Operational efficiency claimed the top spot for priorities of accounting firms and tax leaders in the year ahead, according to the 2023 Thomas Reuters State of the Tax Professionals Report.
Thirty-six percent of this year’s respondents — representing more than 500 accounting firms globally — mentioned drives for efficiency as their top strategic priority. This is a shift from 2022, when waves of retirement, an “anemic talent pipeline,” and the Great Resignation put seeking and developing talent in the top spot, the report said.
Firm size was an important factor in terms of how respondents ranked priorities for the year ahead, with recruiting and developing high-caliber talent still remaining the highest priority for larger firms, whereas midsize and smaller firms were more focused on efficiency and client services, the report said.
In 2022, accounting firms overall ranked talent, then growth, then efficiency and finally client service as top priorities. The narrative has changed this year, as efficiency moved to the top spot, with client services and growth following, and talent coming in at the fourth spot.
Aside from talent’s drop from the first to the fourth spot — 30% ranked it first in 2022 and just 21% did so in 2023 — the most dramatic difference between last year’s report and this year’s is the 14-percentage point rise in the importance of client services, according to the report.
“The prioritization of client services is especially evident at mid-sized accounting firms, where both individual and business clients are asking their accountants to play a more active advisory role,” the report said.
In the midst of a potential recession, accounting firms may be looking for more ways to streamline their operations, especially with a re-evaluation of new technologies. Though most firms still deal with a labor shortage — different industry sectors are providing a flashier draw for workers — firms are looking for alternative ways to mitigate some of these problems.
In fact, most firms have automated at least some of their tax workflow processes, only 11% of midsize and large firms say they use no automation whatsoever, and only 20% of firms with fewer than three people rely entirely on manual processes, according to the report.
Overall, one-third (33%) of firms automate up to 25% of their tax workflows, about one quarter automate between 26% and 50% of their tax workflows, and 29% automate more than half or all of their workflows, the report said.
Many firms said they plan to prioritize the improvement of current workflow systems and processes instead of investing in new technology solutions.
Meanwhile, with efficiency taking priority overall, the leadership needed to execute these plans is lacking — more than half of firms at all levels said they did not have a designated person whose role was to drive efficiency — making initiatives difficult to execute.
As firms struggle with sufficient leadership, the accounting profession at large is already struggling with issues stemming from burnout — audit committee directors recently reported being overwhelmed by the growing scope of their responsibilities — as individuals in different accounting roles are seeking different opportunities.