| Staffing is biggest issue for industry going forward |
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| Difficulties in attracting the right staff is proving to be problematic for Ireland’s accountancy industry, at a time when ‘over-regulation’ is proving to be both an opportunity and an obstacle, say the managing partners of Ireland’s leading accountancy firms. |
A shortage of quality staff has been identified by the managing partners responding to this year’s Annual FINANCE Accountancy Survey, as the biggest threat facing Ireland’s accountancy sector.
Donal O’Connor, managing partner of PricewaterhouseCoopers, says that, ‘As an industry, probably the single biggest issue is to ensure that we remain an attractive career’, and the majority of managing partners concur with him. They say that recruiting and retaining staff with the right skill set is increasingly difficult, with audit, accounting and tax proving to be the most troublesome areas, with Sharon Gallen, auditing and accounting partner with Horwath Bastow Charleton, also highlighting corporate finance as being a troublesome area.
Julian Caplin, managing partner at Caplin Meehan, and Pat Kenny, managing partner at Deloitte, also recognise that the ‘shortage of quality people’ remains the most pressing concern for accountancy firms today, while Vivan Nathan, managing partner of HLB Nathans, also points to the ‘lack of trained staff’ as an obstacle to growth.
The common response to this problem seems to be to employ a strategy that has enhanced recruitment methods and in-house training. Denis O’Connor, KPMG’s managing partner says, ‘We continue to focus on recruiting the best people and then invest significantly in their knowledge, skills and career development’.
Paul Raleigh, managing partner at Grant Thorton, explains his firm’s approach, ‘We have increased our intake of graduates for 2005,’ adding that, ‘Our approach is to not only provide normal training but also includes career planning, coaching, mentoring and further education’.
The focus on in-house training is re-emphasised by Mark Tully, a partner at UHY O’Connor Leddy Holmes, who says that his company believes in, ‘Attempting to ‘grow your own’. Julian Caplin’s solution to recruitment problems, is by ‘offering varied portfolios, variety of work and an opportunity in a growing firm with above average remuneration’.
At Brenson Lawler, managing partner Patrick Lawlor says that his firm is focusing on in-house retention of staff and internal training of qualified staff.
Human resource management is the primary focus at PwC, says O’Connor. ‘Our firm has a huge focus on ensuring that we continue to recruit and retain the best,’ he says, and in order to maintain a high standard amongst staff, employee participation is continually sought within the organisation. O’Connor says, ‘In seeking to ensure that we are focusing on the right areas, we undertake regular internal staff surveys seeking our people’s views on a number of areas which we then seek to address. The responses to these initiatives indicate that people recognise their views are having an impact in the workplace and this is appreciated’.
Other challenges
The other key threat identified by the accountants was the onerous regulatory environment, with KPMG’s O’Connor, saying that staffing combined with regulation is the biggest problem, ‘the retention of high quality people as regulation takes over as an emerging challenge to the profession as a whole,’ he said.
This viewpoint was echoed by Paul Keenan, managing partner at BDO Simpson Xavier, who expressed concern over, ‘too much bureaucracy and regulation’.
Over three quarters of those surveyed believed that there is a trend towards ‘over-regulation’ in both an Irish and international context. Furthermore the remaining accountants, who thought there has not been a tendency towards over-regulation in 2005, typically stated that the increased regulation in the sector had been present prior to 2005.
Some executives see the manner of regulation and the lack of differentiation in regulation between firms as a possible concern for the sector is. Paul Keenan asserts that there is, ‘no distinction between public (public interest) and private companies’ and he recommends that the government should take steps to, ‘recognise that over-regulation of private companies will hinder entrepreneurial activity’.
Niamh Meenan, a partner with RSM Robson Rhodes, believes that over-regulation is leading to, ‘Increasing demands (current and proposed) which make the life of a small business difficult and may lead to the decision to go elsewhere’.
Denis O’Connor says the government has an obligation, ‘Government policy must promote a healthy competitive economy with fair business practices. Regulation is one, but only one element of the mix, and unfortunately it has been turned too as the solution to all ills. Ireland urgently needs: a re-balancing of this over-regulation and a proper evaluation of the full impact for Ireland of all new proposals’.
