In an increasingly global economy clients have high expectations of their legal and accounting advisers' international capabilities. In order to compete more effectively professional firms must be able to deliver first-class advice in jurisdictions outside of their traditional marketplace.

To meet this client-driven requirement, small and mid-sized, independent law and accounting firms have been joining international associations, alliances and networks of independent professional firms since the 1970s.

The competition among these organisations intense, yet the demand for membership also remains high as firms recognise the strategic importance of combining knowledge of local conditions and practices with international reach and resources.

This article provides information for professional firms considering membership of an international network, alliance or association of firms, and explains the different factors that should be considered.

1) What is the difference between a network and an association?

Until recently the difference between the various types of organiations was somewhat blurred, and indeed, both types of organsiation share common aims and characteristics. However, these are times of change and a new IFAC Ethics Code (and the European Union 8th Directive for countries in the EU) creates a distinection between 'networks' and 'associations' and has been drafted with the aim of creating greater transparency. Organisations cannot present themselves as a closely-knit, internally regulated, global organisation unless there is some substance to those claims.  If an outside observer could be forgiven for thinking that different firms in different jurisdictions are all part of the same organisation, and therefore working to the same standards, because of the impression that those firms create, then that observer should be able to rely on that assumption. 

If organisations are less closely knit, and are not able to provide the reassurance on a global basis that external stakeholders may be looking for, that is not necessarily a problem per se, but it is a different scenario, and one which those external stakeholders should be able to understand.  And therein lies the distinction between a ‘network’ and an ‘association’ that IFAC is making.

In a nutshell, networks are considered to be more cohesive. Network firms will tend to adopt a common brand name, for example, each individual firm, though independent , may adopt a common brand name and called itself "XYZ Italy" or "XYZ Australia". Networks are therefore more globally recognised organisations. Network firms also adopt common methodologies (e.g. for audits) and have greater quality control procedures. Network membership does however place greater responsibilities on the individual member firms in terms of indepedence checking when taking on a new audit client. Firms belonging to networks tend to be involved in multilateral transactions that require coordinated services across multiple jurisdictions.

Associations are 'looser' organisations whose member firms tend to be strong local firms occasionally involved in international work of a bilateral nature. Whilst branding is important, it is secondary to the firm's own brand. Quality control tends to take place during the due diligence process at the selection and recruitment stage, with firms being regulated by their own local bodies. An association charter will typically ensure that member firms adhere to recommended service guidelines. Association members will tend to have less liability exposure than network firms.  

2) Why join an internati