26 Jul

Crowe UK expands corporate offering with appointment of Christine Dobson as partner

National audit, tax, advisory and risk firm, Crowe UK has appointed Christine Dobson as an audit and advisory partner in its Corporate team.

Christine joins Crowe’s thriving Corporate sector team from a Big Four firm where she was an Audit Director. Bringing with her 25 years’ experience in in advising a range of organisations from start-ups and SMEs to owner-managed businesses and private-equity backed firms, Christine’s appointment will further expand Crowe’s offering in this area.

Christine will be based in Crowe’s Thames Valley office where the firm’s corporate offering has expanded significantly in recent years. With Thames Valley cited as one of the fastest-growing economic regions in the UK, Christine’s appointment underpins the firm’s commitment to supporting businesses to achieve their aims, both nationally and throughout the region.

Jeremy Cooper, Managing Partner of Crowe’s Thames Valley office, said:

Christine’s appointment marks the next phase of our growth in our Corporate Services in the Thames Valley. Her experience of working with private equity backed and owner managed businesses complements our existing team as we continue to build our Corporate Business offering locally

Christine Dobson, audit and advisory partner at Crowe, said:

I am delighted to be joining Crowe UK as a corporate audit partner. I am looking forward to working together with my new colleagues and bringing the breadth and depth of my experience to help my clients and new businesses achieve their ambitions

Nigel Bostock, Chief Executive of Crowe, said:

Christine’s appointment adds considerable and varied experience to our Corporate offering and will play an important role in servicing our clients’ evolving needs as their business grows and develops. We welcome her warmly to Crowe and look forward to her adding value, insight and experience to our clients and across our firm

27 Feb

Praxity participants achieve record revenues – growth underlines the global alliance’s leading position in the accounting sector

Combined global revenues of Praxity participant firms hit a record high of US$5.20 billion for the year ended 31 December 2017, representing a year-on-year increase of 9.5% in real terms, and 8.7% at constant exchange rates.

The combined income of participants in the IAB’s ‘Association of the Year’ has now grown for 11 consecutive years, reflecting the continued strength of the 65+ expertise-sharing firms in more than 100 countries. This further cements Praxity’s position as the world’s largest alliance of independent accounting and consulting firms.

This is a great way to kick off our second decade” said Hilton Saven, Praxity’s Chairman, reflecting on what’s been accomplished and how the strength of the Alliance and activities of participant firms continues to elevate its global offering.

“This record-breaking performance is testament to more than 47,000 worldwide experts and support staff at participant firms. The continued success of the Alliance demonstrates their commitment to sharing expertise across international borders and delivering world class service at a local level.”

For Executive Director Græme Gordon this is not the end of the story:

We’re delighted with the result of our collective endeavors over the past 11 years. But our real focus remains on making a world of difference for our firms’ clients. We will continue developing our platform for participant firms to connect and share international expertise, seamlessly and cost-effectively – embracing our distinctive resources and championing our firms’ independence to help us keep fit for purpose.  Here’s to the next ten years!

Growth at a glance:

Employment

  • 47,609 people in 100+ countries (up 14%)

Service lines

  • Audit & Assurance US$2,091 million (up 12.2%)
  • Accountancy US$585 million (up 8.3%)
  • Tax Services US$1,271 million (up 4.9%)
  • Advisory US$1,023 million (up 7.8%)
  • Other US$230 million (up 25.2%)

Regional growth

  • US & Canada US$2,855 million (up 5.3%)
  • Latin America* US$62 million (up 15.9%)
  • Asia Pacific** US$706 million (up 36.7%)
  • Europe US$1,435 million (up 7.7%)
  • Africa US$91 million (up 10.5%)
  • Middle East US$51 million (down 1.2%)

*including Mexico & Caribbean

**including Australia & New Zealand

The biggest growth in revenues was in audit and assurance services, up more than 12% to nearly US$2.1 billion. Audit and assurance remains the main revenue stream for the Praxity Alliance.

There was impressive growth in revenues from ‘other services’ – an increase of more than 25% to US$230 million reflects the growing depth and diversity of services being provided to clients increasingly interested in the opportunities of globalisation.

The Asia Pacific region continues to grow consistently with a near 37% increase to US$706 million. There was growth in Africa region, up more than 10% to US$91 million, while revenues from Europe grew 7.7% to US$1.4 billion and US and Canada more than 5% to US$2.9 billion.

