A new report looks at how accounting firms and their tax professionals are thriving despite the many challenges they face
Having weathered several years of uncertainty, tax professionals and their accounting firms are now doing everything they can to streamline their operations, diversify their service offerings, and position themselves for future growth.
In fact, results from the newly released 2024 State of Tax Professionals Report, from the Thomson Reuters Institute, suggest that this year is shaping up to be a re-building year for many accounting firms. The annual report is derived from more than 500 surveys of tax professionals from accounting firms around the world, including the United States, Canada, the United Kingdom, Australia, and Latin America. Every year, the survey asks respondents about their top strategic priorities, their biggest challenges, and what their firms are doing to achieve the goals they have set for the year.
And according to the results, 2024 could be a year in which firms reassess their business models and take decisive action to make themselves even more resilient and competitive. As those tax professionals surveyed for the report say, many accounting firms are still grappling with the implications of technology and a persistent talent and skills gap, but they are also learning to adapt to the evolving business landscape while taking advantage of new business opportunities.
Impressively, some of these efforts are paying off. A majority of respondents in the survey said their accounting firms reported a 24% increase in revenue over the past 12 months, and many were expecting that their revenues will continue to rise at a rate of more than 20% over the next 12 to 24 months as well — a welcome note of sunny optimism for an industry that has seemingly dealt with more than a few black clouds in recent years.
Top strategic priorities for 2024
According to this year’s report, the top priorities for accounting firms in 2024 are:
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- Driving efficiency
- Retaining and hiring quality talent
- Exploring new pricing models
- Improving client services
- Growing strategically
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These priorities are similar to those cited in the past, although the order tends to shift from year to year. For example, the search for talent was listed as the fourth priority in the last report, but jumped to second this year, suggesting that the talent squeeze from senior-level retirements and an anemic pipeline of new blood entering the accounting field is an issue that accounting firms are still grappling with.
To address this and the many other challenges tax professionals face, accounting firms are reportedly employing a number of strategies, including greater use of automation and continued expansion of service offerings, especially in the areas of tax strategy and business consulting.
For the first time ever, however, one of the top priorities mentioned by tax professionals around the world is an eagerness to explore alternative pricing strategies in addition to simply billing by the hour.
Embracing technological innovation
The use of more advanced technology, including artificial intelligence (AI), is still very much a topic of conversation for accounting professionals. However, according to the report, technological innovation is a double-edged sword for accounting firms — a force that is not only displacing tax preparation as a core function but also providing the means for greater efficiency, higher profit margins, and the ability to provide a wider range of specialized tax services.
On balance, however, new tax technologies have proven to be beneficial for the tax & accounting profession overall. Indeed, most firms in the midsize- and large-firm categories are continuing to embrace automation as an efficiency driver, with almost half of respondents (47%) saying they are interested in leveraging new technology solutions.
There is also keen interest in — and some skepticism of — the possible applications of generative AI (GenAI) in accounting. Not many accounting firms use GenAI at the moment, but more than one-third (35%) of survey respondents said their firms will be investing in some form of GenAI or new AI-powered technology over the next two years — a significant increase from past years.
You can download a full copy of the Thomson Reuters Institute’s “2024 State of Tax Professionals Report” by filling out the form below:
