The government is holding a Cobra meeting today to consider further action and is likely to announce further measures as soon as this afternoon.

The coronavirus pandemic is hitting accounting firms from all sides as they react to increasingly worried client demands and activate their own business continuity plans, but they are staying very resilient.

Firms are already facing a stream of questions over the covid-19 business support measures announced at last week’s Budget, which were primarily focused on small to medium sized enterprises (SMEs). So far there is limited information about which companies will qualify for coronavirus business interruption loans, with HMRC expected to issue details within the next few weeks.

For the top 10 accounting firms, their FTSE and listed clients are facing enormous pressure from the impact of the rapid economic downturn, with global risks heightened by the extent of the pandemic, which is now centred in Europe. The continued uncertainty on the potential impact and duration of covid-19 will hit profit guidance and will many listed companies due to report year ends in the next three months there is widespread unease.  

The London Stock Exchange opened to announcements from leading FTSE 100 companies about the immediate financial impact of covid-19. International Airlines Group (IAG), owner of British Airways and Iberia, said it plans to cut flight capacity by at least 75% in April and May compared to the same period in 2019 as the airline is hit by transatlantic flight bans, border closures in Europe and a collapse in demand for flights. IAG is audited by EY.

Kingfisher plc, owners of DIY chain B&Q, also posted an early RNS update, stating that it was looking at cost containment to protect its financial position. Thierry Garnier, CEO of Kingfisher said: ‘While significant uncertainty exists around the impact of covid-19, we are taking immediate and significant measures to contain our costs and protect our financial position. We have a strong balance sheet, with significant liquidity headroom and limited financial debt.’

In a statement, IAG chief financial officer Stephen Gunning said: ‘IAG is also taking actions to reduce operating expenses and improve cash flow. These include grounding surplus aircraft, reducing and deferring capital spending, cutting non-essential and non-cyber related IT spend, freezing recruitment and discretionary spending, implementing voluntary leave options, temporarily suspending employment contracts and reducing working hours.’

Meantime, accounting firms are putting contingency plans in place while trying to keep offices open and looking to implement remote working if the government announces further tightening of movement across the UK. Deloitte reported a case of covid-19 several weeks ago which resulted in a temporary floor closure and a deep clean in one of their London offices.

Grant Thornton said it was following government advice closely and that some staff were already working at home.

A Grant Thornton spokesperson told Accountancy Daily: ‘We maintain an agile working environment at all times and are encouraging our people to work from home to minimise any unnecessary travel’.

There are no plans for office closures for now, ‘but this could obviously change if Government guidance changes or the situation escalates. We have continuity plans for client work to continue, where possible, across all our operations’.

‘We have prohibited all international business travel to locations advised against by the FCO (Foreign & Commonwealth Office). All other international business travel requires prior approval and we are also asking our people to minimise any domestic travel by hosting meetings online where possible.

‘Some clients and other stakeholder engagements have moved to virtual formats (Teams, Skype, etc), postponed or cancelled.’

No firms are considering office closures at this stage, but all firms Accountancy Daily spoke to have cancelled overseas business travel as per Foreign Office advice.

Simon Marsh, partner at WSM Advisors, said that the firm had plans in place for staff to work remotely if required. ‘We have made plans for this to be an option if required. We will close if advised by government or relevant authorities and have made arrangements if this is required. Home working plans are in place with relevant hardware, remote access to data systems and online communication with relevant security in place,’ Marsh said, adding that staff could transfer to alternate sites if required.

Face to face client meetings have not been ruled out completely. Marsh said: ‘Clients in the high risk category are being asked to communicate other than in meetings and other clients are asked for their preference. We will not refuse to meet clients who wish to meet but will ensure all who attend ensure appropriate precautions are taken and that the meeting environment is as safe as possible.

‘We have cancelled all seminars and events for the immediate future.’

There are significant concerns about the impact of covid-19 on the UK economy.

‘We are evaluating with our clients those which are most at risk of significant business cost, disruption or failure as a result of potential shutdowns, remote working, staff issues, etc arising from covid-19 and assisting in developing action plans including contacting HMRC, bankers and insurers,’ Marsh added. ‘We anticipate there will be business failures resulting from this pandemic however the extent will depend on the measures put in place by the authorities and the reaction of the general public.’

