Rules for setting up an accountancy practice

[CGorman]

Hi all,

A few of my class have been discussing the rules for setting up accountancy practices in the past few weeks. As many of us are about to embark upon our 3.5yr training contracts, we are all keen to ensure we keep doors open down the line should we decide to go down this route. However in our discussions much confusion of the exact rules regarding setting up in practice arose. Heres a few ideas that have been bandied about, can people confirm them and add any missing ones please? (assume ICAI qualified)

> Is it true you must be a qualified accountant for 2yrs before you can obtain a practicing certificate?
> Is it true you must have spent X time in an auditing department to be allowed to audit? What is X? 52 weeks???
> Do firms not have to change auditor regularly these days (a friend said in a Big 4 practice the same individuals could'nt do the same audit for more than 3yrs running)?? Does this not largely preclude one partner practices from audit work?
> What functions can a qualified CA offer in his/her own practice? Obviously bookeeping and general advisory, but can they offer tax and auditing?
> Does not being a member of the ITI preclude you from offering any degree of tax advice?
> Any other big regulations/rules regarding setting up a practice?

Obviously we all have long careers ahead of us as employees... but we whould all dearly like to ensure we don't unintentionally make life difficult for ourselves later in life should we wish to go into practice.

Replies to the questions, and general stories of practice setup are much appreciated. Thanks

 

[ubiquitous]

> Is it true you must be a qualified accountant for 2yrs before you can obtain a practicing certificate?

Yes

> Is it true you must have spent X time in an auditing department to be allowed to audit? What is X? 52 weeks???

Not necessarily in an auditing dept but iirc you need a certain quantum of audit experience before you can be registered as an auditor.

> Do firms not have to change auditor regularly these days (a friend said in a Big 4 practice the same individuals could'nt do the same audit for more than 3yrs running)??

No - unless perhaps you are talking about PLCs.

Does this not largely preclude one partner practices from audit work?

No. That said, most sole practitioners would regard audit work as a necessary evil at best and as a nightmare at worst. Some sole practitioners don't bother with audit work anymore.

> What functions can a qualified CA offer in his/her own practice? Obviously bookeeping and general advisory, but can they offer tax and auditing?

Yes, and yes. Many firms also offer company secretarial services, investment advisory services, insolvency etc. Of course accounts preparation and tax compliance work is the bread & butter of most practices. Firms can offer any other services they want to, once they don't conflict with their core work. Many offer mortgage services for example.

> Does not being a member of the ITI preclude you from offering any degree of tax advice?

Not really, but its dangerous to offer tax advisory services unless you know what you are doing.

> Any other big regulations/rules regarding setting up a practice?

Where do I start... Best bet is to talk to someone in ICAI, CPA or ACCA Ireland for help on this. Otherwise read their publications and websites.

Do bear in mind that regulations tend to evolve dramatically over time and what might be relevant and important now might be comparatively irrelevant if and when your own turn comes around to open a practice.

 

[CGorman]

Thanks ubiquitous, thats all very helpful. On the auditing side, have you any idea how the quantum of experience is measured/recorded. I know the ICAI have more detail on their website, but it's buried in Chariot which a non-member like me can't access.

Not really, but its dangerous to offer tax advisory services unless you know what you are doing.

I was reading up on the ITI qualification and it appears a qualified ACA (within in 3yrs) can get exemptions from part 1 of the ITI, and that it is not necessary to work in tax to sit the other two parts (8 papers)... would it be a reasonable idea to study/sit these in the years preceding setting up on ones own?

It's interesting our own lecturers (DCU BA Acc. & Fin) or careers advisory don't even mention these things to us as for many this is a topic of serious confusion & conversation.

One of my primary reasons for this post is that I am considering doing my training contract in a department other than tax/audit (its a department I find fascinating) and as such I don't want to impede my career down the line should I wish to go back down the country to set up a practice (a strong possibility). I'd rather do the rather less interesting work now (whilst im young and on poor money) than try and brush up in 8/10/12yrs time...

