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Digging deeper on strategic organic growth for accounting firms

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Are private equity organizations knocking on the door of your firm? Have tech advancements helped reduce head count while increasing profitability? It may seem that growth is washing up over the sides of the boat as you paddle merrily along. But as noted in the first part of this article, the past and present are not necessarily prologue. Market change is always inevitable; it’s not a matter of if, but when.

When that time comes, you want to be prepared with a proven model for achieving strategic organic growth. My approach focuses on three elements: services, distribution channels and targets (targeted buyer groups), or SCT. The formula was born of my love of fishing Lake Lanier near my home in Atlanta. I was consistently unsuccessful when a fellow fisherman suggested I was using the wrong bait for crappie, a popular freshwater fish. He also advised that if I wanted to catch crappie I was at the wrong end of the lake. Once I changed my bait (from artificial lures to live crickets) and my location (from the north end of the lake to the south) I was unstoppable.

The parallel with firm growth and success jumped out at me like an excited late-summer crappie on the line. After rethinking the service (the bait) and the distribution channel (the location) my success with my target buyer group (the crappie) was guaranteed. The process of getting the needed information (my conversation with the fisherman) was what came to be known, as I refined the process, as the “research call,” the ingathering of intel and insight from those in the know.

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Maridav/Maridav – stock.adobe.com

Services, distribution channels and targets are the elements I assess at the beginning of a consulting engagement, and at every stage of the process. It’s a matter of constantly evaluating the relative knowledge of each element and shoring up further discovery where indicated. Let’s unpack some of the details.

Throughout the consulting process with firm leaders, I look for strong performance within the three elements. In my mind, I assign a point value of one to 10 on each, the highest level of strategic growth readiness.

  • Services. When the service element is strong, a firm’s offerings are innovative, differentiated, properly tested with an early adopter program, and properly priced and packaged. These are just some of the common attributes I review with service-line and industry leaders to assess service/market strategy fit. If, for example, they’ve never heard of or conducted an early-adopter program, we discuss how it’s optimally done and what they can expect from it. A strong program will not only confirm service/market fit but will enable market success. Much depends upon the early adopter choice and the critical role they play beyond providing feedback on the service.
  • Distribution channels. The definition of channels is “where you and the targeted buyers find each other in great quantities.” It’s where the targeted species of fish are congregating. Are the distribution channels the best ones? Has the leader identified enough of them? Do they know how to align the firm’s interests with the channel’s interests? Is the firm relying on outdated channels to find the targets? Identifying the channel keepers’ goals and helping them achieve them is the secret. This requires a commitment to delve deep and understand how they see their role in their organization. Channels and channel keepers are typically thought leaders, vendors and competitors. Sometimes they’re likely buyers.
  • Targets. Your targeted buyer group should be well-defined and properly segmented. You should know how many subspecies of fish are in each segment (market sizing). It’s the granularization of your market at this level that begins the process of target market selection. Evaluate your competition to understand who else is fishing for the same subspecies. Research calls clarify your understanding of your target market’s needs and preferences to ensure you’re feeding them the services they wish to consume. If not, tailor the offerings to stay relevant and top of mind.

Whether you’re sitting in a boat on a lake waiting for fish or sitting in front of a channel keeper assessing their objectives, aligning your services, channels and targets at the optimal level of understanding will unlock extraordinary success. SCT-based strategy reveals itself over time and is continually changing with market conditions. Bear in mind that the process of discovering these combinations is not sequential but is a continuous refinement of the three elements.

Got all the fish you can handle for the moment? Great news. But remember, there’s nothing more certain than change, and you want to be ready when it comes.

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Accounting

IAASB tweaks standards on working with outside experts

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The International Auditing and Assurance Standards Board is proposing to tailor some of its standards to align with recent additions to the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants when it comes to using the work of an external expert.

The proposed narrow-scope amendments involve minor changes to several IAASB standards:

  • ISA 620, Using the Work of an Auditor’s Expert;
  • ISRE 2400 (Revised), Engagements to Review Historical Financial Statements;
  • ISAE 3000 (Revised), Assurance Engagements Other than Audits or Reviews of Historical Financial Information;
  • ISRS 4400 (Revised), Agreed-upon Procedures Engagements.

The IAASB is asking for comments via a digital response template that can be found on the IAASB website by July 24, 2025.

In December 2023, the IESBA approved an exposure draft for proposed revisions to the IESBA’s Code of Ethics related to using the work of an external expert. The proposals included three new sections to the Code of Ethics, including provisions for professional accountants in public practice; professional accountants in business and sustainability assurance practitioners. The IESBA approved the provisions on using the work of an external expert at its December 2024 meeting, establishing an ethical framework to guide accountants and sustainability assurance practitioners in evaluating whether an external expert has the necessary competence, capabilities and objectivity to use their work, as well as provisions on applying the Ethics Code’s conceptual framework when using the work of an outside expert.  

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Accounting

Tariffs will hit low-income Americans harder than richest, report says

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President Donald Trump’s tariffs would effectively cause a tax increase for low-income families that is more than three times higher than what wealthier Americans would pay, according to an analysis from the Institute on Taxation and Economic Policy.

