11 Apr

FRC to enhance monitoring of audit firms

The FRC has announced plans to enhance its monitoring of the six largest audit firms to avoid systematic deficiencies within firms’ networks, disruption in the provision of statutory audit services and instability in the financial sector.

The plan announcement comes after warnings issued and collapse of major infrastructure companies in the UK.

The FRC will set out its expectations of each audit firm and use evidence it gains to inform its supervision programme for these firms.

The introduction of such “supervisory” role undoubtedly will place more pressure on the FRC. Furthermore, the consequences, if any, the FRC reputation may face shall a client of the top six audit firms were to fail again under its watch.

The FRC will focus its attention on five key pillars that are critical to the stability of the audit firms and quality of audit work. These are:

  • Leadership and governance;
  • Values and behaviours;
  • Business models and financial soundness;
  • Risk management and control; and
  • Evidence on audit quality, including from the FRC’s annual programme of audit quality reviews.

The FRC has begun work on monitoring risk reporting, contingency planning and IT security at audit firms and will report to the firms on its findings on all the five pillars. The results of the FRC’s inspection of audit quality by the firms will be published in firm-specific reports in June and summarised in the annual Developments in Audit report in July.

Melanie McLaren, Executive Director of Audit and Actuarial Regulation at the FRC, said,

As the UK’s competent authority for audit, the FRC is responsible for the regular monitoring and mitigation of risks in the audit market. The work of the Big Six audit firms is core to the integrity and transparency of UK capital markets and so it is vital that the FRC introduces a new approach to monitoring their stability and performance by focussing on aspects of their businesses that are critical to the provision of high quality audit. We will discuss with firms how well candidates for key leadership and governance roles such as Independent Non-Executives, Heads of Audit and Ethics Partners meet our expectations in terms of experience, skills and attributes. Where we do not have specific powers in this regard we will look for the firms’ cooperation
11 Apr

New guidance for finance teams to build sustainability into strategic planning

A new guide on strategic planning, budgeting and forecasting has been produced by finance professionals to help businesses embed sustainability into their decision making.

The guide helps finance teams to navigate the complexity of a changing world by providing tools, practical examples and guidance on how to integrate sustainability into strategic planning, budgeting and forecasting.

The long term economic, social and environmental outlook is increasingly complex and uncertain. Failure to respond effectively to social and environmental trends can result in missed opportunities. Effective response can help organizations to improve their decision making and risk management. It can enhance their innovation and stakeholder engagement and their ability to align business performance with long term value drivers.

The organizations who took part in the project to produce the guide found clear business benefits to long term strategic planning, budgeting and forecasting by:

·         Identifying sustainable opportunities and risks

·         Driving investment for long term success

·         Aligning performance management with long term value drivers

·         Reducing cost

·         Providing brand benefits

·         Encouraging better employee and customer engagement

Jessica Fries, Executive Chairman, A4S said:

Social and environmental issues now top the World Economic Forum’s Global Risk Register. There is a clear need for organizations to adapt their financial processes to respond to a changing world. It can be a challenge knowing where to start, which is why this guide is designed to give CFOs and their teams practical advice and case studies developed by finance for finance

Scott Longhurst, Managing Director Finance & Non Regulated Business, Anglian Water Group commented:

Whatever line of business we are all in, as a finance community we all share the necessity to have a financial plan that delivers the business strategy, securing the long term success and sustainable future of the business

Craig Vink, Partner, Deloitte commenting on the guide said:

Complex social and environmental trends are placing a greater need for leading organizations to practice integrated thinking and build sustainability into their decision making process. This guide has been designed to help with this transition

The guide can be downloaded from http://www.accountingforsustainability.org/strategic-planning

11 Apr

UK ACCOUNTING FIRMS USING THE CLOUD OUTPACING TRADITIONAL PRACTICES

Despite the commonly perceived threat of technology taking jobs away from accountants, new research from Xero has shown that in reality, the opposite is true. 

Xero’s Accounting and Bookkeeping Industry Performance Report which surveyed 939 practices revealed that when serving more clients online, practices are experiencing a greater demand for new staff as well as a dramatic increase in year on year revenue.

