Low scepticism hit high street hard
With many household names disappearing from the UK high street since the financial crisis, April Warrier calls for more professional scepticism as demand for accountancy skills increases.
Since the recession in 2008 the decline in the UK high street has been remarkable. Well know names such as Woolworth and Comet have disappeared, and 10 years on, despite economic recovery, the decline continues with many retailers continuing to close stores to save costs.
But how does this impact the accountancy world?
Industry challenges and changes
The well-publicised demise of BHS exposed the importance of auditors and wider finance roles. PwC was handed a £10m fine and the lead partner was banned from auditing for 15 years due to their role in the collapse of the high street giant.
Such a significant and public case results in other firms considering their own audit procedures and adapting their auditing techniques to avoid these downfalls.
It isn’t just auditors who work within this sector. Analysis shows that up to 50,000 staff have been made redundant or seen their role put under threat in the first half of 2018, with a large contribution from high street retail businesses. This provides plenty of work for accountants who spend hours salvaging businesses through mergers, acquisitions, restructuring and insolvency procedures.
Firms recognise this growing need for accountants to embrace challenges and develop better financial management skills. In 2017 ICAEW saw another record ACA student intake, reflecting the increasing demand for accountants.
The key messages from the high street collapse are missed scrutiny of directors and an overreliance and trust in management in these businesses. Professional scepticism in all these scenarios may have helped identify some of the issues sooner. This skill is therefore vital to apply when working within the accounting profession.
To develop as individuals, obtaining a detailed understanding of your client, its industry and wider commercial awareness are essential, especially for roles in consultancy, administration management and insolvency.
To remain commercially aware, you can follow news stories that interest you (did you use to work at one of these stores?) and think about what went wrong and why.
Another interesting story is the recent troubles at Patisserie Valerie. How would you as an accountant spot these types of issues?
April Warrier is Supervisor at RSM UK Audit LLP and immediate past chair of CASSL, the London Student Society.
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