TO USE A WELL worn cliché, accountants live in interesting times. In many senses it has always been like this, but as we look ahead at 2011 it seems the challenges and events that lie before the profession are more significant than for many years.
After what seems an age of debate about the audit market, this could be the year in which something does actually change. Michel Barnier at the European Commission is intent on reforming the market and is consulting widely on what to
do. Likewise, the House of Lords – which spent a good part of 2010 aggressively asking questions about the audit of banks during the crisis – will draw its conclusions. It seems the status quo is unlikely to continue for much longer and substantive change could be on the horizon.
In the US all eyes will be on the lawsuit brought by the New York General Attorney’s office against Ernst & Young for its audit of Lehman Brothers. This is bound to be a brutal battle in which the firm will defend its reputation tooth and nail. If the case is pushed to a finale and E&Y loses, it could have huge implications for the profession.
Also on the agenda is whether the US?will put most of the rest of the world out of its misery and get around to finally endorsing international accounting standards.
At home it has been a painful couple of years for accountancy firms. We have had serious warning about the toll the crisis has had on accountants in terms of crippling stress and dangerously high levels of personal debt. 2010 also saw figures reveal the shocking number of accountancy firms have entered some form of insolvency. At end of last year many partners were looking to 2011 for a much better year.
What can we expect then? Firms will need to increase social networking to market their businesses. They will need to see compliance as yesterday’s business service and focus on how they provide value added service to clients. This will also be make or break year for many partners hoping to retire. The omens were not good in 2010. Buying a practice became as cheap as it had ever been with prices reduced to a fraction of turnover rather than multiples, in many cases. Ageing professionals who had not provisioned worried how they would pay for their retirement while a younger generation eschewed taking equity as too risky and too expensive.
Those doing decent business with the public sector will be braced for bad news as austerity measures bite while others will be wondering if there are opportunities to be found in the demise of the Audit Commission. Local government minister Eric Pickles has still to inform us what the alternative will be.
Elsewhere, the work of the newly formed Office of Tax Simplification should see some conclusions while HM Revenue & Customs will look to take as much money as possible from taxpayers through cracking down on avoidance and evasion.
Accountants have much to keep their minds occupied in 2011.
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