Favourite press release of the downturn so far has to be that from French Duncan who marshalled an empathy driven spin for their flat results.
The Glasgow and Edinburgh said it was helping guide clients through the crisis with lots of uncharged hours that prompted the firm to admit that it had had an effect. Revenues were up by pre tax profits were static.
The cynics out there might see that only as spin. But my guess is that there's been a large element of this going on across accountancy.
And it chimes with some other observations about the profession that have been amplified by the recession - accountants are terrible at offloading clients that bring poor returns and even worse at collecting their fees. As a result many suffer crippling cashflow difficulties at the very time they're advising clients on how to improve theirs. The irony is almost too difficult to bear. Literally.
That said if you get it right, see clients through the tough times, they will hopefully come good for you when the economy is in a better state. That must be the calculation that a firm like French Duncan makes anyway.
And OK spin it, we don't mind. It's good to see even a modicum of sympathy going on in business. Whatever its motives.

February 3, 2010 | Permalink | Comments (0)

Davos, the annual jamboree of world business leaders and politicians, has just finished and seems to have ended with most commentators saying it produced little that was constructive.
Perhaps though its importance lay not in what it may have produced by way of policy contribution (incidentally Accountancy Age budgets sadly do not run to a junket to the ski resort, so I wasn't there) but it terms of the mood it produces among attendees.
I recently met a very senior partner from one of the Big Four who confessed that the whole thing seemed to be more upbeat than it was last year. And in mentioning this his own tone was certainly without the sombre shades it had throughout last year. Last year's event, as I recall, was riven with concern that regulators were about to put the kibosh on anything that smacked remotely of capitalist activity. This year, apparently, there was still talk of regulatory fears, but they less intense and the talk was about progress.
The value then, in Davos, this year may not have been in substantive ideas, but in simply giving a morale boost to international business leaders.
Which is a good thing. Because if they're feeling optimistic they tend to turn to a different set of strategic decisions. They can return to a mode of building something rather than damage limitation.
Which seems to be a good thing for accountancy. Cautiously, my contact suggested though expectations for this year were flat, they might in the end turn out better. Consultancy has the potential to do well (it's certainly hiring a lot of people at the moment, if the job ads are anything to go by) and people are tentatively allowing themselves to think that transactions might make something of a come back. Though the key word here though is "tentatively."

February 2, 2010 | Permalink | Comments (0)

Shock news this morning as Vantis' auditors Ernst & Young issued a going concern warning alongside the firm's interim results.
Ostensibly an accountancy firm, it's got to be painful for the firm's managers to see E&Y deliver that opinion.
The appalling irony for Vantis is that much of the firm's difficulties come from acting as joint liquidator to Allen Stanford's Standford International Bank. Vantis has spent a lot doing the work, but is yet to receive full payment. The interims reveal a loss amounting to a little more than £10m overall.The future of an accountancy business threatened by taking on a high profile liquidation? In this environment:? Who'd have thought it.
Investors meanwhile have been losing faith in Vantis for some time. Last May the share price stood at 91p. On Friday last week it closed at 29p.
The Stanford ordeal means that Vantis is the largest accountancy business, around thirteenth in the UK, to face a real threat from the economic crisis.
Problems at the company will no doubt spark speculation over whether the business is ripe for takeover. The current share price possibly offers a decent deal. And with liquidators in place who can attract work like the Staford job, Vantis might look attractive.

February 1, 2010 | Permalink | Comments (1)

Grant Thornton International reports global results and for the first time the US and UK combined make up less than half the organisation's revenues.
Overall, the revenues fell 9% - hardly surprising given the crisis everyone has been grappling with.
But it's the shift in the balance of power that is fascinating. China and Hong Kong has for the first time become one of GTI's top ten performing territories. Economists among you will have noted that China has posted staggering growth in GDP, despite the global downturn.
Are we looking at a time when those territories are so successful that GTI has to run the organisation out of Beijing? HSBC's chief executive Michael Geoghegan has just relocated to Hong Kong to be closer to the bank's centre of main interest. How long before other multi national CEO's find they have to do the same thing?

January 28, 2010 | Permalink | Comments (0)

The UK emerged from recession in the last quarter of 2009 racking up growth of 0.1%, it emerged this morning. Just enough to indicate things are on the up, though only just. The figures, by the way, are estimates. The full data, when it's in, might reveal a slightly different picture, though there is good reason to remain optimistic.
That said, R3, the professional body for insolvency practitioners, delivered bad news this morning. A poll of its members indicates that corporate insolvencies will continue to rise this year and possible next year too.
The numbers indicates professionals expect around 28,000 business to go belly-up in 2010 against just over 22,000 last year.
The reason? Banks, the main creditors in these difficult times, will come under pressure to redistribute their money to start-ups, and away from struggling companies.That's a harsh decision. There's no reason why many businesses in difficulty shouldn't be worthy of continued help. Many can still be prosperous companies.
R3 members probably polled the way they did because experience tells us that what happens after a recession. But many things in this downturn have bucked expectations. Unemployment never reached the dire levels that economists first predicted and there have been volumes written on why this crisis, though appalling on paper, has not been felt as badly as other downturns out there in the real world. There have been significant efforts to help companies endure. Unlike previous crises. Whose to say that the corporate survival rate won't be a little better than the professionals expect? Of course, that would 't suit business recovery professionals

January 26, 2010 | Permalink | Comments (0)

More than 5,000 HMRC investigations last year used special surveillance laws to allow the taxman to spy on individuals (read the story here).
There was always a worry that this piece of law, the Regulation of Investigatory Powers Act, was going to be misused - a real civil liberties concern.
There were assurances that it would only be used in extreme cases involving smuggling and the like but usage at such a rate is pretty alarming and might just indicate it's being used in areas where it was never intended.
Just one year in and a compelling case for an detailed audit and review of what's going on with this controversial piece of legislation looks as if its made itself. The Home Office needs to commission an independent body to look at its use now. The public, and taxpayers, will need reassuring such extraordinary powers are being used appropriately and not on a whim.

