As we bid farewell to 2023 and look to the future, the accountancy sector is going through a number of changes. It’s undoubtedly exciting to see new tech being integrated within businesses, as well as the detailed insights it can provide, but it can also be perceived as complex or costly for those out of the loop.
The same goes for regulation, which is due to shake up the accounting industry in 2024 and beyond. Clearly, for businesses to stay informed and competitive heading into the new year, they must prepare for these developments as much as possible.
So, what trends and developments can we expect in 2024?
ESG Reporting
Despite coming to prominence earlier this year, ESG reporting is something which will particularly accelerate in 2024. Plenty of discussion was had about businesses and their carbon footprint; now, they must decide on concrete strategy if they’re moving into ESG transparency.
Understandably, this will be breaking new ground for many small and medium businesses. Possessing the knowledge and the skillset to report accurately is critical as mistakes can be costly, both in monetary and reputational terms. Taking a look at what the four biggest firms are offering is a good place to start, shedding some light on what’s expected and whether you can keep up. Is it best to partner or recruit an expert? Perhaps you can look to the time when bookkeeping moved online and create a role similar to the ‘Cloud Champions’ of old. Whichever approach you choose, it’s essential to be informed.
Legislative changes
2024 heralds a number of legislative changes and accountancy professionals must be ready for them. Attending webinars and being well read on these issues will ensure your firm is not on the back foot, allowing rivals to offer stronger advice.
More specifically, long-awaited reforms to Companies House were unveiled earlier this year, but the impact will be felt in 2024, and even 2025. Broader powers will be used to reject and query information being filed, as well as remove illicit sources of information. The filing of accounts will also change at a future date; companies will need to use software to file their accounts and all will now need to file profit and loss accounts (small and micro are currently exempt). Companies House will also be able to cross reference and share information more widely with other government and public bodies to identify discrepancies and economic crime.
In addition to the main changes introduced, the bill brings about key modifications to Companies House, incorporating identity verification for both new and current registered company directors, individuals with substantial control, and those submitting documents to the registrar.
Basis Period Reforms will be a big change in 2024, too, for self employed individuals and partnerships which do not use an accounting period end date between 31 March to 5 April. If you are affected, it means that the way you report your profits for tax purposes will change from the 2023/24 tax year onwards. Again, getting ahead of these changes and staying informed is the best way to prepare.
MTD for ITSA
While questions around MTD for ITSA still linger, an announcement confirming the current threshold of £30,000 and further clarity around the quarterly reporting requirements is a small stepping stone for accountants and bookkeepers.
It equips accountants and bookkeepers, to strategically plan amidst the uncertainties, facilitating a smoother transition for their clients into the era of more frequent reporting, set to unfold in 2026.
Consolidation of the accounting space
Consolidation of the accounting space is not a new development, but we can expect it to continue into 2024. The acquisition of smaller firms by bigger firms, as well as the operation of sole practitioners, picked up pace in 2023, and it’s a trend we’ll see more in the new year, especially as the mid market squeeze rumbles on.
This plays out while a global talent shortage hangs over the accounting sector. As a result, more firms are open to outsourcing, with client demands set to increase and pressure growing on accountants and bookkeepers. Firms have a decision to make; do they reduce the number of clients to create capacity? Or perhaps utilising tech effectively offers a solution.
Better use of technology
AI continues to dominate the headlines and the minds of those in the accountancy space. That’s, of course, set to continue into 2024 and beyond. But the new year should see adopters of the technology thinking more carefully about its effectiveness and how best to utilise it. If you’re integrating AI into your business, how is it actually benefiting you?
Data will continue to play a vital role and AI offers accountants the opportunity to access and analyse it in new, more ambitious ways. Artificial intelligence can process much bigger swathes of data; therefore, the insights you provide to your clients can be quicker and more detailed. This, in turn, can give you the edge over your competitors.
The bottom line
With 2024 set to be a year of increasing change, businesses should be as organised as possible when it comes to the shifting outlook. While no one can predict the future, firms should ensure they’re up to speed on what we already do know, allowing them to react quicker to any unexpected developments. Failure to do so could give competitors the upper hand and stifle all- important growth.
