It’s been a couple of days since the British people rolled the dice and made a historic decision to leave the European Union (EU), despite the advice to remain by number of leading businesses (more than 1,200) and the country’s Prime Minister.
The post-mortem of the decision is yet to be concluded in the coming months if not years, but the decision has come as a shock to many in the business community and the political arena, as well as more than 16 million voters (48.1%) who voted to remain.
Some speculate the decision could herad the unravelling of the United Kingdom as we know it, while some Euro-sceptics believe the UK’s exit could signal the collapse of the EU itself.
Brexit has multiple dimensions politically and economically and puts Britain in uncharted territory. It also has the same ramifications for the accounting profession. While there are many unanswered questions for the profession itself, there are also many opportunities to support businesses through this change in an advisory capacity.
High on the agenda are likely investment banking advice services, restructuring and human resources advice for companies with a European footprint.
And as we saw through the 2008 recession, there are always clients needing a guiding hand from accountants and accounting firms in periods of uncertainty and adversity.
In a flood of initial views on Brexit, the Institute of Chartered Accountants of Scotland (ICAS) chief executive Anton Colella said that the decision had created a "sense of shock in Britain’s boardrooms" and called for clarity to end uncertainty as soon as possible.
ICAS promptly put together 20 questions which need to be answered to end uncertainty, including questions affecting the work of accountants such as VAT restrictions currently imposed by the EU, the future of IFRS in the UK and European audit reform.
Some of the largest UK accounting firms did not see the EU audit reform favourably; however the wheels are very much in motion in terms of implementing the changes, but what happens now?
Gilly Lord, PwC’s UK head of regulatory affairs believes, "we shouldn’t expect the UK’s current implementation of EU audit regulation to be affected in the short to medium term".
"In or out of the EU, the focus must still be on improving audit quality, confidence in auditors, competition and ensuring auditor independence. In the long-term, we could see some changes in the rules as the UK forges its way through its new landscape, but it’s likely that the UK would continue to apply much of the European regime in order to maintain market access."
Looking at Brexit more widely and as already seen in the past couple of days, a period of volatility is unavoidable.
Mark Weinberger, EY global chairman and CEO commented on the day: "Today’s UK referendum results on EU membership will mean more uncertainty for businesses around the world as they navigate the complex implications of the UK leaving the EU. In a global economy already struggling with a slow growth, this may further dampen the outlook. The broader consequences to the EU also remain uncertain at this time. The UK has strong political, economic and financial systems and is well able to deal with short- and longer-term effects of Brexit."
Similarly, Robert Hannah, chief operating officer at Grant Thornton UK predicts a period of uncertainty and instability after initial market volatility.
"No member state has left the EU before and there is no agreed process for building a UK outside the EU. Business needs to lead this debate and help shape a vision of what a vibrant UK outside the EU will look like. The world is changing fast, driven by technology and social change, and we need to create a UK that can harness this change rather than ignore or resist it," he said.
Positives in uncertainty
BDO UK managing partner Simon Michaels echoed those views and called for calm.
"As with all major economic shocks, businesses that remain engaged and adaptable will be best placed to trade profitably through the changes and make the most of the opportunities that they offer."
Deloitte UK chief executive David Sproul’s statement was much along the same lines and called on the UK to play at its strengths of being one of the leading global economies.
"While the UK has opted for a future outside the EU, Britain remains a competitive, innovative and highly-skilled economy and an attractive place for business. However, as indicated by today’s market volatility we are likely to see a period of uncertainty. Businesses need to ensure they are set up to navigate the immediate risks and impacts of an exit, and have the processes and people in place to manage a period of upheaval."
A global approach in light of more fragmentation
The accounting profession has spent the last couple of decades trying to globalise the profession and end the area of fragmented rules and regulation.
IFAC chief executive Fayezul Choudhury called for a continued global approach as the UK attempts to break from the EU.
"IFAC has always stressed that governments, businesses, and the regulatory community across the globe must work together, cooperatively, to respond to the challenges being faced by our interconnected financial markets and economies," Choudhury said.
"Brexit makes this collaborative approach all the more vital, and the global accountancy profession must be engaged in bringing its experience and expertise to bear in many of the areas where work will be needed."
As initially mentioned over 1,200 businesses and over 50 of the FTSE100 business leaders openly supported to remain in the EU, including some accounting firm leaders, and the British public’s decision will need to take time to sink in. However, professional services firms probably have the least time to ponder as clients look for guidance.