The Merger That Dare Not Speak Its Name!

 

AccountingWeb note the following about the merger/non merger talks between CIPFA and the ICAEW:

"ICAEW also noted that the outcome of the discussions will be subject to approval within the institutes and by key external stakeholders.

We won’t know the details of the talks until early 2022, when the two bodies will bring forward the formal proposals, but an ICAEW spokesperson told AccountingWEB that "At this stage we do not believe that the nature of the relationship with CIPFA under discussion would require an ICAEW membership vote." 

That to me sounds as though they hope that they won't need membership approval, even though they say it will need approval within the institutes!

Can someone enlighten me as to how the institutes can approve something, if they don't ask the members to vote?

It seems one change will be faster routes to membership:

"The Institute can't say whether the closer relationship would mean a fast-tracked entry into either membership except, "We envisage any closer working would bring benefits to both ICAEW and CIPFA members. However, at this stage, it is too early to say what implications it may have on our Pathways to Membership scheme."

While the word ‘merger’ wasn’t mentioned in the press release, Ken Frost, who was a vocal opponent of the merger last time around, believes “this is an attempt at a merger by the backdoor”. 

“The fact members will have to vote on this cooperation validates that view,” he told AccountingWEB. “Suffice to say the arguments against the merger, that I put forward on my site in 2004, are still valid.

However, an ICAEW spokesperson confirmed to AccountingWEB that "a merger is definitely not the starting point for our current discussions".

"We are exploring various options, which go beyond any past relationship with CIPFA, and any outcome to these discussions will be subject to approval within the Institutes, as appropriate and necessary under their respective governance requirements, and by key external stakeholders including the UK Government, the Privy Council and regulators."

To my view, based on what the ICAEW have said, this is a merger that dare not speak its name - lest the members be required to vote on it!

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Merger By The Backdoor?

 

‘@CIPFA and @ICAEW discuss potential for closer working’ … no sign of the ‘m’ word in the press release - but I thought the pair had a strategic partnership post-failed merger anyway? @ken_frost

— Kevin Reed (@Goonerreed) December 8, 2021

Don't you dare! 

Here is the text of the press release, it is clear that they are proposing a merger!

08 December 2021 PRESS RELEASE: 

CIPFA and ICAEW discuss potential for closer working

Professional chartered accountancy bodies, CIPFA and ICAEW, have announced that they are in talks to explore the potential of closer working.

The vision driving the discussions would see CIPFA and ICAEW combining their strengths and resources to better equip them to serve the public interest across all areas of economic activity, including the enterprise, public and third sectors.

In a joint statement, CIPFA Chief Executive Rob Whiteman and ICAEW Chief Executive Michael Izza said:

“We believe there is significant strategic benefit in our two bodies working more closely in the future and our discussions will examine ways of achieving that.”

CIPFA and ICAEW will now conduct further discussions with the aim of bringing forward proposals in 2022.

Any outcome to these discussions will be subject to approval within the Institutes, as appropriate and necessary under their respective governance requirements, and by key external stakeholders including the UK Government, the Privy Council and other regulators.

NOTES TO EDITOR:

About ICAEW

There are more than 1.8m chartered accountants and students around the world and 186,500 of them are members and students of ICAEW. They are talented, ethical and committed professionals, which is why all of the top 100 Global Brands employ chartered accountants.

ICAEW promotes inclusivity, diversity and fairness. We attract talented individuals into the profession and give them the skills and values they need to build resilient businesses, economies and societies, while ensuring our planet’s resources are managed sustainably.

Founded in 1880, we have a long history of serving the public interest and we continue to work with governments, regulators and business leaders around the world. And, as an improvement regulator, we supervise and monitor over 12,000 firms, holding them, and all ICAEW members and students, to the highest standards of professional competency and conduct.

ICAEW is proud to be part of Chartered Accountants Worldwide, a global network of 750,000 members across 190 countries, which promotes the expertise and skills of chartered accountants on a global basis.

We believe that chartered accountancy can be a force for positive change. By sharing our insight, expertise and understanding we can help to create strong economies and a sustainable future for all.

*Source: CAW, 2020 – Interbrand, Best Global Brands 2019

For more information please contact the CIPFA press office on +44 20 7543 5885 or email mark.davey@cipfa.org, or the ICAEW media office on 07918 767 822 or email media.office@icaew.com

About CIPFA

CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.

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ICAEW Paid Tory MP £14K - Money Well Spent?

 

Ben Everitt, the MP for Milton Keynes North, was paid nearly £14,000 for 60 hours of work for the Institute of Chartered Accountants in England and Wales (ICAEW), according to Financial News, which first reported the story.

He spoke in Parliament against extensions to the IR35 tax law that the ICAEW has been pushing to delay.

Everitt’s conflict of interests is the latest to come to light in a string of recent scandals involving MPs holding paid consultancy roles.

