Partner An unnamed firm
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Imprudent accountant: Could election fever spread to accounting firms?

28th May 2019
Partner An unnamed firm
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Our resident blogger ponders the recent announcement that Theresa May will stand down as Prime Minister and examines whether election fever could spread to the accounting world.

I don’t suppose that many AccountingWEB readers will have noticed, but the Prime Minister has announced that she will be stepping down in the next couple of months.

On second thoughts, I guess even slaves to the profession might just have overheard colleagues talking about the political climate or sat in meetings with clients who inexplicably took a few minutes out from discussing the latest expansion plans or tax-saving opportunities in order to bemoan the fact that the country was going down the pan.

They might even have noted the observation that within the Tory party the old mathematical maxim 'my friend’s enemy is my enemy' has callously become 'my friend is my enemy'.

You might wonder: what this has to do with the world of accountancy? Many readers will have noticed that since the government has been at an effective standstill for several months and shows little sign of revival before the autumn (and quite probably the end of the year), tax policy has been on the backburner – virtually static with no new policies introduced by Philip Hammond either in the last Autumn Budget or his recent Spring pronouncement.

I wonder how many advisers might have wondered whether this could provide an opportunity to take advantage of some of the racier tax-saving opportunities, confident in the knowledge that although the Treasury may inevitably catch up with dodgy schemes at some point, clients are able to benefit for a year or two longer than would otherwise have been the case?

Away from tax, it may surprise some readers but in many partnerships - even accountancy practices - there is frequently dissatisfaction with the performance of those running the business.

Predictably, I have worked in several firms where the majority of partners felt that their performance deserved a higher profit share than the amount allocated by the powers that be.

In many cases, this was based on a completely delusional belief that resulted more from pride than a cold, calm look at the underlying numbers. Frequently, where the beef was justified, the real problem was actually a lack of profitability across the practice rather than the way in which the unimpressive profits were shared out.

However, corporate underperformance leads to rumblings way beneath the surface as partners meet in corridors and mumble about the unfairness of life and, more directly, the failures of the current management to share profits out on a fair and equitable basis.

It may not be entirely unconnected, but generally those running firms get bigger profit shares than anyone else despite the fact that their client portfolios are either negligible or non-existent.

Without wishing to give anyone the idea that election fever may spread to the accounting world, I have begun to ponder the possibility that some of those accountants who have been bellyaching for years might club together to demand changes in policy from their rulers with the intention either of achieving changes to profit-sharing or, more significantly, an election to replace existing managing partner or CEO with somebody who might just do a better job.

If you happen to be your firm’s Theresa May, it might be a good idea to watch your back over the next few months.

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