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Question of the Week: Accountancy - Shape up or ship out?

28th Feb 2007
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The perennial discussion over the role of non-qualified accountants has exposed a clear division in the profession – not only between qualified and non-qualified, but also between those accountants who look forward to the future as business consultants and those who see their traditional ground of compliance work being pulled from underneath them and see no future other than out of the profession. In the US, the debate does not exist. CPAs have positioned themselves as key business advisors and forged a host of partnerships with related disciplines such as lawyers and real estate professionals. So why not here? Have accountants become ring-fenced by their own reliance on compliance. Do UK accountants need to be more innovative?


Replies (12)

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By Mike Bassy
28th Feb 2007 21:56


At last ! .

I 've been waiting a very long time for the accountancy profession to face up to the fact that a lot of its member are extremely dozy and have absolutely no idea how to offer good customer service. Far too many regard themselves as a branch of HMRC - a tax em and flog em out reach team, paid for by the client.

As the winds of change begin to blow ruinously through the halls of these low standard practitioners, let me state once again what your customers want.

1) Sound, pro-active advice enabling them to repel an increasingly rapacious Government, which doesn't care about how the tax burden is rapidly killing the golden goose.

2) A much more strident attitude to complaining about this increasing tax burden. You are best placed to see how businesses are struggling to pay the bills. Your future employment depends upon our continued existence. Don't just sit on your hands . Lobby loudly for change.

I expect this comment will provoke the usual torrent of complaints from accountants who have neither the skill nor the imagination to act as anything other than glorified book keepers. Nevertheless, I shall enjoy reading them all, even the most vitriolic and abusive. It's the least I can do to show some respect for a dying breed.

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By DMGbus
28th Feb 2007 20:28

A robot as an accountant or a pro-active business advisor ?
A complaint I often hear about previous accountants is that "they gave no advice".

A robotic "tick the box" / only do what's in a manual is the last thing any go-ahead fledgling business needs.

Businesses need really valuable pro-active advice..

..working tax credits
..small business rates relief
..a good general knowledge of business
..offering advice rather than waiting to be asked for advice

The above are as well as the practical experience and knowledge of tax issues facing the small business.

Sadly some or all of the four specific matters listed above are so often lacking from the advice offered to new businesses, or so it seems.

A friend of mine who runs a limited company has just changed accountants - from a fairly large practice (who, I wrongly thought were highly competent and professional) to a local small firm of accountants.

Both old and new firms are Chartered, by the way.

The outgoing firm (located 20 miles away, captured the client by acquiring his previous advisors fee book) had full information from the client in May 2006 - and in December the client was having to ask the firm of advisors where his 31 December deadline CT600 return was - they still failed to meet the deadline (despite his reminders to them) so he got a £100 fine from HMRC. His two dormant Companies were "forgotten" so two £100 fines from Companies House were received.

So, the client suffered THREE penalties for deadlines being missed !
OK, fair enough, a credit note was very willingly issued to cover the penalties, but this does nothing to compensate the busy client for the stress and trouble he has suffered. And, yes, he said to me "they never gave me any advice". Oh, they did offer something unwanted - a telephone call from a firm of consultants asking the client's views on location of the accountant's offices, how he became a client of them and (oh, so relevant!) what colour scheme they should have in their offices !
One thing he complained to me about was the idiotic "text book silly rules not overrided by commonsense" concept of depreciating a freehold property to £30,000 when it was factually appreciating in value (£600k market value he tells me). A further complaint is that he had difficulty getting a signed copy of the main company accounts and has to date, not received any copies of the dormant company accounts.

New small firm is on the ball, and at a £1,000 saving in accounting fees the client is happy - the new firm is 3 miles away and is more versed to dealing with his sort of business - he the client has moved from being a nothingness of a client with a big firm to becoming an important customer for his new small firm of accountants.

I await with trepidation to see if the new firm perform to his expectations - I fully hope and expect that they will.

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By Rachel Battersby
02nd Mar 2007 15:09

Innovation and business advice can only be a good thing
Of course most accountants would love to give business advice and tackle the Revenue on technical points. But where are the business owners happy to pay the fees that this approach generates?

Mr Bassy, if you are happy to pay for such services I am sure it would not be at all difficult to find the sort of accountant you require. Accountants persistently complain of red tape and tax burdens - as do business representatives but to no avail. Why do you think accountants are to blame for government regulation?

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By frauke
02nd Mar 2007 15:15

I have worked for US subsideries in the UK from time to time and have always had to close each month end within 5 working days, and Year ends within 10 working days. Reporting in the US is on very short dead lines and I got into the habit a long time ago, of organising my time (and my holidays) to make sure I meet them. US companies "look" after thier accounts staff, and consider it very important to make sure the staff are paid well and look after - and the accounts staff perform to the standards required. I find it fustrating getting invoices late - sometime months late. Suppliers are always surprised when I ring them up - asking were the invoice for the previous month is.

I find this also with accountancy firms. Some are pro-active, but many are not. The ones that aren't tend to have staff that quite frankly don't care, or don't have sufficent knowledge. As well as working as an "in-house accountant" I also have a small practice. From time to time clients leave (usually to try an save fees), but most of the time (within 1-2 years) they return. This is because I try to be proactive - and until they go elsewhere, they don't realise what extra benefits they get from my practice. The ones that come back - are the best referers.

