Regulatory changes, technological evolution and worker shortages are some of the top trends shaping the near-term outlook for accounting firms, according to a Wolters Kluwer report.

Wolters Kluwer’s Future Ready Accountant report, which surveyed tax and accounting professionals, indicated that firms’ largest challenges included adapting to new technologies, keeping up with regulatory changes and ensuring client satisfaction despite worker shortages.

“Significant challenges, like keeping up with evolving tax laws and managing client expectations, take center stage among many others. However, these challenges also create opportunities for growth and innovation,” Jason Marx, CEO of Wolters Kluwer.

“The survey's findings exemplify how technology advancements, especially AI, are disrupting and shaping the future of the tax and accounting industry.”

More than half (57 per cent) of accounting firms believed that AI will have a large near-term impact on the profession. However, global adoption remains in the early stages, with 27 per cent of accounting professionals using it currently within their workflows and 22 per cent planning to start next year.

The top reported benefits of AI included its ability to streamline tasks, automate processes, improve the accuracy of tax calculations and reduce costs while boosting productivity. The largest barriers to adoption included concerns regarding accuracy, data security and high implementation costs.

Larger firms were more likely to view AI positively than smaller firms and had higher rates of AI adoption.

The survey indicated that accounting firms were also grappling with staffing challenges. Almost half (41 per cent) of respondents believed that talent shortages will have an ongoing impact on the profession.

Balancing workload and wellbeing was the most pressing talent-related issue for 45 per cent of firms. Respondents indicated that worker shortages were making it difficult for businesses to meet client demands whilst maintaining a healthy work/life balance.

Attracting the right talent was the second most commonly cited issue. To attract and retain workers, companies were offering incentives including competitive salaries and benefits, flexible work arrangements, professional development opportunities and positive company culture.

Regulatory complexity also posed challenges for firms, with 41 per cent citing it as their top issue. In efforts to adapt to changing requirements, 39 per cent of companies were investing in staff training. Of the firms planning to implement AI into their workflows, 36 per cent intended to use it for tax, accounting and audit research.

The report also identified a handful of ‘growth drivers,’ trends and practices associated with higher company growth.

Technological integration was found to be a strong factor in growth. Companies that had fully integrated systems were more likely to report revenue growth of 10 per cent or more. A majority (74 per cent) of cloud-based firms reported profitability growth, compared to 65 per cent of traditional firms.

Offering advisory services like financial planning, management reporting and benchmarking also had positive impacts on profitability. High-growth firms were 49 per cent more likely to offer advisory services as a core service, compared to stagnant or declining firms.

The report showed that growth remains strong in the accounting industry despite challenges, with most firms (72 per cent) reporting revenue increases. However, firms’ ability to integrate new technologies, attract talent and adapt to changing regulations would be key to their future growth.