Praxity participant firms now employ 47,609 people in 103 countries, an increase of nearly 14%. The number of partners rose 6.7% to 3,682.

Praxity Global Alliance was once again named ‘The Association of the Year’ in 2017, an accolade it has won in three of the last four years.  It was named Rising Star Association in 2013.

Judges once again praised the Alliance for its “outstanding progress, support and knowledge sharing on a global level”.  Hilton Saven considers this “a timely celebration of the Alliance’s consistent growth and development since its foundation in 2007, reaffirming its position as the No. 1 alliance for independent accounting and consulting firms!

Services are delivered by Praxity’s independent member ‘participant’ firms.  The Alliance is unashamedly selective in the firms it welcomes, each of which retains their own branding, independence and financial responsibility. Praxity is a not-for-profit entity covering all international jurisdictions, is not a ‘network’ and does not practice public accountancy or provide audit, tax, consulting or other professional services itself.

Praxity participating firms are handpicked for their size, strength, reputation, financial condition, leadership and strategic geographic relevance. All are successful firms in their own right, highly-rated by peers and share the same service ethos and international collaborative spirit.

Alliance firms build capacity and capability through accessing established specialist Praxity working groups, using an online cloud-based collaboration platform, thought-leading communication forums, regular regional and global conferences and retaining and developing their best employees through international secondments.

Praxity welcomed five new firms this year, expanding its global reach and the depth of specialist services that can be provided collaboratively and seamlessly across the globe:

  • Fučík & partneři – Czech Republic
  • Hansem-Holm & Co – Ecuador
  • PRIME Audit & Consulting – Azerbaijan
  • Rabel & Partner – Austria
  • Nangia & Co – India
09 Nov

haysmacintyre takes up larger London office premises

haysmacintyre, the top 30 accountancy firm will move to Queen Street Place, located on the north side of Southwark Bridge, as of 18th December 2017. At over 25,500 sq ft, the new office is 8,000 sq ft larger than the firm’s existing premises and will serve as home to 35 partners and over 230 staff.

An impressive growth trajectory and desire to keep the whole firm together on one floor of a building has driven the decision. Since moving to new offices in Holborn in 2013, the firm’s turnover has grown by 43% and headcount has expanded by 27%. In October the team won ‘Audit Team of the Year’ at the British Accountancy Awards 2017, demonstrating the high value of professional audit advice delivered to clients. With four senior lateral hires and three new audit partner promotions having been announced in recent months, the additional space will allow the firm to continue to expand.

The building includes an impressive roof terrace, well suited to both client and staff meetings, with fantastic views of the Thames and the Southbank, sitting opposite the Tate Modern and Shakespeare’s Globe. Working facilities include a central hub area with a café at the heart of the office. The entire firm are currently being consulted on key elements of how the new office is set up and equipped.

Ian Cliffe, managing partner at haysmacintyre commented:

The move to Queen Street Place represents an important new chapter in the growth story of the firm. A key element of the search was to accommodate the whole firm on one floor as we believe it helps cement our firm culture and ensures that clients benefit from a truly integrated service. We are delighted to have secured a space which gives us significant headroom for further growth.
We hope the fantastic views and dedicated space for creative and collaborative thinking will inspire our staff, visitors, and potential recruits alike. We look forward to welcoming our clients to our new home in the coming months
09 Nov

BDO Indonesia takes over PKF

BDO Indonesia is pleased to announce a merger with one of country’s PKF offices, in the city of Tangerang – the largest city in Banten province and the third largest urban centre in the greater Jakarta region.

This consolidation adds 6 CPA partners, 2 CPA directors, 2 advisory directors, 2 tax directors and 110 professional staff with credentials in several listed companies, foreign direct investment, banking, insurance, property, airlines, jewellery manufacturing and other specific industries.  It includes an established Korean business desk to better serve BDO’s Korean clients and companies operating in Indonesia.

Michell Suharli, head of the Banten office, explains:

The team and I have observed the recent transformation of BDO in Indonesia and welcome the opportunity to be part of the firm’s future success. We are uniquely placed in Banten as the largest group of public accountants servicing one of the fastest-growing industrial corridors in Indonesia. Having a BDO office in this industrial area will significantly help to drive the firm’s growth to meet its ambition.