“As a professional body serving the public interest, ICAEW will routinely provide technical briefing material for parliamentarians and civil servants on major issues within its area of expertise,” an ICAEW spokesperson told City A.M.

“This Representation by our Tax Faculty on IR35 in June of last year was treated in this way and published on our website at the time, and remains freely available and accessible,” the spokesperson added.

City A.M. understands Everitt concluded his ICAEW contract in January this year. 

Has ICAEW members' money been well spent?

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Deloitte - The Fox in Charge of The Hen House?

 

Guess who’s been put in charge of preparing the “knowledge management system in preparation for the public inquiry” into Test & Trace failings? Deloitte, the very consultants who got hundreds of millions in contracts to, er, run Test & Trace. Full story in the new Eye, out now.

— Private Eye Magazine (@PrivateEyeNews) November 10, 2021

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Happy International Accounting Day! - #InternationalAccountingDay

 

International Accounting Day is celebrated on the anniversary of the publication of a critical work in the 15th century by the Italian mathematician Luca di Borgo.

Fra Luca Bartolomeo de Pacioli (sometimes Paccioli or Paciolo; c. 1447 – 19 June 1517) was an Italian mathematician, Franciscan friar, collaborator with Leonardo da Vinci, and an early contributor to the field now known as accounting. 

He is referred to as "The Father of Accounting and Bookkeeping" in Europe and he was the first person to publish a work on the double-entry system of book-keeping on the continent. He was also called Luca di Borgo after his birthplace, Borgo Sansepolcro, Tuscany. 

However, the history of accounting dates back several millennia. Records and documents originating from the Mesopotamian region traced back as far as 5,000 B.C. reveal the employment of accounting systems in the service of tracking the exchange of goods between temples. 

Further evidence of the prevalence of accounting would appear from discoveries in ancient Egypt and Babylonia, but the most comprehensive findings would first originate from materials belonging to the period of the Roman empire. Information notated across innumerable archives during this era show detailed quantifications kept across areas, spanning public revenues, private expenditures, the distribution of commodities, and more.

The field of accounting has undeniably developed significantly since its introduction in pre-modern times. It would experience especially robust advancements throughout the Middle Ages and the Renaissance period.

The discipline would go on to see a sharp rise in necessity and demand in the fields of business and finance starting in the mid-19th century. The Industrial Revolution would prove to increase the number and size of companies across the world to an unprecedented degree, and it became imperative for corporations to maintain strong accounting departments to have a part in all aspects of business’ operations. 

The combined membership of the five CCAB bodies – ICAEW, ACCA, ICAS, CIPFA and Chartered Accountants Ireland – amounts to some 275,000 professional accountants in the UK and the Republic of Ireland (415,000 worldwide).

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ICAEW Cold Calling Members

 

ICAEW accountants note .....

The ICAEW are using contact information to make outbound (what I would call) sales calls from someone who wants to check your data and set up a telephone chat with a Business Development Manager!

This is what my membership fee is being used for! pic.twitter.com/WOjQFSzPM4

— CheapAccounting.co.uk & TaxBootCamp.co.uk (@cheapaccounting) November 3, 2021

Any other members been cold called by the ICAEW?

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Keep an Eye on The Exam Systems Page

Our exam systems page display’s alerts, issues and updates relating to our exam systems. We recommend you check this page frequently for any updates which may affect you.

Find out more > https://t.co/oRCL0Tic5B#icaewExams #icaewATE pic.twitter.com/Y7mRA9asZn

— ICAEW (@ICAEW) October 25, 2021

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KPMG Found To Be Untruthful - Whither Professional Standards?

 

The Financial Reporting Council (FRC) published a summary of a tribunal that found a senior partner at KPMG had presented an “untruthful” defence during a disciplinary hearing.

The FRC hearing was convened to investigate KPMG’s misconduct during the sale of bedmaker Silentnight to a private equity fund. The tribunal found that partner David Costley-Wood failed to co-operate with the accounting regulator’s investigators. 

During August of this year, KPMG was fined £13m and incurred costs of over £2.75m for its role in placing Silentnight into a insolvency process during 2011 that allowed private equity firm HIG Capital to acquire it without the burden of a £100m pension scheme liability.

KPMG’s lack of objectivity and “obvious” conflict of interest was the latest in a string of public humiliations including lawsuits and disciplinary complaints relating to audits the firm carried out at Carillion, Rolls-Royce and Conviviality, the owner of Bargain Booze.

This latest sanction was a huge financial hit for the Big Four firm. The tribunal report states that for the first time ever, the tribunal found a respondent had advanced dishonest evidence. 

Costley-Wood, who faced fines of £500,000 for his involvement in the original case, claimed that Silentnight faced a “burning platform” prior to the debt sale agreement. However, the tribunal stated: “The defence put forward by Mr Costley-Wood in relation to the burning platform was a construct invented by him to assist in his defence.”

