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Tuesday, November 08, 2005

Letter To Council

For your information I reproduce the full text of a letter sent by Bruce Lawson to all members of the ICAEW council.

"Dear Member of Council,

A miss is as good as a mile – No means No!

So the Institute gambled and lost – just 29% voted for a merger – 15% voted against and 56% don’t care – hardly a recipe for a re-run. Taking the ICAEW cost of £1.42 million, the 37,004 Yes votes cost £38 each.

The No camp, with two websites and less than a £5,000 spend, was successful because ICAEW strategy was inherently wrong. Try again, and with a £38 a head budget for the Nos (£734,000) you might not even get 50% of the vote and become even more embarrassed.

Your Chief Executive compares the vote with a parliamentary mandate – should a 29% vote be permitted to run the country – does the Council want to compare themselves with spinning politicians and the apathy that they expensively create. Hopefully not after the excellent leadership ICAEW has given until recently.

The debate has had the benefit of educating members. I did not know ICAEW had 500 staff whereas ICAS have 140. A lady at the EGM, who spoke eagerly in favour of the merger, was amazed to know there were 95 Council members.

So where next?

Surely the strategy must focus on falling income. Increased regulation, Practice Assurance, CPD requirements, etc. mean members will not fade away as in the past, but stop and resign to save paying expensive subscriptions. We might like to work longer, but will stress levels permit?

A recent Robert Half report shows (AA 27th October) 25% of a 2,232 sample don't want to work past 55. So face it, budget for a 20% fall in income in real terms over the next five years (think of the 1946 baby boomers) and cut your cloth accordingly.

A truly independent panel of ICAEW members with a budget of say £200K – 10% of what has recently been wasted – should review all ICAEW activities with a view to cutting costs and staff by say one-fifth, and Council members by at least half.

Dissident members will (and should) from now on, resist any subscription increase of more than general inflation – say 3% p.a. ICAEW must live within its means – members have to.

We note gratefully that ICAEW "work hard to provide value for money for our members and realize future cost savings" (page 8, Accountancy – November 2005).

ICAEW should concentrate on training, discipline and a dissemination of technical information and advice on ethics. Sponsoring major symposiums in Washington … what utter drivel.

Council should also abandon the collective responsibility secrecy, which MAC have written evidence of existing and find so disturbing. ICAEW must be utterly transparent in its dealings and an unwieldy Council should not be led by the Executive. What was wrong with the previous system anyway?

Your Chief Executive sees the vote as a mandate to continue to discuss consolidation. He and the Council would be wrong to pursue that strategy. Say you were wrong; budget for lower numbers and the inevitable recession. Cut costs and fanciful delusions of grandeur and then maybe you will get 71% of the members, who voted No or don’t care, and perhaps some of the Yes voters, who only reluctantly voted on your side again.

Ignore these warning signs and the Institute could become ungovernable.

On a lighter note, and in football parlance, you lost, the Nos won; accept defeat as graciously as your current President. Both sides knew the rules. Complaining to the referee after the match achieves very little … and what of the manager’s position?..


We shall see what happens next.

6 comments:

  1. I hope another meeting will follow if Eric is still in post next week.

    I am not at all sure that 100 staff dismissals is anything like enough.

    For an alternative view on how to proceed; Dr Damien Roche has researched this

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  2. Ken,

    Does Bruce anticipate any replies and if so, might we be updated?

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  3. Anom,

    If I hear anything I will post.

    Ken

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  4. Excellent letter Ken - I still believe that in the long term, the profession as a whole has to consolidate. Where I think you have done a great service is in raising issues that need urgent attention beofre any further steps are taken. At the moment, the ICAEW doesn't look as though it could manage a fish and chip shop. And that's the worst place to be.

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  5. Nobody should take much notice of Dennis. He couldn't forecast a storm in a teacup.

    The evidence points away from mergers not towards them. Who now needs to be rejected by whom? The volume of legislation will abate. Institutions may withdraw from the IFAC when they come to their senses and Government is not interested in a consolidated opinion. If they open tax consultations and they get a consolidated view and a single letter in green ink from a little old lady in Worthing, that, I am reliably informed, is two responses of equal merit.

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  6. Future of the Accountancy Profession

    My view is that the Irish approach to regulation of the accountancy profession is the right way forward. The government in Ireland is about to define the term accountant and legally protect the term. Nine accountancy bodies are precribed in law and these 9 belong to a forum of prescribed bodies which advises the Irish government - not CCAB - on policy matters.
    Whether the 9 bodies eventually merge is of benefit to them in terms of economies of scale etc but as the forum speaks as a unified voice to government, the Irish government would have nothing to gain by any such merger.
    I recommend that the Rt Hon Alastair Darling MP should follow the Irish example and replace the non statutory POB with a statutory authority like in Ireland ( www.iaasa.ie ). This statutory authority could prescribe bodies in the UK and also protect the title accountant. CCAB would be sidelined and a forum of all the RQBs/RSBs in the UK could be formed.

    In this way the public interest would be served by having the term accountant protected and also HM government would have a single united forum advising on policy.
    issues. HM government could ordain that all member bodies of this forum could describe their members as chartered ie legally recognised accountants by Royal Charter and statute.

    When this is accomplished any merger debate would be held as a discussion among legally protected equals ie chartered accountants and the current hierarchy of qualification debate should be consigned to history.

    Later this month, the AIA expects to be made a recognised body for auditing purposes in Ireland. They have also applied for membership of CCAB in the UK. If the CCAB accepts them into membership then CCAB UK will comprise all RQBs/RSBS and this group would then become the forum of Chartered Accountants as per my proposal.

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