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PROFESSIONAL PRACTICE IN THE UK
professional practice
A PERSONAL VIEW
in the uk
BY
GEOFF BRITTONA PERSONAL VIEW
BY
GEOFF BRITTON
PRESENTATION SUMMARY

EUROPE AND THE UK

THE UK ACCOUNTANCY PROFESSION

ACCA WITHIN THE UK ACCOUNTANCY PROFESSION

GBAC –

CLIENT RELATIONSHIP OVERVIEWS
GOVERNANCE
HISTORY & GEOGRAPHY
STAFF – PRESENT STRUCTURE
TYPICAL BUDGETS
TRAINING
INFORMATION TECHNOLOGY
RELATIONSHIP WITH OTHER ORGANISATIONS
FUTURE
EUROPE AND THE UK
THE BRITISH ECONOMY
POPULATION
•
ENGLAND
50.7m
•
WALES
2.9m
•
SCOTLAND
5.1m
•
NORTHERN IRELAND
1.7m
•
ISLE OF MAN
75,000
•
JERSEY
91,000
•
GUERNSEY
65,000
COMPARITIVE WEALTH DISTRIBUTION
IN EUROPE
COUNTRY
POPULATION
POPULATION
POS.
$ US
$ US
GDP
GDP POS.
GDP/PERSON
GDP/PERSON
POS.
LUXEMBOURG
0.48m
41
50,160m
23
104,500
1
NORWAY
4.80m
26
391,498m
15
81,562
2
ICELAND
0.30m
43
20,003m
36
66,677
3
IRELAND
4.30m
29
258,574m
16
60,133
4
DENMARK
5.50m
23
311,905m
14
56,710
5
SWITZERLAND
7.60m
21
423,938m
13
55,781
6
SWEDEN
9.20m
18
455,319m
8
49,491
7
16.40m
10
768,704m
6
46,872
8
5.30m
25
245,013m
17
46,229
9
60.60m
4
2,772,570m
2
45,752
10
NETHERLANDS
FINLAND
UK
COMPARITIVE WEALTH DISTRIBUTION
IN EUROPE
COUNTRY
POPULATION
POPULATION
POS.
$ US
GDP
GDP POS.
$ US
GDP/PERSON
GDP/PERSON
POS.
AUSTRIA
8.30m
20
373,943m
11
45,053
11
BELGIUM
10.60m
12
453,636m
7
42,796
12
GERMANY
82.20m
1
3,322,147m
1
40,415
13
FRANCE
64.50m
3
2,560,255m
3
39,694
14
ITALY
59.50m
5
2,104,666m
4
35,373
15
SPAIN
45.20m
7
1,438,959m
5
31,835
16
GREECE
11.10m
11
314,615m
12
28,344
17
CYPRUS
0.85m
39
21,303m
30
25,062
18
SLOVENIA
2.00m
36
46,084m
24
23,042
19
PORTUGAL
10.60m
12
233,303m
18
22,010
20
0.40m
42
7,419m
32
18,548
21
MALTA
COMPARITIVE WEALTH DISTRIBUTION
IN EUROPE
COUNTRY
CZECH REPUBLIC
POPULATION
POPULATION
POS.
$ US
GDP
$ US
GDP POS.
GDP/PERSON
GDP/PERSON
POS.
10.40m
14
175,309m
19
16,857
22
ESTONIA
1.30m
38
21,278m
31
16,368
23
SLOVAKIA
5.40m
24
74,988m
22
13,887
24
HUNGARY
10.00m
15
138,388m
21
13,839
25
LATVIA
2.30m
35
27,341m
28
11,887
26
LITHUANIA
3.40m
32
38,345m
27
11,278
27
CROATIA
4.60m
27
51,356m
29
11,164
28
POLAND
38.10m
8
420,284m
10
11,031
29
TURKEY
70.60m
2
663,419m
9
9,397
30
ROMANIA
21.40m
9
165,983m
20
7,756
31
BULGARIA
7.60m
21
39,609m
25
5,212
32
COMPARITIVE WEALTH DISTRIBUTION
IN EUROPE
POPULATION
POS.
