Speaking to 200 attendees of the Institute of Chartered Accountants in England and Wales' sole practitioner day, CPA and consultant Chris Frederiksen told the audience they must embrace change in order to survive.

He called accounting and auditing the "last bastion of inefficiency." With the rise in the audit threshold, audit work is about to disappear, and basic accounting is soon to be replaced by the application service provider concept, whereby accounting services are conducted by ASPs out in cyberspace. Tax work is also declining at a rate of 2 percent pa and will eventually be taken over by Internet companies, which in the U.S. are doing tax returns for free in exchange for the company information they access.

So it is time for small practitioners to move into financial services and strategic planning, which offer low risk and high reward, said Frederiksen. "This is the natural place for accountants to be; it is our territory. White collar workers want financial services advice, not from an independent financial adviser but from their accountants whom they trust."

He referred to the "turnkey model" that is evolving in the United Kingdom, where a small group of firms shares an IFA, enabling accountants to move into new product areas but with their reputation intact. And strategic planning should no longer be carried out only on an ad hoc basis. He said that with the new computer programs that are currently on the market, this traditionally time-consuming and expensive service can easily be simplified.

As well as recommending the audience to raise their billing rates, he also expounded the PITA theory: every year, get rid of two clients that are a "pain in the assets." "Don't be their hostages. Firing clients is great for morale and empowers the staff."

Send comments to information@smartpros.com.

Copyright 2000 AccountancyMagazine.com. Used with permission.