Accounting firms are stepping up their business advisory services and moving beyond just providing standard tax compliance.
That’s among the takeaways from Wolters Kluwer’s latest “Future Ready Accountant” report released last week.
In a survey of nearly 2,800 tax and accounting professionals from around the world, 93% of respondents said their firms are now providing business advisory services. That’s up from 83% in Wolters Kluwer’s same survey last year.
Cathy Rowe, senior VP and segment leader of the U.S. professional market at Wolters Kluwer Tax & Accounting North America, noted that accounting firms have long been providing some level of advisory services as part of their traditional compliance work. What’s different now, she said, is that firms are now opening new revenue streams by providing higher-level, strategic advice. That could include input on merger and acquisition targets, for instance.
“We absolutely see advisory as the growth engine,” Rowe said in a Tuesday interview.
In the report, Wolters Kluwer officials said the increase in firms providing advisory services marks a “deliberate evolution” in how they deliver value.
“Rather than focusing exclusively on compliance and transactional work, they are investing in deeper partnerships with clients,” the report authors wrote. “This shift is particularly strong among small, midsize and large firms, where 70–73% now consider advisory a core service.”
And accounting firms are apparently turning to data and artificial intelligence tools to bolster their advisory offerings. Wolters Kluwer reported 87% of respondents “use client data to uncover and tailor advisory opportunities.” Among firms that have reported revenue growth of 10% or more, 41% said they’re seeing “better-than-expected results from AI in improving client guidance,” the report stated.
Wolters Kluwer’s report spoke repeatedly and glowingly of the business potential of artificial intelligence in the accounting world, but was comparatively sparse on the many financial and legal risks involved. Consider the fate of Deloitte’s Australian arm, which has agreed to partially refund about $290,000 to the Australian government for creating a report that was “littered with apparent AI-generated errors,” according to the Associated Press. The accounting firm’s report for Australia’s Department of Employment and Workplace Relations included fabricated quotes and references to other “nonexistent reports,” the AP said.
If AI tools have the capacity to make such costly errors, why would an accounting firm want to use them in the first place? Rowe maintained that such tools can still result in productivity gains and, in the long run, revenue gains. She said firms can avoid mistakes like Deloitte’s by having clear security policies around the usage of artificial intelligence tools. She emphasized that firms must always have a “human in the loop … to review key findings and communications” and to avoid overreliance.
It doesn’t hurt to have a system that uses only internal data; Wolters Kluwer, which itself provides accounting services, works that way and does “not have hallucinations,” per Rowe. “It’s all verified and grounded within our authoritative content and our data points,” she said of the company’s AI tools. “That is a big differentiator, as well.”
For what it’s worth, the potential risks of AI were not lost on many respondents in Wolters Kluwer’s survey. About four in 10 cited “security risks” among their top concerns around AI implementation. A similar share cited “lack of staff experience with AI” and “data quality issues.”
“These challenges reflect the complexity of integrating AI into regulated environments where sensitive information and accuracy are paramount,” the report said.
Rowe suggested firms pick out clear, discrete use cases that could be ripe for automation, echoing the sentiments of many others working in corporate finance these days. And, despite the risks, Rowe encouraged firms to move quickly on new tech adoption. Those that don’t, she said, could “risk losing talent and client trust.”
“‘Begin by beginning’ is a mantra I use,” she said. “Pick a clear use case, align technology with business goals and build for sustainable transformation.”
Meanwhile, Wolters Kluwer’s survey also picked up on private equity’s increasing interest and influence in accounting firms. Just about a third of respondents (32%) said they had received private equity investments in the past years.
Rowe said that accounting firms “offer some pretty attractive fundamentals for private equity investors.” Those include recurring revenue, the “stickiness” of client relationships and predictable cash flows, she said.
Wolters Kluwer’s “Future Ready Accountant” report is based on a survey of 2,768 tax and accounting professionals from North America, Europe and the wider Asia-Pacific region. The survey, conducted in April and May, went to respondents at “firms of all sizes,” according to the company.
