Do your employees need to be chartered accountants?

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Different kinds of businesses have different needs to meet. Here’s why qualified accountants may be more than enough.

Apologies, the previous version of this article included the 2016 audit threshold figures. It has been updated as of 31 May 2024.

As a business grows, its needs change. In its early days, financial management consists largely of basic bookkeeping with some additional elements of payroll and tax. However, as the company grows in size and complexity so too does the level of financial oversight needed.

At such a point, many business owners look at the expertise levels within their organisation’s finance team and decide whether they employ a bookkeeper, qualified accountant, or even choose someone with additional qualifications – for example, a chartered accountant. It’s a decision that has cost and compliance implications for the business, so needs to be carefully weighed up.

“There’s no right or wrong approach when choosing a chartered or non-chartered accountant. In the modern world of work, skills-based hiring has become more predominant, particularly given how quickly environments can change,” says Hannah Szymanski, Market Director Finance & Accounting at Robert Half. “Any decision around choosing an accountant needs to be skills-based and specific to individual role demands more than anything else.

“Even if the job requires more of the technical elements of the profession than in the past, a chartered accountant has often been the first choice, but it doesn’t mean that they are the only ones with the skills to perform the tasks.”

Casting a wider net

With that in mind, it’s worth remembering that qualified accountants can sign off the accounts for most companies up to the audit threshold. The current threshold rules are that if you meet two of the following criteria, you are not required to undertake an audit:

  • an annual turnover of no more than £10.2m,
  • assets worth no more than £5.1m
  • or 50 or fewer employees on average.

And given that the vast majority of businesses the UK are under the audit threshold, it’s clear that AAT-level accountants, for example, are responsible for maintaining the financial health of huge swathes of the UK economy.

And of course, qualifications aren’t everything. “We also often advise finance leaders to be guided by experience, including their chartered experience and training,” says Szymanski. “And of course, this includes their soft skills and ability to operate and influence outside the confines of the finance function. “

So what about cost? “As a result of tenure, we also see little variation in costs for both, so realistically, the decision needs to be based on what an accountant can bring in terms of experience and value for the organisation,” says Szymanski.

“It’s unlikely that the size or complexity of the business will play a role in the decision-making apart from the entrenched habits of hirers. For these reasons, it’s always advisable to speak to an expert recruitment partner to discuss the specifics of each role, rather than be limited by traditional talent pools or unnecessary job specification requirements.”

Questions on chartered vs. unchartered accountants

There are questions worth asking when you’re considering whether your business requires a highly qualified accountant.

Can we afford it?

The cost of a chartered accountant, whether through salary or professional fees, will typically exceed that of a similarly experienced non-chartered counterpart, so it’s worth bearing in mind whether you’re paying for qualifications that you don’t need.

Do we need it?

On some basic levels, this is easy to answer. If you’ve gone over the audit threshold then yes, you have a statutory obligation to ensure you have a chartered accountant running your financial report and accounting function. You should also consider whether your business is likely to be regularly involved in buying other businesses, selling overseas or working with complicated tax mitigations.

Can we get one?

Availability is a crucial aspect in this, and it’s not just as simple as looking on a recruitment website. It may be that finding a suitably qualified chartered accountant who wants to work for you at that time is tricky: for many chartered accountants, working in smaller businesses might not align with their ambition. They may also expect to be in more senior positions than the business currently has to offer.

When chartered is the way to go

In some cases, it may be that the business requires the services of a chartered accountant. The difference between different kinds of qualification can be immaterial depending on your business, but there are a few significant areas where the expertise of chartered accountants is required.

ICAEW describes becoming a chartered accountant as an indication that “the person has undertaken a minimum of three years in-depth training, passed a series of rigorous examinations in financial management, auditing, business strategy and taxation, and committed to continuing professional development to keep their skills up to date.”

Chartered accountants can typically assist in more complex areas and transactions than qualified accountants. These usually incorporate financial management and cash flow forecasting and might also involve elements of corporate finance (such as buying businesses, tax negotiations or insolvency). These typically necessitate a high-level understanding of the business’s changing needs.

When qualifieds qualify

If it turns out that the answers to these questions is ‘no’, then there may be alternatives to hiring a full-time chartered accountant onto the payroll. Some businesses opt for buying in accountancy expertise as and when they need it, while others look to technology for a solution and opt for bespoke accounting software that can meet their needs.

Of course, for millions of businesses across the UK, the most convenient, compliant and cost-effective answer is to simply hire a qualified accountant. AAT accountants learn on the job right from the beginning of their training, tackling real-life problems faced by most businesses. As a result, they can apply their training to a wide range of areas, no matter what type of business they work in.

Christian Doherty is a business journalist and freelance writer for AAT.

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