NOT A FAN OF AUDITS (July 2025)

I started the talk off by pointing out that one of their websites (they have several many franchise sites) had been down for weeks. Between the time I presented my talk and prepared this follow-up article, their main site content had been updated and the broken URL removed— so if that is not a sign that someone was listening to me and taking action after the talk, well then I don’t know what might be!

There is a saying: “There are lots of people doing things with great efficiency that didn’t need to be done at all.” My clients entire industry, I believe, has one pressing anxiety (more so than audits), which I will summarize in one sentence: “Will their firms be around in the next few years?” This is a valid concern. Can anyone really predict if there will be more firms or fewer? I believe, percentage-wise, the firm to client ratio will decrease, resulting in fewer firms. I promised my client I would unpack this point in this article.

The fact is, there is no positive counter-influence I can currently point to or even imagine that will alter the industry’s current trend trajectory, of declining firm-to-client percentage ratio. Therefore, it will likely continue this way, especially considering how much money some firms are making. The accounting software market, for instance, is projected to reach a $19 billion valuation by 2026.

In 2025, many services offered by firms in this sector are being automated by vendors and software companies. Depending on how a firm collaborates with innovative solutions, it can position itself positively — maintaining or increasing output with fewer personnel. Additionally, the need of meeting colleagues in person is diminishing, reducing the relevance of brick-and-mortar offices and physical locations. With technology, we can now connect with other markets from thousands of kilometres away, begging the question of importance of that office and the rental fee?

The end result is there will be fewer professionals working in offices in the coming years, and in spite of this, businesses will still be able to serve a growing client base. While this trend rolls out, another is taking shape. Depending on the research data you refer to, around 48% of CFOs are planning to invest in accounting technology and software to automate jobs we are trying to create or preserve — essentially bypassing service providers and transforming their companies into technology-driven businesses. There are both internal and external influences at play.

The big challenge, as always, is how we attract future clients (and staff), especially here in South Africa — a country that is extremely unique, influenced by post-apartheid dynamics, the effects of nine wasted years under Zuma, a fragile government of national unity, the ongoing national water crisis, a pending gas crisis, and the constant threat of our electricity calamity returning. These are just a few local issues I could mention.

Outside of our borders, business is also affected by geopolitics, the evolution of e-money, banks having to evolve to remain relevant, climate change, and of course, all these ongoing wars. Soon, we will need to address carbon budget allocation, and a host of other concerns. I know, for the people in the room I was speaking to, many things need to be adjusted to keep up with the future —regulations, laws, entities like the IFRS Foundation and the South African Accounting Authority all needing to adapt. My clients’ industry does not operate in a vacuum, and it has many moving parts and influences: decentralized finance, people trying to avoid banks altogether, and don’t even get me started on SARS. But it’s not all doom and gloom.

I do believe the future of the sector I was presenting to will be prosperous for those who innovate. We will see successful firms that are client-centric, with custom applications, portals, or mobile apps tailored for future target markets.

As I wrote this article, I must point out that no super App currently exists in the industry in South Africa, and this presents a real opportunity for those willing to take the risk and invest. For the firm that does, I hope they’ll speak to me about developing a perfect digital solution!

Let’s address a few final points and then submit my conclusion like a tax claim! Karbon’s 2022 Practice Excellence Report stated that cloud accounting is the most-used technology solution, with 86% of firms reporting adoption. The keynote speaker before me offered a solution related in part to cloud computing. I enjoyed listening, and the most important point (for me) was when he mentioned that their development team is open to listening to ideas from clients. I can tell you that’s not something every software provider is quick to agree to – and that particular company must have already caught onto what I said, customization is key to success.

Data is the new gold, the new oil. Very few companies in my clients’ sectors are prepared to handle ‘it’ in-house, and for the most part, this means involving third parties—usually on a subscription basis. This opens firms up to all kinds of data, privacy, regulatory, and cybercrime risks and concerns.

Following naturally from this is the subject of data analytics. Data without interpretation is like people holding lots of Bitcoin but having no idea how to spend it. Future firms need to learn the basics of how to process and present data analytics so that it serves a helpful purpose—not only for their own business but also for their clients.

My point was that a lot of trade (which could need the services of my clients’ guests) is happening in new spaces, many of which most people in our sector and that room that day were unaware of. (Although there was one gentleman on the left who I suspect knew about OnlyFans because his face had turned red when I mentioned it.)

When exploring future business opportunities and selecting which technology and innovations to adopt, look back at the past. What drove innovation then is likely to do so in the future. Don’t forget the unique opportunities South Africa offers, such as our informal sectors—over 500 townships with more than 9 million people living in them, all of whom need to be compliant with their small businesses and household expenses, presenting my client with a new market worth R150 billion to R200 billion annually… which could be tapped with an App!

Embrace and cultivate a culture of technological curiosity, and incorporate it into your future business operations.  Employ a Chief Technology Officer, and learn about Blockchain, Cryptocurrencies, Robotic Process Automation, BlackLine, Float, Botkeeper, (to name just a few) and study your competitors, like Thomson Reuters with Onesource and KPMG with Clara.

Most importantly, focus on enhancing the human element. Never before has it been more crucial to take your clients out for coffee. If budget allows, treat them to a round of golf at Fancourt, which I think you can write off as a tax expense, I don’t know, speak to an expert to get advice on that.

The END.