Share this content
29

Client wants to do accounts inhouse

Client wants to do accounts inhouse but wants us to help

Didn't find your answer?

Search AccountingWEB

At present client does their own vat returns and bookkeeping. They employ two AAT trainees for this. We prepare the annual accounts and tax and submit  for them. It has worked very well for both of us so far.

But now they want the trainees to do the final accounts and tax in house with our "help and guidance". So we have to train them and then review the accounts they prepare. They also expect a reduction in fees to reflect the 'reduced' work.

Has anyone come across this sort of request? 

Should we even consider this arrangment? Can we refuse to train them on the final accounts aspects? If we refuse could that reflect negatively on us?

If we do train them then I can see the day when we would be told : "Thanks for your help, we can manage ourselves now"!

Thoughts and comments welcome

 

 

Replies (29)

Please login or register to join the discussion.

By Tim Vane
06th Jan 2017 02:04

Why would they expect a decrease in fees? You should tell them to expect an increase in fees, as you will have to be checking everything their trainees do and correcting it, and this will take longer than just doing the work yourselves. They'll probably also incur significant hourly training charges that will further bump up their cost, and they may find their day to day bookkeeping and credit control etc is adversely affected too.

They will presumably also incur additional software costs as they will need accounts prep and tax software. This could well offset any savings they would eventually make.

You should certainly be supportive of their aims, and tell them that you are happy to help them achieve their long-term goal to achieve some savings, but that in the short term they are likely to see increased costs. Also point out that as their staff will only do this once a year it will likely take them more than one year to get the full savings that they might expect.

Thanks (3)
By cheekychappy
06th Jan 2017 08:15

You can't crash course them. There's too much to learn.

They would need to be seconded to your practice for a minimum of 12 months to receive adequate training. The cost should be £30k + VAT for each trainee.

They will also need to study ATT alongside the training and existing AAT course.

They'll need tax refresher training on an annual basis too in order to keep up to date with changes. £3500 + VAT for each trainee sounds about right.

Thanks (1)
Replying to cheekychappy:
avatar
By jasonowsky
11th Jan 2017 01:37

that depends on how complicated the accounts are of course. When I was in practice a client said they wanted to see a saving of 50% in their accounts production and tax calculation. With our guidance, their inhouse people provided us with spreadsheets, calculations and tbs we had never dreamt of asking them to prepare. Result: we made a profit on the job for the first time for years and the client got a big saving. Admittedly, We did the final compliance part of accounts production and tax comps but I wouldn't get too precious on who presses the button on your accounts software package to produce a set of accounts. It's reviewing the accounts produced where us accountants can earn our crust with our expert technical knowledge, ability to spot inconsistencies and attention to detail. As long as your client understands how important this is, let them do as much of the donkey work as they like, and concentrate on the higher level points. You might find, if your firm isn't quite as involved in accounts prep, you can focus on that hallowed term of 'adding value' by looking at basic KPIs, trends, practical ways they could improve their bookkeeping etc. Good accountants shouldn't just produce accounts but be able to read into them to help clients (although if theyre not produced until nine months after year end it's not quite so easy!). Frankly, a lot of work accountants do prior to draft accounts production can be done by non-accountants. So your client may have a point. Areas of accounts such as directors' reports and RPTs should be prepared by clients, and reviewed by accountants, not produced.

As with so many things, a middle ground needs to be found. Its hardly likely it will be cost efficient for your client to buy accounts production software, and their trainees may not welcome excessive responsibility. However, if they are at all competent, they should be able to prepare schedules of accruals, prepayments, provisions for credit notes, final bank recs, analysis of certain p and l items, vat and paye recs. Possibly, if you have your own juniors, they could run through things with the trainees, but explain it's chargeable but will improve their trainees. In year 1 get the trainees to produce an 'audit file' even if not an audit and ask them to draft certain notes in the accounts. Always write down formally to your client your expectations of what you will receive. Presumably, their bookkeeping software already produces a basic TB...get them to make sure this TB is as accurate as possible. Days 1 and 2 of accounts prep for me was always putting through the same old journals...depreciation, write back of uncleared cheques, rent prepayment. Try to get the client to produce a TB with these included. then involve them in any journals you need to add yourselves...the number of journals you need will demonstrate to the client how accurate their trainees are and whether in year two they can get even more closely involved.

