A director of the Big Four accountancy firm carrying out independent audits of prospective members of the FCSA (Freelancer & Contractor Services Association) says existing members have been “pleasantly surprised” by how much the audits “got under the skin of their businesses”.

The comments from John Chaplin, director people services at KPMG, came after the trade association revealed that the three founder membersof the FCSA - Brookson, Parasol and giant - are the first companies to have successfully completed the review.

So far, these are the only companies to have gone through the review process, launched in September, with the intention of raising levels of compliance in the industry, which includes umbrella companies, and businesses providing support and accountancy services to small limited companies.

The audit, which is a prerequisite for FCSA membership consists of two stages: a desktop questionnaire and an onsite visit by KPMG. It covers areas such as employment contracts, checks on directors and financial checks, as well as checks that that companies are adhering to rules on expenses, minimum wage legislation and standards of customer care.

Chaplin said that while it was easy for companies to have the right documentation, training materials and guides, it was more difficult to ensure that standards were being met in practice “when people [auditors] start shaking a stick at it”.

He said the onsite visits included listening in on conversations between staff and clients/prospective clients, and asking staff hypothetical questions about how they would react in certain circumstances.

Chaplin said that the audit was not a simple matter of pass or fail. “It’s more ’here are the gold, silver and bronze standards’. Where are you and how can we help you to move up the scale? Firms that initially fail to meet the ’pass standard’ have four weeks to correct any failings,” he explained.

Chaplin said the code was already having an impact, with three clients asking KPMG for “a dirty and quick review” before they go through the full process.

Following the process, the desktop questionnaire and the report from KPMG go to HM Revenue & Customs. The review process is completed annually to ensure standards are maintained and any changes to legislation are applied.

Stuart Davis, chairman of the FCSA, told Recruiter that nine companies are looking at going through the process “very, very seriously”.

The code was produced with advice from HMRC, though it has not been formally endorsed by them. The cost of £4,000 or £2,000 (where more than one company owned by the same person goes through a review) comes out of the annual FCSA membership fee of £7,500.