Fat cat fee inquiry.
Firms' unwillingness to publish audited accounts highlighted in new
The Office of Fair Trading has confirmed it could examine the issue of non-publication of audited accounts by accountancy firms as part of its investigation in to possible anti-competitive practices in the profession.
The investigation, ordered by Labour into the ‘more economically significant professions’, is thought to be an attempt to root out ‘fatcat’ executives.
Leading players in the profession say published accounts would allow any authority to get a better idea of whether the profession is acting competitively by examining profit and loss reports. Currently very few firms publish their own audited accounts with KPMG, Ernst & Young and Panell Kerr Foster among the notable exceptions.
John Wosner, chairman at PKF, said: ‘Having no accounts published is unhelpful if you are trying to create a competitive environment. What published accounts will do is give an idea of what profitability is like in the profession, what the norms are and whether it is competitive.’
Mike Rake, managing partner at KPMG, said the publications of accounts would aid customers and ‘stakeholders’ when firms made fee proposals.
Among the issues to be scrutinised by the OFT is whether ‘recommended fee scales’ operate in the profession though it is believed this is unlikely to be the case. It will also look at how tight restrictions on entry to the profession.
However, published accounts, which remain a thorny issue for accountancy firms, could crop up and would be investigated thoroughly by the OFT if it did, according to a spokesman.
Despite that the biggest driver to bringing accounts out into the open is likely to be a Bill currently making its way through Parliament that will allows firms to become limited liability companies.
Leader, page 14.