Welcoming Michell and his partners and staff to BDO, Stephen Darley, CEO Asia Pacific, notes that the new BDO Banten office was until recently part of the PKF member firm in Indonesia, adding that – 

This is particularly welcome, given the established Korean desk and, with a relatively new and vibrant Korean member firm in Seoul, I am confident of continued growth in winning more international business in this corridor.

Stephen also makes the point that BDO Indonesia has posted a 34% growth in its audit business over the last year, the highest growth rate amongst even the top 10 firms in our network and firmly reinforcing its number 5 position in Indonesia. This is importantly significant as Indonesia is projected to be amongst the top 5 GDP countries by 2030.

Thano Tanubrata, deputy CEO of BDO Indonesia, adds:

In addition to this expansion in West Java, we will soon open new offices in both Surabaya and Makassar, two of the more significant business centres in East Indonesia, in a further effort to grow our reach and services across the nation. At present BDO Indonesia has 45 partners and more than 700 professional staff, all committed to our vision to be the leader for exceptional client service in Indonesia.
21 Jun

Number One Employer for Social Mobility is…

Grant Thornton UK LLP has been recognised for its significant action to improve social mobility in the workplace.   In what is believed to be the world’s first-ever Social Mobility Employer Index, the firm ranks first out of the Top 50 employers who have taken the most action to improve social mobility in the workplace.

In recent years, Grant Thornton has made a number of changes to its school leaver and graduate trainee selection process, including the removal of academic barriers to entry and removing the emphasis on relevant work experience and extra-curricular achievements.  The firm also changed its aptitude test provider to one that could prove its process did not discriminate based on socioeconomic background. The aptitude test also now takes a more holistic approach to identifying talent and cultural fit.  Additionally, the firm has invested in providing ongoing coaching and peer-to-peer networking for continuous development for its people.

Sacha Romanovitch, CEO at Grant Thornton UK LLP, said:

We started our social mobility journey over three years ago with a vision for the firm to be more representative of all levels of society.  Investing in social mobility is a win-win and a great example of business doing well by doing good.  Businesses get access to a hidden talent pool, bringing diverse perspectives and better reflecting the clients we serve.  Communities benefit through recognition of talent and the reward of opportunities and development

In 2014, Grant Thornton became the first firm to remove academic barriers to entry. Three years later the firm has carried out extensive analysis, in partnership with charitable policy association The Bridge Group, to monitor the performance of its intake.

Key findings include:

  • 17% of Grant Thornton’s intake for school leaver and graduate programmes in 2016 would have been previously unable to apply based on academic criteria, including secondary school performance and degree classification.
  • This year, Grant Thornton saw a 47% increase in applications for our school leaver programme, with trainees joining the firm across 20 different office locations.
  • Looking at the 2014/2015 intake and data from the annual review process, 38% of those who would have been previously screened out due to academic requirements are considered to be strong performers, compared to 34% of those who would have passed the previous screening.  Overall, there is little difference in performance between the two groups.

Sacha Romanovitch continues:

Unlocking the potential of all in society to contribute fully is key to the future of the UK, where we have an opportunity to build a vibrant economy where no one is left behind.  Increasing social mobility is a practical way for business to make a difference.
Collaboration and sharing of ways in which businesses can play their part is also key.  Awards like this provide the opportunity to showcase what works and encourage others to get involved.  We are also founding signatories of Access Accountancy, an industry-wide social mobility initiative, and we’re delighted to see many others from that collaboration named on this list today.
By taking steps together, we can help build a positive future and a society that creates opportunities for all

The Index is a joint initiative between the Social Mobility Foundation and the Social Mobility Commission, in partnership with the City of London Corporation.  It ranks Britain’s employers for the first time on the actions they are taking to ensure they are open to accessing and progressing talent from all backgrounds and it showcases progress towards social mobility.

The aim of the Index is to encourage firms to share their initiatives, to progress in becoming employers that are more inclusive and to reveal which sectors and companies are taking the issue of social mobility most seriously.

