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| Brian Walsh looks at the outlook for accountants in 2002 and he is cautiously optimistic that the opportunities will remain strong for skilled financial professionals who are flexible and mobile. |
Any effort to predict the outlook for accountants in 2002 must be based on reviewing how the profession has performed in the last ten years. There are many similarities between the way in which the overall economy and the accountancy profession developed during that period.
The workforce overall has increased dramatically with over half a million more people in employment in Ireland than we had a decade ago. In the same period, the number of chartered accountants has increased from seven thousand to twelve thousand.
Much of our economic success has been based on the growth of employment in multi nationals, including financial services companies in the IFSC. The profile of chartered accountants has similarly shifted. In 1990 the same number of chartered accountants worked in practice (mainly providing audit, accountancy and tax services) as in general business. To-day almost two thirds of chartered accountants work in business, many in large companies, with three hundred and fifty working in the IFSC alone.
The booming economy has created tremendous opportunities for our young people. In every year since 1997, the Institute of chartered accountants has attracted a record number of new trainees, up from 760 in 1997 to 928 in 2000.
We are seeing increased participation by women in the workforce. Again the evidence of this can be found in the number of women training to become chartered accountants. Half of all new trainees in recent years have
been women.
Living standards have improved as a result of higher salaries and lower taxes. Salary surveys conducted by the Leinster and Cork Societies of chartered accountants have shown substantial earnings rises for chartered accountants in recent years, with newly qualifieds commanding salaries of ?25-35,000 with a capacity to increase that rapidly based on performance.
Accountants play a very prominent role in all major businesses. In 23 of the Top 30 companies in Ireland, chartered accountants hold the position of Chief Executive or Finance Director.
A changing profession...
We can see a clear correlation between the health and growth of the economy and that of accountants. Greater economic activity generates more work for accountants, but the changing nature of work also creates challenges and opportunities. The globalisation of business, the liberalisation of trade, the information technology revolution and the re-engineering of work, all affect the work chartered accountants do and will affect the whole range of skills and expertise which they will need in the future.
There is a strong likelihood that, within twenty years - or half the working lifetime of chartered accountants qualifying today - the attestation of historical information will be largely redundant as a prime role for accountants. Instead, accountants are likely to be business and information managers and pro-active business advisers. Already, accounting is ceasing to be a discrete business function. The information technology revolution will drive further changes in how work is organised and information managed.
All of these changes must be reflected in the way in which chartered accountants are educated and trained, and in how they re-equip themselves with new skills throughout their professional lives. A recent survey by a major recruitment agency in the US confirmed the changing roles of accountants as they shift from being backroom statisticians to boardroom strategists. A survey of 1,400 CFOs predicted that five years from now issues and responsibilities outside of traditional accounting functions would occupy 37 percent of a senior accountant’s time.
There is a very serious debate going on in the United States at present about the desirability of creating a new global designation (cognitor was one working title) for business advisers/experts that transcends what is seen as the confining definition of an accountant. Whatever the outcome of that debate within the major US accountancy body -the AICPA, the accountancy profession worldwide is currently in a period of reform, with a view to ensuring that the skills of members remain relevant to to-day’s ever changing business world.
Looking ahead…
All commentaries on the state of the economy and the outlook for 2002 are united on the slowdown in the economy and the risks which the downturn in the US poses. The December Budget of Minister McCreevy (a Chartered Accountant) will be analysed closely to see how the Government proposes to respond to the most challenging economic outlook than it has faced since coming into office in 1997. More job losses in the information technology industry seem inevitable given the slump in that sector and the spin off to ancillary services and suppliers will surely follow. We look certain to be facing low single digit economic growth in the economy. We are likely to see a more cautious and less expansionary Budget 2002, despite the imminence of an election. But many factors lie outside the control of Government - the economies in the US and Europe, the value of the euro etc.
How will this shake out affect accountants? Clearly some will be affected by businesses which close or cut back significantly. Accountancy practices, especially the larger ones, which have seen strong growth in the past five years, will surely be affected by some of the fallout from the multinational sector in particular. However, there will be opportunities in restructuring businesses and in many ways, I believe that accountants need not be pessimistic about career opportunities in the coming year. Mobility and flexibility will be the key.
Accountancy is a service which every business needs. While the IT sector is currently facing difficulties, other sectors like pharmaceuticals and healthcare remain strong. The indigenous sector of Irish industry has been modernised and is in a healthy competitive position. The implementation of the Government National Development Plan will create new opportunities as major expenditure programmes have to be planned, executed and reported on. For example a new Science Foundation Ireland has been established to implement the Government’s Technology Foresight initiative. The Technology Foresight Fund of E711 million (?560 million) will support projects in key strategic technologies and niche areas within Information and Communication Technologies (ICTs) and Biotechnology, and is a vital element in the Government’s strategy to move Irish industry higher up the value chain. All of these activities will need skilled accountants.
A key feature of the training, which chartered accountants get, is the requirement to undergo a three-year training contract, with either a practicising firm (over 90 per cent) or with a business approved by the Institute of Chartered Accountants. For most chartered accountants, this period of in-office training builds upon their technical knowledge, exposes them to a range of disciplines- such as tax, audit, accountancy and consultancy- and provides them with a breadth of experience working with clients in a range of businesses. This underlying strength in their training will give chartered accountants the mobility and flexibility to cope if their current employers run into difficulties. They also possess a qualification, which is recognised globally, and we currently have Irish CAs working in over 90 countries around the world.
My outlook for accountants in 2002 is one of cautious optimism. The economy is certain to be less buoyant and individual businesses and sectors will suffer cutbacks and closures. However, the overall economy remains strong and there will continue to be a demand for skilled finance professionals who are flexible and mobile. |
Brian Walsh is chief executive of the Institute of Chartered accountants in Ireland.
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| Article appeared in the September 2001 issue.
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