The report found that 81% of small firms serving more than 100 cloud clients are actively looking to employ more staff, compared with just 49% of firms with fewer than five small business clients using online accounting. The trend continues for mid-sized firms – nine in 10 firms with more than 300 online accounting clients are looking for new staff compared with 59% for firms with fewer than five.

The demand for tech-savvy online accountants has also resulted in increased revenue per employee for cloud-based firms, as well as higher compensation packages for employees within firms that are adept at using technology to serve their clients. Practices with 6-35 online clients achieve an average revenue contribution of £65,000, while firms with between 100-299 achieved an average of £115,000.

Furthermore, technology is enabling the transformation of the role of the accountant to that of the connected business advisor. The report found that practices providing advisory services earn considerably more revenue per client than firms purely offering compliance (£6,990 vs £4,200).

By offering expertise in solving challenging business problems, these specialist services are generating a significant annual revenue per client. The accountants that take the role of personal trainer/coach, tech-loving expert and holistic coach are seeing the highest revenue per client.

Damon Anderson, Director of Partner at Xero commented:

We’re seeing an increasing number of practices embracing cloud technology, particularly in the lead up to Making Tax Digital. Our research shows that rather than putting an accountant’s job on the line, cloud technology is enabling significant growth and as a result, revenue is increasing, teams are expanding and roles are evolving.
What it means to be an accountant today is a far cry from what it was before online accounting. Practices are diversifying their offering beyond just compliance into the realm of business advisory and seeing real growth. The cloud has been instrumental in this journey, freeing up time for accountants to develop their skills further as they do more to help small businesses prosper

Xero Partner, Olly Evans, Evans & Partners commented:

Since becoming a Xero Partner we’re doing a lot of our work more cost-effectively. We’re making better recovery on our jobs, we’re not carrying so much work in progress, we’re doing the jobs faster. All those good things are happening. We’re in double figures for growth, percentage-wise

Jonathan Bareham, Raedan commented:

This year we’re hoping to hit about 75% growth. But we’re getting that out of what’s still a really small team. Xero has allowed us, in a way, to punch above our weight from day one because we’ve been able to streamline so much. We can focus on doing more interesting things that make us look like a bigger firm than we are

To coincide with the report, Xero has launched an online benchmarking tool which allows practices in the UK to compare their firm with similar businesses across the nation. More than 900 accounting and bookkeeping practices told Xero about how their practice is performing, resulting in an interactive tool to compare performance based on revenue per client and clients served by employee.

For more information and to read the full report please click here.

29 Jan

It’s just too little, too late: Carillion plc

The FRC will conduct the investigation as quickly and thoroughly as possible. However, most stakeholders have raised concerns to whether the warnings of such a prominent player in in infrastructure development should have been under the magnifying glass of the FRC before it all collapsed.

The FRC has now decided, following enquiries made since a profit warning in July 2017, to open an investigation under the Audit Enforcement Procedure in relation to KPMG’s audit of the financial statements of Carillion plc. The investigation will cover the years ended 31 December 2014, 2015 and 2016, and additional audit work carried out during 2017.

Many have criticised the auditor KPMG which failed to detect and make the wider stakeholder aware of the issues which led to the collapse of its client. It is reported in the accounts of Carillion that KMPG earned fees reaching almost £30m. It is one of the primary duties of an auditor to detect and report on any matters which may lead to the client not being able to carry out “business as usual” for the foreseeable future. The reporting of going concern is enshrined in the rules in which the auditor then must sign off its clients with a clean bill-of-health.

FRC will consider whether the auditor has breached any relevant requirements, in particular the ethical and technical standards for auditors. Several areas of KPMG’s work will be examined including the audit of the company’s use and disclosure of the going concern basis of accounting, estimates and recognition of revenue on significant contracts, and accounting for pensions.

The FRC is progressing with urgent enquiries into the conduct of professional accountants within Carillion in connection with the preparation of the financial statements and other financial reporting obligations under the Accountancy Scheme.

The FRC is liaising closely with the Official Receiver, the Financial Conduct Authority, the Insolvency Service and The Pensions Regulator to ensure that there is a joined-up approach to the investigation of all matters arising from the collapse of Carillion.

