But it’s not all bad news. Recent developments have confirmed that the small practice continues to play a significant role in the SME economy.
First, research carried out by consultants from the Mercia Group found that 80% of exempt companies would choose to continue having their statutory accounts audited.
This does suggest that the DTI’s view, widely touted during the consultation process, that the audit fee is a regulatory burden that brought no substantive benefits, is not as widely shared among SMEs as the government thought.
Clearly, small companies have looked at the pros and cons of the audit process and are seeing merits in it, which the DTI and the Treasury could not.
Another encouraging development was the release of a comprehensive survey of the SME environment by the Federation of Small Business. When asked who was their most frequently used source of business advice, three quarters cited their accountant. Banks came second with 34% and solicitors third with 30%.
Another good sign was the satisfaction among SMEs when asked about the service from their accountants – 59% said they were either satisfied or very satisfied.
Together these figures reiterate the views borne out in previous surveys – that accountants are the primary source of business advice for SMEs.
A related development is the initiative to establish some new accreditation scheme for accountants who advise clients on sources of finance. Given the FSB findings, this could prove very significant to accountants in the future.
Contrary to popular belief, difficulties accessing finance do not currently appear to be a significant obstacle to small business start-up and growth.
Recent studies by both the Bank of England and Lloyds TSB report that finance is a constraint on growth for only a very small proportion of SMEs.
That is not to say it’s not an area worthy of long-term support from the profession. Figures across the board may suggest no problems, but there is evidence that the financial situation may not be so comfortable in specific business sectors and for particular parts of the community.
And just because SMEs say that they currently have no problems accessing finance, you have to ask whether they are necessarily obtaining the most advantageous form of finance available to them? And, of course, today’s low costs of borrowing will not last forever.
The business environment for small practices remains very competitive.
Accountants will soon have to deal with international standards and the increased regulation being brought in by the revised eighth directive.
But the indications are that the market remains very healthy.
- Send in your questions for our adviser panel of experts on matters relating to small practices by emailing firstname.lastname@example.org.
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