Accountancy firms in UK facing problems?

Matthew Wilcox our consultant managing the role

The number of accountancy firms in the UK has fallen by two per cent over the last year, according to a new report from Syscap. Furthermore, some 1,335 have fallen off the face of the high street over the previous five years, equivalent to a drop of 15.5 per cent.

Some of this fall can be attributed to more firms taking their financial services in-house, while the relaxation of audit thresholds on smaller businesses has also played a part, reports Accountancy Age.

Research from the Financial Reporting Council showed that 69.1 per cent of all companies were exempt from auditing in 2007/08 compared to 71.4 per cent in 2011/12, perhaps offering one explanation for the decline in high street accounting.

Syscap chief executive Philip White said: "The relaxation of audit thresholds means that more and more businesses can opt out of being audited. This has been extremely problematic for accountancy firms, as auditing is a business they rely on for their bread and butter."

However, he added that there has also been a degree of weakness in high-margin work like corporate finance since the credit crunch, suggesting macro-economic factors could also be playing a part in the drop.

Independent financial provider Syscap recently released research noting that IT firms are attempting to expand and securing funding for this, noting that they often see independent financing as the best way to do so.

Its study found that the use of financing by businesses has grown by five per cent over the last 12 months, with the industry lending a total of £14 billion to UK companies in this period as high street banks remain relatively reticent when it comes to offering funding to start-ups.

Mr White pointed out that many high-growth sectors such as IT have decided to go with independent financial providers as the best route for securing the necessary cash for expansion.

The increased flexibility offered by these firms is also an incentive compared to high street banks, he concluded.

11/04/16
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