Last month, a large number of global mid-tier accountancy
networks were named as inaugural Forum of Firms members. One
association that steered clear of the group is MSI Global Alliance.
Chief executive James Mendelssohn explains the
reasons why.

While the news that 17 international accounting networks and
firms have negotiated the necessary hurdles to become full members
of the Forum of Firms is, to quote forum chairman David Maxwell,
“an important milestone”, the news has to be kept in
perspective.

It is a step forward, without a doubt, albeit a belated one for an
organisation that first appeared in 2002. Will it drive up quality?
Probably, although there are many other pressures on the networks
and firms to achieve the same results. Maxwell goes on to say that
membership of the forum is not a “badge of quality” but rather it
reflects the ethos of those involved as being about quality.

All good stuff. All true, as far as one can tell. Perhaps this is
further evidence of the growing trend of those organisations that
have decided to become networks under the International Federation
of Accountants (IFAC) and EU definitions, or have become members of
the forum, to assert or imply that they are somehow ‘better’ than
organisations that have decided to go down the association route.
That is not necessarily true.

Quality paramount

Any firm, any association and any network worth its salt will be
concerned about quality. Those involved in management know that to
build a successful and sustainable organisation, the need to
maintain appropriate quality standards is paramount. The IFAC and
EU rules, though, were driven as much by the need for transparency
as by the need to improve quality.

And one of the benefits of the profession generally being more
transparent is that clients and other intermediaries should find it
easier to find a more appropriate adviser, not necessarily a
‘better’ one. Although the accounting scandals of recent years have
stolen the headlines when observers are looking at what has been
wrong with the profession, it may be more relevant to look a little
deeper.

As many have argued in the past, one very significant problem has
been the absence of choice, caused by the lack of a viable middle
tier. And one way of overcoming this problem is to educate clients
and work referrers about the alternatives available outside the Big
Four and, dare I say it, from those firms and associations that
have decided not to go down the network route.

MSI Global Alliance took a very considered and unpressured decision
to become an association, rather than a network. While that
decision was in part predicated by the presence of a significant
number of law firms within our grouping, more important was the
very clear focus that we have on the type of firms that we have in
the association, and the type of clients those firms are best
suited to service.

2007 was an interesting year for MSI Global Alliance. More than 250
firms applied cold from our website to join the organisation – more
than ever before, although only 28 were accepted – and the flow of
enquiries noticeably increased after we had announced our decision
to become an association rather than a network.

The association route

For some firms considering joining an international organisation,
the association route is clearly more attractive than joining a
network. Perhaps more significant, though, is the fact that two
firms that are currently part of organisations that have decided to
go down the network route have made tentative approaches in recent
weeks to see whether there is any chance of them joining our
association.

The critical factor, though, is that clients understand the
distinction between associations and networks, and that they buy
professional services from firms best suited to meet their
needs.

Not every international grouping is looking to service
multinational clients that have service needs in many countries.
Some are servicing a sector of the market in which the client has,
predominantly, bilateral needs. And that client almost inevitably
wants a high-quality, responsive service that matches his or her
entrepreneurial needs, not one that is more concerned about
complying with regulatory requirements that, while entirely
relevant and appropriate for clients of a certain size, and of a
certain risk profile, are not so pertinent to an essentially local,
entrepreneurial business.

Similarly, that client is going to feel that its resources could be
better spent on research and development, marketing or any other
area that may provide a better and more tangible return than on the
regulatory costs that its auditors have incurred as a result of
being a ‘network’ firm, which inevitably and understandably have to
get passed on to clients.

Cost of quality

And those costs are very considerable. The enhanced quality control
processes and the independence checking between member firms need
to be addressed rigorously if they are to be effective and are
going to stand up to scrutiny. To pay lip service only to the new
rules would be counterproductive and would come back to haunt those
who don’t address the issues seriously.

So being a member of the Forum of Firms, or being a network, is
without doubt a good thing for certain organisations, and for
certain firms. But it is not appropriate for all organisations and
all firms. Transparency is paramount – and it is vital that clients
and referrers of work not only really understand the distinction
but also go on to choose an appropriate service provider to meet
their needs. It may well be a network firm – or it may not. But
membership of the Forum of Firms should not necessarily be seen as
a panacea.