Accountants - qualified or not?

[ContrataxLtd]

The debate will run and run as to whether or not having a 'qualified' accountant brings anything extra, you can have good and bad qualified accountants just like you can have good and bad non qualified accountants.

One of the big safety nets (from a clients perspective) which is often overlooked is that as a qualified firm you have to hold specific levels of professional indemnity insurance based on turnover level, level of single biggest client fee etc. which means that if, as a client, you were to receive terrible advice that cost you money you have a backstop that should pay out if the firm wouldn't etc.

As an unqualified firm you don't have to hold professional indemnity insurance so could in theory just shut up shop and spin up a new company in the event of a big claim.

HTH

Martin
Contratax Ltd

[WordIsBond]

It's another thread not far from here that raised the question in my mind - exactly what protections does having a chartered firm and/or individual provide the client?

Interesting. My thoughts after last night ran along exactly these lines, as you can see by my latest comment in that other thread.

So we've seen that chartered accountants have ethical standards they have to abide by. Does that include checking the identity of people they hire and making sure they aren't notorious in the community they purport to serve?

[Maslins]

I definitely prefer the "small contractor specialist" model, but was surprised to see that quite a few firms are not chartered.

Hmmm...could be a bunch of reasons. I have moments when I toy with the idea of giving up my chartered-ship. Would save on a lot of hassle, and a bit of cost...plus do clients really give a toss if we're a firm of qualified accountants or not? Most wouldn't have a clue. My mum would be very disappointed in me if I did give it up tho!

It's another thread not far from here that raised the question in my mind - exactly what protections does having a chartered firm and/or individual provide the client?

You have someone to complain to, who can potentially take disciplinary action against the firm. I believe this is only relevant if the firm itself is chartered/equivalent, not just if one/some employees within the firm are.

From a very practical perspective, not a great deal. Plenty of unqualified folk in a wide variety of industries could do a decent job. I guess it's mainly if things go wrong, is there a regulatory body that can do something about it.

[Fred Bloggs]

Thanks - interesting stuff.

I definitely prefer the "small contractor specialist" model, but was surprised to see that quite a few firms are not chartered. It's another thread not far from here that raised the question in my mind - exactly what protections does having a chartered firm and/or individual provide the client?

A code of professional ethics and (in theory anyway) a route for serious misconduct to be punshed by striking off the professional bodies register.

Note that doesn't mean it stops you being and engineer or an accountant. It just means you can no longer be a registered professional in that discipline.

[mudskipper]

It's a massive topic...for accountants.

Qualified staff (ie chartered/chartered certified accountants) are expensive. There's certainly a school of thought that with a streamlined accountancy firm, you can "get away with" having mostly unqualified staff, who don't know much, but can point clients to guides written by those who do. This enables a very cheap service, which can either lead to low fees, or perhaps just high profits for the firm. If your needs are very standard, this will often work out ok for you. However, it's when a curveball is thrown in that those qualifications and years of experience can be worth their weight in gold.

Re the firm, typically you need at least X% of the directors/partners/whatever to be qualified (and a handful of extra hoops) for the firm to count as qualified. Being "a firm of chartered accountants"/similar does bring with it extra responsibilities. Perhaps most notably surrounding ethics. A very practical example is getting kickbacks from recommended third party suppliers. Often the bigger firms that aren't registered with one of the relevant bodies (though may well have some staff who individually are) will be milking their clients for extra cash via commissions. It can be a lucrative area, though a very sad one IMHO. We've all heard the phrase "if you don't pay for the product, you are the product", well some big contractor accountancy firms do a great job of both making you pay for the product and be the product that they can make money from too.

Sweeping generalisation, but I would anticipate most of the smaller firms will be better qualified overall. They're likely to be set up by a qualified accountant who's earned their stripes, and wants to go it alone. As they grow, they may well get on supporting staff who are unlikely to be qualified to help with donkey work...but those staff will gain experience, and hopefully be put through exams, to become the qualified accountants of the future. Smaller firms will be run more like traditional professional service firms. Client happiness and ethics being central.

Again sweeping generalisation, but bigger firms will be run less like professional service firms, more like businesses. Profit is central, client/staff satisfaction is secondary at best, ethics are out of the window. They will spend far more than smaller firms (even in percentage terms) on marketing. They'll have a snazzy website and a smooth talking sales team, so they'll continue to dominate. Rapid growth is great, as then you can sell out to a VC in a few years. Staff and clients are unfortunate collateral damage...but who gives a stuff about them when the shareholders win big.

At the end of the day, does a contractor need their accountant to be qualified? On the whole, no (a few niche exceptions, eg mortgage references a common one). Whilst inevitably there are some shoddy qualified accountants out there, and even great accountants will cock up from time to time, it should guarantee a minimum level of competence and ethics.

