Audit, Tax and Advisory Firms Navigating Success in a BANI World

Until recently, business leaders characterized the environment in which companies operate as a VUCA world (Volatile, Uncertain, Complex, and Ambiguous). This perspective drove leaders to implement agile processes to navigate and succeed. However, the pandemic exposed the need for a new framework to address the extreme uncertainty, fragility, and complexity of today's environment while offering hope and empowerment. Enter BANI (Brittle, Anxious, Nonlinear, and Incomprehensible)—the new lens through which the business landscape is viewed.

• Brittle – Systems and structures are easily shattered due to rapid change.
• Anxious – High levels of uncertainty create anxiety among employees and stakeholders.
• Nonlinear – Future trends and outcomes are difficult to predict.
• Incomprehensible – The high volume and complexity of information make decision-making challenging.

Key Market Forces Shaping the Future

The global accounting industry has entered a transformative phase defined by the BANI framework. In recent years, audit, tax, and advisory firms have also felt the impact of a BANI world, driven primarily by key market forces.

Evolving Client Expectations

Clients now expect accounting firms to go beyond compliance and play a strategic advisory role. Businesses need insights to help them improve cash flow, optimize operations, and manage economic volatility.

• According to a 2023 survey, 78% of accounting firms reported that clients demand more proactive business advisory services rather than just traditional tax preparation or audits.
• A 2022 Thomson Reuters report revealed that 68% of businesses expect their accountants to offer insights powered by data analytics and AI.
• Top firms like PwC and Deloitte have launched real-time financial dashboards to help businesses manage risks efficiently.

Private Equity (PE) Investments

Over the past four years, private equity firms have heavily invested in accounting firms, seeing them as high-value, stable businesses. Beyond the Big Four, many mid-sized and regional firms have attracted investors due to recurring revenue models, high-caliber professionals, and growth potential through consolidation.

• In 2022 alone, more than $3 billion in private equity deals were finalized in the accounting sector.
• Firms like Eisner Amper, Citrin Cooperman, Cherry Bekaert, Grant Thornton, and Baker Tilly have received PE investments to fuel expansion and technology adoption.
• PE-backed firms have seen an average revenue growth of 15%-20% annually, outpacing traditional firms.

The Rise of AI & Automation

Firms are leveraging cutting-edge technologies such as Artificial Intelligence (AI), Natural Language Processing (NLP), Robotic Process Automation (RPA), Generative AI (Gen AI), and Data Analytics to transform their service delivery models.

• AI-driven audits have reduced manual testing efforts by 40%, improving both accuracy and efficiency.
• Automation tools have streamlined tax compliance processes, reducing compliance time by up to 50% for firms using RPA.
• Big Four firms are investing billions into AI—PwC announced a $1 billion AI investment in 2023 to enhance tax and audit processes.

How to Thrive in a BANI World

Adaptive Decision-Making

In a world where information is often incomplete or rapidly changing, leaders must make decisions with agility and stay flexible. KPMG’s “Connected Enterprise” initiative provides clients with digital-first strategies for navigating BANI environments.

Proactive Risk Management

Identifying and mitigating risks to safeguard the business is essential in a BANI environment. Firms now need to actively manage the increased levels of risk faced. This includes cybersecurity investments. A 2023 PwC survey found that 67% of accounting firms have increased their cybersecurity budgets to protect client data.  With over 500 global tax law changes annually, Accounting firms need to use AI-driven compliance tools to stay updated and ensure regulatory compliance. 

Fostering a Growth Mindset

Successful firms embrace experimentation and iteration to adapt quickly. PE investment has pushed Accounting firms to grow revenues at an accelerated pace, which they are doing through a combination of acquisition-driven inorganic, and cross-selling-focused organic growth. Many firms are launching subscription-based advisory models to create predictable revenue streams. Firms such as Eisner Amper, Citrin Cooperman, and Cherry Bekaert which all received funding in 2021 or 2022, were able to grow their revenues by more than 100% in the past 18 to 24 months.

Strengthening Client-Centric Empathy

Client needs must drive service development. Firms should prioritize industry-specific advisory services, just like Deloitte has developed sector-specific AI models to provide tailored insights for healthcare, retail, and manufacturing clients. Predictive tax analytics – AI-powered tax forecasting has reduced tax liability risks for 60% of firms using these tools.

Prioritizing Employee Well-Being & Change Management

Accounting professionals face mounting stress from workload pressures and compliance demands. Leadership needs to prioritize employee well-being and provide support to navigate uncertainty. Effective change management and constant communication become the hallmarks of successful leadership. Flexible work models are being adopted. A recent KPMG study found that 80% of CPA firms have adopted hybrid work models. Increased investments in mental health and well-being programs to support employees are seen across the industry. Upskilling and reskilling are becoming key. More than 50% of firms are investing in AI and digital skills training for professionals to prepare for automation-driven changes. 

In Conclusion

Accounting firm leadership must adapt to the BANI reality and proactively guide their teams. Firms that embrace agility, innovation, and client-centric strategies will position themselves for long-term success.

• AI-driven tax services could increase firm efficiency by 30%-40% over the next five years.
• Cybersecurity spending in the accounting sector is expected to grow by 25% in 2024, making it a top priority.
• Firms that embrace digital transformation now are projected to outperform competitors by 2x in revenue growth by 2026.

Inaction is no longer an option—leadership and professionals must navigate this evolving landscape with bold and strategic moves. Stay informed. Stay ahead. Stay winning. Subscribe for expert insights now!