Contributors from New Zealand were asked three questions: What were the highlights/trends in your market last year? (i.e. important mergers, regulatory changes, economic situation etc.); What are the opportunities and challenges for accounting firms in the market?; What are the expectations for the future short/medium/long term?
By David Searle, managing partner, Auckland, Baker Tilly Staples Rodway
The New Zealand economic environment has been consistently strong for several years now. We have had a business-friendly government for nine years which has given the business community ongoing confidence to employ and expand their markets. New Zealand has been relatively benign from a professional firm merger point of view with little activity in this area. Although there has been some roll up of smaller local firms into national and international networks.
Accounting firms had a period post the global financial crisis where finding and retaining talented people was less of an issue than it had been in the past. We are now heading back into a resource constrained environment and firms are looking at alternative options around offshoring/outsourcing, using technology and improving efficiency to alleviate this issue.
The traditional model of an accounting firm needs to be reconsidered given the employment behaviour of millennials. Most new staff employed have no intention of spending a significant period of time with one employer and expect to have multiple roles (and potentially career changes) throughout their working lives. This will cause significant issues for organisations that require longevity to train and groom employees through to partner level and who have the expectation to retain them once they reach partner. The question therefore needs to be asked as to whether the existing ownership model needs to be changed?
The audit profession is adjusting to a regulated market (the NZ audit profession has been regulated for around three years now) and a number of small and part time players have quite rightly stopped providing audit services. Firms have not been successful in passing the additional costs of audits onto clients and recoveries (especially in the listed/public space) remain low.
The commoditisation of some of our core services has meant that professional firms have positioned themselves to offer additional added value services to reduce their reliance on the traditional accounting, tax and audit services. Some of these service are in areas where accounting firms have not operated previously and the services are not provided by accounting staff.
Things will continue to move at an ever-increasing pace and digital disruption may fundamentally alter our businesses with some saying many of our services and roles may not exist in the future.
