Auditors and firms in the sector face numerous challenges, among which those related to technology, globalisation, regulation and attraction and the retaining of talent stand out. In order to meet such challenges, small- and medium-sized firms in the sector require cash to invest in new processes, technology and human capital, but not just cash.
They should be aware of the importance and implications of the changes affecting the profession. Furthermore, they have to find a way to take advantage of the new opportunities these changes and challenges offer.
The fulfilment of regulations, and the submission of reports in relation to non-financial information and its corresponding audit are clear examples of the emerging demands society requires of companies.
Auditors and –and should– play an essential role in these areas.
Collaboration with other professionals and firms through alliances, in whatever way or form, is increasingly common. By way of example, the following are some of the advantages arising from strategies of collaboration: the exchanging of ideas, experience and best practices inherent in this process enriches those involved and opens up their minds; partners and employees are involved in a joint project, opening up more opportunities for the future and increasing the capacity to retain and attract talent; a sufficient size and critical mass are acquired for funding the necessary investment in technology, training, marketing and international relations, and productivity is increased and costs reduced.
It is true that there are market opportunities for all sizes, providing high-quality services are provided.
However, it is also clear that the larger the firm, the better equipped it will be in order to face any threats, and also to take advantage of any opportunities within a more complex economic environment. In fact, whatever the starting point, doubling the size would have exponential advantages.
In the case of mergers, and although on occasions it is not easy to find suitable partners for these operations, the main barrier is often more of a question of attitude: having new partners means that decisions must be discussed within a broader group, and when people are used to an individual decision-making process, changes are hard to assume.
Acquisitions are another possibility opening up the doors to collaboration and an increase in size. Although cash is required, firms can easily be identified in which the principal partner intends to retire within a few short years.
From this perspective, an agreement for acquisition in the medium term presents opportunities for growth and for good professionals to join, who may be key to strengthening the acquiring firm.
Another option is a local association. The search for diversification might be a very important reason for this type of association with other professionals complementing the services provided by the firm, such as the need to broaden the service portfolio. On attempting to diversify the activities, it is important to ensure that a suitable quality level is maintained. Within the framework of a local association, firms can remain financially independent and even keep their trade names.
Another option is for an association proposed for a national territorial.
Such collaboration can be established for specific projects, and should explore the possibility of collaborating project by project, or on a permanent basis.
The collaborating companies may choose to keep their own brands, use a common brand, or both strategies together: i.e. keeping their own brand while also adopting the brand of the association.
An initial step towards collaboration often leads to closer alliances.
Finally, an international network or association allows the needs of clients with cross-border businesses to be met.
There are collaborations of many types but, in general, all contribute to improving the quality of the members comprising them, as well as the services they provide. With a view to the future, we should assume that, in order to compete, it is better to work together than alone.
International chair of Auren
First Deputy Chairman of the Professional Chartered Accountants’ Association of Catalonia (Collegi de Censors Jurats de Comptes de Catalunya) and member of the SMP Committee of the IFAC