What has been happening in the accountancy profession
Demand for accountancy services is affected by the health or otherwise of the economy - during times of recession many clients become bankrupt and survivors reduce the amount they spend on accountancy services to a minimum. The recession years of the early 1990s hit the accountancy profession hard, although the late 1990s and most of the 2000s saw much higher levels of demand. However, the severity of the recent long-running economic downturn badly affected demand for accountancy services. Many practices had to discount their fees and suffered from a fall in the number of clients.
The economy picked up quite strongly during 2014 and into the first half of 2015 before slowing again in the second half of 2015, through 2016 and into 2017. The vote in June 2016 to leave the EU added further uncertainty to the economic outlook. Growth is expected to remain low through 2018 and 2019 so the profession can expect to continue to suffer from clients putting downward pressure on fees.
As well as suffering a decline in demand for their services during the recession, a degree of overcapacity in the profession arose due to:
- a reduction in the time spent on routine compliance work because of increasing computerisation
- the entry into the market place of new businesses offering accountancy services. Many of these offer online-only services for a fixed fee or subscription
- the raising of the audit threshold so that fewer companies need auditing services
Despite this, research in 2015 showed an increasing demand for graduate entrants into the profession, and increased starting salaries.
Today's clients demand a high quality service from their accountants and it's very important to make sure that you have the skills and expertise to offer an efficient and professional service. The quality of the service provided by accountants is subject to the oversight of the Financial Reporting Council (FRC), an independent body set up in 2012 to put in place, monitor and enforce audit and accounting standards and to monitor the way in which the professional accountancy bodies regulate their members. The audit sector faces increasingly stringent regulation aimed at improving standards and, as seen following the collapse of Carillion in January 2018, the FRC is prepared to investigate the audit work of the largest firms of accountants, as well as the smallest. There are more and more calls for big accountancy firms to separate their audit and consultancy services.
Since the beginning of 2004 the accountancy profession has had to comply with the requirements of the Money Laundering Regulations which require practices to put in place anti-money laundering systems; appoint a Nominated Officer; keep records of all transactions; report to the National Crime Agency (NCA) any suspicions that money laundering has taken place, and train staff. New Regulations introduced in 2007 oblige accountants who are not supervised by the Financial Conduct Authority (FCA) or a professional body - like the ICAEW - to register with HM Revenue & Customs (HMRC). New Money Laundering Regulations introduced in 2017 have tightened up the current anti-money laundering procedures and at the beginning of 2018 a new anti-money laundering body, the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), based within the Financial Conduct Authority, became operational. OPBAS oversees the activities of the anti-money laundering supervisors in accountancy and is charged with improving standards and penalising those who don't comply with the anti-money laundering regulatory regime.
Since the end of 2011 alternative business structures (ABS) have been allowed for legal firms, meaning that accountants can now join solicitors in multi-disciplinary practices. This may provide opportunities for the accountancy profession to reduce costs and increase fees - particularly important during periods of economic downturn. In January 2018 the LSB gave approval for the ACCA to begin authorising probate activities.
In April 2014 HMRC introduced new tax rules for limited liability partnerships. These affect salaried partners who may in some circumstances now be treated as employees for tax and National Insurance Contributions (NICs) instead of being self-employed.
The introduction of Making Tax Digital (MTD) will mean that your clients' records will have to be maintained digitally and returns will have to be made to HMRC on a quarterly basis. You will need to be familiar with the software needed to meet HMRC's requirements under MTD. You will also need to decide whether you will offer bookkeeping services to your clients and whether you will need additional staff to deal with this.
Keep up to date with developments
The four main professional accountancy bodies regulate the activities of their members and also provide a great deal of information and support. The bodies are:
- the Institute of Chartered Accountants in England and Wales (ICAEW)
- the Institute of Chartered Accountants in Scotland (ICAS)
- Chartered Accountants Ireland
- the Association of Chartered Certified Accountants (ACCA)
There are several professional journals such as:
- Accountancy Daily and Accountancy magazine published by Croner-i
- Accountancy Age published by Contentive Ltd, 1 Hammersmith Broadway, London W6 9DL
- economia published by the ICAEW
Organisations such as SWAT UK offer a range of services to accountancy practices to help them to comply with regulation and to improve profitability. Visit the SWAT website for details of the services available.
The Accounting Web website contains a wealth of information of interest to the profession.
The Gov.uk website contains detailed guidance on complying with the requirements of the Money Laundering Regulations.