The FRC said mounting an untruthful defence “seriously risks undermining the regulatory system [and] compounds the original failings”.

Not unreasonably decent, professional, honest members of the ICAEW are asking why the shameful behaviour of the larger firms is not being addressed adequately by the ICAEW.

One to get our blood boiling on a Friday @cheapaccounting @DellaHudsonFCA KPMG offers 'untruthful' defence in Silentnight tribunal https://t.co/beE1CZJZCf

— Simon Denton (@SimonDenton2) October 15, 2021

The subject of ethics brings to mind my application for the role of the ICAEW's Ethics Examiner in 2005. 

As I noted in 2005 I was invited for interview on 19th October, along with 24 other candidates who had applied for the other 11 papers. Prior to the interview I was sent the 5 page Ethics syllabus to read through, together with some other information and a training disc.

I had a one to one 20 minute interview, then a 45 minute panel interview. Seemingly I was the only person to specify Ethics as my first/only choice of paper.

I was told that I would hear by the end of the month, and that if chosen I would have to make a decision quickly; as work on the paper would start in November.

I received an email on the 1st of November which stated that since the interviews the ICAEW had rethought the approach to Ethics, and that there may well not be an assessment of the kind envisaged.

As such no Ethics exam team would be appointed.

Well then!

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The Profession Finally Recognises The Value of Internal Audit

Accountancy Age states that a more collaborative relationship between internal and external audit will be a critical step as the profession strives to increase quality and bolster its standing in the public eye, according to industry voices.

“I think it would produce much stronger assurance,” says Liz Sandwith, chief professional practices advisor at the Chartered Institute for Internal Auditors (CIIA). 

“Each side knowing and understanding that control environment and what new and emerging risks are being mitigated, would help them both do their job that much better.”

Though fundamentally similar, several disparities exist between the two functions. Internal audit will examine issues related to business practices, while their external counterparts issue opinions regarding financial statements and records.

The purpose of the two sides is also key. Internal audit reports act as a tool for the organisation’s management, whereas external audit caters to key stakeholders such as lenders, investors and creditors.

“Internal audit are there 365 days a year and, therefore, have a much greater understanding of the organisation, and a much broader remit. There is a real opportunity for external audit to build on this knowledge rather than repeating it.”

Sandwith’s view largely resembles that of Sir Tony Redmond, who was commissioned by the UK government in 2020 to conduct a review into the effectiveness of external audit and transparency of financial reporting in local authorities. While focusing on the external side of audit, the review makes several references to its relationship with internal auditing.

“There is a question as to whether external audit could make more use of the knowledge and expertise of internal audit in developing sufficient understanding of the local authority,” it said.

“Internal auditors are likely to be much closer to the business than external audit and, in many authorities, a proportion of their work focuses on governance and service delivery matters. This could make internal audit a rich source of knowledge, should the external audit team wish to use it.”

I find it more than a little ironic that the usefulness of internal audit, and the need for collaborating with it, is only now being discussed when in 2002 I wrote about the Added Value of Internal Audit here is a brief extract:

"Internal audit provides independent objective assurance to the Board as to the adequacy of the business controls, and the effectiveness of the risk management and risk identification process.

In other words, the internal audit department should tell the Board when the company is being poorly managed, where risks are not being identified or mitigated and when the business objectives are not likely to be met.

In addition to this very wide ranging remit, a well run internal audit department adds value in the following ways:

 It acts as a training ground for future line managers, by exposing fast track members of the department to a variety of situations, activities and functions within the organisation.

 It provides a “one stop shop” for best practice advice.

 It provides an independent, objective opinion as to the quality of the business controls.

 It stimulates risk awareness throughout the organisation.

 It is a source of qualified, experienced talent that can aid management in business improvement programmes.

 It provides specialist professional independent opinions on a variety of situations; such as due diligence exercises.

 It reports on fraudulent activity within the organisation, with a view to understanding how it happened and how to prevent it occurring again.

 It ensures that the company wide initiatives, such as a code of conduct, are being adhered to.

In 2003 I went on to list the Attributes of a World Class Internal Audit Department  based on my experience as Head of Internal Audit and International Forensic Co-ordinator, in both Philips and De Beers.

It is more than a pity that it has taken almost 20 years for people to realise the worth of a well run internal audit department!

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Rebecca Cave Calls on Women To Step Forward For The FRC

Wanted - 6 senior women who don't take no s**t from anyone, to sit as non-exec and chair
of the new accounting watchdog.
With a few women in charge the disgraceful state of audit regulation may shape up pretty quickly.
- https://t.co/egUnZSDTIu via @FT

— Rebecca Cave 🇪🇺 🔶 (@TaxwriterLtd) August 6, 2021

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