From Traditional to Tech-Savvy - Accounting Firms Plan Increased Tech Spend

Investing in technology is a key priority for accounting firms as they move into 2024 while mitigating the ongoing talent shortage and keeping pace with new laws continue to cause challenges for many within the profession. This is according to findings from the 2024 State of Accounting Firms Trends Report released by Caseware International, a global leader in cloud-enabled audit, financial reporting and data analytics solutions.

Meanwhile, Caseware’s 2024 State of Internal Audit Trends Report highlights the need for technology expertise amid ongoing issues around attracting and retaining top talent.

Caseware explores worldwide perspectives within the accounting and audit professions annually. Both reports are based on extensive surveys of practitioners from around the world conducted in late 2023.

State of Accounting Firms Findings

Technology Adoption

Firms are committed to investing in technology, with 77% of survey respondents stating their financial outlay will increase significantly or slightly over the next two years. This represents an increase of 8% when compared to the 2023 survey findings. Innovative technologies are entering the accounting landscape quickly, with Generative AI being a notable example. Despite only becoming widely available in the same year that the survey was conducted, more than 10% of respondents identified it as a top three area of intended software investment for 2024. Engagement software (audit, review and compilation, tax, etc.) ranked in the top three investment areas for the coming year by 21% of respondents.

Talent Crunch

Hiring and retaining talent remains a key issue for accounting firms. Overall, 88% of respondents said hiring and retaining talent was challenging to some degree, with 47% describing it as somewhat challenging and 41% saying it was extremely challenging. However, firms are starting to take action, with 32% offering training programs to upskill existing employees, 27% offering newly-created roles and capabilities into their firms and 24% opting to outsource some of their functions.

David Osborne, Chief Executive Officer of Caseware International remarked, “Technology is a magnet for those considering joining the profession. The firms that fail to match the expectations of future accounting and audit professionals will see their talented, dynamic employees drift to competitors who offer more tech-savvy, progressive environments.”

Laws and Regulations

Dealing with new laws and regulations was identified as the most frequently cited challenge among survey respondents, with 16% confirming this as their top issue. This highlights the pressures on firms to keep up with today’s dynamic and fast-paced regulatory climate.

As global economic and regulatory environments become more complex, many clients turn to their accountants for advice and guidance. As a result, the demand for client advisory services is increasing – 76% of survey respondents indicated that their firm has seen either significant (23%) or modest (53%) growth in this area.

State of Internal Audit Findings

Talent Crunch

Finding and retaining skilled auditors is slightly easier than in the previous year but remains difficult. When asked how challenging it was to hire and retain the right talent for their firms, almost 90% of survey respondents stated that it was either extremely or somewhat challenging.

With technology expertise in high demand for internal audit departments, it’s clear that audit firms are looking to build teams equipped to deliver the audit of the future. When exploring the skill sets departments sought, data science elicited 18% of responses, while IT audit and cybersecurity garnered 15% and 12%, respectively. Artificial intelligence secured 9% of responses, while fraud examination was the most sought non-technical skill (10%) with ESG polling 8%.

Data Analytics

Many firms look to data analytics to support and enhance their auditing activities. When asked about the use of data analytics in their audits, 21% said they are now using analytics for all audits, while an additional 57% indicated they are selectively using data analytics for some.

Ian Kirton, an internal audit industry expert commented, “It’s not a surprise to see that the use of data analytics is increasing. It’s how auditors are meeting the challenge of doing more with less. Analytics helps them spot risk, re-evaluate controls and perform continuous auditing.”

Do More with Less

A significant internal pressure for audit teams is the need to do more with less time and resources - 30% of respondents identified this as their top selection. Auditors face increased reporting requirements, such as ESG, DEI and culture, often without a corresponding budget increase, so teams need to be as efficient as possible when completing their audits.

Trends to watch:

2024 State of Accounting Firms Trends Report

• Although 73% of respondents indicated they are either currently implementing or planning to implement DEI initiatives in their firm, an alarming 27% said they are not and have no plans to do so.

• Firms continue to modernise their practices, with 76% responding that they use either cloud-only tools or a mix of desktop and cloud to help manage their practice. This is an increase of 17% compared to the 2023 findings.

• 17% of respondents use offshoring to mitigate the accounting profession’s talent shortage.

2024 State of Internal Audit Trends Report

• Just 10% of respondents said hiring and retaining the right talent is not a challenge for their firms.

• According to 76% of respondents, the number of employees in their internal audit department has increased or stayed the same last year.

• In the past year, 45% have seen growth in ESG-related audit work.