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Home / ... / Live Long and Prosper! Practice Comparison Survey

[Full text] Huge variations in the cost of PII and high levels of stress arising from the increasing burden of compliance-related red tape are amongst the key findings of the latest ICAI Practice Comparison Survey. But, on the positive side, growth in fees continues and the vast majority of respondents would still recommend Chartered Accountancy as a career. John McCarthy reports..

Professional Indemnity Insurance The biggest surprise in this year's survey is in the area of Professional Indemnity Insurance (PII) premiums. Amongst respondents, the survey found a difference of as much as �??�?�£4,365 for the same level of cover, despite the fact that none of the respondent firms had suffered any claims against them. For example, sole practitioners with cover between �??�?�£501,000 and �??�?�£1m, the variation in premium is �??�?�£2,075. (See Table 1). In partnerships, with the same level of cover, that variance is more than double at �??�?�£4,635. (See Table 2). Table 1 SOLE PRACTITIONERS RANGE OF COVER AVERAGE AVERAGE MINIMUM MAXIMUM �??�?�£ COVER PREMIUM PREMIUM PREMIUM <100k 89,286 441 306 686 100k-250k 233,333 710 550 1,020 251k-500k 461,364 951 469 1,800 501k-1m 927,778 1,151 350 2,425 1m-2m 2,000,000 3,120 3,120 3,120 table 2 partnerships range of cover average average minimum maximum �??�?�£ cover premium premium premium 100k-250k 250,000 880 880 880 251k-500k 325,000 1,173 1,173 1,173 501k-1m 908,333 2,325 765 5,400 1m-2m 1,612,500 3,860 2,400 7,000>2m 3,000,000 12,900 12,900 12,900 Partnerships Partnership, it appears pays - not just in financial terms but also on the personal level. Taking sole practitioners, the average yearly fees billed now stand at just over �??�?�£139,000 which, disappointingly, is actually slightly down on the last year�?�¢??s figure. By way of explanation, it should be borne in mind that respondents vary from one year to the next and last year�?�¢??s figure may have been skewed by the fact that practitioners from Scotland were included in a joint survey. This year�?�¢??s survey dealt only with firms in Ireland and Northern Ireland.

For partners, yearly fees billed are averaging just over �??�?�£171,000 per partner. And taking partnerships and sole practitioners together, the overall yearly fees billed now stand at just over �??�?�£151,000 per principal.

On the personal front, it is interesting but perhaps not surprising to find that partners have lower stress levels and seem to manage to find a better balance between their personal and professional lives. Given that the burden of compliance with regulation and with a never-ending stream of new accounting and auditing standards is commonly cited as one of the key stress-generators for practitioners, it is not surprising that stress levels are slightly lower in firms where there is some method of sharing this burden.

Networks There are now 25 practitioner networks around the country, North and South, and it is increasingly clear that participation in these networks serves a useful purpose, particularly for smaller practices and sole practitioners. Typically each network has members from about eight firms who meet once every month and discuss issues ranging from regulation to staff retention. Some networks already share training of staff, assessment and purchase of software, and hardware collectively, and share staff resources within the group. In practical terms, this can mean the members of the network coming together for in-house tailored CPD training courses maximising the benefits of training and minimising costs and travel time. Of course, partnerships find it easier to be involved in networks because the partners can alternate attendance at meetings amongst themselves. That said, however, sole practitioners probably have most to gain from participating in these informal groupings.

Information Technology All of the partnerships participating in this year�?�¢??s survey are using email and 83% of sole practitioners are also online. Of those who do not currently have access to email, all are planning to introduce it in their firms before the end of this year.

In terms of websites, 29% of partnerships participating in the survey report that they have their own website compared to 19% of sole practitioners. Firms with websites may be interested to know that they can have them listed for free on the Institute�?�¢??s website where there are now links to more than 70 practising firms (www.icai.ie/cafirms.htm). According to the survey, one third of sole practitioners who do not have a website at present plan to introduce one later this year at an anticipated average cost of �??�?�£866. Partnerships responding to this question intend to spend approximately �??�?�£2,300.

Services Given the continuing decline in the market for audit services, practitioners expect traditional services to account for significant fees in the foreseeable future. Respondents to the survey identified a number of growth areas which they believe are likely to become increasingly important. In particular, business advice, tax advice, and personal financial planning advice, followed closely by outsourcing, IT advice, and investment business services were identified as potential growth areas.

Stress There are a range of issues which create stress in the lives of both partners and sole practitioners. Factors listed which include: the balance between personal and professional life; admitting a new partner; succession planning; provision of a high quality service; business planning and development issues; staff retention and development issues; fees; billing and collection; regulation, standards and compliance issues generally; revenue audits and tax investigations.

Predictably compliance issues related to regulation and standards is the number one cause of stress for the majority, closely followed by staff issues in particular the recruitment and retention of staff. You need only look at the findings of Mark O�?�¢??Neill�?�¢??s survey elsewhere in this magazine, or indeed the recruitment section at the back, to see just how significant the staffing issue is for firms at the moment. That fact is reflected in the findings of this year�?�¢??s survey.

It beats the hell out of teaching! Despite the stresses of life as a practitioner, it is encouraging to see more than 85% of respondents to the survey would still recommend Chartered Accountancy as a career. Reasons cited range from the fact that it is �?�¢??overall a rewarding career�?�¢?�?�� to �?�¢??good career prospects�?�¢?�?�� and �?�¢??good mobility and remuneration�?�¢?�?��, it�?�¢??s �?�¢??a good brand�?�¢?�?��, it�?�¢??s �?�¢??a global qualification�?�¢?�?�� or as one respondent said �?�¢??It beats the hell out of teaching!�?�¢?�?��

The minority who don�?�¢??t think it such a good career choice suggest that the level of return does not adequately compensate them for their level of responsibility. Broadly speaking, if there is a common theme running through the very few negative responses on this question, it would amount to an inability to make sufficient money to offset the hassles of life at the coal face.

If you are wondering how your own practice might have measured up had you participated in this survey, you can request a private, confidential analysis from Practice Advisory Service

Accountancy Ireland Vol 32 No 5 October 2000. (c) Accountancy Ireland.