Assessing and understanding the relationship between accountancy expertise and business performance is complex and requires consideration of what accountancy expertise entails, as well as the wide range of performance measures. A new research report released by the International Federation of Accountants® (IFAC®) demonstrates, through a review of existing literature, the positive association between use of professional accountants for expertise and advice, and business performance.
“It has long been assumed that taking advantage of the breadth and depth of experience and expertise of professional accountants helps organizations optimize performance, efficiencies, and more. It is heartening to see robust global evidence in support of this relationship,” said IFAC CEO Fayez Choudhury. “The report finds that organizational development and performance lead to increased use of accountancy expertise, and accountancy expertise leads to superior performance and development.”
The report summarizes the findings by entity size—small- and medium-sized entities (SMEs) and large entities—as important differences exist between studies about each group and in how business performance and accountancy expertise are operationalized and the results interpreted. The research also shows the positive impact professional accountants have on aligning organizations’ goals and actions. Professional accountants are well-suited to play various roles in organizations, including analysis and communication of information, decision making, managing risks, and creating sustainable value—roles that indirectly impact business performance.
IFAC is the global organization for the accountancy profession, dedicated to serving the public interest by strengthening
the profession and contributing to the development of strong international economies. It is comprised of more than 175 members
and associates in more than 130 countries and jurisdictions, representing almost 3 million accountants in public practice,
education, government service, industry, and commerce.
Commissioned by IFAC, researchers at the Bucharest University of Economic Studies conducted a literature review to assess the relationship between accountancy expertise and business performance. The IFAC report summarises and discusses the findings of more than 90 academic research papers and relevant publications covering literature from around the world that investigates this relationship for small and medium-sized entities (SMEs) as well as large entities.
The full report can be accessed here. (https://www.ifac.org/publications-resources/relationship-between-accountancy-expertise-and-business-performance) SME owners can review performance as a mix of financial and non-financial expectations; this is due to the fact that they may measure their performance in terms of profitability and growth, but also image and work-life balance. Prior studies indicate that accountancy expertise, generally analysed as the accounting or business advice accessed by SMEs, is associated with better performance. Research has also implied that advice in non-traditional areas such as human resources, environmental issues, and business and management support are most likely to impact SME performance.
Large entities make use of accountancy expertise, both internal and external, in different ways to some of their SME counterparts. Business performance appears to improve in those enterprises where the accounting function takes a greater strategic role as a business partner and advisor.
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