06 Feb 1997
Douglas Llambias' remarks on the English ICA's constitutional review (News, 23 January) - 'I support 80% of the recommendations, but there's not a hope in hell of them happening' - are disturbing.
Disturbing because the English ICA Ginger Group feels Mr Llambias is probably right in believing the institute will find ways of not following the recommendations which we broadly welcome.
We are satisfied that the Gerrard review has been carried out independently, and believe the proposals show a clear-sightedness not apparent in most recent English ICA pronouncements.
We are even pleasantly surprised that the cost of the review is only u40,000. We thought that Gerrard had been given a blank cheque and feared much greater damage. Indeed, if the proposals are carried out, the cost savings may make the u40,000 seem like chicken feed.
The move to make the BCAB redundant is welcome, as it puts the emphasis on faculties that are popular with members. It is difficult to see why we need BCAB and faculties at all.
Similarly, stopping the central funding of district societies is to be applauded. These bodies should become self-financing.
Again, we like the idea of regular professional polling of a random sample of members, if the questions are not loaded and the answers manipulated.
Perhaps the Ginger Group could be employed to help in ensuring objectivity?
However, there is no real substitute for sounding out the whole membership at least once a year as part of the agm proceedings. For a start, the individual proposals of the Gerrard review should be the basis of a questionnaire to all members at the next agm.
These decisions are much too important to be left to the English ICA which is as much out of tune with its members as it ever was.
English ICA Ginger Group, London
Accountants too can learn from non-executives
While I agree with much of Michael Snyder's article (Opinion, 23 January) on the benefits to small companies of employing non-executive directors, accountancy practices should also be looking at their own businesses for such management guidance.
Most firms are in the small to medium-size range, but very few have an independent voice to provide practical advice on how to run their practices more efficiently.
We have been advising firms to appoint a non-executive 'partner' with extremely positive results and can confirm that firms which employ such people do have significantly higher profit margins.
Firms, however, are reluctant to adopt this measure. They may feel that the returns will not justify a modest investment or think they know how to run their practices without outside help.
This may be so in a very small number of cases in well-run firms, but firms do need someone, preferably with the knowledge of running a larger organisation.
A whole range of issues can be addressed by someone independent of the day-to-day work of a firm allowing for concentration on bottom-line improvements.
Small practices want the audit to be abolished
John Malthouse (Letters, 5 December) fails to offer any reason for maintaining the audit apart from the fact that suppliers may want audited accounts.
He rightly states they add no value at all to clients' businesses and, actually, accountants are selling them something they do not require.
He also ignores the fact that suppliers could always request audited accounts if needs be.
I would be interested to know if John Malthouse in auditing his accounts has ever found anything that would materially change the accounts being sent to Companies House. What difference would it have made if the accounts had remained unaudited?
Is he suggesting that unincorporated businesses be given no credit? It is all very well saying that the proprietor is personally liable, but if they are strapped for cash what use is that to the unpaid supplier?
Also, what happens to a business from the time it starts up to the time its first audited accounts are submitted? Is he suggesting that no credit be allowed at all? That would be a tremendous blow to people looking to get new businesses off the ground.
I would also draw Mr Malthouse's attention to the fact that if you form a limited partnership between a sole trader and a limited company, making the sole trader the limited partner and the limited company the unlimited partner, you will achieve the effect of limited liability.
However, the audited accounts of the limited company, if it were say a 2% partner, would not reflect what is going on in the business and the client would have achieved the best of both worlds while the suppliers would end up having gained no information.
John Malthouse is quite wrong. The majority of small practitioners wish to abolish audits and quickly. We did not qualify to become form-fillers and pen-pushers, filling in rain forests of paper to satisfy Joint Monitoring Unit inspections before rubbing our hands in pride to say what a great audit job we've accomplished. It is about as useful as an army which spends months polishing its boots, but does no weapons training.
SPA gives itself away on lifting the audit limit
Peter Mitchell, on behalf of the Small Practitioners Association, has been a vociferous advocate of lifting the audit threshold to the small companies level. Now the real reason for his campaign is out.
The association's latest mailing makes it clear. It says that SPA members believe statutory audit and 'the presence of JMU monitoring activity should both commence at the small company threshold'. The motion they want to put forward to the Audit Practices Board and Deregulation Committee says 'any small non-public interest company, as defined by the Companies Acts, may elect not to be subject to a statutory audit, in place of which a suitably worded qualified accountant's report would be provided, and that such limited companies should be exempt from JMU monitoring activity'.
Now we know what all the fuss is about. SPA members simply want rid of the JMU. They just don't want to be auditors.
Not that there's anything wrong with that, but Mr Mitchell should come clean and leave the rest of us to carry on providing a high standard of work and care to our clients.
SPA members seem to want to do the work among small companies but avoid the responsibilities. Since this is the case, why don't SPA members just resign their audit registrations. It couldn't be that they want to have their cake and eat it?
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