HOW DOES A firm govern itself?

We know it's not easy. As Gary White, one of four partners involved in managing Essex-based practice CBHC, puts it, the firm ends up "run by player-managers".

The analogy works like this: As a player manager you've got to do the business on the pitch, and off it. For a fee-earning partner, it's tremendously difficult to look after clients and then make sure the firm runs smoothly. And as Gary put it openly to me: "At £3.5m revenues per year we can't justify having someone not earning their way."

CBHC's answer was to recently appoint a chairman. But to stretch the analogy to appointee Jeremy Allen - he's more Fergie than Christian Gross by pedigree and impact.

Allen spent 19 years at Dresdner Kleinwort, where his work in equity markets saw him build up an understanding of how companies differentiate themselves from competitors, and grow.

Having served as a consultant at the firm for six months, Allen helped strip out £500k in costs from the practice.

Now he will spend four days a month managing and coaching the board.

My big question was how does an outsider in this situation drive practice owners to do what he tells them to?

White says that Allen's vast experience, neutrality and already-proven record with the practice effectively makes the owners accountable to listen and act on his ideas.

"We're four equals with a part-time CEO," says White.

The importance of external advice is one I fully advocate for firms. Governance isn't the preserve of the top businesses ironically, that's what clients expect from their accountants.

Firms of different shapes and sizes will require different models to that of CBHC's. but it's surely worth considering.

Image credit: Shutterstock

GREAT TO SEE the ICAEW taking an aggressive, some might say patronising, tone in letting the Law Society know in no uncertain terms that it must not restrict the onset of multi-disciplinary practices (MDPs).

The Law Society, don't forget, is led by Des Hudson (pictured). I've always found him very amiable, feisty and determined. The ICAEW might agree - in part - with me, having received a bloodied nose from him as ICAS boss.

Back in 2005, with Des at the helm, ICAS enlisted Scottish first minister Jack McConnell to protest against the English institute's proposed change of name to the ICA.

But that's history, as much as ICAEW v Des Round Two would make for great stories.

Much more interesting is the subtext of the ICAEW's letter to the Law Society.

The institute has so far been thwarted in its efforts to extend legal professional privilege to tax advisors' clients. Lawyers will often use privilege as a USP to win tax clients ahead of accountants.

But it seems that allowing lawyers and accountants to work together in partnership will set off the next phase of the privilege battle. It seems there is concern that accountants will use MDPs as a backdoor for gaining privilege.

Whether this is true or not, pushing the society to water down any attempts to fend off lawyers and accountants working together is a smart move.

The Law Society will be on a sticky wicket if it goes against the intention of the Act by making it difficult for the two professions to work in MDPs. Let's face it, the two often work together as it is.

With the Joint Committee having already called for a review into how privilege would work in MDPs when the Act was at Bill stage, it's clear that the institute has some grounds for sticking to its guns.

It may have lost some fights, but an ICAEW rematch with Des Hudson might merely be an eliminator to take on the government for the title.

IN CASH-STRAPPED TIMES, the pressure on accountants to overstep the mark for the sake of retaining revenue streams is stronger than ever.

Maintaining objectivity and independence is key for auditors. At the highest level, firms are facing the strain of market intervention, despite their protestations that the quality of their work is in no way diluted by offering non-audit services to existing clients.

At the other end of the market Accountancy Age, professional bodies and business lobbyists extol getting as close to clients as is acceptable, providing them, their suppliers and lenders with assurance regarding their finances - and to help steer them through the travails that smaller businesses perennially face.

So I have some sympathy regarding the plight of two accountants, whose firms have been disciplined for finding themselves beyond 'ethical thresholds' of reliance on clients - or in other words, they looked after clients who represented too large a proportion of their firms' respective fee income.

The thresholds are in place to warn firms off from becoming too reliant on any one client, and prevent placing their independence at risk.

The vast majority of firms have enough on their plates holding onto clients, or being paid by those who do stay with them.

So it's a tough situation, and very tempting to hold onto the client and in your own mind believe that independence is not affected - while also trying to win other clients to dilute the existing clients' effect on overall fee income.

But for the profession to maintain its lofty status, even the smallest firms have to be strong, brave and recognise that independence and objectivity is key - the perception of the profession and its vaulted status is at stake.

It will be interesting to see how the world's biggest firms deal with this in their negotiations and lobbying to water down current EU proposals to break them up.

Whatever the outcome, will they end up with their heads held high, or give off the perception that they've merely fought to hold onto all that's dear?

Interesting times indeed.

NICE TO SEE PwC resisting putting the boot in after retaking its position as the largest global firm by revenues.

In a Q&A provided to journalists today, which is in no way an attempt to save hacks from having to come up with their own questions, PwC asks: "Is PwC again the world's largest professional services organisation?"

The answer...? "Yes."

