AIM chairman savages accountants
There is a withering assesment of the accountancy profession in today's Financial Times, from Warren Tayler, the chairman of AIM-listed direct marketing group Themutual.net.
In a latter to the paper (you can read extracts at AccountancyAge.com) he says the group's auditors have failed to explain the reasons for a trebling in fees and the need to appoint two sets of accountants.
'While many businesses have cut overhead and staff costs by the use of technology, the accounting profession, while stating that they too are moving with the times, end up greatly increasing the costs to clients,' Tayler writes.
I suspect Taylor is voicing what many of his fellow executives privately believe.
The accountancy profession, while fantastic at carving out niches for themselves as industry commentators, are appalling at discussing 'issues' that affect the profession more directly. Too often firms hide behind 'client confidentiality' when there is none at stake and point to a lack of regulation requiring them to do something as a reason for doing nothing.
Taylor also raises an interesting question: why can't auditors use the internet to update client accounts in real-time instead of wasting time and resources on client visits. A recent survey from the IAAITC suggests too many firms barely know what the internet is, having no web presence themselves and at best emailing clients from Hotmail addresses. In that light, Taylor's suggestion might be a problem, though it shouldn't be.
Damian - some of us have been voicing these concerns for many months across a broad swathe of subject areas. That's not to be negative about the profession but the sooner it stops trying to 'live the brand' and starts acting in an ethical, modern and consistent manner reflective of client needs, the less we'll see this kind of comment.
And this is nothing new. McKinsey talked about this in detail last year. Today, I have professors at Purdue suggesting the profession is on the brink of irrelevance. I sincerely hope that's not the case. There a few bright spark areas. Like one practice I know that's transforming routine work into a production line so that it can concentrate on value add. But this is a rarity.
If the profession doesn't wake up, it's going to find the work has suddenly vanished. Of all firms with an online presence, I only know of several handfuls that have dynamic websites. Most are static and hopelessly out of date or are dependent on third party 'cookie-cutter' content. It's a disgrace at a time when the country ios transforming to a knowledge basis. American online companies are coming in and stealing the work accountants would otherwise achieve. I already know of 7,000 businesses where that's happened *this year.*
What Taylor is proposing, I've discussed on a number of occasions. I can point to the technology to do it - right now. If anyone cares to listen.
Innovation isn't that hard, but unless the profession is prepared to take on a different mindset, then I really don't know what the future holds.
Posted by Dennis Howlett | September 27, 2006 7:01 AM
A few years ago there was a stink surrounding Clifford Chance's decision to set annual targets for billable hours for associates. I've not seen evidence of accounting firms doing the same (though I don't doubt it's the case and hear plenty that is anecdotal) but at conferences for small firms up and down the country these days all the talk is of the need to increase chargeable time and how to convert costs (eg marketing) into chargeable services.
Posted by Damian Wild | October 5, 2006 12:20 PM
We had targets years ago and as far as I'm aware it's still a staple at my old firm. But as a concept, the billable hour is dead. It has nothing to do with value and everyting to do with time utilisation. If you went to the garage to have your car serviced, you'd expect a menu price. Why can't you expect the same from your accountant who has been doing similar work for years?
I personally find is staggering that accountants should think they have a clue about marketing. Mostly, they don't.
Posted by Dennis Howlett | October 9, 2006 3:33 AM
Forgive me Damian but I cannot follow your thoughts. What does ” how to convert costs (eg marketing) into chargeable services” actually mean?
Posted by Stuart Jones | October 9, 2006 10:07 AM