Accounting practice Haslers has run a successful test closure day but has no plans to shut their offices unless government advice changes.

Haslers chairman Jon O’Shea said: ‘There have been no current changes to working practices but we have run a successful test closure day. The business continuity plan is fully tested and ready to implement.

‘We have stopped unnecessary travel, client meetings continue as per the requirements of the clients; more client contact is taking place on the phone, video calls etc.’

The firm has already seen the immediate impact of coronavirus on a client which is considering delaying its audit. ‘We have one potential case delaying while they fully implement their own continuity plans.’

The fast moving nature of the crisis also means that Budget measures announced last week will quickly be superseded by events. ‘The Budget is already out of date in that regard, we expect further Government announcements as the situation develops,’ O’Shea said.

We’ll have to get used to using Facetime and Skype. But people will still need advice

Peter Rayney FCA CTA

For sole practitioners, the issues are different as they tend to work remotely but many interact with larger firms, offering specialist advice and expertise. Others are local accounting firms with clients at micros and small businesses who will be looking to their accountants for expert advice.

Tax expert Peter Rayney, who owns his own sole practitioner firm, said: ‘As a one-man consultant it is slightly different as I work from home anyway, but I do have a lot of interaction with other firms on complex cases.

‘We have been talking and people are thinking about social distancing; and face-to-face meetings will not be happening. We’ll have to get used to using Facetime and Skype. But people will still need advice – at times like this there is always demand for advice about business restructuring.

‘It looks much more serious than last Friday – look at what is happening in the US and Europe; conferences and lectures are all being postponed. Webinars will make a bit of a renaissance as people will still need to do their CPD.

‘If you just look at what’s happening with the football; if it goes on like this people will be asking for refunds for their season tickets, refunds on their Sky Sports, the implications for the whole of business are very serious. Then there’s tickets for music events, will the money be refunded?’

Many firms are waiting for the government to clarify home working and social distancing guidance, and have activated remote working contingency plans in case they need to implement these at short notice. However, already travel between regional offices is being curtailed except in exceptional circumstances.

Adrian Hyde, partner at restructuring experts, CVR Global, said: ‘The situation is being reviewed on a daily basis and will act in line with government advice, and to ensure the safety and well-being of our staff.

‘A minority of staff are working remotely and all inter-office travel has been stopped unless essential, and is approved in advance with the covid team. UK and international travel is also stopped unless essential – in reality international travel is impossible.’

The firm is geared up if it has to move to remote working.

‘All staff use portable IT equipment and we run a paperless office environment. We have mass text message facilities to contact all staff, and everyone has the facility to work remotely.

‘All inter-office travel is stopped unless essential. Where possible, we have opted for video calls and phone calls to cause minimal disruption to on-site meetings.’

Likewise, Simmons Gainsford LLP is continuing to work out of their offices with some staff working remotely. 'A few of our clients want the audit to be done remotely where possible,' said partner Atul Mehta. 'We have a business continuity plan in place. We are monitoring the situation and following government guidelines. We have systems in place for our team to work from home.

Big Four

At the other end of the spectrum, Big Four firms are prioritising staff and clients, with a firm-wide trial home working day at Deloitte this Tuesday. Deloitte has 15,398 staff in the UK.

A Deloitte spokesperson said: ‘We’ve been closely monitoring and managing the covid-19 situation since its inception. The health and safety of our people and clients is our priority. 

‘As the covid-19 situation progresses, and as part of our ongoing business continuity planning, we’ve asked all UK employees to work remotely on Tuesday 17 March. This is an approach we have taken in line with other large UK businesses.

‘Deloitte has long been a proponent of agile working and we have the technology and capabilities in place to enable our people to work remotely.’

EY UK offices remains fully open, although EY Australia has told all its 6,000 staff to work remotely from Wednesday.

In a statement, EY UK said: ‘The safety and wellbeing of all EY people, clients and communities remains our primary concern.

‘We have asked EY people to defer all travel to those countries at highest risk – currently China, Hong Kong, Macau, Japan, South Korea, Iran and Italy. EY people returning from those locations are required to abide by recommendations for a 14-day self-quarantine period.

‘We have placed limitations on international and domestic travel and are using remote working as needed. We are monitoring this situation closely and updating guidance as developments warrant.’

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Report by Sara White