Who Are the Stakeholders in Accounting Firms?

Traditional business models place shareholder needs as the highest value. While businesses still prioritize maximizing shareholder wealth, more and more companies are moving to a stakeholder-oriented viewpoint. This means engaging and considering the needs of all stakeholders instead of just shareholders. Stakeholders can be any individuals or groups that have a vested interest in the company.

Employees have a vested interest in the profitability and stability of the firm. While some accounting firms have high turnover rates, some employees stay on long enough to become a partner in the firm. Even if they don't plan to stay on long-term, employees rely on the reputation of the accounting firm to vouch for their professional credibility. Accounting firms can engage employees as stakeholders by being transparent regarding the firm's financial situation, strategies for growth and market share in the region.

Most accounting firms offer a combination of audit, tax and advising services to their clients. Companies have an interest in the quality of their accounting firm because of the critical nature of the services they provide. If someone discovers a material error in company financial statements and their accounting firm didn't catch it in the audit, it reflects poorly on both the accounting firm and the company in question. Similarly, companies don't want to have to pay back taxes and penalties if their accounting firm incorrectly filed their taxes. Clients are also interested in how long an accounting firm is going to stick around. Accounting firm employees often spend substantial time onsite with clients, and it's time-consuming and expensive for clients to switch firms.

Accounting regulators have a strong interest in the structure and performance of accounting firms. When an accounting firm performs an audit for a company, they assure the public that the company financial statements are free from material error. Investors and lenders rely heavily on this information to make choices on where to place their capital. If accounting firms aren't doing their job correctly, it can damage capital markets. The Public Accounting Oversight Board in the U.S. routinely checks in on accounting firms that audit public companies. The American Society of CPAs provides oversight for accounting firms that audit private companies.

Many accounting firms consider local schools to be significant stakeholders. Prestigious accounting firms often employ the top talent in the local accounting community. They'll often source new candidates from the schools of finance and accounting within nearby universities. Firms can engage universities by holding information sessions for students about how to prepare for a career in accounting. Firm partners and seniors can also offer guest lectures in classes about current accounting topics.