But how it works will be determined by the skill set available at both your clients and your practice. We were lucky that the bookkeeper involved in our client I mentioned was competent. You don't have to be a fully qualified accountant to work out a light and heat accrual..and if there's two trainees at least they can ask one another. Their big problem is they wont have last year's file to look at!

Thanks (1)
Replying to jasonowsky:
Teignmouth
By Paul Scholes
12th Jan 2017 13:20

This mimics my experience of all "accounting" work since I started in the business, the vast majority of the things I did for clients 30-40 years ago is now done by clients and with the benefits of collaborative working via cloud apps, this has accelerated, and, like it or not, this will continue to do so.

If the client is willing and able to do something why should they pay us to do it? The restriction to this philosophy is in our own needs, fears & even arrogance.

Our explanation to them that they are incapable of getting involved, is wearing thin, so best we retain them and help in the process, rather than them discovering for themselves and moving elsewhere.

Thanks (0)
Replying to Paul Scholes:
Worm
By TheLambtonWorm
12th Jan 2017 14:21

I think the 'willing and able' part the crux of it.

Many people are willing, but very few are actually able.

Still, that's the beauty of self assessment.

Thanks (0)
Replying to TheLambtonWorm:
RLI
By lionofludesch
12th Jan 2017 14:41

That's true - clients can help. It's the extent to which they help that is the fine judgment.

I have a client whose staff prepare analysed Excel spreadsheets of payments which are very useful. However, there are still crosscast errors, some columns don't add up and I found a new van in motor expenses.

View their work with a critical eye and you'll be grand but the suggestion that they'll be able to prepare the final accounts without further input is eyebrow-raising.

Thanks (0)
Replying to jasonowsky:
By cheekychappy
12th Jan 2017 14:58

I stopped reading at:
“Result: we made a profit on the job for the first time for years”

I cannot take anybody seriously that would continue to work on a loss making job year on year without increasing the fee or sacking the client off.

Thanks (0)
Replying to cheekychappy:
RLI
By lionofludesch
12th Jan 2017 15:10

cheekychappy wrote:

I stopped reading at:
“Result: we made a profit on the job for the first time for years”

I cannot take anybody seriously that would continue to work on a loss making job year on year without increasing the fee or sacking the client off.

We used to do it all the time at my last proper job. The partners decided to jack all the charge-out rates by 60%. All the managers thought they were off their heads and, sure enough, once billing time came around, it was a case of "Bless me - we can't charge them that!!"

Obviously, we called it a loss but it was only a loss compared to an improbably high charge-out rate and not a real commercial loss.

Actually - I can't remember any job making a "profit".

Imho - charge out rates are for monitoring staff, not deciding how much to charge.

Anyway - we digress ..........

Thanks (0)
RLI
By lionofludesch
06th Jan 2017 08:10

Clients are dreaming, I'm afraid.

Sure, give them a reduction in fees for preparing the accounts but point out that you'll need to bill them for the time you spend training their staff.

It'll take a long time for the benefits to work through. By which time, the employees may well have moved on.

Thanks (1)
avatar
By peter.wood100
06th Jan 2017 08:39

We had a similar request from a client. It inspired us to think about the cost of servicing the company Bentley (we have no qualms about paying BIK..... we like to contribute to the Exchequer)

So, we asked our local Bentley dealer to provide our juniors with some training......

We now know how to respond to our clients who make silly requests!

Happy New Year to all!

Thanks (0)
avatar
By peter.wood100
06th Jan 2017 08:44

Duplicate reply deleted

Thanks (0)
Hallerud at Easter
By DJKL
06th Jan 2017 09:21

I would pass on to the client the salutary lesson that the grass is not always greener, what they are proposing has a significant hidden cost in the long term as the trainees, however good they become, will lack the breadth of experience being in practice brings.This could be costly.
(I was poached by my current employers from the firm I was then with, they were clients, and at the time I was well past being a trainee having worked in accountancy/tax for fourteen years at that time)

I still read a fair bit, and study, but there are now whole areas of tax/accounts that these days I may have read about but have no practical experience re same, it is the consequence of leaving full time practice seventeen years ago. In the late 1980s and through most of the 1990s I felt on top of tax and accounts disclosures, these days I tend to run to stand still, whilst I may be able to run a part time practice I have to be comfortable in areas to take on clients in that particular area-I have no IR35/contractor clients because it is an area in which I have no practical experience.

