Our Top 50 survey of 2009 is out and makes for slightly alarming news. Of the biggest 50 firms, 39 have seen their growth rates shrink or go into negative territory. That got to hurt. (Read all about it here at Top 50.)
Some are really going through the mill. PKF posts -1% growth. Haines Watts is in negative territory too, as is Horwath Clark Whitehill, Menzies, Armstrong Watson, Cooper Parry, Hazlewoods and Target.
Others have escaped going into minus numbers but are flat. Have a look at Baker Tilly and Scott-Moncrieff up in Scotland. Others have just managed to bag a little growth. Mazars bags just a single percentage point of uplift, Littlejohn 1.9%, Shipleys and Lovewell Blake 0.7%.
But the Big Four are fascinating to watch. None have provided 2009 year end numbers and three of the firms have seen growth rates slow. What will they report this year? Deloitte's result usually come in June or July and Ernst & Young should follow shortly after. KPMG reported numbers for year end September of last year of just 0.7%. that was at the time of Lehman's collapse. The world for global corporates, their main clients, has been a different place since then.
PwC bucks the trend on 2008 figures going from 6% growth the year before to 7%. Will they continue that when they report towards the end of the year, or will they see a reversal as struggle with the worst phase of the recession?
There are success stories however. BDO Stoy Hayward saw their growth improve, as did Tenon and RSM Bentley Jennison. Some of that is through acquisition and some it through clever investment in business recovery/insolvency services. Green shoots won't necessarily be the greatest news for them and they will need to ensure they are well placed to capitalise on a turnaround in the economy. The ancient Chinese curse goes: 'May you live in interesting times.' Well, Uk practice looks as if its doing just that.

June 18, 2009 | Permalink | Comments (0)

As little as 1p in the pound, if there's a following wind. That's all that some creditors are getting from bankrupt debtors at the moment. You need to read our top story today to get the full details.
It means that the personal insolvency units of the firms are turning away from bankruptcy as a viable line of business. Bankruptcy simply doesn't pay anymore.
Before anybody thinks our only interest is in the bank balances of insolvency professionals - think again. The underlying issue here is the help that some individuals will receive with their debts and, of course, the return to creditors.
If professionals are turning away from bankruptcy it leaves a much reduced set of options for those suffering under the weight of debt, however they managed to acquire it. And without a viable bankruptcy procedure there will certainly be a number of creditors who do not receive the return they might otherwise have done.
The root problem is the reduction in property values and bankrupts finding themselves without enough equity to pay of at least some of their debts. There's some hope that might be returning, but we shouldn't bank on a short-term return to property boom.
The worry is that this new state of affairs leaves desperate people contemplating desperate measures andbeing vulnerable to unscrupulous individuals who take over the running of their debts. It's a very sorry state we've reached.
Who would have thought that the crisis would become so bad that even bankruptcy would be too expensive. There's an irony there that is just too uncomfortable to dwell on.

June 11, 2009 | Permalink | Comments (0)

They must be wondering when it will stop, but the Daily Telegraph shows no sign that it is letting up. Yesterday we had revelations that ministers claimed on their expenses the fees they paid for tax advice.
This includes chancellor Alistair Darling who, more than anyone else, should know that such fees are not an allowable expense against tax for anyone else in the country. The rest of us have to pay our accountants and be happy the fact that we won't see any of that money again.
Now the question is whether the taxman should get involved to decide whether they need to recover tax on those fees. Oh dear, the shambles that is MPs expenses will just not stop and at every turn not did MPs appear to think they could take the public for a ride, but the rules seem to allow a tier system for tax - one for MPs and one for the rest of us.
Well, that's clearly not on and this latest debacle will only demonstrate further that when the expenses system does get round to being fixed, politicians will need to sort their tax affairs out too so that they no longer advantages over the rest of us.
A last word on this. A spokesman for Hazel Blears, the communities secretary, issued a statement over the weekend saying she used accountants HW Fisher and that they were recommended because they dealt with many MPs. In fact it's understood HW target MPs with a marketing campaign for their services when their is a new intake to the House of Commons. No rules broken here, but how painful to be a professional services firm caught up in the furore and at risk of being tainted by it.

