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Compliance costs creating career crisis

THE crushing weight of compliance, spawned mainly by the GST, may mean an end to the days of the lone accountant.

The small business option, once contemplated by accountants after they had served their apprenticeship with one of the big accounting firms, is losing its attraction for some.

A number of sole practitioners are being forced to work six and even seven days a week to keep up with the compliance work they face.

Many accountants are now opting for careers in management, commerce or are even heading overseas.

Others are simply leaving accounting and turning their hand to other areas, such as financial planning or consulting.

Those who remain as small practitioners do so partly because they like being their own boss.

Others cite financial constraints as their reason for staying.

Before the introduction of the GST accountants in public practice were being urged to focus on helping their clients build their businesses and wealth.

It was thought most compliance functions could be automated, which would allow practitioners to concentrate on providing business and financial planning advice to their clients.

Several accounting consolidators, such as Stockford and the ill-fated Harts, entered the market with plans to turn accountants away from compliance issues and towards more lucrative services such as financial planning.

However, the huge compliance load associated with the GST and other changes made that business-advice focus difficult.

The attraction for accountants to enter sole practice is similar to that of a lot of other small businesspeople – they want to be their own boss and work for themselves.

However, the ability to recoup costs from client compliance work is becoming much harder.

CPA Australia WA director Justin Walawski believes a lot of account-ants are going into management.

“There has certainly been a move out of practice, but it is not a mass exodus,” Mr Walawski said.

“People are looking for more than just compliance work from their financial adviser.

“There has been a huge growth in financial planning in the past year and a half and a lot of accountants are moving into that area.

“There are questions being raised about how much an accountant is expected to do. They don’t just have to deal with legislation from the Australian Tax Office these days. They are also being asked to understand laws from the social security side because that’s what their clients want.

“These accountants can’t pass on some of those compliance costs.”

Institute of Chartered Accountants in Australia WA regional manager Con Abbott said about 45 per cent of the institute’s members had opted for a career in commerce.

He said many also were pursuing careers overseas.

“A few years ago a lot of people would break out of the big firms and start their own practice, but it is a lot harder these days,” Mr Abbott said.

“Sole practitioners and small firms are finding it hard just keeping up to date these days. Firms often need two to three people just to keep track of the tax legislation.

“I think a lot of accountants in small practices are sick of working for the Government.

“Some feel commerce offers a better lifestyle because you’re only working for the one client and can get across the issues in that particular industry quite quickly. They see it as better value for their careers.

“We’re starting to see a lot of chartered accountants at executive and board level, such as Normandy executive chairman Robert Champion de Crespigny and AMP’s Paul Batchelor.

“I think the financial skills they bring to boards and their due diligence approach is being sought.”

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