More interesting was PwC's description of last year's results, where Deloitte pipped the firm to number one spot by a mere $9m.

"However, because of the slim margin, fluctuations in foreign currencies and how the organisations report their revenues, the difference in total global gross was difficult to determine accurately. This year, given the US$400m difference in reported revenues, the ranking is clear cut."

In other words, 'last year we might have been number one anyway, this year there's no doubt'.

Ouch - put the claws away guys.

HOW FAR would you go to help your clients?

Would you hold their hand - or go all the way?

One advisor prepared to get up close and personal is Bobby Lane of Shelley Stock Hutter.

His idea of what constitutes client service is one that goes beyond what most practices would offer - even those that consider themselves as fully attentive.

For him, advisors should do everything they physically can to enable their clients to focus on the job in hand.

As an example, Lane tells of four hairdressers looking to set up a salon. Lane and his team not only managed the tax and accounting compliance issues that arise with setting up a new business, but arranged the property lease and shopfitting.

The haircutting was left to the hairdressers.

Lane's thinking comes from his unusual background. Trained at a big firm, then into commerce in a number of finance roles, before heading back into practice.

His commercial experience has left with a strong contact base and clear idea of the help that SMEs need.

Lane feels that more practices should attempt to entice accountants back out of commerce and use them to provide a deeper range of services to clients.

Anything that advisors can do to leave clients to get on with the day job is good.

But for more practices to go down this 'complete business service' route is easier said than done, I fear.

For starters you've got a whole range of stakeholders who need to buy into the plan. The senior partner, of course. Other partners would need to let their clients loose with the newly-formed 'business service division'.

You'd then need to find the right people to do the job. Recruiters would need to be really well briefed, and even then they might struggle to get the message across to those on their books to 'come back into the fold'.

Any change is difficult to push through, particularly in firms. But I can't help feeling that Bobby Lane has the right idea on this.

SO IT'S THE END of the beginning for overhaul of the audit market. Some will argue it's the beginning of the end.

Current proposals from the EU, according to a draft seen by Accountancy Age, include pushing the biggest firms down an audit or non-audit path, mandatory rotation of auditors and joint audits.

Whether this will sate those that say auditors aren't independent enough - or constrained by legislation - to understand and state the risks facing their clients, we shall have to wait and see.

We can expect, shall we say, 'intense lobbying' from the biggest firms to prevent a situation where they have to divest either their audit or advisory businesses.

But the quietest group (with regards to a public voice) - the FDs who work with the firms - would do well to step forward.

The changes are likely to see increased cost on the firms - more tendering for example. And the clients are likely to be on the receiving end.

Most FDs we speak to seem quite satisfied with their auditor, and how firms' close knowledge of them as a client enables them to provide strong advisory services. Critics of auditors would no doubt suggest this 'relationship' is by definition too close and the root of concerns.

The big issue is two-fold: whether making changes to the market will satisfy investors and regulators that the auditors are independent; but more importantly will this independence produce the kind of rigour and checks that might have helped prevent the financial crisis?

Creating a stronger impression of independence could make it even more difficult to place any blame at auditors' feet when a company collapses. And if the answer is no to the second part - as is argued by some who say there is no hard evidence linking auditors to banks' travails - is it still worth taking such drastic action?

THE LATEST RANKING of auditors by Hemscott provides a nice marketing opportunity for Crowe Clark Whitehill.

The Top 20 firm has muscled its way into Hemscott's elite ranking of FTSE 350/AIM auditors by number of clients.

Q3 2011 shows CCW have a net gain of eight audit clients, bumping the firm into ninth place, from 13.

It could well be argued that the move of five former Mazars partners to CCW are the key reason for this shift. Mazars, for the record, lost a net five clients during the quarter and moved from ten in the rankings to 11.

But the key will be how CCW moves forward. Are the gains a one-off?

Possibly. But I'm sure that CCW will think otherwise, and will use their new talent pool and expertise to drive more wins.

So how are Mazars? OK, if you look at the numbers. The firm argues that its market cap of clients has held up, and has new clients lined up.

Still, interesting to note that Mazars has hired PR giants Weber Shandwick to help push out some messages.

We've more to hear from both firms, no doubt about that.

WHAT PRICE a house owners' amnesty??

The taxman is acting as a 'hired gun', providing mortgage lenders with an 'assurance service' by validating some mortgage requests against the individual's tax return. The idea is to cut down on mortgage frauds.

But it appears a very small step for the taxman to take to use such requests to analyse whether the individuals have ducked income tax or CGT through owning more than one property.

HMRC certainly didn't shoot down my suggestion. When put to the taxman a spokeswoman replied in a statement: "HMRC uses many sources of information as part of its risk assessment processes, and information provided to HMRC by lenders as part the MVS will naturally feed into this.

So, as the opening line says, house owners' amnesty anybody?