So what your client long term will get is individuals who know his business well, possibly know his industry well, but are narrow in outlook; Donald Rumsfeld's

"But there are also unknown unknowns. There are things we don't know we don't know."

is the real danger to your client.

I can near guarantee that if your client follows the route of eventually removing a professional firm from the mix mistakes will likely happen in years to come.

Thanks (1)
avatar
By aadil
06th Jan 2017 11:01

Thanks all for your comments.

It does look like that's the route they want to follow. So in terms of training should we charge at the relevant hourly rate?, fixed fee?

Then there would be the reviewing fee to work out too.

Or may be provide a crash course and just disengage altogether?

Thanks (0)
Replying to aadil:
By cheekychappy
06th Jan 2017 11:15

aadil wrote:

Thanks all for your comments.

It does look like that's the route they want to follow. So in terms of training should we charge at the relevant hourly rate?, fixed fee?

Then there would be the reviewing fee to work out too.

Or may be provide a crash course and just disengage altogether?

When the trainees fuck[***][***] it up, who's training do you think they are going to blame?

Thanks (0)
avatar
By Cloudcounter
06th Jan 2017 11:15

I'm always reluctant to engage in anything described as training for clients or their employees. For a start it is an open ended commitment as they will feel entitled to phone up with queries whenever they get stuck. There's also a very strong chance that if they misunderstand and get things wrong you'll get the blame.

I am not a trainer, and point that out to clients. I wouldn't feel qualified in drawing up a training programme or in finding ways to test the progress of the participants and let them know what their progress is. That wouldn't be fair on them or on me.

I'd probably prefer to lose the client than get dragged into this.

Thanks (0)
Replying to Cloudcounter:
By petersaxton
06th Jan 2017 12:00

I would just tell the client that it's not a realistic idea. Accountants in practice prepare company accounts every day and they have a lot of knowledge and experience. Their staff would be trying to prepare company accounts once a year without that knowledge or experience. It's a disaster waiting to happen.

Thanks (1)
RLI
By lionofludesch
06th Jan 2017 11:31

I'd tell them to find someone else.

I'm not a teacher.

And I'd tell them that, in this madcap world where stuff changes every ten minutes, it's a madcap idea they've got into their heads. These in-house accounts staff won't be going on update courses.

Let them try to find someone else who'll take the job on, making their own services redundant.

Thanks (0)
Teignmouth
By Paul Scholes
06th Jan 2017 11:36

I have had several similar requests over the years and, whilst I agree with some of the warnings already made, this is not necessarily a backward step.

It obviously depends on the level of complexity of the accounts but, if I look at my own history of client work 20 years ago I wouldn't have let most of my clients anywhere near their own books, VAT or payroll, whereas today, pretty much all of my clients now do over 95% of these, leaving me to do the stuff I'm willing and able to do and that they would feel is beyond their capabilities.

So a few years back, with one of my clients who have their own in-house accountant, I spent time with him bringing his technical knowledge up to date, and charging accordingly, then over a couple of years handed the year end accounts and tax return work over to him and ended up just double checking everything before he submitted.

This only worked because I charged a good fee to impart my knowledge and then support him but, more importantly, because the year end stuff only formed a relatively small part of what I did for the client and so I maintained reasonable fees for the rest AND the goodwill of the relationship.

In other cases where this was proposed and it would have left me with little if anything else to do, other than double checking, it wasn't worth my while doing it and so I lost the clients.

So, if it was me, I'd look at the client as a whole and decide whether the handing over of this work would seriously deplete what I do for them and, if I decided I wanted to hold on to them, I'd charge properly for the hand over.

Thanks (1)
Worm
By TheLambtonWorm
06th Jan 2017 11:51

It's a ludicrous idea.

Hoping to train a couple of AAT students in preparing year-end accounts, and all the tax complexities that go with it with only 1 job per year to practice on.

Thanks (2)
Routemaster image
By tom123
06th Jan 2017 21:12

It seems a strange thing to want to do.

I would certainly not feel to happy if I was asked to do all the filings for my employer, and I have been qualified for several years.

It's just that the daily bread and butter work of fellow Aweb members is a once a year event for me.

Thanks (0)
avatar
By dbowleracca
07th Jan 2017 09:40

My approach would be similar to as suggested above - advising the client of the significant upfront training costs, risks associated with the trainees only doing one set of accounts a year and having very limited knowledge etc.