David Johnston, chief executive of the Social Mobility Foundation, said:

All the Top 50 firms in the Social Mobility Employer Index should be applauded for the progress they are making towards ensuring that everyone has the opportunity to get in and get on – regardless of their background. They should be congratulated both for having prioritised social mobility and for being prepared to have their processes and practices independently scrutinised

The Rt Hon Alan Milburn, chair of the Social Mobility Commission, added:

Social mobility is hugely important if the UK is to become more productive and make the most of its talent. But research has shown that people from working class backgrounds – even if they are high educational attainers – are less likely to secure professional jobs because they have less access to the networks and knowledge to navigate the system.
The Top 50 firms are paving the way by changing their workforce strategies to ensure they get don’t lose out on talented people from less privileged backgrounds. We want the index to herald a step change towards improving social mobility by encouraging many more employers to compete to recruit, and keep, the best and brightest candidates – regardless of background

Catherine McGuinness, Policy Chairman for the City of London Corporation, said:

These firms have shown real ambition in their approach to tackling social mobility. They are leading the way in removing the barriers which are holding back the best and brightest candidates in our society. Statistics show that people from more prosperous backgrounds, who attend private schools and elite universities, often take a disproportionate number of the best jobs.
But more companies are making progress on social mobility, casting the net wider in the search for talent and recognising that a level playing field is in the best interests for all businesses. The Index is an effective incentive to UK businesses to demonstrate the progress they are making in this vital area
21 Jun

KPMG second in new list of Top 50 employers for social mobility

Following KPMG’s strong performance in the inaugural ranking of UK’s top-performing businesses for social mobility, Melanie Richards, Vice Chair of KPMG in the UK, calls social mobility the critical social issue of our time.

Melanie Richards siad:

Social mobility is no longer just a matter of fairness but an economic necessity. The publication of this new ranking couldn’t be timelier. We know that the UK is one of the least socially mobile countries in the OECD.
KPMG has taken a leading role on social mobility for some time – walking the walk not just talking the talk. At the end of last year, the firm became the first UK business to publish comprehensive data on the socio-economic makeup of its workforce. The move was a key component in KPMG’s strong showing in today’s Index,
What gets measured, gets managed. By tracking and publishing this data, KPMG’s aim is to ensure the firm is held to account and that the leadership takes positive and decisive action on these issues rather than simply paying them lip service.

For KPMG, this is another key milestone after the firm won a Queen’s Award earlier this year for its work on promoting opportunity through social mobility.

Melanie Richards continued:

We are all delighted to see KPMG achieve second place in the Index. It is recognition of the work our people do across the UK, often quietly and behind the scenes, to ensure our profession is more open and accessible to everyone
However it is far from a case of ‘job done’. We will redouble our efforts so more people from diverse backgrounds feel our firm and businesses like ours are places they can reach their full potential, no matter where they started out

David Johnston, chief executive of the Social Mobility Foundation, added:

All the Top 50 firms in the Social Mobility Employer Index should be applauded for the progress they are making towards ensuring that everyone has the opportunity to get in and get on – regardless of their background. They should be congratulated both for having prioritised social mobility and for being prepared to have their processes and practices independently scrutinised

KPMG’s top five tips for businesses looking to improve the socio-economic makeup of their workforce are:

  1. Making the business case

At KPMG social mobility isn’t just a ‘nice to have’ – it’s an integral part of our talent strategy. By widening access to the profession, we know we can attract and recruit the best talent from a diverse range of backgrounds, helping us solve our clients’ complex challenges.

  1. Educating staff about what social mobility is, why it matters and how they can contribute

You need a swell of support from all levels of the business to create change, all the way from your leadership through to new starters. Only by clearly outlining the case for social mobility from the outset will you be able to take them on this exciting journey with you.

  1. Learning from the experts

At KPMG we’ve sought out external experts to inform our social mobility strategy – for example, we consulted with experts at the Bridge Group and the Institute of Education on the right mix of socio-economic background questions for our new applicants and workforce.

  1. Developing data driven strategies

At the end of 2016 we became the first UK business to publish comprehensive data on the socio-economic background of our workforce. This data provides an evidence base for change and we can use it as a baseline to measure our future progress. Going public with this data will also ensure the firm is held to account on its social mobility work.

  1. Collaboration is key

Tackling social mobility isn’t something government or any one business can achieve on its own. That’s why KPMG has worked hard to drive collaboration and cross sector learning from our advocacy of the Living Wage to being a driving force behind the development of Access Accountancy.

