My Predictions for 2024

It’s predictions season! I have always hated being asked “where will the accounting profession be in 5 years” - because things are moving so quickly. But I’m going to share some key trends I’m expecting to see auditors focus their innovation efforts towards in the nearer-term – in 2024…?

Generative AI in audit.?

Let’s start with the headline grabber – Generative AI!?

This hit the peak of the Gartner hype curve in late 2023, meaning people’s expectations were at their most inflated.??

The challenge in external financial audit is the need for reperform ability and reliability. Good luck to the auditor who starts their documentation on file with “Per ChatGPT…”!?

I’m yet to hear of any truly ground-breaking broad uses of Generative AI in the audit process. But 2024 will see extensive exploration by firms and technology companies into how Generative AI could more significantly impact the work of auditors at scale. I expect we’ll start to see some clearer use cases appearing to apply this transformational technology which remain within the confines of the existing audit standards and regulatory expectations.?

Auditors break the shackles of desktop software.?

Against this exciting new dawn of Generative AI, the harsh reality is that most external auditors are still trapped performing most of their work in legacy desktop software. In 2024 many firms will finally ditch software built in the previous century for more modern, cloud-based platforms. This will better position them to take advantage of Generative AI developments, automation, and new opportunities to leverage data.??

Liberation from desktop shackles signifies not just a technology upgrade. It promises a fundamental transformation in the way auditors approach their work, paving the way for greater efficiency, collaboration, and innovation.?

Large US vendors bring new solutions to market.?

We’ve been hearing for years of new audit solutions coming to the market from the large US players. Firms are losing faith and are tired of waiting. So, 2024 is a do-or-die year for many of these promises given the burning platform desktop software legacy represents.?

I predict we’ll see solutions like CCH’s Axcess Cloud and the CPA.com’s Dynamic Audit Solution finally entering the US market and showing what close to 5 years of development has produced. Whether good, bad, or indifferent, entry to the market will thaw a US profession which has been partially frozen waiting for these large players to show their hands.?

I predict many firms will embrace more innovative solutions from newer, cloud native technology companies who have taken more progressive, data driven approaches. Most firms don’t want a better axe, they want to embrace the chainsaw…?

Integration, integration, integration.?

Firms are moving towards an ecosystem technology strategy. This involves adopting best-in-class solutions and creating integrations for a seamless user experience. Firms will make API capabilities and the willingness of technology providers to integrate with other providers a key part of their decision-making process.??

I predict we’ll see the newer, cloud native technology companies increasingly partnering with each other to create out-of-the-box integrations for firms. This will cause a dilemma for the incumbent large vendors. Will they continue to adopt their legacy suite strategy - to try to tie firms into all their products – or open their walls to support the integrations firms now demand??

Talent shortages improve but aren’t solved.?

Shortages of talent will remain a challenge for many firms in 2024, restricting future growth and the ability for leaders to make strategic moves. Recent growth, and other factors including an aging profession and regulatory scrutiny, have created demand which has outpaced supply.?

Technology and innovation in accounting firms has often had a bias towards achieving efficiency. This naturally helps to address talent shortages. But I predict firms will continue improving retention and recruitment place a greater focus on technology and innovation benefits for their team’s experience and career development to improve staff retention and demonstrate their attractiveness as an employer.?

Increased M&A activity.?

We will see increased merger and acquisition activity across the accounting profession, as consolidation continues. Larger firms will merge with smaller firms who are drawn to the attractiveness of leveraging the superior technology and broader resources of larger firms.??

I predict we’ll also see continued activity from private equity investment into the accounting profession. This will take the form of both new firms taking investment, and firms already backed by private equity investment going on acquisition sprees.??

I believe this will drive an increased investment in technology and innovation by all accounting firms. Private equity backed firms will deploy capital to expedite the transformation of their business model and wield a technological competitive advantage, driving growth in revenue and profitability. The firms remaining independent will realize the only way to beat them is to join them and invest more in innovation…?

More firms move to a corporate leadership model.?

Private equity backed firms commonly replace the partnership model with a corporate leadership structure – including a CEO, COO, and similar positions. Some other firms are also embracing this change already.?

The corporate model is viewed as supporting quicker decision making and a more consistent execution of a strategic plan. I predict we will see more accounting firms evaluate making this change in response to dynamic client needs, talent challenges, and the rapid pace of change in the technology landscape.?

Lack of reform exposes UK audit to criticism?

The failure to advance audit reform in the UK on the back of the Carillion corporate failure exposes audit firms in the UK market to severe criticism should another high-profile collapse occur.?

This is something I really hope does not come to fruition, but I predict that should there be another UK corporate failure hitting the press in 2024 we’ll see journalists heavily questioning how the UK audit market learned the lessons of Carillion. Let’s hope the smaller changes made by the accounting profession of their own back are sufficient to avoid this…?

It’s going to be another exciting year for sure! I would love to hear your predictions for 2024!!?

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