Whether it is taxation or technology, the world of accountancy never seems far from disruption. Rumblings about conflicts of interest in the area of company audits/consultancy roles are another source of controversy in the profession.
Scott Knight, head of audit at BDO, the UK’s sixth largest audit firm, is the latest high-profile operator to contribute to the audit fee debate.
He wants to see more restrictions on the range of services auditors offer clients.
Audit fee rules change
The issue is that auditors can be tempted to overlook client difficulties so that they can continue raking in the high fees from other services, such as tax advice, that they provide for the same client.
The EU tried to address the problem in 2016 with new regulations restricting non-audit fees.
But Knight says there are too many grey areas. “The rules are too confusing and it’s too easy to trip up. I would love there to be a really clear black line. The rule should be if you do the audit, you can only do audit and audit-related work. Audit committees should have a really clear demarcation,” he tells the Financial Times.
Failed construction group
The issue came to light recently with the Carillion collapse. Each of the Big Four accounting firms, EY, Deloitte, PwC and KPMG, had provided non-audit services to the failed construction group.
Prem Sikka, professor of accounting at the University of Essex, agrees with Knight.
He tells the FT: He said: “Instead of 125 pages of verbal gymnastics we need a very simple rule — that auditors should act exclusively as an auditor — and that means no consultancy services of any kind for audit clients.
Leads to unfair competition
“That rule should apply to public and private companies, though small and medium-sized businesses could be exempt.
“The provision of non-auditing services by auditing firms leads to unfair competition. Auditing firms have used audits as loss-leaders in the hope that having got a foot-in-the-door, they will then secure lucrative non-auditing work.
“This is an abuse of the external audit function and disadvantages those businesses who cannot use audits as a market stall for selling other wares.”
Sponsors for the British Accounting Marketing Awards
The first British Accounting Marketing Awards, which will feature at Accountex in just three weeks, will be sponsored by MyFirmsApp.
The awards will showcase the best marketing from accounting firms across the UK and recognise those that that have made the biggest impressions and impact over the past 12 months.
Experts from accounting and marketing industries will form the judging panel and include:
- Steve Pipe, speaker and marketing strategist.
- Richard Woods, digital marketing specialist and BBC Apprentice finalist.
- Kelvin Golding, CEO MOST Marketing.
- Steven Briginshaw, business coach and mentor.
- Gary Das, entrepreneur.
- Zoe Lacey-Cooper, Accountex event director.
Winners to be revealed at Accountex
The winners will be announced at Accountex, the accounting profession’s leading exhibition for accountants on Wednesday, 23rd May 2018.
“This is the first time that the profession will be able to see what others are doing in terms of pro-active marketing to win new clients and raise the profile of their practices,” commented Joel Oliver, CEO, MyFirmsApp. “Sharing best-practice and what really works will make a huge difference to accountants that want to develop their marketing potential.”
Amanda C Watts, the founder of TwentyTwo Agency and the British Accounting Marketing Awards says: “Marketing can seem like something that has not been needed in the profession to date, as many firms have chosen to just rely on referrals.
“However modern marketing enables you to build deeper relationships and trust with prospects and clients. I saw a massive gap for Accounting Practices to be recognised for their hard work and dedication.”