13 Mar

PwC announces alliance and investment with Codebase

PwC has announced an alliance with CodeBase, Europe’s largest incubator, to help accelerate its growth in a move that reinforces the professional services firm’s commitment to startup and scale-up technology companies in Scotland.

More than quadrupling in size since its March 2014 launch, CodeBase in Edinburgh is home to over 90 startups – including Administrate, QikServe, TVSquared and Care Sourcer – which employ more than 600 people.  A Stirling incubator was announced earlier this month.

CodeBase’s mission is to build and scale the next great tech companies out of Scotland and it has helped to incubate scale-up companies which have raised over half a billion dollars of investment since its 2014 launch by co-founders Jamie and Stephen Coleman and others.

The alignment will see PwC offer business support concentrating on a number of tailored services focussed around its My Financepartner offering which offers a low-cost subscription service providing business advisory services.

The My Financepartner suite includes cloud-based accounting software, state of the art management information reporting, payroll and traditional accounting and tax services in an easy to access format that fast growth businesses demand.

At PwC, the deal was pulled together by the My Financepartner team and head of innovation for Scotland, Douglas Shand..

Douglas Shand said:

I’ve been involved with a lot of startups and scale-ups and very often they are companies which initially struggle to justify the cost and complexity of a traditional back office function. Reflecting that, My Financepartner lets them pick and choose the services they may want to use and pay for them as needed on a subscription payment model.
Some of the work coming out of Codebase is cutting edge stuff. It’s fantastic to see the passion and enthusiasm for what’s being created. Stephen and Jamie did a fantastic thing when they set this up and it’s exciting to be involved with it as it goes to the next level from Edinburgh to Stirling and elsewhere.
As part of the agreement, PwC will take up a presence at Codebase, with the team led by newly-appointed My Financepartner leader for scotland Ian Marshall.

Stephen Coleman, CEO and co-founder of CodeBase, said:

The partnership with PwC allows us to both accelerate development at Argyle House on our journey to build a tech powerhouse in Edinburgh and for our companies to tap into the firm’s global expertise and networks

Lindsay Gardiner, PwC regional chair said:

Professional services is changing and PwC in Scotland has attempted to be at the forefront of that change where it makes sense for our clients and the Scottish economy. We were one of the first to recognise the growing importance of cybersecurity and now we have the largest team in Scotland. Additionally, our digital forensics team is one of the strongest and most robust in the country
This deal and the development of My Financepartner also reflect these exciting, changing times. Startups and scale-ups don’t want or need a traditional financial advice service so we’ve adapted to that. My Financepartner lets the companies take care of the majority of their own accounting and business requirements but with the back-up and pro-active support of our experts if and when they need to talk to them.
Many say it’s about wanting to be – or looking for – the next Skyscanner, but to me that misses the point. Yes, it’s fantastic that Scotland can produce unicorns and we hope there are many more of them. Private businesses are the lifeblood of Scotland and the advice companies get at Codebase is set to help them be amongst the next generation of fast growth and big success firms. Being able to help all of these companies to that level will be a fantastic achievement.
These companies – and CodeBase itself – are making a positive difference not only to Scotland but to people across the globe and it’s exciting to be part of that.
18 Jan

PKF WELCOMES NEW FIRM IN CHINA TO ITS INTERNATIONAL FAMILY

China

PKF International rings in 2017 with a new member – Zhongxingcai Guanghua (ZG) Certified Public Accountants LLP – joining its global network of independent firms.

Several representatives attended the signing, which took place in Beijing on 23rd December 2016, including Mr Gengchun Yao, Chairman at ZG; representatives from the Chinese Institute of Certified Public Accountants; Beijing Institute of Certified Public Accountants; Hebei Institute of Certificate Public accountants; the Chairman of China United Guanghua Holding Group; and John Sim, Amy Hui and Wingsee AuYeung from PKF.

With PKF adding ZG to its global family, it now boasts over 400 offices operating in more than 150 countries across five regions. This new venture provides existing ZG clients access to PKF’s global network for international expansion and existing PKF clients with full coverage across China to support their expansion plans.

[amazon_link asins=’0273708279′ template=’ProductGrid’ store=’globalaccountant-21′ marketplace=’UK’ link_id=’cfcfeeed-ddc7-11e6-bef4-a9ae3f0f6bc8′] Based in Beijing, ZG has good geographical coverage with branches in 32 cities, and is among the top 20 accounting firms in China. It has established strategic alliances with many well-known investment banks, brokerages and fund companies and offers its customers a variety of services including Asset Assessment Service, Auditing & Advisory Services. Judicial Expertise, and Tax Advisory Service. The accountancy firm is also becoming known as an operational platform for securitisation of domestic capital.