$ US
GDP
GDP POS.
9.70m
17
44,773m
33
4,616
33
SERBIA
9.90m
16
41,679m
34
4,210
34
MONTENEGRO
0.60m
40
2,347m
43
3,912
35
BOSNIA &
HERZEGOVINA
3.90m
30
14,780m
37
3,790
36
MACEDONIA
2.00m
36
7,497m
41
3,749
37
AZERBAIJAN
8.50m
19
31,321m
35
3,685
38
ALBANIA
3.20m
33
10,619m
38
3,318
39
UKRAINE
46.20m
6
140,484m
26
3,041
40
ARMENIA
3.00m
34
7,974m
40
2,658
41
GEORGIA
4.40m
28
10,293m
39
2,339
42
MOLDOVA
3.80m
31
4,227m
42
1,112
43
COUNTRY
POPULATION
BELARUS
$ US
GDP/PERSON
Total EU
496.9m
16,840,100m
32,221
Total Non EU
183.1m
1,866,208m
16,313
GDP/PERSON
POS.
UK ACCOUNTANCY PROFESSION
LEGAL FRAMEWORK
 The Accountancy Profession – not state regulated apart from
money laundering, auditing, insolvency and financial
services (investment and financial products advice).
 Government delegates responsibility by allowing
professional bodies self regulation as RECOGNISED
SUPERVISORY BODIES (RSB). Audit Regulation is effected by
The Public Oversight Board (POB), Insolvency by The
Insolvency Service and Financial Services by The Financial
Services Agency (FSA).
 Many small accountancy practitioners are not members of
any self regulating body and they cannot participate in
audit or insolvency work and cannot be financial services
providers
 Many accountancy firms are also Auditors, Insolvency
Practitioners and Financial Services Providers. Each
discipline requires a separate regulatory permission
LEGAL FRAMEWORK
 Legally Acceptable Audit qualification are defined by
statute. UK auditors must be members of ICAEW, ICAS, ICAI,
ACCA or AAPA
 Most firms of any size in England are regulated by ICAEW or
ACCA
 Taxation services unregulated
 Advisory services unregulated
 Practices can be Sole Practitioner, Partnerships, Limited
Partnerships and Limited Companies
THE UK
THE ACCOUNTANCY PROFESSION
MEMBERS IN THE UK AND REPUBLIC OF IRELAND (2001 – 2006)
ACCA
CIMA
CIPFA
ICAEW
ICAI
ICAS
TOTAL
2001
49,085
44,979
13,192
105,804
11,196
12,870
237,126
2002
52,678
46,820
13,213
108,157
11,840
13,004
245,712
2003
54,209
48,986
13,223
110,468
12,186
13,312
252,384
2004
56,837
51,386
13,266
110,776
12,757
13,811
258,833
2005
59,059
53,697
13,317
111,114
13,523
14,255
264,965
2006
61,386
55,580
13,381
110,894
14,329
14,535
270,105
THE UK
THE ACCOUNTANCY PROFESSION
MEMBERS WORLDWIDE (2001 – 2006)
ACCA
CIMA
CIPFA
ICAEW
ICAI
ICAS
TOTAL
2001
86,929
57,616
13,471
121,356
12,515
15,042
306,929
2002
95,416
59,782
13,521
123,719
13,039
15,166
320,643
2003
98,293
62,361
13,510
125,643
13,551
15,749
329,107
2004
104,613
65,053
13,499
126,597
14,193
15,931
339,886
2005
109,588
67,670
13,565
127,826
14,973
16,388
350,010
2006
115,345
70,016
13,661
128,416
15,791
16,710
359,939
THE UK
THE ACCOUNTANCY PROFESSION
STUDENTS REGISTERED WORLDWIDE (2001 – 2006)
ACCA
CIMA
CIPFA
ICAEW
2001
173,662
75,263
2,322
10,114
2002
174,158
77,923
2,412
2003
186,902
81,590
2004
203,602
2005
2006
ICAI
ICAS
TOTAL
3,008
2,080
278,179
9,648
3,392
2,327
300,801
2,707
8,694
3,000
2,431
319,683
84,868
2,954
8,910
3,167
2,497
305,998
222,644
86,565
3,194
10,406
3,880
2,636
329,325
252,767
88,256
3,071
13,551
4,525
3,154
365,324
THE UK