 

[ubiquitous]

Thanks ubiquitous, thats all very helpful. On the auditing side, have you any idea how the quantum of experience is measured/recorded. I know the ICAI have more detail on their website, but it's buried in Chariot which a non-member like me can't access.

When I went through this process, it was on the basis of logging one's work experience on an ongoing basis, and getting the employer to sign off on the summaries.

would it be a reasonable idea to study/sit these in the years preceding setting up on ones own?

Indeed it would but studying for the tax exams at night is no joke if you are trying to develop your career during the day. In my opinion, in the area of tax, relevant work experience is much more important than exams, although technical study has its merits too.

One of my primary reasons for this post is that I am considering doing my training contract in a department other than tax/audit (its a department I find fascinating) and as such I don't want to impede my career down the line should I wish to go back down the country to set up a practice (a strong possibility). I'd rather do the rather less interesting work now (whilst im young and on poor money) than try and brush up in 8/10/12yrs time...

If you intend ultimately to start a practice, then it would be logical to train in a firm that will expose you to working for SME and individual clients in as wide a range of areas as possible.

 

[Betsy Og]

If you intend ultimately to start a practice, then it would be logical to train in a firm that will expose you to working for SME and individual clients in as wide a range of areas as possible.

Definitely agree with this. Having trained in big 4 the experience was useless when move down the country. Pick a mid rank or smaller firm, you can always get the "big 4" stamp by working there for a year after you qualify. Nothing worse that a big label and nothing to show for it (that said you get over it but why start 2 steps back).

With the audit exemption most country accountants dont worry about audits anymore - you just need to watch that file with co's office on time so dont lose exemption. Also groups arent audit exempt. However a new Co's act due in the next couple of years so some of these anomolies might get ironed out.


Wouldnt worry about the experience requirements, its farcical. You are meant to rotate between the departments, pure joke, show me one Dublin firm that takes this seriously. Never did an audit in my life and I'm an ACA (never passing myself off as an auditor or even an accounts preparer though).

The Institute runs a "Going into Practice" course which is obligatory. I went on it a few years back, covers a lot of the regulatory stuff. As Ub said, I wouldnt worry your head about all that for the moment.

 

[CGorman]

Thanks a mil betsy... your advice is very useful. As it happens its mid tier firms down the country that i'm applying to... big decision was whether to target niche departments (corp fin etc.) rather than audit... i'm still uncertain, but increasingly looking at aiming for the audit departments.

 

[ubiquitous]

Never did an audit in my life.

Wish I could say the same

 

[Betsy Og]

CG - if you have an interest in tax (thinking of doing the exams etc.) then, IMHO, I think its a better long term bet.

However, all things considered, its probably better training to train in audit first & make the switch after your 3.5 years. Especially if you go for mid-tier down the country as then you will not alone get audit but a lot of accounts prep which is the probably the best training - one drawback of Big 4 is that audits tend to be "pure audit" so you never get to prepare a set of accounts which then is a snag if you want to get into industry. Or you get stuck in some particular industry like insurance or funds and you cant really go outside of that area (at least not without taking a step back).

Having been Big 4 I see their benefits (& I'm not ill disposed to them or anything) but, tbh, the benefits only really accrue if you are going to stay in a Big 4 environment in the Dublin area.

 

[CGorman]

Thanks Betsy. As the closing dates draw nearer, i'm becoming more sure of my choices. Its good to get the feedback on AAM to see what real people think who've been through the same things. I did the same thing when filling out my CAO 3yrs ago! And i'm sure i'll do the same thing 3.5yrs down the line again!

Im pretty certain that i'll apply for two midland based top 10 practices (there are 3 down here) and try for their audit departments + the corp fin and corp recovery depts (start in audit and move to these later down the line). This should ensure I get good intial exposure to a wide range of things and yet get to gain a certain degree of specialisation. Indeed the former of these two may allow me to do the AITI exams after I finish my ACA as tax crosses over significantly in that department....