January 13, 2010 | Permalink | Comments (0)

It was good to be at the Chartered Institute of Taxation's lunch yesterday to see former chancellor Denis Healey, and economist John Kay receive honorary fellowships.
Healey, now 92, garnered a round of applause for making it up the two steps to the stage to receive his award, though the old man of the Treasury quite rightly milked it. He thanked the institute for his "grub", suggested he was sloshed, and then offered sincere thanks for the recognition given that nobody likes to be taxed, so chancellors are never popular.
The highest praise for Healey came privately from a former chairman of the Inland Revenue Sir Anthony Battishill who confided in an aside at our table that Healey was the "most complete" human being he had ever worked with, and he had worked many a chancellor in the past. Whatever, you might say about Healey's time in charge at the Treasury, and it was he who had to go to the IMF for aid, there can be no doubting his credentials as a man after praise like that.
Economics buffs among you will know John Kay very well. His offering during a gracious acceptance speech was a variation on the old story about two economists being chased by a bear in the woods. In the first version one of the economists dons trainers while the other tells him not to be stupid he'll "never outrun the bear". The economist with the running shoes replies by saying he doesn't have to outrun the bear, he only has to outrun the other economist.
However, the new version is perhaps more fitting for these times.
This time, on the approach of the bear, the first economist takes out his laptop and begins running through some complex calculations. The second asks what he's doing. The first says he's modelling the optimum behaviour for this situation. The second is astonished and insists there's no time for it. To which the first says: "Don't worry. The bear has to do it too."

January 13, 2010 | Permalink | Comments (3)

A little piece of research reveals that HMRC is behind a big piece of work - apparently being responsible for being responsible for half of all winding-up petitions. The taxman, in short, is the grim reaper for business (read our story here).
It's well known that the taxman is more than happy to act as the chill hand of death for business but the scale on which it seems to be happening places it on the weapon of mass destruction scale.
Observers have already remarked that, if this is HMRC in "soft-touch" mode (because of the recession), then who knows how the department will react when the economy turns around?
The fact is though, when the economy is healthy, the taxman receives more revenues, there are fewer tax debts and fewer companies need a helping hand into the next life.
The taxman has also been surprisingly good with its Business Payment Support service in allowing companies to postpone paying their bills.
This is the duality of HMRC's position right now. Giver and taker of business life. A clear sign of the times.

January 11, 2010 | Permalink | Comments (1)

BDO's Fraudtrack report has revealed the largest increase, 76%, in reported fraud ever to take its value through £2bn in 2009. Wow!
That's a lot of fraud (read our story here). The average size of a fraud is at an impressive level too at £5m.
Truth is though that this is "reported" fraud. Not all of it. There's much more going on than that which means plenty out there for the accountancy fraud teams to investigate. But that's not me telling me anything you didn't know. Also we shouldn't be too surprised by a steep increase in fraud during a recession. Crises tend to bring out the worst in people. Desperate people are driven to desperate measures.
But people will also follow where they are led. If others are doing it people will always conclude for them to do it to.
Take the property fraud BDO expects. They predict people will overstate the value of property as security to raise loans.
But the banks largely don't deal with that as fraud, they deal with it as a bad loan.
If that's the kind of mindset among the victims well, they're going to get hurt.
But with such a large increase in reported fraud we can assume also that there must have been a significant increase in unreported and undetected fraud. That's a guess of course, but if the assumption is correct you have to wonder to what extent the UK is becoming a nation of fraudsters. It sounds ludicrous. We're a country of people who follow rules and regulations. Isn't our complaint about the EU that it's alright passing all those laws, but the British are the only ones who take them seriously?
But the fraud figures point to something else. It points to a country where people increasingly feel they are owed and they can push the boundaries.
At the weekend my barber told me he was a bit of property developer in the eighties and that everyone who developed applied for "first-time buyer" mortgages on preferential terms, no matter what there position. Even his lawyer he said bought "five" flats and each time told mortgage companies he was a first-time buyer. "Everyone was doing it," he said. From the BDO report, seems like everyone's doing it now too. It many different ways.

January 11, 2010 | Permalink | Comments (1)

HMRC has announced an amnesty for doctors so that they can get their tax affairs in order. Clearly the taxman feels doctors have some questions to answer about the income they declare for tax purposes.
The point is though its unusual for the taxman to target a single profession in quite such a bold way. Already observers have signaled they believe this is a sign of things to come. In examining the ironically entitled Tax Health Plan, in which doctors are offered an amnesty to come clean, and only a 10% penalty, experts believe HMRC has set a pattern for how it will deal with other professions going forward. It's clearly one way of dealing with unpaid tax at a time when the Treasury is desperate to replenish its coffers.
But who is next? Presumably HMRC will undertake a risk assessment but who would bet against architects and lawyers coming to the attention of the taxman. Then, who knows. Maybe even accountants. Now that would be ironic.

January 11, 2010 | Permalink | Comments (0)