Mr Gengchun Yao, Chairman at ZG, explained:

The partners are very excited to join the PKF family. This is an important strategic move to show the growing support to our clients as they expand internationally

PKF’s global family of legally independent firms specialise in providing high quality audit, accounting, tax, and business advisory solutions to international and domestic organisations in many sectors.

John Sim, CEO of PKF, explained:

Finding the right audit firm in China is an important part of our strategy to becoming the leading global brand for independent accounting firms. It not only helps ZG put themselves on the global map but also gives PKF the coverage we need in China. We look forward to getting to know them better and to helping their clients implement the ‘One Belt One Road’ strategy of the Chinese Government across the PKF network

Sebastian Wohldorf, Chairman of PKF International, concluded:

ZG joining PKF is a win-win for both parties. ZG is one of the fastest growing accountancy firms in China, so we are delighted they have decided to join our family. They share the PKF values of passion, teamwork, clarity, quality and integrity so I’m sure it will be a great step forward for both parties
13 Jan

Baker Tilly International Announces New Member Firm in the Seychelles

Baker Tilly International have announced the appointment of a member firm in the Seychelles.

Located in the largest island of the Seychelles, Mahé, Mathur Associates has one partner and eight professional staff. While the main service line focus is audit, the firm also provides accounting, taxation and advisory services.

The firm has worked with the Baker Tilly JFC Group, our existing member firm operating in Bahrain, Oman, Qatar, Saudi Arabia and the United Arab Emirates over the past year. Mathur Associates and the Baker Tilly JFC Group are currently in the process of merging, after which, the new member will trade as Baker Tilly.

Ted Verkade, CEO and president of Baker Tilly International, commented:

I believe this initiative offers the network the opportunity to gain a stronger presence in the Indian Ocean which will help the Baker Tilly JFC Group serve their existing clients more efficiently. Appointing Mathur Associates in the Seychelles is another step towards further strengthening our network and an example of our continued investment in ensuring that we have the global reach and local expertise which allows us to support our members’ clients as they seek to enter new and emerging markets. We are delighted to welcome Mathur Associates to the network
05 Jan

The clock is ticking

Moving from traditional hourly billing to value pricing has been the subject of hot debate for years with most firms reluctant to change. However, as accounting firms turn to machines to increase efficiency and consulting services to grow profits, value pricing suddenly makes more sense.

Imagine taking a long-haul flight and being charged for each hour of your journey. Imagine that flight makes an unscheduled stop and takes twice as long as originally planned and then you receive a bill for the total duration of your flight. How would you feel?

Hourly billing is still the norm in the accountancy profession. And it’s easy to see why. This traditional method of pricing is simple to use, easy to track and it’s what everyone knows.

However, the client can be left in the dark about what the final price will be, and the quality of service isn’t factored into the bill.

Is value pricing the future?

Switching to value pricing, where firms offer a price based on the estimated value of the service they are offering, would seem a common sense approach, but unfortunately it’s not that simple. The problem is nobody has worked out how to do this effectively in accounting, or if they have, they are keeping quiet about it.

If value pricing is the pricing strategy of the future – and 77% of respondents said this is likely or very likely in a survey by IFAC – then the profession hasn’t exactly been quick to embrace it.

Back in 2013, IFAC ran an article entitled “tomorrow’s firm and the role of value pricing” which was published with IFAC’s permission by Praxity, the world’s largest alliance of independent accounting and consulting firms.

In the article, Andreas Noodt, Partner at Praxity participant firm FIDES and former German Representative in the Small and Medium Practices Committee (SMPC), quizzed Ron Baker, value pricing evangelist, best-selling author and founder of the VeraSage Institute.

Ron, who is known for his quest to “bury the billable hour” and “trash the timesheet” put forward a compelling argument for the value pricing model, claiming that traditional billing encourages firms to accept low-value clients and inhibits innovation. The great thing about value pricing, he said, is the focus on effectiveness and outstanding service rather than efficiency, adding: “Professional Knowledge Firms need to start pricing upfront for everything they do, period. No more excuses.”

