We’ve been consulting with practitioners across the country. What did you tell us?
Executive summary ACCA UK’s Practitioners' Network has been holding focus groups around the country with practitioners since 2002 at the request of ACCA’s Council. These focus groups enable us to keep in touch with practitioners, spread the word about how we support them, and gain valuable information to share with other departments.
To facilitate benchmarking, focus groups are held annually in five locations, and then further focus groups rotate every year between two or three locations. In 2016, focus groups were held in Birmingham, Manchester, London, Leeds, Bristol, Milton Keynes, Nottingham, Exeter, Chelmsford, North Wales and Glasgow.
The key issues and points raised were:
The national economy is mixed – for example Birmingham, Exeter, Nottingham and Milton Keynes are booming; Leeds, Manchester and Bristol are improving; London is stable; but North Wales and Glasgow are still struggling. There are geographical factors involved – high rental and living costs in London; and planning inspectors making property development in Birmingham more difficult – that are causing the economy to flatten in those locations.
Where the economy is finally improving, barriers to growth – mostly relating to the national minimum wage, employment law and government regulation such as auto-enrolment - are preventing owner-managed businesses from taking on staff and moving up to the next stage. Companies that are willing to take on more staff are finding themselves unable to do so due to a labour shortage. Practices themselves are unable to grow despite there being plenty of new clients available because they cannot recruit staff to service potential clients.
A potential Brexit is a concern in London, Leeds, Exeter and Milton Keynes where attendees fear a loss of overseas investment,and international companies moving their European headquarters out of the UK. The economy feels finely poised at the moment and a vote to leave Europe could result in a downward turn.
Access to finance
Banks are lending again in some locations but only very carefully and after significant amounts of information have been provided. Even where such information is provided, banks are refusing to lend in some locations unless the business has a long trading history or significant capital. Overall there is some lending but it is extremely cautious.
Alternative finance is widely used in some locations such as Milton Keynes, Exeter and Bristol - in Milton Keynes it is the only source of finance – but in other locations it is mostly self-funding if any finance is needed. Finance is not sought in some locations where businesses are either cash strong or do not wish to borrow because of uncertainty about the strength of the economy and the future.
Feedback at this year’s focus groups was very similar to last year – in most locations there are still some auditors but a significant number have withdrawn from audit – mostly because they no longer had the critical mass of audits to make the cost of audit work justifiable, but also because many clients do not see the value of an audit.
A minority of practices have seen the potential and are building up their audit portfolio by picking up audits from those exiting the audit field or from mid-tier firms, but it is seen as a specialist field of work now. Audit automation software has made audit work easier and less time-consuming, removing the need for bespoke software.
The difficulty training or recruiting audit staff has become more acute in the past 12 months and is now a bigger concern than at last year’s focus groups. .
The feedback from this year’s focus groups was similar to last year with continued deterioration of service from HMRC. In some locations, the time spent dealing with HMRC and the mistakes it makes with clients is considered the biggest issue facing practices that do not feel that they can charge clients for such work. Repayments are taking too long and HMRC will not offset tax liabilities against refunds due. HMRC is quick to call in the bailiffs even when there is no proven tax liability – in the worst cases, HMRC has been reported to the police for attempting to obtain funds by deception.
HMRC’s proposals for quarterly tax returns and making tax digital are causing serious concern given its inability to function now. Practitioners want agent online prioritised so that they can do tax work for clients more efficiently, and they need to be able to communicate with HMRC through more dedicated agent helplines and email communication.
Students and recruitment
Very few practices now recruit graduates because they cannot compete with the Big Four for them. Some practices would prefer graduates because of their perceived maturity and readiness to enter the working world but graduates are snapped up by the biggest practices. The bias towards recruiting school leavers last year has now become the preferred option. Many practices consider it the only option given the difficulty recruiting graduates and it brings the benefits of lower salary expectations and the ability to mould the recruit to the needs of the practice. However, some practices caution against recruiting too many school leavers – parents and schools want children to go to university and school leavers require different support to graduates because of their lack of maturity. There has been a significant increase in apprenticeships in practices over the past 12 months, and some work placements are being offered.
As with last year, recruitment was cited as being difficult in every location with qualified staff being virtually impossible to recruit. Some locations have said that recruitment is their biggest concern, and the inability to recruit suitable staff is preventing practices from growing.
As with previous years, unqualified accountants are a source of annoyance at best and competition at worst. There is still a strong desire for protection of the term ‘accountant’ or, in the absence of that, education of the public as to the difference between qualified and unqualified accountants. The focus has moved on slightly this year with some locations questioning the value of protecting the term ‘accountant’ as the profession needs to move towards being business advisers rather than number crunchers.
Support from ACCA
The technical advisory helpline is considered in some locations to be the best resource that ACCA provides its practitioners. The free tools that ACCA provides – such as model accounts – are very useful and practitioners would welcome more tools and checklists.
In some locations, ACCA was asked for benchmarking information so that practices can make an informed decision on where to position themselves in the market place in terms of fees. ACCA could also help practices save research time by providing information on what professional indemnity insurance should cost, the cost of different software packages, and suitable hardware.
Succession planning has become a concern in the past year and there is a dual role that ACCA could play in educating its members – information on exit options should be given to members nearing the ends of their careers whilst the benefits of partnership should be sold to younger practitioners.
Marketing activity and social media
Word of mouth continues to be the biggest source of new work and is the preferred method of gaining clients. However, the use of social media is seen in an increasingly positive light in some locations where it is seen as a means of brand promotion rather than a direct marketing tool. More practitioners are embracing it and writing blogs, tweeting, and maintaining a social media presence. The majority of practitioners are still unable to find the time to do it properly but most see some value in it.
ACCA’s monitoring regime
The attendees were largely positive about ACCA’s monitoring regime and the majority had found their monitoring visits to be constructive and useful.
ACCA should run an education campaign on succession planning that provides information on different exit routes and sells the role to younger practitioners. It should also partner with finance providers so that incoming partners can finance the purchase of goodwill.
Advisory and consultancy work is widely regarded as the future for practices and ACCA needs to position practitioners as sellers of planning services.
Members feel that ACCA has a responsibility to stand up to HMRC on their behalf. If HMRC will not listen to ACCA and the other professional bodies then ACCA should consider leveraging the press to encourage HMRC to improve its performance.
Attendees would like specialised or practical training - attendees want practical CPD from which they can take away skills to apply to their jobs.