The FRC have just published their Key Facts and Trends in the Accountancy Profession – June 2015
The Financial Reporting Council is the UK’s independent regulator responsible for promoting high quality corporate governance and reporting to foster investment. We promote high standards of corporate governance through the UK Corporate Governance Code. We set standards for corporate reporting, audit and actuarial practice and monitor and enforce accounting and auditing standards. We also oversee the regulatory activities of the actuarial profession and the professional accountancy bodies and operate independent disciplinary arrangements for public interest cases involving accountants and actuaries.
If you search the internet you will find that almost every accounting practice now offers to be your Virtual FD. Compliance work on year end accounts and tax returns has become highly competitive and accountants feel they should provide additional services.
Many smaller businesses and SME’s can’t afford a Full Time (or even in some cases a Part Time FD) but they need help with:
Budgeting and Forecasting
Cash Flow Management
Buy or Rent decisions
Capital Investment Appraisal
Accounting Procedures and Systems
Busines Funding and Investment
Virtual FD’s fill this gap because:
You only pay for what you need
There is no employment contract
It provides access to higher level of expertise (in theory)
In May this year the ACCA issued a warning after research from cloud accounting software provider ClearBooks showed just 8 per cent of small businesses considered an accountant’s qualifications when choosing one. There is no law preventing anyone from calling themselves an accountant, and that as a result small businesses could be unknowingly paying someone without the necessary skills to handle their finances and help their business grow.
Although some unqualified accountants may do good work, an unqualified accountant is not answerable to any regulatory body and so cannot be disciplined. They have not passed exams that would have tested their knowledge, they are not subjected to any ongoing inspection of their practices and processes, and, crucially, they are not obliged to participate in any ongoing training to keep them up to date with ever changing legislation. Many may not even have any professional indemnity insurance, which clients can turn to if their qualified accountant makes a mistake.
So what experience does your accountant have to show that they have the skills to be your Virtual FD?
I am sure that in theory they have the technical skills but is that enough?
With the exception of CIMA accountants many accountants in practice have never worked in business let alone been a Finance Director!
I happen to think that time served experience as an FD does make a difference because it greatly improves your insight and skills.
Would you get on a plane with a Pilot who in theory knew how to fly but had never actually piloted a plane before?
When you choose a Virtual FD you are trusting them with the success of your business. Choose wisely!