The appalling story below is true but, as I have no desire to embarrass anyone, I have not identified the client, the firm or the partner concerned.
Instead, I have identified seven practical tips that smaller firms can learn from the blunders outlined below. The tips may not be ‘new’ but I think the context that gives rise to them emphasises their importance.
Background
In 2015 I took on a voluntary role that included responsibility for the finances of a members’ club that had long been audited by a top 20 firm.
I called the audit partner to introduce myself and to mention that we would no longer require an audit. Turnover was less than £250k and the bulk of income and expenditure arose from mutual trading. I explained that I had also engaged a bookkeeper – my predecessors having done the bookkeeping themselves. All the bookkeeping is maintained on Xero.
We agreed that an independent examination of the accounts, to be drafted by the bookkeeper, would suffice. That was February. Our accounting date was 31 March. The partner said that a manager would liaise with me over the timing of the work.
The service
Four months later, in June, an audit manager got in touch and agreed to send a fee quote. It was lower than previous audit fees but still seemed high given there was to be no audit and the bookkeeper would be drafting the accounts.
To give the firm credit, everyone who communicated with me and the bookkeeper was efficient, polite and professional. However I never once received a phone call from anyone. Not once.
I still think it bizarre that an accountancy practice (whatever the size) could service a client, paying the firm many thousands of pounds each year, without anyone actually talking to their key contact at least once during the annual process. Even more so given that I was new in role.
My conclusion was, as I had anticipated at the outset, that the job was too small for the firm and that perhaps they had been waiting for us to sack them. It certainly felt as though they simply went through the processes without any thought as to how we, the client, related to their work. They had a few queries but proposed no changes to the draft accounts prepared by the bookkeeper.
The tax
Someone from the tax department emailed me in November to remind me of filing deadlines and to ask if I wanted them to do their work as usual. I agreed and realised only then that that the fee quotes, supplied in the summer, excluded any ref to the tax work (suggesting the traditional lack of communication between departments that I recall from my own days in practice).
No one confirmed what they would do on the tax side. I was pleased however that the tax team seemed on the ball and took responsibility for sorting everything.
Remember the client here is a mutual trading body with many annual recurring sources of income. I was surprised therefore to receive a number of queries from the tax team as to the taxability or otherwise of income sources. I suggested that their files or colleagues should be able to confirm which sources were taxable etc. I had my own views too of course.
The club had been client of the firm for many, many years, so it struck me as odd that the tax team were asking basic questions as if new to the affairs of the client. They were otherwise efficient and helpful so I paid the tax fees without query. However, again, no one spoke with me or quoted for the tax fees which were simply charged without any explanation at all.
The upshot
It transpired that the 2014 accounts contained an under-accrual for the audit firm’s fees for the year. Whilst they were not auditing the figures I would have hoped that they would have ensured we were adequately accruing for their full charges. Our draft figures for the year to 31 March 2015 therefore had to reflect the previous under-accrual. Had this been correctly accrued the results would not be swinging from a surplus one year to a deficit the next year.
As a side issue I also noted that postal communications from the firm’s accounts and marketing department, more than a year after I took over, continued to be addressed to my predecessor.
All in all the firm did little to cover itself in glory.
The switch
I had made the decision to recommend that we replace the firm earlier this year, but thought I would wait to see when they would get in touch to plan the work for our accounts to 31 March 2015. They didn’t.
In the meantime I briefed 3 possible replacement firms, all of whom then submitted fee quotes around half what we had paid previously. All 3 were top 30 firms.
When I emailed the old audit partner to explain why we were switching to another firm, the response I received simply said:
Thank you for your email.
I am sorry to hear that you were not happy with the service you received.
We await your further information regarding our selected replacement.
Seven constructive takeaways
- Communicate proactively: Regular, proactive communication with clients is essential. Don’t wait for the client to initiate contact, especially when a new person is involved. A quick phone call can build rapport and clarify expectations.
- Clarify scope and fees upfront: Ensure that fee quotes clearly outline what services are included. Ambiguity leads to confusion and potential dissatisfaction. Discuss all potential charges and services before starting the work.
- Maintain continuity and knowledge transfer: Keep detailed and accessible client records, including notes on their history and specific needs. Ensure that new team members can easily access this information to avoid asking basic or repetitive questions.
- Be thorough with account management: Regularly review and update client contact information. Sending correspondence to a former contact is unprofessional and can lead to missed communications.
- Maximise teamwork: Ensure seamless communication between teams. Clients expect that their accountant, tax advisor, and other service providers are on the same page and aware of each other’s work.
- Ensure clients feel valued: Even smaller clients can provide long-term value and referrals. Don’t make them feel like their business isn’t important to you. Treat each client with respect and dedication.
- Follow up consistently: If there are delays or issues, keep the client informed. Don’t leave them wondering about the status of their work. A simple follow-up can prevent frustration and show that you are on top of things.