The report from the progressive think tank outlined the outcomes for Americans of all backgrounds if the tariffs currently in effect remain in place next year. Those making $28,600 or less would have to spend 6.2% more of their income due to higher prices, while the richest Americans with income of at least $914,900 are expected to spend 1.7% more. Middle-income families making between $55,100 and $94,100 would pay 5% more of their earnings. 

Trump has imposed the steepest U.S. duties in more than a century, including a 145% tariff on many products from China, a 25% rate on most imports from Canada and Mexico, duties on some sectors such as steel and aluminum and a baseline 10% tariff on the rest of the country’s trading partners. He suspended higher, customized tariffs on most countries for 90 days.

Economists have warned that costs from tariff increases would ultimately be passed on to U.S. consumers. And while prices will rise for everyone, lower-income families are expected to lose a larger portion of their budgets because they tend to spend more of their earnings on goods, including food and other necessities, compared to wealthier individuals.

Food prices could rise by 2.6% in the short run due to tariffs, according to an estimate from the Yale Budget Lab. Among all goods impacted, consumers are expected to face the steepest price hikes for clothing at 64%, the report showed. 

The Yale Budget Lab projected that the tariffs would result in a loss of $4,700 a year on average for American households.

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Accounting

At Schellman, AI reshapes a firm’s staffing needs

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Artificial intelligence is just getting started in the accounting world, but it is already helping firms like technology specialist Schellman do more things with fewer people, allowing the firm to scale back hiring and reduce headcount in certain areas through natural attrition. 

Schellman CEO Avani Desai said there have definitely been some shifts in headcount at the Top 100 Firm, though she stressed it was nothing dramatic, as it mostly reflects natural attrition combined with being more selective with hiring. She said the firm has already made an internal decision to not reduce headcount in force, as that just indicates they didn’t hire properly the first time. 

“It hasn’t been about reducing roles but evolving how we do work, so there wasn’t one specific date where we ‘started’ the reduction. It’s been more case by case. We’ve held back on refilling certain roles when we saw opportunities to streamline, especially with the use of new technologies like AI,” she said. 

One area where the firm has found such opportunities has been in the testing of certain cybersecurity controls, particularly within the SOC framework. The firm examined all the controls it tests on the service side and asked which ones require human judgment or deep expertise. The answer was a lot of them. But for the ones that don’t, AI algorithms have been able to significantly lighten the load. 

“[If] we don’t refill a role, it’s because the need actually has changed, or the process has improved so significantly [that] the workload is lighter or shared across the smarter system. So that’s what’s happening,” said Desai. 

Outside of client services like SOC control testing and reporting, the firm has found efficiencies in administrative functions as well as certain internal operational processes. On the latter point, Desai noted that Schellman’s engineers, including the chief information officer, have been using AI to help develop code, which means they’re not relying as much on outside expertise on the internal service delivery side of things. There are still people in the development process, but their roles are changing: They’re writing less code, and doing more reviewing of code before it gets pushed into production, saving time and creating efficiencies. 

“The best way for me to say this is, to us, this has been intentional. We paused hiring in a few areas where we saw overlaps, where technology was really working,” said Desai.

However, even in an age awash with AI, Schellman acknowledges there are certain jobs that need a human, at least for now. For example, the firm does assessments for the FedRAMP program, which is needed for cloud service providers to contract with certain government agencies. These assessments, even in the most stable of times, can be long and complex engagements, to say nothing of the less predictable nature of the current government. As such, it does not make as much sense to reduce human staff in this area. 

“The way it is right now for us to do FedRAMP engagements, it’s a very manual process. There’s a lot of back and forth between us and a third party, the government, and we don’t see a lot of overall application or technology help… We’re in the federal space and you can imagine, [with] what’s going on right now, there’s a big changing market condition for clients and their pricing pressure,” said Desai. 

As Schellman reduces staff levels in some places, it is increasing them in others. Desai said the firm is actively hiring in certain areas. In particular, it’s adding staff in technical cybersecurity (e.g., penetration testers), the aforementioned FedRAMP engagements, AI assessment (in line with recently becoming an ISO 42001 certification body) and in some client-facing roles like marketing and sales. 

“So, to me, this isn’t about doing more with less … It’s about doing more of the right things with the right people,” said Desai. 

While these moves have resulted in savings, she said that was never really the point, so whatever the firm has saved from staffing efficiencies it has reinvested in its tech stack to build its service line further. When asked for an example, she said the firm would like to focus more on penetration testing by building a SaaS tool for it. While Schellman has a proof of concept developed, she noted it would take a lot of money and time to deploy a full solution — both of which the firm now has more of because of its efficiency moves. 

“What is the ‘why’ behind these decisions? The ‘why’ for us isn’t what I think you traditionally see, which is ‘We need to get profitability high. We need to have less people do more things.’ That’s not what it is like,” said Desai. “I want to be able to focus on quality. And the only way I think I can focus on quality is if my people are not focusing on things that don’t matter … I feel like I’m in a much better place because the smart people that I’ve hired are working on the riskiest and most complicated things.”

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