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2019 in practice: AML scrutiny tightens and stress levels soar

This year saw anti-money laundering scrutiny increase, big accountancy firms jostle for dominance and a wellbeing crisis that looks to rage on into the New Year. Richard Hattersley reviews the year in practice.

17th Dec 2019
Editor AccountingWEB
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Here comes 2020

Now that MTD for VAT is in full swing, you'd assume accountants would settle back to afternoon games of golf and cricket at Xerocon. But practitioners looking for a respite from the digital thorn in their side were instead hit with other headaches.

Let’s look back at the 2019 headlines and see what areas have caused practitioners the most consternation this year, as well as the challenges which will likely come home to roost in 2020.

AML clampdown

It’s hard to ignore 2019's sleeper challenge: the tightening of anti-money laundering compliance. Not only did AML emerge this year as one of AccountingWEB readers' biggest compliance burdens but due to the upcoming tightening of the rules, this issue is only likely to escalate next year.

However, it was a totally different story at the start of the year when many accountants were questioning whether they should even bother submitting a SAR. “I've made a number of SARs re tax evasion, but they've been completely ignored by HMRC, even when I've handed them the information on a plate,” said AccountingWEB reader Ken Howard in one example.

Yet Jennifer Adams set a more measured tone when she argued in January that “No SAR is wasted". This lesson was hammered home by the Office for Professional Body Anti Money Laundering Supervision (OPBAS).

The supervisors of the supervisors had conspicuously kept schtum since its formation in 2018, with the AAT using the regulator’s one year anniversary in January to raise questions over the group's cost and awareness.

Metal Wheel
(Picture credit: istock_EtiAmmos_aw)

But the regulator came out of hibernation in April and instantly pushed AML to the top of everyone’s agenda, not least the professional bodies which were slammed for their inaction. Alison Barker, the director of specialist supervision at OPBAS, said: “The accountancy sector and many smaller professional bodies focus more on representing their members rather than robustly supervising standards.”

Although not supervised by this regulator, HMRC has had no bones in shouting about its efforts in getting tough on money laundering, which it has met non-compliance with hefty fines.

With OPBAS coming down hard on the supervisors, one can also expect that this scrutiny will trickle down into accountancy practices and underlines the importance of complying with the incoming fifth money laundering directive on January 10th.

Headlines from 5MLD will include extending the requirement to identify and verify beneficial owners and broadening the definition of tax adviser in terms of money laundering compliance.

Stress levels soared

No question, 2019 continued to see practitioners browbeaten and overburdened by relentless compliance change. An anonymous accountant who was working longer hours to plough through additional compliance such as MTD told Richard Sergeant about the effect it’s had on their health.

“I had something of a breakdown in 2018, and my doctor has pretty much told me to retire, but I’m not in a position to do that yet at 58 years old.”

Stressed Businessman

It’s no wonder then that many practitioners are looking towards the exit, and according to broker Nicola Draper “MTD has been the final straw for those already under pressure and who see too much emphasis on systems and not relationships”.

At the 2020 conference in November, Gordon Gilchrist said he’s heard first-hand from baby boomer accountants who have said “enough is enough”. He encouraged those at the point where they can’t cope to seize the bullish market. “If you want to cash in and de-risk, this is the time to do it.”

The always-on culture has also had a hand in ratcheting up these stress levels, with many forgetting that “lunch is even a thing” as they chew over client emails. But as we've found out this year, striving to provide the best for clients with round-the-clock email replies ends up having a negative impact on their own lives and health.

It’s unsurprising, then, that research in June found that 40% of senior accountants are stuck in a rut and hate their jobs, while one-third of accountants admitted to feeling stressed every day.

Wellbeing at the frontline of the recruitment battleground

Not only is it wise not to have staff members work their calculators out of battery, but with recruitment charting as the biggest challenge amongst Accounting Excellence award entrants (46%), firms are combatting this stress crisis by investing in wellbeing initiatives.

In efforts to outdo rival firms in accountancy’s recruitment battleground, practices are going beyond just flexible working. Accounting Excellence award-winners Farnell Clarke has done away with the traditional 9-to-5 working week by offering unlimited holiday and scaling back its time tracking.

“We had to move to a place where we can measure output effectively rather than simply measure input in the hours our teamwork,” said Farnell Clarke’s Will Farnell when the scheme was announced in February.

