Guide to Practice Management for Small- and Medium-Sized
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Guide to Practice Management for Small- and Medium-sized Practices Small and Medium Practices Committee International Federation of Accountants 545 Fifth Avenue, 14th Floor New York, New York 10017 USA This Guidance to Practice Mangement for Small- and Medium-sized Practices was prepared by the Small and Medium Practices Committee of the International Federation of Accountants (IFAC). The committee represents the interests of professional accountants operating in small- and medium-sized practices and other professional accountants who provide services to small- and medium-sized enterprises to international standard setters, IFAC boards and committees, and other international organizations. This publication may be downloaded free-of-charge from the IFAC website: http://www.ifac.org. The approved text is published in the English language. The mission of IFAC is to serve the public interest, strengthen the worldwide accountancy profession and contribute to the development of strong international economies by establishing and promoting adherence to high-quality professional standards, furthering the international convergence of such standards and speaking out on public interest issues where the profession’s expertise is most relevant. For further information, please email [email protected]. Copyright© June 2010 by the International Federation of Accountants (IFAC). All rights reserved. Permission is granted to make copies of this work provided that such copies are for use in academic classrooms or for personal use and are not sold or disseminated and provided that each copy bears the following credit line: “Copyright © June 2010 by the International Federation of Accountants. All rights reserved. Used with permission.” Otherwise, written permission from IFAC is required to reproduce, store or transmit this document, except as permitted by law. Contact [email protected]. ISBN: 978-1-60815-067-0 Contents i Preface This Guide to Practice Management for Small- and Medium-sized Practices (the Guide) was commissioned by the IFAC Small and Medium Practices (SMP) Committee to provide guidance to small and medium sized practices (SMPs) on how to better manage their practice and ultimately operate in a safe, profitable, and professional manner. IFAC is grateful to its member bodies Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili and Certified General Accountants’ Association of Canada for providing some of the funding for the Guide’s development. While developed by CPA Australia, the Guide is the full responsibility of the IFAC SMP Committee. IFAC staff and a global advisory panel, with members drawn from a broad cross-section of IFAC member bodies, have assisted in reviewing drafts of the Guide. The Guide provides SMPs with knowledge of practice management principles and best practice guidance on a whole range of practice management topics including strategic planning, managing staff, client relationship management, and succession planning. As such the Guide will help SMPs operate with greater proficiency and professionalism and in a so doing help them cope in an increasingly complex and competitive environment. Member bodies and practices either use the Guide as is, or tailor individual modules to suit their own needs and jurisdictions. It has been designed to provide a basis from which member bodies and others can develop “derivative products” such as training materials, journal or website articles, customized checklists, and forms and practice management programs. Sylvie Voghel Chair, IFAC SMP Committee June 2010 ii Request for Comments This is the first version of the Guide. We consider the Guide to be of high quality and useful in its present form, but like any first edition, it can be improved. Hence, we are committed to updating the Guide on a regular basis to ensure it reflects current best practice and is as functional as possible. The next update is scheduled for late 2011. We welcome comments from IFAC member bodies, practitioners, and others. These comments will be used to assess the Guide’s usefulness and to improve it prior to publishing the second edition. In particular, we welcome views on the following questions. 1. How do you use the Guide? For example, do you use it as a basis for training and/or as a practical reference guide, or in some other way? 2. Do you believe that the Guide has appropriately included all of the relevant aspects of practice management? If not, which elements would you suggest be added to or deleted from the Guide? 3. Do you consider the Guide’s contents to be sufficiently tailored to the key practice management issues faced by small- and medium-sized practices? 4. Do you find the Guide easy to navigate? If not, can you suggest how navigation can be improved? 5. What other references, further readings, and resources do you suggest be included? Please be as specific as possible. 6. In what other ways do you think the Guide can be made more useful? 7. Are you aware of any derivative products, such as training materials, forms, checklists, and programs, that have been, or are being, or might be developed based on the Guide? If so, please provide details. Please submit your comments to: Paul Thompson, Senior Technical Manager at: Email: [email protected] Fax: +1 212-286-9570 Mail: Small and Medium Practices Committee International Federation of Accountants 545 Fifth Avenue, 14th Floor New York New York 10017, USA iii Introduction Purpose The Guide aims to assist firms to practice in a safe, profitable and professional manner. The Guide seeks to do this by providing practical guidance across a whole range of practice management topics. The Guide is intended to improve the management and operational efficiency of SMPs so as to ultimately make them more sustainable and successful. As such, the Guide is intended to: address the opportunities and challenges faced by SMPs; improve the competitiveness, profitability, and sustainability of practices; enhance the expertise, competence, and efficiency of those managing practices; provide practical assistance to those engaged in managing practices so as to provide an environment conducive to the provision of high quality services; showcase global best practices and latest practice management techniques. Intended Users As the title suggests this Guide is primarily directed at professional accountants working for or as SMPs. While its primary user is likely to be those managing the practice and senior professional staff, certain parts will be useful to more junior staff and as an introduction to the practices for new staff. It is also considered suitable as a reference guide meant for everyday use. In addition, SMPs may find the Guide helpful when it comes to providing general business advice to SMEs, likewise professional accountants working in SMEs may find it useful. Finally, students, educators, training providers, researchers, and international development agencies may find the Guide useful. Topics Covered While the Guide covers a diverse range of topics, both strategic and operational, the depth and nature of coverage varies according to the topic. Where there is a high degree of homogeneity of practice and custom across jurisdictions a topic is covered in depth. But for topics which are especially jurisdiction sensitive for example, practice structure, employment law, etc – coverage is more generic and principle based. A brief outline of each module follows, with a detailed index which includes hyperlinks found in the contents section. Planning for your firm The essential ingredient for success is for every firm to know its own strategy—the path that the partners and employees wish to travel. There is not necessarily a single right or wrong direction for a public accounting firm. Successful firms can be highly specialized or general, focusing on transaction or compliance services or high-end advisory services. Successful firms can comprise a small or large number of employees and partners. Module 1 examines the business and strategic planning processes and the more detailed policies that govern the development and implementation of the strategic plan within your firm. Practice models and networks If an accounting firm is built on a solid foundation of good decision-making, ethical and efficient processes, and a balanced team of committed leaders, it can be confident about its long-term future. Module 2 looks at the structural considerations inherent in owning or running an accounting firm, and the various models available. It includes examination of profit sharing and decision-making within a firm and the use of networks to add value and grow profitability. Building and growing your firm Module 3 expands on the themes covered in Modules 1 and 2 by exploring in more depth the issues of developing a growth strategy, coping with increased regulation and competition, marketing and developing a firm culture. iv People power: Developing a people strategy The degree to which your firm can provide good service and be successful is determined by the calibre of your staff and your leadership. Module 4 examines key elements that will play a pivotal role in achieving your firm’s objectives—people. This module explores your role as a leader as well as the staffing issues that have to be addressed as your firm grows, including your firm’s ability to attract, retain, motivate, and train their employees. Technology and e-business In a climate of ongoing change, increased regulation and the emergence of global reporting systems, it is even more critical for firms to adopt best practice in respect to their technologies. Module 5 examines the increasing role technology plays in the success of an accounting firm. Effective selection, implementation and management of technologies, as well as training employees to use these tools, are fundamental to the success of any firm. Client relationship management Strong and effective client relationships are the backbone of a successful accounting firm. The relationships accountants have with their clients is fundamental to the value of the accountancy firm. Increased competition demands that firms maintain and enhance client relationships.