“The global accounting & auditing consultancy market is projected to expand at 5.7% CAGR and be valued at US$ 379.05 billion by 2032”. – Global Newswire
This proliferation of accounting and auditing firms can be attributed to market volatility, rapidly changing tax laws, global trade expansion of companies, and so on.
An accounting and auditing consultancy firm require a diverse range of people with different auditing and accounting skills combined with some niche expertise roles like actuary and forensics accounting.
However, building an optimized workforce while ensuring every assignment is delivered successfully is easier said than done. The projects of these firms are often seasonal in nature and witness a noticeable surge in consultants’ demands during different times of the year. These factors cumulatively make resource capacity planning challenging.
The pertinent question is, how to address these capacity planning challenges in accounting & auditing firms?
This informative article will address the query and delve deep into this concept. So, let’s get started.
1. Salient features of an accounting and auditing firm
An accounting and auditing consultancy firm specializes in providing customized and knowledge-based services to their clients. For example, it organizes and manages a company’s cash flow, conducts regular audits, gives tax advice to stay compliant, etc.
Let’s delve into the services it delivers.
A. Corporate Accounting & Finance Advisory – It consists of services like portfolio review, capital allocation processes, financial planning, and so on. They help corporates, governments, sovereign wealth funds, family-run businesses, educational institutions, etc., with critical financial issues.
B. Auditing – Auditing is basically the examination and analysis of an organization’s financial records after the final preparation of financial statements. It gives an unbiased and fair opinion on the financial position of an organization and helps make decisions accordingly.
C. Tax advisory –It provides connected services across all tax disciplines. This includes calculating and filing business tax, international tax, transaction tax, etc., while avoiding legal penalties and issues related to people or compliance.
D. Consulting – This empowers a company to adapt to the latest technology trends and develop sustainable and responsible strategies and operations to stay ahead of the curve. Consulting service also helps a firm to become more agile and resilient in a business and avoid threats to ensure business protection.
E. Forensics – Encompasses the investigation of fraud or financial manipulation through in-depth research and analysis of a company’s financial records. Helps resolve issues like insurance claims, insolvency, embezzlement, skimming, or any other type of financial theft.
A. Accountant – They are responsible for analyzing a firm’s assets and liabilities, preparing profit-and-loss statements, evaluating a business’s financial records/processes, and creating and managing other relevant financial records.
B. Auditor – The auditor analyzes an organization’s financial reports and records to ensure they are accurate and comply with business laws. They help make a business immune to potential fraud.
C. Business Analyst – They work in coordination with stakeholders to determine goals, identify areas of improvement, and implement changes and strategies to strengthen the business process.
D. Tax Staff – It consists of accountants, auditors, compliance officers, and consultants to help a company file corporate tax properly, implement suitable tax-saving measures, and stay compliant with corporate national or international tax laws and regulations.
E. Risk Analyst – These consultants are often more on the technical side and help a company with its holistic risk management approach. They compile and evaluate data about risks, share it with managers, and mitigate their negative outcomes by implementing the most appropriate measures.
Subject to these roles, accounting and auditing firms often find it challenging to employ the right personnel. The following section explains these challenges and the strategies to combat them. Let’s delve deep:
2. Capacity planning challenges in accounting and auditing firms & how to combat them
As discussed above, an audit and accounting consultancy company requires a myriad of human resources with varying skill sets. Hence, capacity planning in these firms is challenging. Moreover, seasonal fluctuations in the workforce demand make it an even more arduous job.
Nevertheless, one can implement a robust resource management solution and follow a few best practices to overcome them. So, here are a few major capacity planning challenges and how resource management software can help counter them.
2.1 Lack of visibility into project resource demands
Due to the absence of foresight into upcoming accounting and auditing projects, managers fail to forward-plan them efficiently. As a result, in case of resource shortage, it may lead to last-minute firefighting and hiring of high-cost or incompetent consultants.
On the contrary, an excess of accounting consultants can escalate project costs and lead to a loss of billable hours as managers can’t find suitable activities for them. In either case, this causes project delays, budget overruns, and subpar deliverable quality.
So, what is the suitable solution for this?
Solution – Forecast resource demands and plan accordingly
With the help of project vacancy reports, resource managers can witness demands in current and pipelined projects. It helps to stay abreast of these requirements and get foresight into the capacity vs. demand gap. Accordingly, they can implement resourcing measures to bridge the gap.
If there is a shortage, managers can initiate planned hiring or upskill/train benched resources or employees with partially matching skillet before the project’s onset. This way, one can avoid excess/shortage of accounting consultants, fill project vacancies, and allocate competent resources. It also helps to save last-minute firefighting costs, thus ensuring profitability.
2.2 Shortage of skilled accounting consultants
Accounting and auditing is a knowledge-intensive industry. Therefore, it is often challenging for accounting firms to maintain a large talent pool of highly skilled accounting and auditing consultants all the time. That is why,
Managers often face resource constraints, especially in a multi-project environment, due to the shortage of experienced consultants.
Failure to cater to resource demands across all the projects jeopardizes one or the other project and affects the bottom line. Moreover, an ongoing shortage of accounting consultants causes a loss of billable opportunities as the firm fails to acquire new clients.