22 Nov

EY and Concur to collaborate on the first fully integrated tax and immigration solution for business travellers

Concur, an SAP company and provider of travel, expense and invoice management solutions, is working together with business partners to offer  clients a better experience in global business travel and manage tax and immigration compliance risks via the Concur App Centre. 

The Concur Fusion Exchange event in London provided a great opportunity for current and prospective clients to speak to Concur partners such as AMEX, Acquis, BusinessVisaHQ, ATPI, Oversight, HRS Global Solutions, Realisable and many others, all of which are established and highly knowledgeable suppliers in the travel and expense industry to understand how their corporate travel can be improved.

Simon Mathews, Business Development Manager at AMEX said:

American Express is widely known for its credit card business. However, we are also a market leader in fraud detection and virtual payment solutions. We support our card users in being at the forefront of tackling fraud. One of many ways in which we do this is to offer clients one time payment mediums to be used at say, a hotel, and not to be used thereafter. This is by default a one time use card which eliminates fraud as no one else will be able to use the card again.
Furthermore, AMEX has full integration with Concur to make the travel and expense management data collection a seamless operation; Monitoring and tracking expenses from initiation to finance department with ease.

Matt Fryar, Vice President of Sales of Oversight said:

The travelling industry is an area highly underestimated in respect of deliberate fraud and error. Our solution offers users the ability to wholly integrate into Concur and detect corporate policy violations and reveal an array of risks from the smallest intentional fraud attempts to more larger scale transaction manipulation by travellers.

Real-time immigration and tax assessments to business travellers through the integrated offering by EY and SAP will capture relevant travel and business activity data within Concur. Using EY tax and immigration technology, the integration analyses the data to make a real-time assessment of a business traveller’s tax and immigration obligations before they travel.

By linking directly to real-time data within the Concur Travel and Expense platform, EY clients will be able to receive robust, real-time analytics into their domestic and international cross-border tax obligations. This seamless integration will give organisations increased visibility into potential risks before they occur, with no additional effort required from their travellers.

Michael Bertolino, EY Global People Advisory Services Leader, says:

Business travel is vital for EY clients around the world, and workforce mobility is an important driver of competitive advantage, as well as an operational necessity. The new offering helps us ensure that tax and immigration issues don’t impede employees from doing business when they are on the move. By harnessing the collective power of 10,000 EY professionals providing EY People Advisory Services, we will work together with Concur to support clients with a unique experience when it comes to managing business traveller risks

Mike Eberhard, President, Concur, says:

We want to make it easy for companies to adjust and adapt to the increasingly complex demands associated with global business travel-related tax and immigration. As Concur’s customers currently operate and expand globally, it’s important that we not only continue to innovate, but also work closely with industry leaders like EY to meet our clients’ current and future needs

The integrated solution will be available globally in the Concur App Centre for EY clients as well as Concur’s.

With more than 160 pre-built integrations with Concur Travel, Expense and Invoice products, as well as connections to popular apps, the Concur App Centre delivers innovative functionality in key categories such as finance, regulatory compliance, enterprise identity, traveller productivity, travel management and much more.

For more information, visit: https://www.concur.co.uk/app-centre.

17 Nov

The Future of Management Accountants

Global Accountant came together with the Chartered Institute of Management Accountants (CIMA), part of the community of the world’s largest body of accountants, the Association of International Certified Professional Accountants, to discuss what the future holds for the profession, education and the shift in industry dynamics.

Automation and Data analytics

Only a few accountants have the time to lift their head and look around to see the pace in which the industry is shifting beneath their feet. Strangely, and many would not have guessed this ten years ago, the industry is being shaped by those who are less qualified [in accounting terms] and dare compare with the accounting knowledge of a qualified management accountant. However, they are delivering what the user of accounts want and the way they want it. And that counts.

To state the obvious, we are living in an age of technology and its best buddy, transition; which both are shaping the accounting and finance industry faster than some can keep up. The shift in data analytics and how management accountants provide better insight, live streaming reports offering customisation and serving various stakeholder needs through a single tool, automation and its eagerness to replace the accountant is almost what we hear every day in the public domain. This is all great for trees, need for speed, and user of accounts, but what about the years of study, sweat and [sometimes] blood given by those management accountants to get to where they are; now to realise someone else is in the driving seat.