May 27, 2009 | Permalink | Comments (0)

That's a slightly provocative headline I'll admit, but the Financial Reporting Council has a new chief executive (not starting until November) and he is Stephen Haddrill, currently director general of the Association of British Insurers.
Haddrill's CV reveals he is something of a career regulator, having headed the Fair Markets Group at the department of trade before heading off in 2005 to help insurers do their jobs.
But what's important is what interests and agenda he brings to the FRC. The council's chairman Sir Christopher Hogg gave us a clue in his welcoming statement this week. He said Haddrill would bring the interests of investors to the table.
That's important because while Paul Boyle, current CEO, has hardly been the auditor's best friend (or, rather, we should say he hasn't been best buddy to the Big Four having challenged their hegemony with a distinct effort to bring another player into the global audit market) Haddrill looks as if he might be one step removed again from being sympathetic to their position.
What happens when big auditors look for more protection through limited liability agreements, as they currently are? Does a man with the interests of investors upper most in his mind buy into the argument that auditors bear too much liability? Across the water in Washington the Securities and Exchange Commission refuses to buy into that. If Haddrill remains detached and unsupportive, what are the chances getting the legislative backing for limiting liability?
Last week MPs on the Treasury select committee said that they believed the auditors of banks regress into 'tunnel vision' where the 'big picture' interests of shareholders is lost. It's a comment aimed largely at 'process' rather than auditors themselves, but it's hardly a ringing endorsement and sets the tone for the public perception of what auditors are doing. And it's unlikely to lead to a very high opinion.
How will Haddrill respond? His 'investor' focus could well mean he will buy into that view and it could make for difficult auditor relations in the near future.

May 21, 2009 | Permalink | Comments (0)

So Hazel Blears, communities secretary is to pay about £13,000 in capital gains tax on the sale of her second home.
As many readers of this site have pointed out she doesn't actually have to pay the tax and, even if she did, she doesn't appear to be paying any penalties or interest on the overdue amount.
If only Blears could represent all of us in our tax affairs life might be so much easier when it came to dealing with the tax man. I do wonder how HMRC would react if I sold a second home without paying the tax due. Most of us won't have the benefit of being able to wear our tax hairshirts in public in a bid to gain positive PR. We'd just be stuck with the bill, the penalty and possibly a prosecution if it were shown we were engaged in evasion.
Blears - be my tax adviser, please.

May 13, 2009 | Permalink | Comments (2)

The leaking pipe under the tennis court, the wisteria on the chimney, the antique chairs, the gardeners, flipping second homes, no CGT on the sale of second homes and horse manure.
The stink over MPs' expenses had me fuming this week. But what dawned on me yesterday was that there was no difference between what many MPs were clearly doing and the way some companies manage their tax liabilities - an issue that would have many of those self same MPs hopping up and down with fury in the House of Commons.
Wonder if they will be quite so ready to criticise now? After all, we'll be able to go to their expenses claims and ask them what they were doing.
By the way, before anyone has a go at journalists and their expenses - I never worked anywhere where even the smallest claim did not have to be accompanied by a bona fida receipt. What on earth were the House of Commons authorities thinking?

May 13, 2009 | Permalink | Comments (0)

Where do I stand on the Budget and Alistair Darling?
Here's some thoughts. He was calm, composed, he did not look overly flustered. There was no hint of panic, no histrionics, no playing to the crowd. Alistair Darling looked and sounded like a man under control.
And lets hope he is because the country is submerged in a economic mire.
But what appeared to be missing from this Budget was a strategic direction, a vision of where we were and the way we would climb out of the trouble we're in. Composed though Darling was, what he might have tried to do was inspire us.
That didn't happen. And that's a pity because, as one tax expert explained to me just before the speech began, what Darling really needed to do is fill us - the country, consumers and business - with confidence. Because economics is a confidence game. Convince us that everything is alright and we will go out and buy a new TV, a fridge, the red leather sofe we've always loved and, if we're feeling particularly reckless, we might even buy a new car on a finance deal. If our confidence is reciprocated a bank might even lend a considerable sum of money to move home, start a new business or support the one we're already running.
What I didn't get from Darling was that electric bolt of confidence that told me we were going to be OK. Sure, he said we would start to emerge from recession later this year. But sadly the claim had the ring of over optimism about it. He didn't really say it like he believed it. It was merely another statement that was read off his papers. Capital allowances, loss relief, maintaining small business tax at 21% - all his measures to protect the tax base - there was a lot going on under the surface, but there wasn't anything that said: 'This will turn the tide.' In fact there was precious little reasurance. There was nothing that said: 'This is how we will protect jobs.' Or: 'This is how we will inspire you go out and do business.' These landmark policies, these moments that might illuminate a route through the gloom were missing.
The downturn in GDP this year, -3.5%, and this year's budget deficit, £175bn, militates against an uplift in mood.
This even might become known as the Budget in which the chancellor fiddled. There are almost 100 notes on specific measures included in the Budget. Bits and pieces of avoidance, bit of this, bits of that. So many small fragmented things that at first it was almost impossible to make sense of it all. Let's hope this Budget doesn't become known as the Budget in which Alistair Darling fiddled while the economy...well, you know the rest.
If I take some solace from the Budget it is this. After bank bail outs, nationalisation, multi-billion pound guarantees, quantative easing, two G20 summits and countless other measures and meetings, Darling and the government may already be feeling that they have done all the big stuff that will help. there was nothing very much left for the Budget to do. The house had been built, all that was left was to tidy it up. Now, it is just a matter of time to see how the policies work out. It's just a matter of time to see if confidence will return. Which brings me to the place where I started. Confidence. It's a great trick if you can pull it off.