Pressure to change

Fast forward to today, and value pricing is firmly back on the agenda. The Big Four are signalling a move away from hourly billing as they become increasingly digitalised, using machines capable of processing vast amounts of data in seconds, and investing in artificial intelligence. There is also a continued trend towards business advisory services which is a strain on resources or an opportunity to drive profits depending on who you talk to.

Ron Baker says firms are “going to have to embrace” value pricing sooner or later because machines are taking a fraction of the time to complete tasks, putting pressure on the traditional pricing model. “If you charge by the hour and you can do this in tenths of a second, you are going to take a major hit.”

He claims hourly billing is inhibiting transformation, not only in terms of rolling-out new technology like cloud-based accounting but in developing more of an advisory role where value is king.

The problem I see here is it is very difficult to turn an accountant into a consultant. This is because consultants are paid for questions and accountants are paid for answers

Daunting task

So why is it taking so long for accounting firms to embrace value pricing? Ron blames the ageing nature of the profession, claiming that two thirds of the American Institute of CPAs (AICPA) are eligible for retirement. He also cites a fear of change. “What we are talking about is a business model change. It’s a daunting task and they just don’t want to do it.

However, Andreas Noodt, while remaining a keen supporter of the value pricing model, says the problem is that value pricing is proving difficult to implement throughout the whole firm:

The idea is great but I still think it’s very difficult to adopt value pricing in practice in the pure teaching of Ron. At FIDES we have been working on this and have achieved some progress but there are still obstacles that we have yet to overcome.

Obstacles

Andreas stresses that pure audit services are difficult to price by value in a heavily competitive environment. Thus, most audit engagements are tendered and fixed fees are used. This is combined with the fact that most clients perceive less value in an audit. He says the challenge for auditors more and more is to “make the value of audits clear in the mind of the client”.

A major stumbling block, Andreas says, is audit enforcement institutions continue to look for hourly billing.

We have to document how much time has been incurred and billed for. In this sense, you can often exclude auditing from value pricing. Furthermore, it is difficult to have audit work bundled with other work, although bundling would be a way forward

However, value pricing does already exist in a less radical form than that proposed by Ron Baker. In Germany, for example, key aspects of the work of accountants, especially tax compliance and compilation work, have long been subject to a public fee ordinance in which fees are prescribed within in a bandwidth linked to the value of revenue and balance sheet figures.

Higher value services

Value pricing is yet to be applied with higher value services like tax structuring (consulting) or certain advisory services in Germany. Andreas explains that one of the difficulties lies in scoping a project. “Very often, it’s difficult to see the end of the tunnel in a consulting project, especially given the enormous complexity of German tax law. Where the necessity of repeated scope change in complex consulting projects makes it difficult to apply pure value pricing, billing by the hour at higher rates that reflect the value of the project is often the easy way out for the consultant. This way, the consultant builds in a higher margin of the value for the client instead of undergoing the exhaustive exercise of amending scopes, which is often not possible in time critical projects and annoys the client.”

Commenting on the trend towards consulting packages and digitalisation within the profession as a whole, Andreas says:

Packages with consulting represents a way forward in terms of value pricing, and audits and new technology will definitely be something to consider in the future if the obstacles can be overcome, but many firms are far away from this

Even if value pricing is not yet fully embraced, greater focus on value is a positive step forward according to Andreas, who adds “talking about value with the client improves their perception and esteem of our work and helps achieve higher fees.”

Death of the billable hour?

Donny Shimamoto, founder of management consulting firm IntrapriseTechKnowlogies, says it’s possible to move to value pricing without eliminating timesheets. He recently suggested the key is to change management mindset so that performance is not judged solely on billable hours.

Donny explains:

I define value pricing simply: ‘Pricing a service at a rate that reflects the value of the service delivered’. My firm applies this definition to hourly and fixed-fee engagements. Our standardised hourly services are billed based on the perceived value of the service

The idea of continuing with timesheets is dismissed as “absurd” by Ron Baker. He says timesheets are a constraint, adding: “By the time we see something on a timesheet, it’s no longer manageable.”

Three years after Praxity investigated the role of value pricing, the debate is still raging and set to intensify as the profession adapts to industry trends.  Perhaps Ron is right when he says: “The death of the billable hour and the timesheet is maybe not within reach, but within sight.”