The shortage of skilled accounting and audit professionals has led audit firm partners to navigate workloads via short-term fixes. Whether taking on more low-level audit projects or increasing billable hours in spite of non-billable strategic needs, this short-term vision can lead to long-term impacts on growth and talent development.
To avoid these pitfalls, audit firms must optimize partner time and embrace innovative talent solutions like fractional staff augmentation. This proactive approach realigns partner focus on driving growth while ensuring efficient handling of routine tasks to thrive in an increasingly challenging environment.
Growth Opportunities Hinge on Optimized Partner Billable Hours
While increasing a partner’s billable hours is guaranteed to increase revenue in the short term, low bandwidth among junior staff often leads to misapplication of the partner’s billable hours. Hours that could be spent on new and more profitable clients or high-level projects are now devoted to routine audit tasks, like cash or prepayment audits, that junior staff should be able to complete. Plus, as labor time increases, not all hours may be billable. These opportunity costs have long-term implications for firm growth.
Aligning tasks with the appropriate talent levels is essential for firms to optimize billing rates and profitability. But they can’t do this without available talent—both at the staff level and senior management. The shortage of skilled accounting professionals is shrinking the professions from both sides: increasing retirement rates are meeting lowered entrance rates. This ongoing trend, hastened by the pandemic, leads to partners increasingly taking on routine audits, like cash audits or prepayment audits, to expedite completion of client projects. The reduction in bandwidth also diminishes a partner’s ability to focus on their strategic, high-value work, such as leading AI integration efforts or ramping up cybersecurity.
The Looming Issue of Stunted Talent Development
When partners concentrate on the completion of immediate accounting tasks, the future talent pipeline is also affected. Partners might think it more expedient to quickly accomplish a task rather than explain the complexities to new hires, but that has a lingering impact on employee skill and morale.
Charles O., a fractional auditor, has seen the consequences firsthand. “It’s a Band-Aid solution, because in the next instance, you’ll do the same thing. And your staff will never become more experienced than they are now.” Instead of adding to expediency, the firm is being set up for future failure.
Neglecting the mentoring aspect of partnership is detrimental to overall staff development, impeding an employee’s ability to develop an entire suite of skills. In times when skilled workers are more difficult to locate than ever, this bodes poorly for future performance. Rather than saving a few hours here or there by doing the work themselves, partners can use the expertise of fractional audit experts to both provide the bandwidth to mentor junior staff and offer specialized expertise and training to junior staff.
Staff Augmentation Leads to Enhanced Profitability
In addition to addressing immediate pressing needs, introducing fractional staff can position audit firms for sustainable success in an increasingly competitive landscape. The quick onboarding of specialized expertise drastically reduces the cost traditionally associated with hiring.
Augmenting a firm with factional staff allows for flexible resource management without long-term commitments. Engagements can be task or time-oriented, giving partners the ability to scale based on project or seasonal needs
Many forward-thinking firms have turned to staff augmentation, bringing in both staff-level talent to expand capacity and senior-level experts to handle complex audits and provide internal oversight. By integrating these fractional professionals into their teams, firms have been able to:
- Stabilize workflows and improve team morale.
- Free up partners’ time to focus on high-value advisory services.
- Catch up on backlogged projects and take on new, profitable clients.
- Achieve record profitability—much like this nonprofit firm—allowing for more bonuses and raises.
Short-Term Thinking Threatens Long-Term Profitability
The growing lack of experienced audit professionals has led to a concurrent rise in the misapplication of partner resources. Time and work pressure can divert partners away from performing the billable hours that ensure profitability. Instead of concentrating on strategic advisory services, business development or staff enhancement, partners are devolving to the performance of routine audit tasks.
“That kind of short-term thinking risks both your people and your firm,” says Charles. Fractional staff augmentation reduces the risk of burnout, improves partner bandwidth and leads to more billable hours, thus ensuring firm prosperity. Rapidly onboarding fractional staff increase a firm’s efficiency, audit expertise and profitability
By strategically leveraging specialized audit expertise and talent, firms can alleviate the burden on partners, freeing them to focus on high-value activities while ensuring the development of their teams. By optimizing their billable hours, partners can focus on ensuring their firm’s success, both today and in the future.
Learn more about Paro’s staff augmentation services. We match firms with general and specialized audit experts within just 72 hours to help firms like yours alleviate bandwidth issues and maximize their profitability.