THE ACCOUNTANCY PROFESSION
SECTORAL EMPLOYMENT OF MEMBERS WORLDWIDE 2006
ACCA
CIMA
Public Practice
31,143
1,400
Industry &
Commerce
63,439
49,011
Public Sector
11,534
Other
Total
Retired
GRAND TOTAL
CIPFA
-
ICAEW
ICAI
ICAS
57,787
5,211
4,678
1,229
44,945
9,316
6,851
12,602
9,152
2,568
-
668
4,613
2,100
273
6,420
473
1,336
110,729
65,113
10,654
111,720
15,000
13,533
4,613
5,601
3,005
16,694
789
3,174
115,342
70,714
13,659
128,414
15,789
16,707
ACCA PRACTICE
FRAMEWORK
• ACCA is responsible to the Public Oversight
Board in respect of Audit and to the
Department for Business Enterprise and
Regulatory Reform in respect of Insolvency
work. It takes upon itself the task of regular visits
to Practitioners wishing to be ACCA approved
employers and for those wishing to attain the
quality checked seal in respect of general
accountancy work.
• ACCA Members in Practice must hold a valid
Practising Certificate and in addition those
carrying out audit work must also hold an
Auditing Certificate, submit to regular
monitoring visits (approximately every 5 years)
and hold professional indemnity insurance.
ACCA PRACTICE
FRAMEWORK
• Strong codes regarding ethical standards are strictly
enforced but formal complaint is usually needed in order to
start the disciplinary process. This complaint can be made
by any person including monitoring officers of the
Association. The disciplinary committees are entirely
independent of ACCA and the judging panels are made up
of lawyers and lay people as well as accountants. The
Chairman is never an accountant and usually from a legal
background.
• All staff working for any accountancy practice are
individually required to comply with money laundering
regulations.
• Control of all Accountancy and Auditing Practices
monitored by RSB’s must be controlled by qualified
personnel but minority shareholdings are allowed to be in
the hands of others.
GOVERNANCE
ACCA
 Letter of Engagement guarantees ACCA
standards
 Statutory audit regulation – 5 year
inspections
 Availability of practice assurance
 Approved employer status –
internationally accepted standards helps
recruitment
CONTRACT OF EMPLOYMENT
• Employer Details
• Full Name/Date of Birth
of Employee
• Job Title
• Start Date
• Remuneration
• Hours of Work
• Holiday Entitlement
• Training Rules
• Standards of Conduct
• Confidentiality & Non
Disclosure to Others
• Restrictions After Leaving
• IT Policy
• Sickness – Statutory
Entitlement
• Working Parents
• Pensions
• Trade Unions
• Retirement
• Employment Termination
Requirements
• Grievance
• Disciplinary
• Changes in Circumstances
• Outside Interests
• GBAC Property
• Money Laundering
ENGAGEMENT LETTER
Standard terms and
conditions
 Adherence to ACCA standards assured
 Quality control
 Confidentiality
 Complaint procedures
 Investment services excluded
 Applicable law
 Declaration of commissions
 Internet communication
limitations
 Treatment of client monies
 Fees and payment methods
 Retention and access to records
 Data protection
 Money Laundering
 Limitation of liability
CLIENT ENGAGEMENT LETTER
 Responsibilities of Directors for Limited Companies
