Is ACCA leadership in touch with the real world? To save its own privileges
it wants all businesses to have an audit. Its campaign is being led by
Jonathan Beckerlegge who wants to be the next Vice-President (ACCA members
will have no say in the choice) and ultimately the President. Here are
three letters that appeared in Accountancy Age on 29th October 1999
From Accountancy Age, 29 October 1999
COME DOWN TO THE REAL WORLD. Jonathan Beckerlegge (23 September, page 20) should clearly leave his ivory tower and join the real world. Creditors gain confidence by being paid on time, not by seeing audited accounts. Banks gain confidence by their customer remaining in credit or working within agreed facilities that the bank believes are adequately secured. If the bank wants additional information, then it is information direct from the company, not auditors. Government agencies again are happy if they are paid promptly and they have adequate powers to protect their interests if they are concerned.
Well-managed businesses will not, in practice, continue to engage an
auditor. I run an asbestos-removal business (after 19 years as a senior
partner of a sizeable professional practice) employing 36 people, and can
produce my own accounts for filing at Companies House with software at
a cost of £200 a year. I also produce accounts for others that under
present legislation require an audit. The auditor appears to just
produce a file for his compliance purposes which provides an additional
cost at no benefit whatsoever for the client. We already know that the
accounts are true and fair. Those inclined to cut
corners, Mr Beckerlegge, already flout the law. Your existing audits do not hinder them, so raising the
threshold will have no effect on them.
Hemel Hempstead, Herts
AUDIT DEBATE IS HOTTING UP I should like to add the following petrol to the flames of the audit exemption debate (23 September, page 20). I began my career in a small chartered practice where I spent five years dealing with many 'accounts and audit' clients. Now, after four years in commerce and industry, during which I have qualified with ACCA, I am running a small business providing, inter alia,
accountancy and taxation services (but not audit, as I have no practising certificate). I read with interest and wholehearted agreement the comments by David Franklin and Peter Mitchell (no relation), but was astonished by the comments made by Johnathan Beckerlegge on behalf of ACCA (my institute). Has he never come across the following limited company: Turnover (say) £2m, two (or more) working director shareholders (who are the only authorised cheque signatories), no bank debt, no borrowing requirements, no disputes with suppliers over late payment, regular profits and corporation tax payments (so no Inland Revenue concerns). I am sure such a scenario has been experienced by anyone who has worked in the world of 'real' small businesses, rather than government-defined small business. What possible benefit does this 'fictitious' company derive from an audit? Who is the auditor appointed by? Who does the auditor report to? Who are the shareholders and stakeholders? Who pays the audit fee? I think that the accountancy profession as a whole will not suffer 'financial distress' as a result of the removal of the statutory audit, but will be required to be much more honest and forthright about the basis of charges being made for professional advice. If you are in business yourself, have you ever asked your accountancy service provider for a breakdown of the fee into an hourly rate per staff member engaged on your assignment? If not, give it a go - much hilarity will ensue! I also agree with the letter from Mark Cortavans, and absolutely treasure the Revenue comment received by Stewart Ryan.
Steve Mitchell ACCA,