Kreston International plans to become Top 10 network

Executive director Jon Lisby told the
International Accounting Bulletin Kreston’s plan to be
classified a ‘network’ is motivated by a desire to make firms more
cohesive and profitable with the ultimate aim of becoming a part of
the top 10.

“It’s driven by profit,” Lisby explained. “We
wanted to be in a position where our members win more work, can
service more economically and efficiently, and as a consequence
make more profit. At the moment we don’t win enough work because of
the difference in perception between an association and a
network.”

Kreston plans to become a network by
implementing a globally co-ordinated quality control monitoring
programme and providing the option to use a common brand name to
sign off assurance reports, which would satisfy the International
Federation of Accountant’s definition of a ‘network’.

The group hinted at a strategic shift last
month when it appointed Sue Almond, an experienced director of
quality control and professional standards. Almond is Kreston’s
first dedicated manager of audit quality and will roll out an
inspection and review programme.

“I would say 70 percent to 80 percent of the
network is using one common [audit] tool, which gives us a
headstart,” she said.

Almond believes there are opportunities to
improve cohesion by developing support tools for clarity ISAs and
establishing group standards. She said Kreston’s independence
policies were more advanced than she had expected leading into the
role.

Kreston has not yet established a strategy to
introduce a common brand but this is a high priority for the
board.

Member firms are required to sign a new
membership agreement. This binds them to the network strategy from
November 17.

The cost of implementing this strategy is
partly being funded by a membership fee hike of 30 percent.

Kreston’s member firm combined revenue has
grown by 83 percent in the past three years. In 2008, the combined
fee income grew 22 percent; 10 percent was the result of net firm
additions and 12 percent was organic.

Lisby predicts this year’s revenue could
flatten or fall due to the economic slowdown and some firms leaving
the association because of the change in strategy.

Arvind Hickman