The beginning of the year is high time for planning. However, when making annual plans and developing long-term development strategies, it is important not to lose sight of the global context. It is no secret that events and circumstances of the world scale can undo all efforts to fruitfully work during the year, separating themselves from the global realities by the walls of our own office. So, what should the owners and executives of audit firms keep in mind when planning their activities for 2020?
Crucial Davos conclusions
In the next 10 years, the consequences of climate change will be a serious challenge not only for business, but for humanity as a whole. In fact, every sector of the economy is connected to natural resources in one way or another. So, the best solution could be to join business efforts and work together to respond to climate change.
Cyber threats and economic instability will also be significant challenges for businesses today and in the near future. You should be prepared for this.
The International Monetary Fund has lowered its estimate of global economic growth. So far, the world has managed to avoid major economic shocks, so a global recession is not expected.
The time is ripe for the reform of the World Trade Organization and the structure of the international tax system. The topic of taxation will be key during G20 meeting in November.
The digitalization of the business environment can be a lifeline for the world's economies. Companies need to take this into account when formulating their development strategies.
Brexit: what to expect
Changing the balance of powers
First of all, it should be remembered that the UK will lose its voice in the highest EU political bodies, which will affect the balance of powers and decision-making process. The global regulators of the profession, the parent offices of major audit networks, and the headquarters of international trade associations and alliances are located in London. We will see what adjustments Brexit will make to their work during the transition period. In any case, you should pay attention to everything that will happen and respond quickly within your own business.
New immigration rules
London will introduce new immigration rules. Before Brexit, the UK was obliged to abide by one of the EU's four basic principles - freedom of movement for labor. Although the country is not part of the Schengen area and always had its own visa regime, citizens of the EU countries and the European Economic Area were able to live and work in the UK relatively freely. Brexit will change this reality. Migration is now coming under British law, and London intends to introduce new rules in this area.
Audit firms that are members of international professional networks, associations, and alliances should be prepared that attendance at conferences and international projects, staff rotation may become complicated due to new immigration rules.
Statutory audit – what rules should be followed
In its work, “Implications of Brexit on cooperation within the European audit profession”, Accountancy Europe states that Brexit may not have the best impact on the quality of statutory audit in the UK.
Inability to reach clear synergies between the UK and the EU member states on statutory audits and the UK failing to prepare a timely framework for auditors to manage their work will have detrimental effects on businesses and the economy as a whole.
Indeed, Accountancy Europe is concerned about the possibility of legal uncertainty, especially as regards the legality of UK audit reports prepared for businesses located in the European Union.
In addition, according to the organization, today there is a high risk of non-compliance with the requirements for auditors put forward by the UK and the EU. Therefore, it is important for the auditors who will confirm the reporting for European companies to clearly understand what rules are to be followed to avoid problems.
This year will be generous with important sport events. The most important of these will be the European Football Championship and the Olympic Games. Both competitions will be held in the summer of 2020. Although they are not directly relevant to the audit business, let's not forget that this is a unique opportunity to strengthen the brand position. Time is short, so consider the opportunities offered in Ukraine to advertise and promote an audit firm. This opportunity does not happen often, so you can allocate budget, “get spotted” and receive dividends in the near future.
2020 should be the year of the introduction of the fifth generation of high-speed mobile communications. According to international experts, the introduction of 5G technologies around the world will contribute to the development of the economy. The latest technology will greatly automate and improve workflow. You should think about how 5G can be used in current work and make appropriate adjustments to your strategic plans. It will not be superfluous to think whether the audit firm is ready for such innovations both technically and mentally.