 Responsibilities of client in providing information
 Responsibilities of GBAC as accountants, auditors or advisors
 Scope of work
- scope of audit where relevant
- services to be provided
- services excluded but available
 Form of appropriate GBAC reporting
 Limitation of liability – 15 times fee (NB. The practice is covered for
any single claim of £2m. The practice has never had a claim)
 Standard terms and conditions apply
INVESTORS IN PEOPLE
 Voluntary registration
 Regular quality inspections
 Best practice must be adopted
 Enables good staff relations and quality
recruitment
CORPORATE SOCIAL
RESPONSIBILITY
 Low environmental impact profession
 Free advice for social projects and enterprises
 Endeavour to recycle all waste
 Committed to being energy efficient
 Flexible working
 Car sharing to reduce travel pollution
HISTORY &
GEOGRAPHY
history …
 Formed 1972 – Aged 28
 3 early attempts at partnership, all discontinued
within 2 years
 Sole practice since 1984
 Limited company formed April 2008
 Succession to be resolved by 31 August 2009
 Year on year organic growth
 Fees to 31 August 2008 – around £1.5m with 36
full and part time staff
THE BRITISH ISLES
BARNSLEY
STAFF
PRESENT
STRUCTURE
PRACTICE
PRINCIPAL
CLIENT
DEVELOPMENT
DIRECTOR
AUDIT
DIRECTOR
TAX
DIRECTOR
BUSINESS
SUPPORT
DIRECTOR
INTERNAL
PRACTICE
MANAGER
CLIENT
DEVELOPMENT
MANAGER
MANAGEMENT
ACCOUNTS
3
BUSINESS
PLANNING, SALES
&
ACQUISITIONS
1
PRACTICE
DEVELOPMENT
1
AUDIT
DIRECTOR
ANNUAL
ACCOUNTS
AUDITS
6
4
TAX
DIRECTOR
TAX
COMPLIANCE
TAX
PLANNING
LEGAL
COMPLIANCE
4
2
1
BUSINESS
SUPPORT
DIRECTOR
PAYROLL
& HR
2
BOOK-KEEPING
VAT
2
1
INTERNAL
PRACTICE
MANAGER
IT
& SYSTEMS
1
RECEPTION &
GENERAL
SUPPORT
STAFF
3
PRACTICE
RECORDS
BUDGET
MONITORING
CASH FLOW
1
PERSONNEL
ISSUES
typical staff budgets …
Trainee Accountant
TIME ALLOCATION
TOTAL NORMAL HOURS
HOURS
1,688
52 WEEKS LESS 7 WEEKS
HOLIDAY
= 225 DAYS x 7.5 HOURS
LESS NON CHARGEABLE:
TRAINING – INHOUSE
-WITH MANAGER
-SYSTEMS
110
18
TRAINING – EXTERNAL
-STUDY LEAVE
188
GENERAL OFFICE
46
MISCELLANEOUS
10
TOTAL NON CHARGEABLE:
TOTAL CHARGEABLE
372
1,316
Trainee Accountant
FINANCIAL EFFECT
ANNUAL SALARY
£15,000
EXPECTED FEE GENERATION
£39,480
TOTAL CHARGEABLE HOURS
1,316
HOURLY CHARGEOUT RATE
£30
BONUS PAYMENT DUE:
ACTUAL FEE GENERATION
£40,250
INCREASE ON EXPECTED
£770
BONUS PAYABLE @ 38%
£293
SALARY 38% OF EXPECTED
FEE GENERATION
Senior Accountant
TIME ALLOCATION
TOTAL NORMAL HOURS
HOURS
1,688
52 WEEKS LESS 7 WEEKS
HOLIDAY
= 225 DAYS x 7.5 HOURS
LESS NON CHARGEABLE:
TRAINING AND SUPERVISION OF JUNIORS
114
INTERNAL TRAINING COURSES
20
POTENTIAL CLIENTS
12
MANAGEMENT RESPONSIBILITIES
36
GENERAL OFFICE
45
MISCELLANEOUS
13
TOTAL NON CHARGEABLE:
TOTAL CHARGEABLE
240
1,448
Senior Accountant
FINANCIAL EFFECT
ANNUAL SALARY
£45,000
EXPECTED FEE GENERATION
£107,143
TOTAL CHARGEABLE HOURS
1,448
HOURLY CHARGEOUT RATE
£74
BONUS PAYMENT DUE:
ACTUAL FEE GENERATION
INCREASE ON EXPECTED
BONUS PAYABLE @ 42%
£108,750
£1,598
£671
SALARY 42% OF EXPECTED FEE
GENERATION
TRAINING
EXTERNAL QUALIFICATION TRAINING
 ACCA
 14 exam papers over 3 years
 3 year’s relevant experience
