Top five biggest compliance challenges for accountants over the next 12 months

Data protection emerges as one of the five top compliance challenges for accountants over the next 12 months

Accounting professionals are no stranger to compliance and disclosure challenges. However, the risk that comes with getting it wrong has dramatically increased over the years, particularly in terms of reputation risk.

Tim Pinkney, the Institute of Financial Accountants’ (IFA) Director of Professional Standards, says there are several key areas for accountants to understand and ensure their relevant processes are up to date. Fortunately, for each of these top five, help and advice is close at hand, including via the current Future Proofing Your Practice webinar series.

The solution to staying ahead of compliance and management challenges, Pinkney says, begins with planning ahead.

“Look at what your current capabilities are,” he says. “Look at your resources and analyse what you need to put in place and where you need to upskill, to make sure you meet various challenges. Then, engage with professional training and use that to make sure those tools and processes are in place.”

1. Data protection helps protect clients and reputation

“This is not just about protecting your data, it’s about protecting your clients’ data,” Pinkney says.

“Ultimately, this is about protecting your reputation, because being subjected to cyber criminality, to hacks and other threats, can cause serious reputational impact.”

This is an issue that has become more important over the last five years. Accountants must remain mindful of the various types of threats, designing their own systems and processes around risk mitigation.

“Professional bodies like the IFA offer plenty of training in cybersecurity,” he says.

“I would strongly encourage people, even if they feel they have heard it all before, to seek regular training, to update their knowledge. The threats are developing at such a rapid pace that you can’t have enough training.”

2. Automation and AI technology present compliance challenges

Businesses large and small have a great deal of strategising and compliance in response to automation and artificial intelligence (AI).

Technology presents opportunities and risks for accountants

“It’s important to embrace that technology, because the best and most successful businesses will be using it,” Pinkney says. “You’ll see that at any conference you attend at the moment, AI is a very big topic.”

“Accountants must become adept at using digital tools and platforms. If they don’t, if they stick to traditional spreadsheets, not only will they be left behind by other businesses, but the younger generation of accountants will not want to be part of their business.”

However, Pinkney says, with any new technology comes risk.

“There are challenges about understanding AI and not leaving your business or clients open to being exploited,” he says. “Accountants should engage with their professional bodies for training around technology.”

Compliance in AI is becoming a big issue as governments develop AI legislation.

The EU’s AI Act will be fully applicable to developers and users by mid 2026. In the UK, regulatory principles are being developed shaped around safety, security, transparency, explainability, fairness, accountability and contestability.

Accountants should remain abreast of such developments, for the sake of their own compliance and for the purpose of advising clients.

3. Anti-money laundering emerges as a complex area of compliance

Another area that is increasingly important in the compliance space is anti-money laundering, Pinkney says.

“In an environment of economic uncertainty, constant changes and fluctuations in interest rates, geopolitical events, sanctions and supply chain issues, anti-money laundering is complex and constantly changing,” he says.

“How do you stay abreast of all of the various issues, regulations and expectations? Are there any issues with your clients’ overseas supply chains that might ring alarm bells? How do you embed the right processes into your day-to-day work routines?

The answer is to constantly refresh your training and develop a professionally sceptical compliance culture within your business.”

4. ESG and carbon accounting on small business radar

Smaller practitioners have watched the development of sustainability accounting, particularly in areas such as carbon accounting and environment, social and governance (ESG) reporting, from a distance. It simply hasn’t applied as much to their work, but that is rapidly changing.

“It is now something that all accountants need to be aware of,” Pinkney says. “Most will soon require competencies in sustainability accounting. It is one of those areas that is high on government agendas and it's something larger firms require right now.”

Many smaller clients deal with larger companies, he says. Smaller operators will attract more business from the big end of town if they can provide their own sustainability assurance.

“This is already creeping into small and sole-practitioner businesses,” Pinkney says.

Professional bodies such as IFA, HMRC or Companies House are an excellent place to start for building knowledge around sustainability reporting and other relevant knowledge areas.

5. Succession planning helps retain talented staff

Why is succession planning a top-five challenge? Because it helps to attract and retain talented staff. It communicates clear business development and continuity intentions to all stakeholders. And it provides an exit plan for the current business owner.

“For this to work, you need to deeply consider how you’re going to recruit the right level of expertise and knowledge,” Pinkney says. “You’ll need to plan what platforms you will use, like IFA Direct, to train people within your business.”

“This is a key area for success as, in the current skills shortage environment, succession planning offers numerous benefits to the business.”

Register now for IFA’s Future Proofing your Practice webinar series