Andrew Harding, Managing Director at CIMA comments:

The speed in which the industry is changing and the demand placed on management accountants should not be seen as a threat but an opportunity to raise our skill-set and adapt more appropriately to the changing times.
CIMA is currently ahead in equipping its students and members with the necessary skills through education and relevant CPD requirements and it is clear that management accountants will need to be prepared to learn, unlearn and relearn to support agility and demonstrate competence

The methods employed today by management accountants have changed, for example, streaming visualisations and live data with dozens of KPI analysis visible across the world by various stakeholders. This will all require capability and skill; and that is what we aim to provide our students and members though appropriate training – to become the modern accountant they are destined to be.

CIMA is currently carrying out projects to ensure there is adequate sustenance to ensure this change is sustainable. This change is now enshrined in the new CIMA education ethos and will remain continuous.

CIMA and 2018

CIMA and Global Accountant has discussed what the year 2018 holds for the management accounting profession and what CIMA will do to continue to improve the standard of education and career progression of its students and members.

Andrew Harding said:

In the New Year we will see many new advances in the education system we offer. The way in we deliver and reward our students and members will include various new methods in evaluation and promote career progression.
We are pleased to see the unprecedented increase and importance the employment industry has placed in the CIMA designatory letters and highlighting that employers are now placing more importance and priority for job qualification for those who hold the CIMA designatory letter. We will continue to support our students and members to ensure they are recognised and valued as the modern finance and business professional. This will come though continued efforts to better the standards of our education and support to our stakeholders.
We offer one of the world’s highest quality certifications in the industry and our task now is to ensure this level of excellence is maintained and recognised though different methods of achievements. New methods in assessment, badging and many more advances in learning will be seen in 2018.
16 Nov

THIRD OF FINANCE DEPARTMENTS ARE ALREADY USING AI

Research results released by BlackLine, provider of finance controls and automation software, revealed although still an emerging technology, AI is already playing a significant role in the finance function, with nearly a third of finance departments (32%) using AI software. The prominence of AI in finance is only predicted to increase, with 88% of CFOs agreeing it would hold a significant role in finance over the next 10 years.

The survey, conducted with CFOs, Finance Directors and accountants in the UK, US, France, Germany and Australia, revealed that there is almost unanimous support for AI’s future role in the finance department. Only 6% of respondents felt AI should not have a role to play in their finance department in the next 10 years. German respondents are the most enthusiastic about the significance of the role AI will play in in the next decade, with almost nine in ten (89%) expecting it to be significant or very significant, whilst UK respondents are the most sceptical (71%).

Andy Bottrill, regional vice president at BlackLine said:

This research reveals that, although AI technology is still nascent, a significant portion of finance departments are already beginning to make it a central aspect of their financial processes. Whether the technology will advance to the point that the more enthusiastic companies hope is still uncertain, but we’re seeing that organisations are beginning to build for an AI future regardless

When asked about the more immediate future, when it came to companies yet to utilise AI, the research also highlights a distinct divide in attitudes to upcoming AI implementation. For instance, 20% of respondents in the UK, and 18% in the US have no plans to implement AI in their organisation in the next year. This number falls significantly in Germany (10%) and France (6%), suggesting a generally more optimistic view on the maturity of AI technology from businesses in these two nations.

This trend continues when respondents shared their views on which finance tasks AI would be responsible for in 10 years’ time. Whilst, broadly speaking, respondents from all markets surveyed agree to the same extent that AI would be responsible for the automation of process-heavy and time-consuming tasks (67% in the UK, 65% in the UK, 63% in France, 60% in Germany, 57% in Australia), it’s a different story when it comes to higher-level strategic tasks.

When asked whether they saw AI advancing to the point where it will make strategic financial decisions in the next 10 years, there was a clear divide between countries:

  • 46% of French respondents agree
  • This falls to 35% in Germany
  • Only 31% of respondents in the UK agree
  • US respondents are most cynical with only 24% agreeing
  • Overall, almost a third (32%) of respondents feel AI should be making strategic financial decisions looking forward 10 years

As well as regional differences in attitudes towards AI’s significance and possible future responsibilities, there is a stark variance from different members of the finance department. CFOs are by far the most confident in the future role of AI in their department, with 42% deeming it one of the most significant technology for finance in the next five years (42% agreeing), ranking it above blockchain (18%), cyber security solutions (28%) and data analytics (40%).

