In Practice - Practice Assurance - Pause for thought

With the latest round of institute Practice Assurance roadshows under way, Graham Bale reflects on the visits carried out by the Quality Assurance Directorate so far this year.

Some practitioners who attended the earlier roadshows in the lead-up to the membership vote on Practice Assurance (PA) made the point quite forcefully that they did not need such a scheme to tell them what they already knew - namely, that chartered accountants were, with rare exceptions, providing a highly skilled and valued service to their clients.

These practitioners - and members generally - will, therefore, be gratified to learn that the findings from the visits to date have indeed confirmed these good standards. Some firms, however, though apparently able to provide a good standard of client service, have been somewhat less successful in running their practices and in driving forward their businesses.

More circumspection

One of the most notable and positive consequences of the introduction of PA is the extent to which this has prompted many firms to look more closely at the way in which they currently operate. Indeed, by the time of the Quality Assurance Directorate (QAD) visit, some firms have already produced an action plan which they are keen to discuss with the QAD reviewer.

Such plans tend to focus on issues with which all practitioners will readily identify, such as the management structure and effectiveness of those in senior positions, partner/director succession, responsibilities and accountability, recruiting and retaining good staff, IT and practice protection and development matters.

Many firms have acquired a PA manual and adopted a few of the manual's checklists because they believe their adoption will secure improvements in operating efficiency. Others have adopted a high proportion of the pro-formas in these manuals, apparently in the mistaken belief that the QAD reviewer will expect to see extensive use of such documentation in the firm's files. A firm should only introduce new documentation if this will clearly assist in addressing a deficiency in current procedures but procedures should, of course, be kept as simple and as well-defined as possible.

Most of the feedback received from the firms on the visit process has been very positive. In a few cases, however, firms have expressed disappointment that the reviewer has not raised anything of which the firm had either been previously unaware or which might improve the profitability of the practice. Such expectation gaps are, perhaps, understandable but in the latter case it may be argued that it would be somewhat damning of a firm's management if a reviewer were able in a matter of a few hours to identify something of such significance to the firm's commercial success. Nonetheless, visits usually include discussions on charging rates, fee levels, billing patterns, etc.

A few firms have confirmed that as a result of the visit they have revised some of their procedures, for example, by billing payroll services at least monthly rather than quarterly and by looking closely at whether they should continue to act for those low margin clients who are habitually uncooperative.

A need to bolster the brand

All firms commented on how they view the institute and it is significant that so many practitioners are concerned that the institute may not take full take advantage of the opportunity provided by the early success of the PA scheme to bolster the chartered accountant brand. This concern and indeed all comments will continue to be fed back by the QAD within the institute.

The current roadshow presentations provide more detailed feedback on the results of the visits conducted to date and also guidance on preparing for a visit. Those practitioners who are worried about being visited should be reassured that the process is being seen as providing constructive advice and not confidence-sapping criticism. Those other practitioners who believe that PA has nothing to offer them would perhaps do well to remember that some of the most successful businesses regularly remind all personnel that nothing is good where better is possible.

Graham Bale is a senior member of the Quality Assurance Directorate Practice Assurance implementation team.

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