 Approved employer requiring regular inspections
 AAT
 6 exam papers over 2 years
 1 year’s relevant experience
 CIOT
 4 exam papers over 1 year
 3 year’s relevant experience
 ATT
 4 exam papers over 1 year
 2 year’s relevant experience
EXTERNAL QUALIFICATION
TRAINING COSTS
Course Fees
Exam Fees
Time off
(Avg. £60/day)
Sundries
TOTAL
ACCA
AAT
CIOT
ATT
11,605
4,000
1,990
1,990
728
450
275
450
8,520
2,400
1,800
1,800
200
200
200
200
21,053
7,050
4,265
4,440
INHOUSE CPD TRAINING
 8 sessions per year – 3 hours
 50:50 GBAC : Staff Time
 Updates on all relevant subjects
 Courses in 2007
 HMRC Construction Industry Scheme
 Personal Tax
 Audit & Accounts x 2
 Finance Act & Corporate Tax x 2
 Company Law
 Money Laundering
•Annual Cost circa £8,000 (less government contribution
of around £3,000)
IT
 Integrated system
 Client records
 Email and telephone
 Practice financial records
 Timesheets
 Audit files, Accounts production, Tax
 Remote access
 Move towards
 Paperless office
 Client access
RELATIONS WITH
AUTHORITIES
 Substantial recent changes within the UK Government's Treasury
function have merged the departments dealing with direct taxation.
VAT, Income Taxes and Capital Taxes are now dealt with by a unified
department known as HM Revenue and Customs.
 Moreover the local nature of tax offices has shifted toward larger
and more specialist units dealing with more specific taxation
matters.
 Local offices meant local connections and the personal nature of
relationships with the profession has almost disappeared.
 Our relationship with the authorities continues to be good but we
are very mindful that we do the best deal for our client and we hope
that this attitude earns respect rather than resentment.
RELATIONSHIP WITH OTHER INSTITUTIONS
• Relationships based upon perceived view of integrity
and ability
• Mutual recommendations are very important
• Best deal for client always gains respect and not
resentment
• Do not always accept state interpretation of legislation
• Wide range of specialist consultants
• Never afraid to say we don’t know – but we will always
find out.
FUTURE
COMPETITION, THREATS
AND OPPORTUNITIES
Threats
 Competition from other accountants
- Smaller unregulated firms - smaller clients
- Larger firms - bigger clients (Similar offering to our own)
 Expectation management of staff and clients
 Staff instability / stagnation
 Market perception of sole practitioner
 Practice Principal replacement
 Client age profile
Opportunites
Endless…
 Optimistic view of future growth
 Business plan envisages doubling of turnover over next 5
years with creation of a new office in Leeds
 Planning consents already obtained for extension to
freehold office in Barnsley
 Main focus of expansion on business advice, acquisitions
and business sales
 Increased emphasis on trainee recruitment
 Plans to transfer practice to a Limited Company giving the
facility to offer share options
future …
FEE GROWTH
• Referrals
– Clients
– Banks and professional advisors
• “The other side of the deal”
• Growth from existing clients
• Marketing not undertaken to date
• WE KNOW WE MUST CHANGE!!!
THANK YOU