April 22, 2009 | Permalink | Comments (1)

I cannot help but love some of the fantasy that goes into the Budget book each year.
This year's is a case in point. In case you hadn't heard so concerned is the government to protect its tax revenues it's going to make finance directors personally sign-off on their company's tax calculations. OK, that's understood.
But then the Budget book throws a bucket full of mirkiness over the issue by claiming that the step will save the exchequer £90m over the next couple of years. What? How in all that's holy did they work that out?
It doesn't end there. The Budget says naming and shaming tax offenders will save £80m. Right, and my name is the Mad Hatter.
I would love to know the basis for such calculations. Perhaps they come from the Terry Pratchett book of tax. If you have any ideas, let me know.

April 22, 2009 | Permalink | Comments (1)

the word is that small business will not benefit overly from the Budget making this crisis moment for Alistair Darlin a missed opportunity.
Loss carry back - the measure which allows losses to be written off - has not be extended far enough and the doubling of capital allowance will be for people who will, mostly, not be doing any spending to claim allowances on. the effect therefore negligible
The upshot - if the government was willing to give back to business around £2bn over the next couple of years, as they said capital allowances would do - the effort should have been concentrated on loss carry back.
Of course, the rate of tax for small business has been held at 21% - better than paying 22%. But that only matters if you have a profit to pay tax on. How many businesses can claim they have a decent profit at the moment? Oh dear.
The Budget therefore is disappointing. There will be little for small business to rejoice and therefore and little reason for optimism. If there are green shoots of recovery around the chancellor did little to help them flourish.
The truth is, the economy is reliant on other things and mostly the banks getting their lending practices back to normal.
But here the chancellor merely said international accounting standards would be used to keep a closer eye on the behaviour of banks. ie more scrutiny (OK, that's no bad thing) but precious litlle more than what we already know about to get them moving.
Of course, we knew there was going to be no great fiscal stimulus. Though that said, the government reckons the Budget will put £5bn into the economy this year. That's less than half of one per cent of GDP. So perhaps Alistair Darling was hoping to be seen as the prudent chancellor not wanting to exacerbate too much the Budget deficit, which is going to run to about £175bn this year alone and with almost as much again the following year.
That's reflected in the optimistic statement that the economy will start to recover late this tear. That's a great wish, but will it really happen? Where I'm sitting there were gasps of disbelief at that idea. Overall 2009 will see GDP shrink by 3.5%. A punishing blow to the economy. It's difficult to see how small and medium sized business can sustain that and yet be buoyed up by what little there was in this Budget.
Which means the boost to confidence that was really needed today is unlikely to happen. Which is a shame, because confidence could be everything at the moment.

April 22, 2009 | Permalink | Comments (1)

Apparently, and according to research from a couple of Big Four firms, the feared avalanche of 'emphasis of matter' paragraphs - statements that are just a step away from 'going concern' statements - have not materialised.
There were real concerns that in an effort to protect themselves, and because of the economic conditions, auditors would feel the need to include the paragraphs in annual reports in volumes that have never been witnessed before.
You have to wonder why they haven't materialised. Firstly, the Financial Reporting Council put out guidance specifically to head off such a deluge. This made it clear that there was no need to rush head-long into emphasis of matter statements. In effect not only did the FRC give auditors a warning, but it also gave FDs the very ammunition they needed to argue with the auditors if emphasis of matter became an issue. We know for a fact the FRC was very grateful for the coverage.
Once the guidance was out though, the press picked up on that advice and made it very very public. That must have added to the pressure on auditors indeed it appeared to place the burden of responsibility firmly on the shoulders of auditors. Whether it went too far is an issue for debate. Directors have to carry some responsibility for their performance and the management of the company.
Of course, the research is restricted to large companies. And when working with particularly large clients it is always very sensitive to call them out on going concern anyway issues.
Add all these factors together and you have very little room for auditors to manoeuvre.
For the big clients. What would be interesting to know is what is happening to all the much smaller clients, or those that don't have the issue of being publicly listed. Auditors may feel less less pressure there. Their emphasis of matter/going concern calls may just sway the other way much more frequently. Would that be fair? Well, there's a tough question to answer in the midst of a crisis.

April 21, 2009 | Permalink | Comments (0)