterprises (SMEs) in order to better understand the needs of lenders and SMEs' access to financing, as well as how the accountancy profession can best support both SMEs and lenders.
It is a great pleasure to participate in this Roundtable. As the co-owner of an SME the subject matter is of both personal and professional interest to me. Before I take you through the results of our April SMP Quick Poll I’d like to reiterate, though I’m sure we need no convincing, the importance of SMEs, the vital role the accountancy profession plays in supporting SMEs, and what the SMP Committee that I chair is doing to help.
An Interview with SMP Committee Chair Sylvie Voghel
In 2010, the IFAC Board reviewed IFAC's activities to support SMPs, and made targeted recommendations for improvements. These have essentially become the foundation of the SMP Committee's objectives--not only for 2011, but for the next several years. In this article, SMP Committee Chair Sylvie Voghel provides an update on the committee's implementation of the IFAC Board Recommendations.
This article, prepared by SMP Committee staff, summarizes key elements of the International Standard on Quality Control (ISQC) 1 and features five tips to help SMPs apply the standard in a cost-effective manner.