Accountants’ and Finance Directors/controllers are far less convinced, with only 23% and 19% respectively agreeing with their CFOs that AI is among the technologies having the greatest impact on accounting in the next five years.

The enthusiasm shown by CFOs towards AI should not be taken as technological naivety, however. The research also reveals that CFOs are keenly aware that a failing AI could put them in the firing line.

43% of CFOs believe that CFOs or Financial Controllers should be most liable if an AI were to make a decision that resulted in regulatory non-compliance, a fine or a fall in stock price, whilst accountants and Financial Directors are less sure. Overall, 23% of all respondents thought the CFO or Financial Controller should be liable, 19% said the CEO and 14% said the AI’s developer. Australia is the only market where the CFO was not the person deemed who should be most liable. Australian respondents said that blame should be shared across the accounting department (19%) mostly.

Bottrill said:

CFOs’ inclination to consider themselves responsible should an accounting AI fail and damage their organisation’s financial standing or reputation suggests that the new technology may not have an equal impact across the F&A function. While AI may bring considerable efficiency for the daily work of accountants and Finance Directors, allowing them to concentrate on different tasks, it could add a new responsibility and added complexity for the role of the CFO
14 Nov

Employees are getting smarter with committing expense fraud

84% of UK office workers have never had their expense claims challenged or declined. New global research carried out by Webexpenses has put expenses under the microscope and uncovered a staggering insight into the sophistication of methods that employees worldwide are using to submit fraudulent claims.

In many instances businesses may not be aware of the complex nature of expense fraud and the multitude of ways it could be hitting their organisation. However, 2017 research found that, 42% out of UK office workers surveyed, agreed that if they are sensible with fraudulent claims they are unlikely to be challenged.

With mileage being the most commonly claimed back form of transport (57%) it wasn’t a surprise to learn that nearly half of employees (47%) admitted to increasing the number of miles they travelled, with many respondents confessing to “only ever adding a couple of miles on”. The justification seemed to come from the 71% agreeing that ‘most people increase the miles they’ve travelled’ and a further 43% who agreed with the statement ‘everyone over claims so they don’t see an issue with it’.

What’s more, it appears fraud has become further excusable by over half (51%) of UK respondents thinking if they travel for work they deserve a treat. This is further supported by the 16% that confessed to treating themselves, a partner or child to a present while away on a business trip. The results indicate that an increasing amount of employees think that if they put the hours in they deserve a reward, a concept that if ignored could cumulatively have a detrimental impact on company finances.

The results as a whole indicate a growing endemic in today’s business culture where employees have learnt how to play the system moving to more surreptitious techniques of falsifying and exaggerating already existing claims to ensure it goes unnoticed. 26% of UK employees admitted to requesting a blank receipt for taxi travel to enable them to exaggerate the cost. This further increases prevalence that finance teams are falling victim to the manipulation of claims that essentially abide by the policy but are dishonest.

Although the research suggests that the tactic of little and often seems to be the most common and safest form of fraud, there are still employees trying their luck with more brazen expenses. This was seen in those respondents who confessed to claiming a digital SLR camera or a gas cooker.

Commenting on the findings, Adam Reynolds, CEO at Webexpenses stated:

The results bring to light the changing patterns of expense fraud, the shift to more subtle methods to efficiently enable claims to fall through the cracks and raise no red flags. The most prominent area being exaggerating mileage claims, this could be down to employees feeling it’s completely innocent just rounding up and with a manual process it’s a lot harder to identify.
42% of employees surveyed said there were a lack of adequate checks to keep fraud under control at their current place of work, this ultimately allows fraud to continue ticking on and the longer employees get away with it the more accepting it becomes and the less guilty they feel. We hope these results are the push businesses need to explore and evaluate the effectiveness of their expense management system

With the average number of times per year that those polled had falsely claimed being 11, and on average UK businesses, losing around £100 million each year to falsified and exaggerated claims it’s time businesses look to tighten and improve their processes.

