{"id":19305,"date":"2022-02-24T08:00:40","date_gmt":"2022-02-24T14:00:40","guid":{"rendered":"https:\/\/taxprocenter.proconnect.intuit.com\/?p=19305"},"modified":"2023-08-22T11:08:07","modified_gmt":"2023-08-22T16:08:07","slug":"what-are-advisory-services-and-what-do-they-mean-for-your-practice","status":"publish","type":"post","link":"https:\/\/accountants.intuit.com\/taxprocenter\/practice-management\/what-are-advisory-services-and-what-do-they-mean-for-your-practice\/","title":{"rendered":"What are accounting advisory services – consulting & advisory services explained"},"content":{"rendered":"

In our profession, the term \u201cadvisory services<\/a>\u201d is used frequently, but there is little consensus about what it actually means. When we ask multi-service firms which advisory services they offer, the spectrum of responses is incredibly broad and often overlaps with traditional compliance services.<\/p>\n

View a quick grid that details the differences between “Compliance” and “Advisory Services<\/strong> – Learn more<\/a><\/p>\n

Why does it matter?<\/h2>\n

Compliance services are required, and there is very little differentiation in the deliverable between practitioners. A tax return or financial statement usually looks the same no matter who prepared it. The fact that most firms include the exact same compliance description on client invoices reinforces that there is nothing special about the compliance report.<\/p>\n

Conversely, the advice, expertise, planning and strategy that went into the process before<\/i> the report was created are very differentiated. Advisory services grow from our unique experiences and expertise, and are the secret sauce that creates value<\/a> for our clients.<\/p>\n

We know this intuitively, but many firms do a poor job of separating advisory from compliance, and communicating their advisory expertise to clients. Advisory supports specialization, which leads to higher-value services and separation from the sea of generalists. However, if we can\u2019t articulate our advisory expertise, it\u2019s a certainty that clients won\u2019t be able to untangle our compliance services from higher-value advisory services<\/a>.<\/p>\n

Defining advisory services<\/h2>\n

The AICPA defines advisory services as those services where the practitioner \u201cdevelops findings, conclusions, and recommendations for client consideration and decision making.\u201d AICPA further provides examples of advisory services that include \u201can operational review and improvement study, analysis of an accounting system, assistance with strategic planning, and definition of requirements for an information system.\u201d This is helpful, but this definition feels more formal and narrower than how practitioners describe advisory services in their firms.<\/p>\n

In a recent Intuit\u00ae Tax Council roundtable, firm owners defined advisory services as \u201ctaking client challenges and applying strategies to create opportunities in service to their growth.\u201d This definition feels more outcome-oriented than the AICPA definition, and still aligns with the AICPA\u2019s recommendations for client consideration and decision making.<\/p>\n

Compliance and advisory services are interdependent — advisory services requiring a foundation of current, accurate books to provide actionable insights. While the suite of compliance services is constant across firms, the offering of advisory services tends to be personalized for each firm. Without a clear line of demarcation between services, some firms deliver advisory services while getting paid for compliance work.<\/p>\n

<\/a>To better define advisory services, here\u2019s a comparative analysis to illustrate where compliance ends and advisory begins.<\/p>\n\n\n\n\n\n\n\n\n
Dimension<\/span><\/th>\nCompliance<\/span><\/th>\nAdvisory<\/span><\/th>\n<\/tr>\n<\/thead>\n
Definition<\/strong><\/td>\n\n

Reports and filings required by external stakeholders to comply with regulations and standards.<\/p>\n<\/td>\n

\n

Taking client challenges and applying strategies to create opportunities in service to their growth.<\/p>\n<\/td>\n<\/tr>\n

Service Examples<\/strong><\/td>\nTax preparation, estimated tax payment adjustments, payroll processing and filing, bookkeeping, controllership, monthly close, financial statement preparation, sales tax compliance, tax agency correspondence; taxpayer representation.<\/td>\nTax planning and strategy, onboarding and training, technology stack<\/a> implementation and maintenance, management reporting, cash flow forecasting, key performance indicator dashboards, industry benchmarking, business performance reviews, process automation, budgeting and goal tracking, strategic planning, product price testing, profitability consulting, wealth management.<\/td>\n<\/tr>\n
Deliverables\u00a0<\/strong><\/td>\nCompliance reports are the primary value communicated, delivered and invoiced to the client.<\/td>\nActionable insights and strategies are the primary value communicated, delivered and invoiced to the client. Compliance reporting is a byproduct of well-defined advisory services.<\/td>\n<\/tr>\n
Workflow Attributes<\/strong><\/td>\n\n
    \n
  • Deadline driven<\/li>\n
  • Historical client records<\/li>\n
  • Data entry and formatting<\/li>\n
  • Verified calculations<\/li>\n
  • Done by the professional<\/li>\n
  • Undifferentiated reports<\/li>\n<\/ul>\n<\/td>\n
\n