Darren, one of our Partners and Head of Taxation, was recently featured in the International Accounting Bulletin. His insights on the Australian economy and its impacts on accountancy services have been highlighted in the article titled “Complexity keeps Australian firms in business.”
The article, featuring contributions from individuals such as Greg Hayes, Chairman of Hayes Knight, and Tony Schiffman, Chief Executive Partner at BDO Australia, outlines the challenges posed by the double-edged sword of the complex Australian system for the accountancy sector.
In summary, the Australian accounting industry is navigating an intricate landscape. Regulatory demands surrounding ESG and the complex tax system have intensified the necessity for audit and advisory services, while the surge in inflation and interest rates has heightened the demand for advisory services due to increased M&A activity. However, Australia’s tax system is becoming more convoluted, impeding long-term economic sustainability.
The 2023 Federal Budget aimed to simplify the tax system through measures such as increasing the asset write-off threshold. Nevertheless, experts advocate for more comprehensive tax reform. Irrespective of the tax system, the Australian accounting system also has to deal with the second highest skill shortage in the world along with a need to further strengthen privacy laws in alignment with European GDPR legislation.
ESG and sustainability reporting remains pivotal in Australia, with the recent introduction of two global sustainability standards IFRS S1 & IFRS S2, which will be mandated from 1 January 2024 for certain large, listed organisations.
High inflation and interest rates were beginning to bite when IAB last looked at Australia and while it may seem that these pressures have peaked, the return to the Reserve Bank’s target inflation band is not expected to happen until the 2024-25 financial year. As well as increasing the costs of borrowing, high inflation has also made it harder for businesses to plan, with owners spending their time protecting organisations against inflation rather than investing in productivity improvements, which has impacts on wage growth further down the line.
Darren O’Malley, partner and head of Taxation Division at Kreston Stanley Williamson, has seen clients change their strategy to concentrate on looking for areas where costs can be cut. “Rising interest rates have required clients to review their borrowing arrangements to remain sustainable carefully,” he said.
Even in the face of these challenges, the accounting sector stands strong, driven by robust customer demand and the surge in post-COVID M&A endeavours. The persisting pressure on fees and the escalating competition from cloud accounting and offshore services are notable trends. Despite an anticipated busy year ahead, hurdles arise from inflation and confidence-related concerns. The sector closely monitors technological progress, particularly advancements in AI.
Undoubtedly, 2023 will usher in new trials for Australia’s accounting industry. Successfully navigating these challenges will demand both agility and substantial investment to evade the pinch in the next 18 months.
To read the full article by International Accounting Bulletin click here.
If you have any queries in relation to the above, the Kreston Stanley Williamson team is here to help you. Don’t hesitate to reach out and contact us.
Kreston Stanley Williamson
*Correct as of 24 August 2023
*Disclaimer – this article has been produced by Kreston Stanley Williamson as a service to its clients and associates. The information contained in the article is for general comment only and is not intended to be advice on any particular matter. Before acting on any areas contained in this article, it is imperative you seek specific advice relating to your particular circumstances. Liability is limited by a scheme approved under professional standards legislation.
