Don't let Professional Bureaucracy Strangle Your Business: Resign ACCA and ICAEW Membership

The dead hand of professional bureaucracy is killing small practitioners. They get little benefit from membership of accountancy bodies, such as the ICAEW or ACCA. It is time to walk away and develop alternative strategies.

Major accountancy firms are routinely mired in scandals. They are involved in headline audit failures, money laundering, tax evasion/avoidance and abuses of insolvency practices. Yet they dominate the ICAEW council and committees. Regulators are unable to do anything about them. So they impress the public by flexing their muscles on small practitioners. They are more likely to be disciplined, fined and punished, even for trivial things.

Poorly designed and unnecessary practice monitoring arrangements are imposed on small practitioners.  The monitoring inspectors do not sign audit reports or accept personal liability for anything that they say, or recommend. Yet they claim to be the "authority" on quality of  professional work and force  small practitioners to build mountains of files and paper work. Clients resist paying for this bureaucracy. and competition is intense. The bureaucracy helps fills the coffers of the accountancy bodies and high salaries of their chief executives, monitors and ever increasing number of directors.   Most small practitioners have now been forced out the audit market, entrenching the oligopoly of major firms.  They will be forced out of other sectors as well as bureaucracy increases costs.

Small practitioners do not make big profits and want to left to get on with what they do best. That is to provide personalised service at a competitive price. But the accountancy bodies have got used to picking their pockets and won't leave them alone. They continue to devise  new ways of picking their pockets.

They require anyone selling consultancy to obtain a practicing or a consultancy certificate. This means annual fees and fat cat monitors visiting the practice to suggest useless ways of increasing bureaucracy. Then there is  CPD. Almost every accountant implicated in any financial scandal in the last 20 years had attended a CPD course. This helped to line the coffers of the accountancy bodies but did nothing to extricate the practitioners from the troubles ahead. The very idea of compulsory CPD suggests that markets do not work efficiently and do not generate pressures on practitioners to have relevant knowledge. It also assumes that practitioners are backward and  do not have adequate economic incentives to keep up to date to save their business, job and family.

 The accountancy bodies confuse relevant knowledge with officially sanctioned knowledge. Without relevant knowledge small practitioners can't survive and technical knowledge (e.g. IFRSs) don't apply to all their clients or the business end of their markets. So most CPD programmes are neither focused nor effective or value for money.

Increasingly small practitioners are giving up their professional membership to trade as "accountants", "business consultants", "business advisers", advice centers", "tax advisers" and in other forms. Their performance and business potential is enhanced by forming alliances and co-operatives to support each other and get new clients, which at the lower end of the market is frequently by word-of-mouth. Organisations, such as Affilica International already provide forums and opportunities for such purposes.

The new mode of trading saves on licensing fees, escalating professional memberships costs,  monitoring costs, stifling bureaucracy, and the fear of professional disciplinary hearings. The professional bodies can't deal with big firms, so they pick on small practitioners to justify their existence. It is good for the environment too, as practitioners don't have to receive and pay for irrelevant professional magazines sent by road, rail or air. Instead, they concentrate on what is relevant for their business and building new niches. This way small practitioners can compete with the new breed of consultants which in various guises are appearing in all city centers and offer competitive services. Those small practitioners who do break away from the strait-jacket of the accountancy bodies will increasingly  become uncompetitive and will find it difficult to survive.

It is time for more small practitioners to throw away the shackles of their professional bodies and earn a decent living for themselves and their  their families, save for pensions and provide focused service to their clients.