09 Nov

UK’s Late Payments Culture Impacting 4 in 10 Businesses

Concur, the world leader in employee spend management, has today released a major report examining the UK’s late payment culture, which is putting job creation at risk. The report, entitled Invoice Utopia, includes detailed YouGov polling of 1,233 British businesses and sheds new light on the consequences of poor invoice processes.

The report is published just days after Government announced its Made Smarter industrial strategy, which outlined proposals to create 175,000 new manufacturing jobs and add £455bn to the economy by embracing the Fourth Industrial Revolution.

The report highlighted the consequences of late invoice payments, with businesses being forced to take action to protect cash flows. Responding to the problem companies said they would have to take the following steps: making redundancies (7%), stopping planned investments (17%), being unable to pay salaries (15%) and significantly reducing innovation spend (10%).

A key finding of the report is that 40% of British businesses said they have received a late payment in the last month, a trend which could undermine job creation.

Such a high volume of late payments is significantly worrying when 57,960 businesses each year – 23% of the total number of business deaths – is currently caused by late payments.

The consequences of late payment culture were also exposed with 32% of businesses saying they would feel a significant impact if their biggest customer did not pay an invoice for 90 days – a relatively common occurrence.

In devastating news for the UK’s thriving businesses community, the research discovered that 63% of medium sized businesses (50-249 employees) receive late payments at least once every month, compared to 40% of small businesses, dispelling the myth that smaller companies are often worst hit.

The polling revealed that 21% of medium sized businesses said they would have to stop planned investment if their biggest customer failed to pay a substantial invoice for 90 days, 14% saying that they would not be able to pay salaries and 15% significantly reducing innovation spend. Most worryingly, compared to 6% in small businesses and 7% in large businesses, 11% of medium sized companies said they would also be forced to make redundancies.

Emma Maslen, Senior Regional Director for Enterprise at Concur, explains this issue:

As Britain builds its digital future, it’s shocking that so many medium-sized businesses are the most heavily affected by late payments. This underlines the very real risk this culture poses to the viability of some of the country’s leading employers.
Although not cash-rich, small and micro businesses have the agility and flexibility to make strategic decisions when it comes to cash flow. And of course, enterprises more often than not have a ‘cash cushion’ available to bail them out in difficult situations. But for the mid-market, they have reached a position where they need to keep salaries and expenditure consistent, meaning they lack agility, but may be operating at a relatively slim margin in comparison to bigger players. This is crucial information about the oft-forgotten middle of our economy

Taking into account the business size of those deaths the report shows that approximately 353,000 jobs are being lost per year, or £549m through lost taxation capital. This figure does not include the average of 130 hours, or 16 working days, spent by the typical SME chasing late payments, meaning the overall impact of late payments could be substantially higher.

It’s no secret that late payments have long been an issue in British business – but indeed the scale of the problem has been thrown into sharp relief by the research. 73% of the businesses researched were affected by late payments – 46% in the last month. Once more, medium businesses, along with enterprise, were affected more than small business (63% for medium businesses, compared to 49% of large businesses and 40% for small businesses in the last month).

In parallel, medium-sized businesses are also the worst in regards to paying late, highlighting their reliance on steady cash flow. 56% of medium-sized businesses admitted to paying late at least once a year, in contrast to 47% at enterprise level – traditionally seen as the worst at paying on time.

These statistics show why Concur, as an expert in the area of payments, is launching the Invoice Utopia campaign, with a view to improve the world of payments between UK businesses. With further economic uncertainty, 86% of respondents said they wanted to see the same amount (59%) or greater protection (27%) through legislation for businesses affected by late payments. Therefore, a proactive approach to tackle late payments will have an enormous impact on the UK economy as we move into uncharted waters.

A major component of this will be the continued enforcement of duty to report. However, with 78% of SMEs unaware about these new requirements, the Government, especially the recently announced Small Business Commissioner Paul Uppal, clearly needs to convey this message.

