Accountancy in Decline?
The number of accountancy firms practising in the UK has fallen by 15.5% over the last five years – that’s 1,335 fewer companies.
This decline has been attributed to the relaxation of audit thresholds, meaning fewer companies require an audit by law – regulators the Financial Reporting Council calculating that, by 2011/12, 71.4% of companies were exempt from an audit. (Source here.)
The number of registered audit firms in the UK was 7,239 by the end of 2012, 10.6% lower than before the start of the financial crisis.
Another suggested reason has been the lack of available finance from lenders, with the smallest firms being hardest hit due to an increase in interest rates on small business loans compared to a decrease in those to large businesses.
The Bank of England have reported that overall lending to small businesses through the Funding for Lending scheme fell by £300m in the first quarter of 2013 – with a total decrease in lending of £452m in May 2013 alone. (Other BoE statistics here.)
And last but by no means least: the recession has prompted businesses from all industries to tighten their belts in a bid to save money wherever they can.
As a consequence, accountants are facing pressure to keep their prices competitive and many are struggling to keep their heads above water.
Many firms have exited the industry as a result – either voluntarily or otherwise.