So how do you combat these issues?
Solution- Implement appropriate resourcing treatments
A resource management solution provides visibility into future skill demands. This helps identify the shortfall of consultants across the organization. Accordingly, the resource manager can implement appropriate resourcing measures to fill capacity gaps.
In internal channels, they can first look into the benched personnel or the consultants soon to get rolled off from ongoing projects. If the right consultants are still not found, they can go for external resourcing channels. They can initiate project-specific or skill-based hiring based on business requirements and also contact their empanelled vendors to get the requisite consultants.
2.3 Inability to manage seasonal fluctuations during financial year-end
An accounting consultancy firm often faces high demands for accountants, tax analysts, budget analysts, etc., during the financial year-end. As a result, it becomes infeasible for accounting firms, especially small ones, to scale up and cater to these requirements across multiple projects.
Eventually, this failure to manage the seasonal increase in demand can lead to a loss of one or more business opportunities and client dissatisfaction.
How can managers manage seasonal periods?
Solution – Create the right mix of permanent and contingent workforce
A resource management solution provides visibility and insights into the current and future demands for consultant resources. It helps understand the nature of project requirements and evaluate if they are one-off or recurring.
Based on the analysis, they can make an informed decision on whether to hire permanent and contingent consultants to fulfill given project requirements. They can eventually form the right balance of permanent and on-demand workforce to bridge capacity gaps and handle all projects efficiently.
2.4 Difficulty in increasing billable hours of accounting consultants
Resource managers find it hard to ensure that all the consultants are utilized to their maximum capacity. It happens even more during the trough season when there are not enough billable opportunities to deploy all the consultants on.
For instance, tax consultants are often required towards the financial year closing and have comparatively higher availability at other times. So, finding billable projects during the trough period becomes arduous. As a result, their bench time goes up and leads to a significant decrease in billable utilization, reducing the overall profitability.
So, what is the suitable solution?
Solution – Maximize productive utilization with suitable measures
Resource management software provides insights into current and future bookings of the consultants. It helps resource managers to forecast the utilization rates of individual consultants.
This information helps them identify the ones whose billable utilization rates are sub-optimal and proactively mobilize them from non-billable to billable opportunities wherever feasible. They can also bring forward various projects’ timelines to make the people on the bench billable and maximize productive resource utilization.
2.5 Surge in employee burnout resulting in unplanned attrition
Resource managers often tend to book high-performing accounting consultants on multiple projects. In this process, these resources are booked beyond their capacity, and their schedules are stretched thin.
If not checked at the right time, continuous overallocation of work results in these consultants’ burnout. In the long run, they may decide to leave the organization, causing unplanned attrition.
What can you do to prevent employee burnout?
Solution – Ensure uniform workload distribution
A resource management solution provides data-driven insights into the consultants’ utilization levels through various BI reports, including utilization and forecast-vs-actual. They can leverage these reports to find out the resources overburdened with work and take appropriate resource optimization techniques to ease their workload.
They can use resource leveling techniques for projects with flexible deadlines and readjust the demand against the capacity. For projects with stringent timelines, they can pull in more consultants to complete the project without overloading the existing project team members. Managers can also raise the minimum acceptable benchmark percentage of billable utilization rates by a certain percentage during trough seasons to evaluate burnout accordingly.
2.6 High consultants’ costs due to global competition
An increase in global competition has caused a rise in the demand for audit and accounting professionals across the globe. As a result, the costs of hiring and retaining a skilled workforce have also increased.
While a large-scale accounting consultancy firm can offer high salaries and other monetary benefits, it is not the same with small to mid-sized companies. Therefore, it becomes challenging to maintain a large talent pool for them on a permanent basis.
How can companies reduce resourcing costs?
Solution – Leverage cost-effective global accounting consultants
A resource management solution provides 360-degree visibility into accounting professionals, their skills, cost rate, etc. In addition, it enables resource managers to filter and view the consultants by location. This helps managers to identify and assign cost-effective resources from low-cost regions or countries and maintain the project’s financial health. It also enables them to upkeep the quality of the project without any budget overruns, thereby increasing profitability. The consultants from a different country may need to be given a fast-track course on local law and accounting practices.
Rightly expressed in the words of Waren Buffett, Berkshire Hathaway’s former CEO, “Accounting is the language of businesses.” Hence, it has emerged as a valuable industry in this fast-paced modern business scenario.
However, capacity planning in this industry can pose several challenges, as explained above. Nevertheless, with the right strategies combined with a robust resource management solution, one can overcome them and streamline the firm’s operations and projects.
What capacity planning challenges are you facing within your audit and accountancy consultancy firm?
4. The Glossary
5. The Saviom Solution
SAVIOM is the market leader in helping multinational clients manage their resources efficiently and effectively. With over 20 years of experience, this Australian-based MNC has a global presence across 50 countries and has helped 100+ clients with their Workforce Planning Software. Saviom also provides tools for Enterprise Project Resource Management, Project Portfolio Management, and Professional Service Automation. Boost your remote team collaboration with Saviom.