Dafydd Llewellyn, MD of UK SMB at Concur, concludes:

This report sets out a vision for an invoice utopia where IT ensures that late payments are a thing of the past. This can only be realised if change is present in technology, business culture and an innovative approach to payments and invoices.
Businesses need to lobby harder when negotiating their original payment terms; large businesses need to realise the potential damage extortionate payment terms are bringing; government and regulators – in particular with the Small Business Commissioner and duty to report need to support all businesses; and technological tools that can give a clear picture of cash flow and payments should be utilised across the board. Only then will the burden be lifted from finance teams, businesses will have the room to grow and the UK economy will find itself in a powerful position to face the future.

 

26 Oct

Why Do Good Employees Leave and What Can You Do About It?

If you feel your department is understaffed, you’re not alone. According to the Robert Half report Benchmarking the Accounting & Finance Function 2017, 39% of U.S. business leaders interviewed feel their departments don’t have a full complement of employees. The largest companies — those worth $5 billion or more — feel the biggest pinch, with 62% of respondents saying they’re somewhat or severely understaffed.

While the retirement of baby boomers is one reason for the employee shortage, another is today’s competitive recruitment market, where demand outpaces the availability of skilled accountants.

Whatever the cause, once you’ve landed highly skilled professionals, you need to make sure they’re happy if you want to keep them. And you’ll need to do that sooner rather than later: Another Robert Half study finds that 42% of workers polled are likely to look for a new job in the next year. Among the millennial (ages 18–34) cohort, that figure jumps to 68%.

How can leaders hold on to their top performers? The key to retaining employees who are on the verge of jumping ship is to understand what’s behind their dissatisfaction. Here are the top three reasons people leave, followed by what you can do to trim your turnover rate:

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  1. Subpar salary and benefits

The top cause of employee departures, cited by 39% of workers surveyed, is inadequate compensation and benefits. Starting salaries have been trending upward since the beginning of the decade, but accountants who have been in the same job for several years may not have seen a comparable bump in wages. For them, the best way to get a pay hike is to find a new job with a higher salary.

From an employer’s point of view, low wages is a poor reason to lose a valuable team member. Not only would you have to replace them with professionals who know their market value, you’d also have the costs of recruiting and training. In addition, you lose institutional knowledge and the client relationships they’d built.

Solution: Benchmark your employees’ salaries to make sure you’re in sync with what they may be offered by other firms, which you can do with the Robert Half 2018 Salary Guide. Make sure what your workers earn is at least in the middle of the scale. To really boost morale and increase loyalty, proactively increase salaries.

  1. Unhappiness with management

More money is great, but it can’t make up for strained employer-employee relations. Good bosses inspire workers and make them want to work harder toward a common goal. Bad bosses create a toxic workplace that drives away talent, according to the recent Robert Half report IT’S TIME WE ALL WORK HAPPY.®

Solution: What puts a smile on workers’ faces and a spring in their step? The top two drivers for accountants are feeling appreciated for the work they do and being treated fairly, and managers play a large role in both. Accountants work long hours and mostly behind the scenes. Make the effort to publicly recognise their important contributions with sincere words and tokens of appreciation. Don’t overwork them – bringing in interim staff during peak seasons is a thoughtful way to demonstrate your respect for their work-life balance.

  1. Limited opportunities

For 14% of workers surveyed, they’d move on because their career has stalled. The more they feel they’re in a dead end job, the more they seek an escape route. This is especially the case for accountants just starting out. They’re eager to learn, climb the corporate ladder and make their mark.

Solution: Do you talk about career pathing with individual team members? If you don’t, you’re missing out on a valuable retention tool. At least once a year, perhaps during performance review season, discuss employees’ future within the firm. Plot out a possible course of progression, including the professional development needed to reach their goals. Work with them to develop a short-term plan, such as which industry conferences to attend and when they’ll complete a certain financial certification. Also take a longer-term view, with discussions on moving into management or a specialisation such as analytics. Let them know you value them enough to invest in their future.

Retention is not always a manager’s top priority, but that could be a mistake. Your best people may be happy today, but what about 12 months from now? The only way to be sure they’ll still be around is to create a work environment so desirable they won’t want to go anywhere else.

This article is provided courtesy of Robert Half, parent company of Accountemps, Robert Half Finance & Accounting and Robert Half Management Resources. Robert Half is the world’s first and largest specialised staffing firm placing accounting and finance professionals on a temporary, full-time and project basis. For career and management advice, follow our blog at roberthalf.co.uk/blog.