The Modern Accountant Weekly Newsletter | Insights from DAS 2025

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Editors Pick 📣

Reclaiming Time, Refocusing Value: Insights from DAS 2025

The Digital Accountancy Show 2025 marked a shift from AI hype to practical, grounded innovation. For entrepreneurial accountants, the message was clear: your time is too valuable to waste on manual processes.

Whether it’s late-night client payments, reactive reconciliations, or clunky approval chains—there’s a better way.

Firms are moving fast to:

• Automate payments and reposition them as a service 

• Embrace Virtual FD models that elevate client relationships 

• Outsource finance functions for mid-market growth 

• Use marketing smarter—because 70% of trust is built before first contact 

• Integrate AI intentionally, not just because it’s trendy 

The standout firms? They're using technology to work smarter, not harder.

Sector Spotlight 🌟

ARTIFICIAL INTELLIGENCE

AI Adoption Needs Enhanced Skills And Leadership In Accountancy

Accountants globally are eager to embrace artificial intelligence (AI), yet they face a crucial need for new skills and leadership guidance to do so effectively. Despite the enthusiasm, a generational divide in AI adoption persists, with younger accountants leading the pack—83% of those aged 18-24 reportedly using AI weekly—compared to their older counterparts. Key obstacles include data security worries and inadequate training, highlighting a leadership gap that could hinder AI's integration into the profession.

To navigate these challenges, accountants must champion AI use within their organisations, receive comprehensive AI training, and develop ethical frameworks for its application. Professional bodies are expected to spearhead this educational shift, ensuring chartered accountants are well-prepared to become both data guardians and strategic advisors. By building an AI-ready culture within their firms or practices, entrepreneurial accountants can future-proof their work, drive new value for clients, and thrive in an increasingly AI-driven landscape. The message is clear: lead the change, or risk being left behind.

AI IN BUSINESS

AI as a Collaborative Tool in Human-Centric Workflows

AI adoption is rising fast—78% of businesses now incorporate some form of it into their operations. For accountants, this creates a pivotal opportunity not just to use AI, but to partner with it. According to the latest AICPA & CIMA report, the future of accounting isn't about humans versus machines—it's about combining the best of both.

Real-World Use Cases:

• Drafting and refining reports: AI tools can produce initial drafts of reports or audit summaries by pulling from structured data. Accountants can then review and personalise the outputs, adding professional judgement and narrative context that AI lacks.

• Client communication: Chatbots and AI-driven email assistants may initiate outreach or follow-ups with clients, but accountants are still essential in tailoring responses and building relationships.

• Data analysis: AI can surface trends from large financial datasets, but professionals are still needed to validate those insights and turn them into actionable business strategies.

These examples underscore a key point from the report: AI excels at pattern recognition, language generation, and repetitive task automation. Humans, meanwhile, bring empathy, critical thinking, and ethical judgement—especially in client-facing roles where nuance matters.

But there’s a warning too: the report cautions against over-reliance on AI, particularly if it erodes human skills like attention to detail or professional scepticism. The goal is not to hand over the reins, but to use AI to enhance human inputs—not replace them.

The Takeaway for Accounting Professionals: Accountants must lead the integration of AI into workflows, not just react to it. That means learning how to prompt effectively, interpret AI-generated outputs critically, and apply professional judgement. Firms that embrace a hybrid human-AI model are likely to outperform those that remain either overly cautious or fully automated.

ACCA PASS RATES

ACCA March 2025 Pass Rates Reflect Noteworthy Exam Performance And Challenges

March's ACCA exam results reveal a mixed bag of successes and challenges for students. A total of 90,707 candidates tackled 102,076 exams, with 3,877 achieving affiliate status. Notably, the tax exams sparked student complaints due to their difficulty, yet both Applied Skills and Strategic papers recorded the highest pass rates. The TX exam scraped 52%, slightly lower than previous sittings, while the ATX paper smashed records at a remarkable 52%, finally surpassing the elusive 50% pass threshold.

Despite some impressive performances, areas for concern remain. The AA and PM exams consistently register on the lower end, with PM achieving a mere 42% and AA reaching a still-modest 47%. Strategic level exams present similar challenges, with AAA and APM struggling below 40%. However, there's a silver lining; rates are gradually improving compared to March 2024, hinting at an upward trend. These figures underscore the ongoing balance between student preparation challenges and the pursuit of ACCA qualifications.

TAX REGULATION

Government Seeks Feedback on New Tax Clearance Process for Investments

The UK government is actively consulting on a novel tax clearance process designed to enhance tax certainty for significant investment projects. Initially available to corporate entities subject to UK corporation tax, this initiative supports major investments by offering binding decisions from HMRC, provided full and transparent disclosure is made. An intriguing aspect is the proposed quantitative threshold, dictating eligibility, ensuring that only impactful projects benefit from the service.

Discussions also consider the scope of taxes encompassed, including corporation tax and potentially others like VAT and employment taxes, albeit with checks to avoid redundancy with existing processes. Amidst these developments, the anticipated start in 2026 aligns with other efforts to bolster tax certainty, such as handling cost contribution arrangements through advance pricing agreements. The government's commitment here signals an intent to cultivate a more predictable tax environment, encouraging investment while maintaining transparency and regulatory integrity.

AUDIT CHALLENGES

EY Faces Second Fine for Audit Misconduct Over Mandatory Rotation Breach

In a significant development, EY has been fined again by the Financial Reporting Council (FRC) for audit failures, marking the second such incident within a week. The latest infraction involves exceeding the mandatory 10-year audit engagement limit with Stirling Water Seafield Finance plc (SWSF) without undertaking the required public tender. This breach highlights EY's neglect in adhering to the mandatory firm rotation (MFR) designed to maintain auditor independence and public trust in financial reporting. Moreover, both EY and the engagement partner, Christopher Voogd, face financial penalties and harsh reprimands, with EY shouldering the costs of the investigation.

Adding complexity to the matter, this case underscores deficiencies in EY's internal processes for monitoring the duration and independence of audit engagements. While the firm discovered and reported its ethical lapse to the FRC, the penalty brings to light inadequate measures ensuring compliance with quality control obligations. EY's failure to abide by International Standards for Auditing (ISAs) reflects broader systemic issues, necessitating advancements in audit policies and practices to uphold the integrity of corporate audits and maintain professional credibility.

FINANCIAL STRATEGY

CFOs Tighten Cost Control Amidst Rising Tariffs And Economic Uncertainty

CFOs in the UK are embracing defensive strategies reminiscent of the early pandemic days due to escalating operating costs and tariff-related uncertainties, according to Deloitte's latest survey. A significant 63% are prioritising cost control, reflecting a strategic focus on maintaining fiscal stability. While pessimism is on the rise—with 14% of finance leaders feeling less optimistic than three months ago—the mood is still more positive than during previous global crises like the pandemic or Ukraine's invasion.

The survey highlights a growing concern over geopolitical risks and protectionism, alongside declining risk appetites and projected increases in operating costs and inflation. Although there's anticipation of revenue growth by some, many expect a contraction in operating margins. These financial challenges are leading to a cooling labour market with reduced recruitment and expectations of slower wage growth. Finance leaders are thus preparing for economic turbulence by focusing on cost efficiency and strategic planning.