The profession’s emphasis on work-life balance even influenced the new 'Investing in People' category at this year’s awards, with Seymour Taylor picking up the inaugural gong.

KPMG's year on the naughty step 

Despite these efforts, many accountants consider their workplace to be toxic. A whopping 55% of 2,000 chartered accountants surveyed by CABA complained of a range of office issues, including poor communication, cliquey colleagues, and bullying.

The most high-profile example of a toxic environment happened at KPMG in May when two female partners left the Big Four firm in protest over its handling of alleged bullying conduct by a male partner.

Canary Wharf skyline
(Picture credit: istock_franckreporter_aw)

Maggie Brereton and Ina Kjael, the two former partners, unveiled their rival firm EOS Deal Advisory in September, vowing to end the “all-nighters” and “macho” working rife in the profession.

Brereton reiterated the need for a culture change on AccountingWEB, writing: “the culture of presenteeism and the expectation of long hours are not constructive or sustainable. In fact, people outside our ‘deal bubble life’ often question me on how effective I can be doing over 80 hours a week!”

Alone, this story would have been a black mark on KPMG’s year, but it was just one of many that kept the Big Four firm consistently in the headlines.

It kicked off the year by demonstrating its stick approach to management by encouraging timesheet punctuality through fining tardy staff £100.

KPMG employees who complained that the firm’s overbearing approach treated them “like children” didn’t have to have to wait long to be irked further. As part of the firm’s cost-cutting measures, it took back mobile phones from its junior administrative and back-office staff.

But it was KPMG's retreat from the small business market after five years that caused the biggest headlines. AccountingWEB’s editor Tom Herbert broke the story to the accountancy world after rumours of its demise gathered momentum, and the news prompted a tidal wave of social media schadenfreude from smaller firms and sole practitioners keen to point out they'd called this from the beginning.

Big firms jostle for power

But KPMG wasn’t the only big firm licking its wounds after a tumultuous 2019. Grant Thornton capped off a year mired in audit scrutiny and falling partner pay by sinking down the accountancy league tables after BDO leapfrogged them into the fifth position.

Don’t let these mishaps convince you that 2019 was bad for the big accountancy firms. If anything, this year demonstrated the attractiveness of the profession, with private equity seemingly holding the key to accountancy’s future.

One of the biggest players in the new round of consolidators is Cogital Group, which has amassed an impressive collection of practices large and small over the last couple of months. This year, Cogital placed its cards on the table when news emerged that several private equity groups were circling the consolidator. It was valued at the meagre sum of £1bn.  

A look to the future

If you thought this year was tough, wait until 2020... Those dreading the annual tax return season better save a dash of the Christmas port until January, as things are likely to get even hairier. Come the New Year, not only will accountants have the prospect of client chasing to endure, but January also brings additional compliance burdens in the form of the fifth money laundering directive, and let’s not even mention Brexit, a potential Budget in early February or the upcoming changes to the contractors market…

But 2019 wasn’t all doom and gloom for accountants in practice. AccountingWEB’s Class of 2019 demonstrated how technology has created a fertile market for new firms looking to find a work-life balance that works for them.

And this youth moment was no better seen in 2019 than with Ranveer Singh Sandhu, the UK’s youngest accountant. Rather than spend his free time in his room playing computer games, the 15-year old accounting prodigy instead plays the numbers game with his firm Digital Accounts. With dreams of becoming a millionaire within ten years, the GCSE student already displays many of the attributes of the Accounting Excellence programme such as client workshops, targeting a niche and developing his own bookkeeping software.

If that isn’t hope for the future of the profession, I don’t know what is. See you next year!

Replies (2)

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By wilcoskip
17th Dec 2019 11:24

Alison Barker, the director of specialist supervision at OPBAS, said: “The accountancy sector and many smaller professional bodies focus more on representing their members rather than robustly supervising standards.”

And damn right, too. If they want us to do all the work, how about they pay us for it? And I don't pay my subscription fees to professional bodies so they can act as unpaid government enforcers. Seriously, what planet do these people live on?

Thanks (4)
By barry131
17th Dec 2019 12:52

Have to agree. I finally kicked the accountancy bucket in October this year... and relax!!

Thanks (1)