The UK government is considering raising the turnover threshold for small company audits to £4.2 million. This will bring the UK in line with the arrangements in force in much of the European Union.
Naturally, the ACCA will oppose the reforms even though most ACCA members in public practice (small practitioners) will support it. AABA also supports the abolition of small company audits. They serve no purpose in owner managed companies. Creditors and banks can always demand an audit as a condition of their loans should they so wish. The Inland Revenue and Customs & Excise have their own powers to investigate. So there is no need for a compulsory audit. The abolition of small company audits can save the average small business around £5,000 per annum (audit fees, opportunity cost of space for auditors and productive managerial time given to auditors).
The abolition of small company audits poses real problems for the ACCA officials. They have got used to charging exorbitant fees to license their members for little in return. ACCA has also failed to develop any effective strategy for 80% of its members who are in industry and commerce. What do they get for their fees? Precious little.
ACCA officials continue to suffer from an inferiority complex. They have tried to copy the ICAEW and made 'public practice' their main focus of action. But unlike the ICAEW, hardly any ACCA member is insolved in the audit of a major company. Now the rug is set to be pulled and the ACCA is left with no effective strategy for presenting itself to the public.
Our sources say that the ACCA officials are resigned to losing the regulatory status. Nevertheless, they are dreaming up new ways to preserving the top-heavy management and bureaucratic structures by insisting that all ACCA members in public practice (e.g. consultancy) will need to be licensed and monitored. This will add-on considerable costs to the practice in question and will probably make it uneconomical.
Our advice to concerned ACCA members is that they should consider joining
another accountancy body which will not make it impossible for them to
earn a decent rate of living. ACCA members can always open up a consultancy
business without using the banner 'Chartered Certified Accountants'
in their business name. In consultancy wars, the title 'accountant' could
actually be a hindrance and might portray the business a being narrowly
based anyway. ACCA officials should be freeing their members from the dead
hand of regulation rather than hindering them by inventing new unnecessary
forms of regulation.