A solution could be for you to show them how to prepare a lot of the general working papers - fixed asset schedules, accruals, prepayments etc and get the records up to such a standard that your fees can be reduced significantly.

Aside from the potential cost savings, the trainees could also then provide the owners with regular and accurate financial information to help manage and develop the business.

Your work would then be reduced to just preparing their annual accounts and corporation tax returns from their TB, and any other advisory work etc they need. The compliance itself would possibly only cost them £1,000 or so a year assuming very good records and supporting schedules for balance sheet items, fully reconciled etc.

Thanks (0)
avatar
By aadil
07th Jan 2017 12:31

"A solution could be for you to show them how to prepare a lot of the general working papers - fixed asset schedules, accruals, prepayments etc and get the records up to such a standard that your fees can be reduced significantly."

Yes, this is the arrangement currently. But even that I cannot rely on them to get it near perfect.

Their thinking is that they do all the bookkeeping and prepare the schedules etc, so there is not much for us to do. So we should reduce the fees, (our fees are about £1200 per annum, and we do not charge for the general queries during the year).

They think if they can do the Sage, the rest must be easy! Just enter the TB and it's done!

Thanks (0)
Replying to aadil:
avatar
By raybackler
10th Jan 2017 11:19

Your fees don't justify them even attempting to bring this work in house. If they eventually reduce or eliminate the fee, I can guarantee that over time their accounts will get more and more inaccurate and the risk of them paying too much tax or being investigated for not paying enough is high.

I have a client where there is an AAT who competently does all of the bookkeeping and then prepares the year end schedules, all done to the level of expertise I expect. I end up with several amendments to the bookkeeping and the year end schedules and that is because of the limitation in expertise. That is before I start on the statutory accounts.

In my opinion this AAT is at the top end of capability and there is no friction, because the gap in knowledge is well understood for what is required to go to the next level.

Thanks (0)
Replying to aadil:
avatar
By chatman
10th Jan 2017 11:35

aadil wrote:
Their thinking is that they do all the bookkeeping and prepare the schedules etc, so there is not much for us to do

They think you are selling time, not expertise.

Thanks (0)
Jennifer Adams
By Jennifer Adams
07th Jan 2017 14:20

Isnt this exactly what HMRC are expecting us to do for all our clients under MTD? Teaching them how to do bookkeeping using Sage/Iris so they do the work themselves inhouse, submit quarterly returns (sorry.. 'updates') and then get us to check their figures for the final submission?
In the end you will find that you will teach them and they will take over and say goodbye to you. So I would say no and if they dont like it - say goodbye

Thanks (0)
Hallerud at Easter
By DJKL
07th Jan 2017 22:56

Just ask them how comfortable they will be the next time there is a transition re reporting similar to say FRSSE to FRS (102 or 105)?

(because there will be a next time; in my career we moved from about 24 SSAPs and Companies Act 1948 etc to the current regime with a fair few other iterations over the years)

I did ours recently (early adopted FRS102 re 1/1/15 to 31/12/15) and whilst not that complicated restating the prior year (1/1/14 to 31/12/14) in some circumstances it could have involved a fair degree of technical input and adjustment.

Can they acquire the depth of knowledge and experience to be able to keep relearning and to know when such changes have occurred?

Thanks (0)
Img
By MissAccounting
10th Jan 2017 10:24

This will end badly for a number of reasons, they wont pay what its actually worth, they'll use you for constant free support and then they'll eventually leave because they think they can now do it themselves.

Do yourself a favour and just tell them that its not something you can do for clients due to the complex nature of it.

Thanks (0)
Replying to MissAccounting:
By petersaxton
10th Jan 2017 11:12

I would just tell them it's a crazy idea and it would end badly.

Thanks (0)
avatar
By Shafeen
10th Jan 2017 11:00

Have had a recent similar request as the Company director thought that buying a new computer and some software and sticking it in front of his existing staff would provide him with an instant picture of the state of his growing and successful business. I asked his staff if they were prepared to go on any courses and they were aghast being just elderly clerical staff. Nevertheless, he is going ahead and I am preparing to lose a significant client. But I am not prepared to spend time training other peoples staff well knowing that they may not stay long enough to derive any benefit.

Thanks (0)
Share this content