How to account for corporate crises

There are people looking overseas. The Government has pulled back, but there is still nervousness among corporates

ALL this talk about recession and the credit squeeze is enough to make everybody nervous and apprehensive. Except accountants. Somehow they manage to adjust and rebalance, or whatever accountants do to ensure they soldier on, crisis or no crisis.

James Baird, soon to assume the top job at Deloitte & Touche Scotland, shrugs his shoulders, accepts there is a lot of turbulence out there, but says he is not losing sleep over the current outlook. "We are still seeing high levels of activity," he says. "Just look at our client list – Dobbies, Wiseman Dairies, Royal Bank, Johnston Press – if you've been reading the press this past couple of weeks you will understand that we have been pretty active.

"We are still growing very strongly. We're facing up to the challenge of turbulent times without having to downscale. It means we do things differently as the demands of our clients change."

Among those changes is a shift in how firms want to raise capital. With debt moving off the agenda, more are being drawn towards equity, as witnessed by the recent rash of rights issues. Baird says a number of Scottish firms are now looking at raising capital through the equity markets, including a few smaller firms considering a flotation, offering some encouragement that Scotland's battered quoted sector may be replenished.

Baird, 43, becomes Deloitte's practice senior partner – ie head boy – for Scotland and Northern Ireland from June 1, succeeding Ralph Adams, who once famously criticised Scotland's "Armani-suited entrepreneurs", claiming some who weren't making any money were being promoted as role models. It earned him an equally memorable rebuke from Tom Hunter at that year's Entrepreneurial Exchange dinner. Hunter went on to be knighted, while Adams remains at Deloitte, where he is to become the only vice-chairman outside London. It might be said they've not done badly.

The spat was seven years ago and is now water under the bridge, but there is a touch of irony that Baird is overseeing an increase in Deloitte's entrepreneurial team across the central belt. He will also expand its technology activities and its Aberdeen oil and gas team on the back of a surge in deal flow.

While the high price of oil is fuelling activity within the sector, it is causing concern for oil-hungry businesses. "The price is something we have never seen before and is starting to get outside manageable margins," he says. "It is getting to the level where they will have to look at their business model."

Aside from rising energy costs, business has been hit by the rows over taxation, in particular the controversial moves on capital gains tax and overseas profits. While the CGT proposal forced a Government U-turn and is largely resolved, the UK practice of taxing profits earned abroad once they are remitted to the UK raised the potential for double taxation, making the UK less attractive to internationally mobile firms. The Government is now reviewing the changes, but businesses want greater clarification. Not surprisingly, the accountants find themselves in even greater demand from worried clients wanting to know which way to turn.

"If anything, in these times clients want their advisers closer to them to get clarification and early warning on what is going on," says Baird, revealing that he knows of a number of Scottish firms, including quoted companies, that are concerned enough to say that relocation remains on their list of options. Aberdeen Asset Management was named this month as one firm said to be considering the situation. Baird declines to name names.

"Yes, there are people looking overseas. The Government has pulled back, but there is still nervousness among corporates. They are wondering if something else is going to happen.

"Any corporate who has overseas profits would have to look at this and wonder if it would be sensible for them. I have spoken to three or four Scottish companies of varying sizes who are watching to see what happens. They have expressed sufficient concern to relocate. That's not to say they would do it, but they want to know what they would need to do in certain circumstances. It's a case of watch this space because we do not know where this is going to land."

Baird says he wouldn't be surprised if some companies left Scotland for tax advantages. "They need to see a level of certainty and predictability over the environment they are going to be operating in over the next three to five years. If confusing messages are sent out it doesn't help them to plan their strategy."

It's quite a loaded text from someone who says he does not want to "get political", but also expresses concerns about what he says is a low level of action from public agencies and the Scottish Government in offering support to growing firms.

"Are they being as clear and direct in their actions as they could be? We have to move from politics to actual action," he says. "We (Deloitte] are expanding our entrepreneurial team and there is certainly a spirit of entrepreneurialism in Scotland, but I sometimes think that collectively, as an economy, we could make more happen. A lot of businesses ask whether getting the support and funding they want from public agencies is too complicated."

The Government in particular needs to make its policies on the economy clearer, he says. "I am not sure there is clarity in the message. What I hear is that businesses are waiting for that clarity of action to come through."

Baird is not a beancounter who intends to hide behind his abacus. It may have something to do with being the son of a business journalist. His late father Eric worked for The Herald and he is used to the cut and thrust of the news agenda. Nor does he seem afraid of it.

His CV begins with a training contract at Price Waterhouse and a posting to Paris as an audit manager. From there he moved to Birmingham, joking that his first lunch in the city was a pint and a sausage and wondering what on earth he had done by making the cross-channel move. He left Price Waterhouse around the time of the merger with Coopers and Lybrand and joined Rutherford Manson Dowds, the start-up that didn't live up to its promise to change the face of accountancy.

He transferred to Deloitte when it acquired the Glasgow-based firm. Cahal Dowds, one of the three founders, also made the transition and remains with Deloitte, in charge of the regions and head of corporate finance advisory.

Baird spent five years as head of audit and is now preparing for his role at the head of the top table, responsible for a team that has 37 partners and associate partners and 70 employees across four offices. It's been a long journey from his student days busking at the Edinburgh Festival, and he's mindful of his journalistic upbringing by nipping the next question in the bud. "There are no photographs," he says.