The era of exponential growth among mid-tier accounting firms is upon us, driven largely by the trend of top-tier firms pushing to expand their advisory/consulting businesses. To manage the number of audits that could trigger independence impairments across service lines, they have taken steps to shed the bottom 10% to 20% of their audit clients. Meanwhile, mid-tier firms suddenly find themselves the recipients of these new business opportunities — opportunities that must be managed carefully, writes Jey Purushotham of Intapp.
Mid-tier firms may encounter many challenges when scaling to support such sudden growth. Among these challenges is the lack of ability to manage the influx of welcomed but unexpected new business from a compliance perspective. Once-sufficient risk and compliance processes might not properly detect independence impairments or conflicts before partners make new business decisions during a sudden influx, possibly exposing the firm to associated regulatory consequences.
At the same time, increasingly stringent audit and regulatory requirements that vary around the world are pressuring firms to modernize conflict-clearance processes. Some large, forward-leaning firms have already designed systems that enable compliance with current regulations and incorporate the ability to…