PwC’s Donal O’Connor echoes the sentiments expressed by KPMG, saying, ‘There is a growing sense that Ireland needs to continue to be careful to maintain an appropriate balance between regulation and maintaining a positive and not overly complex environment for doing business. Irish Government needs to continue to be mindful of an appropriately balanced regulatory environment allowing for innovation and that does not add significantly add to the cost of doing business or make Ireland less competitive in the Foreign Direct Investment space’.
Earlier this year, the contentious Directors’ Compliance Statement of the Companies Act 2004 was referred to the Company Law Review Group for further review, and this was welcomed by both PwC’s O’Connor, and Ernst & Young’s Paul Smith, who says that this ‘may ease the burden of regulation’.
A number of firms also expressed concern about the impact an economic downturn would have on the profession, and Paul Raleigh also added, ‘the effect on the profession if another Big 4 firm were to suffer a similar fate to Andersens’.
Opportunities
Although many of the participants identified regulation as being a challenge for the industry, they also said it was an opportunity, with Niamh Meenan saying that ‘compliance and regulatory changes’ are the biggest opportunities for the industry going forward.
Furthermore, the ‘burden’ of regulation, for Paul Raleigh, can prove to be an opportunity given the ‘role the profession has to play in improving corporate governance standards and dealing with new regulation.’ Vivian Nathan also subscribes to this view of regulation, seeing the opportunity for the future of the sector coming from, ‘Embracing the new regulatory structures that are being introduced’.
Specific international regulations such as the Sarbanes-Oxley regime, are also driving growth. Niamh Meenan says that Sarbanes-Oxley, ‘has identified opportunities for us to work with clients on value-added assignments and given us more access to non-audit clients to discuss these areas’. Julian Caplin says Sarbanes-Oxley is ‘starting to impact now’ and is ‘expected to drive growth from 2006’. Paul Raleigh sees Sarbanes-Oxley providing, ‘significant opportunities,’ especially where the ‘Big 4 firms have not been able to supply certain specialist services (SOX work, tax, corporate finance) to their clients due to conflict of interest issues’.
Pat Kenny says that although Sarbanes-Oxley is the biggest growth driver amongst US subsidiaries and foreign filers in the US, local rules are also giving rise to additional requests for support.
Continued economic growth will also be a source of opportunity for the sector, says Joe Carr, managing partner with Mazars, a sentiment echoed by Liam Twohig, managing partner with Baker Tilly O’Hare.
Other areas of opportunity for the accountancy sector include outsourcing, which Geoffrey Lewis, managing partner at Ormsby & Rhodes, sees as the biggest opportunity, and opportunities in wealth management, tax planning and consultancy, which were identified by both Niall Garvey, a partner with Oliver Freaney & Co, and Mark Tully. Patrick Gillen, a partner with Russell Brennan Keane, foresees opportunity in corporate finance and recovery services. Consolidation within the industry and specialisation were identified by Sean Fitzpatrick, managing partner of OSK Accountans & Business Consultants as being areas of opportunity.
For Willie Fahey, managing partner at IFAC, who would be focused on the agricultural sector, restructuring in response to the Common Agricultural Policy (CAP) should drive growth.
IFRS
International Financial Reporting Standards (IFRS) were introduced last January, and commenting on their introduction, Liam Ryan, managing partner at PKF Ryan Glennon & Co, said that companies were generally ‘reasonably well prepared’.
Denis O’Connor explains the salience of providing support for clients during this uncertain time. ‘The corporate sector was initially cautious about the change and given the uncertainty in interpreting some of the standards and developing others, this caution was warranted. The actual implementation projects are generally going well and much of the focus now needs to be on the communication and explanation of what the ‘IFRS’ results mean’.
Paul Smith compares IFRS with Sarbanes-Oxley, and how crucial preparation is to avoiding a depletion of company resources. He said, ‘changes in regulation, such as Sarbanes Oxley have meant that many companies are finding themselves resource restrained. Once the Group changeover to IFRS is complete, many companies will turn their attention to the merits of converting the statutory entities in the Group’. |
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| Article appeared in the October 2005 issue.
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