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All accounting & tax services provided by in-house accountants?

I'm interested to find out thoughts and views on advantages and disadvantages of all accounting and tax requirements (including all accounts and tax preparation and filings etc.) being fulfilled by in-house accountants / accounting teams as opposed to splitting the work between in-house and external accountants.


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By tom123
21st Feb 2016 17:40

Frequency of work.

I have always worked in industry, both for SME and international corporates.

If a company is large enough to have it's own in house teams, then it is also likely to have many and varied reporting requirements.

This website (of which I have been a member for 15 years) is, understandably, biased towards the external practitioner and the statutory reporting needs.

However, there is a whole lot of accounting that goes on for the other 11 months of the year.

I, for one, am glad I have external accountants to do my once a year group stats - that way I only need have a passing knowledge of FRS etc.

It is important for the FD (such as myself) to keep abreast of statutory changes so that I can flag up future changes to the board - but I would not consider a task that needs doing only two-three times per year (depending on group composition) would be something I could possibly gain enough practical knowledge on to do fully correctly.

And I speak as both a CIMA and ATT member.

I should point out that I do prepare draft statutory accounts with disclosure notes, however.

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21st Feb 2016 19:28

When I used to
Work for a top 4 firm in the tax department an Inspector ( yes it was that long ago) told me once that as the ct comps of a particular company were prepared and submitted by the firm then the Revenue place a greater reliance on those comps than if the company had prepared and submitted them.

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22nd Feb 2016 09:04

That independent eye

I think that the external accountant can also give the "independent eye" over the accounts and whilst, the inhouse team can know the trees, the external accountant can offer strategic input especially in terms of future tax changes and trends.

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22nd Feb 2016 10:14

From experience of doing both

For the smaller entities , like the one I am employed with (property development/investment), covering all functions under one hat has its pros and cons.

On the pro side:

I have a far more detailed knowledge of the business than any external accountant could ever have, and I say this as the party who  performed the external accounting functions prior to taking the position of  being "the entire internal finance function"

Something like taking a  development project from start, in detail, to fruition, and seeing say over 200 flats built on a site that was  at outset an unused industrial complex extends one's knowledge and  input into other areas like  planning and development procedures, marketing, legals, banking etc; it is far more in depth multi disciplinary project management that  an external accountant would likely experience (unless worked solely in a niche practice industry sector) . As an external I would only likely need to know the bald facts, that the entity was considering doing x, the profits  were likely to by y, and then help plan the tax/legal structure and approach to the project.

I am accordingly not that sure what  better  in depth vision an external adviser really can have, unless they have fairly extensive specific industry experience, but they may have a role taking a big picture approach and asking questions like, "why on earth are you even thinking of taking that approach!!!!!!",

The external  can have a role as a sounding board but  in the main can be industry specific technically limited;  e.g. say suggesting changes in house numbers on a site with no thought of how increased numbers would impact council roads traffic  policy/ traffic impact analysis/ planning process timetable is not helpful, the external only adds value to the whole of a project with strong industry background.

On the con side

The in house gets spread a bit thin (knows a little about a lot) and has to deal with everything  from payroll, vat, accounts, tax, employment law, pensions etc plus copious amounts of admin like insurances, tenant issues etc. His/her technical knowledge gets weaker, lack of exposure to myriad different clients reduces exposure to particular tax issues and it is very hard to keep up to date across all fronts. The say external tax adviser, with broader real world experience, is likely to have a better feel for what may be possible with tax planning and likely has a better nose for detecting factors that may be issues the internal does not anticipate.

My current position

I cover both functions in a way, I act as FD to a group of property entities during the day but at night/ weekends put my underpants on outside my tights and become "Practicing accountant", however with a distinct  lack of breadth of experience since 1999 when I left full time practice I have to be somewhat circumspect  re the type of work/clients I take on, e.g. do not understand/have experience re IR35/ contractors so none taken on as clients.

I think the secret to being an internal is  to have outside professionals to call on when needed (I have a few)  and to have sufficient radar to know when to call them (develops over time), not sold on the external brings insight- maybe, but without industry experience what they say may be banal and trite.

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