Thanks - interesting stuff.

I definitely prefer the "small contractor specialist" model, but was surprised to see that quite a few firms are not chartered. It's another thread not far from here that raised the question in my mind - exactly what protections does having a chartered firm and/or individual provide the client?

[Fred Bloggs]

I am not an expert here but I draw parallels with my own professional body -

Anyone can call themselves an accountant (or engineer)
It is an offecnce to call yourself a chartered accountant unless you hold current professional acceditation (or chartered engineer likewise)
Chartered Certified Accountant, Chartered Management Accountant, Chartered Public Finance Accountant etc.... Same thing.

Where I believe the accountancy profession differs from engineering, is that partnerships or companies who have chartered accountants can style themselves as chartered accountants. Yet many/most of the staff working there may never be finance professionals in any way. This cannot happen in engineering. For example - Fred Bloggs Consulting Engineers Ltd could exist with no professional engineers in the company. But the Ltd Co cannot publicly style itself as chartered engineers even if the owner is a current engineering professional (I think).

It's a fairly complex situation, but I should think there are many accountancy practises out there with no current finance professionals employed there. Incidentally, that may by no means mean that the company isn't competent. Likewise Fred Bloggs Consulting Engineers, the same. There's loads of back street ABC Engineers Ltd, that have no professional affiliation at all. Some are good, some are bad. C'est la vie etc....

IANAA and I welcome any finance professionals clarifying what I said above, as required.

[Maslins]

It's a massive topic...for accountants.

Qualified staff (ie chartered/chartered certified accountants) are expensive. There's certainly a school of thought that with a streamlined accountancy firm, you can "get away with" having mostly unqualified staff, who don't know much, but can point clients to guides written by those who do. This enables a very cheap service, which can either lead to low fees, or perhaps just high profits for the firm. If your needs are very standard, this will often work out ok for you. However, it's when a curveball is thrown in that those qualifications and years of experience can be worth their weight in gold.

Re the firm, typically you need at least X% of the directors/partners/whatever to be qualified (and a handful of extra hoops) for the firm to count as qualified. Being "a firm of chartered accountants"/similar does bring with it extra responsibilities. Perhaps most notably surrounding ethics. A very practical example is getting kickbacks from recommended third party suppliers. Often the bigger firms that aren't registered with one of the relevant bodies (though may well have some staff who individually are) will be milking their clients for extra cash via commissions. It can be a lucrative area, though a very sad one IMHO. We've all heard the phrase "if you don't pay for the product, you are the product", well some big contractor accountancy firms do a great job of both making you pay for the product and be the product that they can make money from too.

Sweeping generalisation, but I would anticipate most of the smaller firms will be better qualified overall. They're likely to be set up by a qualified accountant who's earned their stripes, and wants to go it alone. As they grow, they may well get on supporting staff who are unlikely to be qualified to help with donkey work...but those staff will gain experience, and hopefully be put through exams, to become the qualified accountants of the future. Smaller firms will be run more like traditional professional service firms. Client happiness and ethics being central.

Again sweeping generalisation, but bigger firms will be run less like professional service firms, more like businesses. Profit is central, client/staff satisfaction is secondary at best, ethics are out of the window. They will spend far more than smaller firms (even in percentage terms) on marketing. They'll have a snazzy website and a smooth talking sales team, so they'll continue to dominate. Rapid growth is great, as then you can sell out to a VC in a few years. Staff and clients are unfortunate collateral damage...but who gives a stuff about them when the shareholders win big.

At the end of the day, does a contractor need their accountant to be qualified? On the whole, no (a few niche exceptions, eg mortgage references a common one). Whilst inevitably there are some shoddy qualified accountants out there, and even great accountants will cock up from time to time, it should guarantee a minimum level of competence and ethics.

[mudskipper]

... yes I've done a search and found a similar question I asked before

https://www.contractoruk.com/forums/...heir-name.html


But this question is different - it's more about the firm rather than the individual.

[NLUKbot]

10 PRINT "Have you asked your accountant?"
20 GOTO 10

[mudskipper]

Is it important to have a qualified accountant?

Doing some googling, it appears some of the smaller firms are not chartered (and don't claim to be on their websites). Looking back over the accountants I've used over the years, most individuals appear to call themselves "client manager" or similar - they don't claim to be qualified accountants. The firm I'm with at the moment is Chartered although my accountant does not appear to be - I assume that must mean they have at least one qualified accountant working for the firm, but also means their covered by regulations and have "something to lose" if it goes wrong. Some are chartered tax advisers rather than chartered accountants.

It seems anyone can call themselves an accountant and set up an accountancy firm.

If you're happy with the service and advice, does it matter? Keen to hear constructive views.

Find A Chartered Accountant