Over the years I have stopped refering people as it normally ends up causing too many problems. I have only 1 solicitor, I still refer people if they ask - someone I have dealt with personally, for over 20 years, that I feel confident to refer people to. Other solicitors I have tried, and there have been many - I have never gone back to.

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By AnonymousUser
05th Mar 2007 06:19

Must learn
UK can learn all the time from US.

Let's see and always learn the ways of ICPA UK and see what the next thing as benefit of mankind learning all the time already.

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Judi Castille senior partner of SP Consultancy LLP Kent, company formations and tax structures
By freelance32
05th Mar 2007 14:55

Here here!!
I am having an on-going debate - and soon to write an article for Accounting Web re the f ailing of accountants - inc the chartered. I set up SP Consultancy a year ago after working for over 20 years in commerce and industrials in financial and management accounting - finally realising that many of my friends who had their own businesses were not getting a good service - in fact a bad service with a high fee attached to it - so I went LLP and have no regrets - apart from the disdainful way I am viewed because I am qualified by experience and not via a text book!!

Some of the profession is loosing focus and having a grasp of the whole business is paramount if you are to provide a compliant/pro-active service. How you can possibly give good tax advice when it is blantantly obvious the company is on its knees because operations and costing is an afterthought beggars belief - it should not be all about tax and fearing the HMRC and making money through selling Investigation Insurance.

Tax advisors should work hand in glove with their clients - not once a year - an on-going service - being there on call as and when required - and without the client fearing that 5 minute call is going to cost dearly.

Things must change.

E: [email protected]

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By JSJ54
06th Mar 2007 13:58

Beaten to it
I was going to ask:

"If OMBs want this type of service from accountants why don't they change to accountants which provide it?" but Edward has answered it already.

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By User deleted
06th Mar 2007 07:16

I'm with Rachael
I would love to provide the sort of proactive advice that is talked of here and am a keen advocate of personal development, soft skills and continual learning, but having made several attempts to get this "type 2" approach going, I have come to the conclusion that the market I serve (OMB's doing less than £1mill t/o and predominantly less than £200k t/o) are just not prepared to pay for this type of thing.

As such, I have had to cut my cloth to suit the work I get through the door.

I believe I offer a good value, basic, compliance service.

I don't pretend I hand hold and I make it clear from the outset that if you want me - as opposed to my staff - it will cost you extra.

It is true, that some of my former clients haven't liked this (or heard me properly when I have said it) and have moved on.

Overall, despite some despondent days, I hold together a £500k sole practice and turn in a decent profit each year (although like many, my cashflow can be "patchy" sometimes!)

Would I do it this way again?

If you go after the main OMB market that small firms deal with, I don't think you really have much choice other than to approach things this way.

If you are happy to have a patchy workflow and a "practice" (E-myth sense of that term) then perhaps you can do other things.

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Nigel Harris
By Nigel Harris
06th Mar 2007 22:08

Or you can try to do both
You're right, the OMB market generally doesn't want to pay for added value services. They are too busy working "in" their business to work "on" it.

(An aside: A friend of mine contacted a large number OMBs last year to try to get appointments to talk to them - for free - about business development, coaching and other value added stuff. He kept a record of 150 who said they were too busy to bother. As of yesterday at least 75 of them are no longer trading)

But the added value work IS more interesting, earns higher fees and engages and helps retain your more qualified staff and higher earning clients. So the answer for many established smaller firms is simply to do both. Keep your portfolio of bread and butter, compliance-only clients (or "customers" as some firms call them). And, in parallel, develop your added value consultancy services which the more ambitious "clients" are willing to pay for.

I would be surprised if many long-established firms have really dropped all their compliance work to focus solely on added-value services. I think most of us are trying to offer both.

It's horses for courses, and at least if you offer both styles some will be able to switch sides from time to time without leaving you for another firm.

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Nigel Harris
By Nigel Harris
06th Mar 2007 22:16

But some business skills training would help
One thing that does concern me with the business consultancy tag is that most qualified accountants lack the skills and experience to do this work, especially in the SME/OMB sector where you need a fairly broad skill set. An accounting qualification, even and MBA, does not give you the skills to run a small business, or to tell someone else how to.

I recall I spent two and a half years ticking plc bank recs and filling out audit forms (plus the mandatory six months in the Corporation Tax department ticking tax comps) before being let loose on the unsuspecting business world as an ACA. Chartered accountant AND business adviser? You must be joking!

We could really use some practical business and management skills elements in the main accountancy qualifications to give us a more useful stream of newly qualifieds in future, if indeed the future is in the consultancy/added value work.

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Dennis Howlett
By dahowlett
07th Mar 2007 12:37

Fat and happy
I don't read anything here that's different from what I used to see 25 years ago. This is about the kind of practice you want and the kond of client you attract as a result. Offer a low ball service and you'll have plenty of clients but a lot of issues. Offer a differentiated service and your practice changes accordingly. I won't pretend it's easy but the first step is to make routine accounts and tax return production as efficient and ciost effective as possible.

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By rockallj
07th Mar 2007 13:31

Nigel is right
It's horses for courses. Some clients are happy for proactive advice and assistance. Others will see it as you breathing down their necks and just trying to get more business out of them. Also, not every client agrees that you have to pay for this advice. We, after all, are not charities.

Likewise, many clients simply want and need the compliance issues dealt with by you, despite what advice you think they need or want.

It all depends on your client relationship and the type of client they are.
It is dangerous to generalise. After all, we all have different skills. There is nothing wrong with the straight-forward complicance work if that's the service you offer well and you convey that to your clients effectively.

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