Restoring trust in audit and corporate governance

This white paper sets out proposals to strengthen the UK’s framework for major companies and the way they are audited.

Details

This white paper sets out proposals to strengthen the UK’s framework for major companies and the way they are audited. The proposals set out how:

• companies should report on their governance and finances
• reports should be audited
• audit and the audit market should change
• these should be overseen by a new regulator

The objectives of these reforms are to:

• restore public trust in the way that the UK’s largest companies are run and scrutinised
• ensure that the UK’s most significant corporate entities are governed responsibly
• empower investors, creditors, workers, and other stakeholders by giving them access to reliable and meaningful information on a company’s performance
• keep the UK’s legal frameworks for major businesses at the forefront of international best practice

The proposals respond to recommendations made by 3 independent reviews commissioned by the government in 2018:

• Sir John Kingman’s Independent review of the Financial Reporting Council
• the Competition and Market Authority’s statutory audit market study
• Sir Donald Brydon’s independent review of the quality and effectiveness of audit

Respond to the consultation

Please provide your views on these proposals: the consultation closes on 8 July 2021 at 11:45pm.

You can respond to the consultation online.

Documents

Restoring trust in audit and corporate governance

Ref: ISBN 978-1-5286-2401-5, CCS0221978662 03/21, CP 382 PDF, 1.53MB, 232 pages

Order a copy

Restoring trust in audit and corporate governance

Ref: ISBN 978-1-5286-2401-5, CCS 0221978662 03/21, CP 382 HTML

Order a copy

 

Every few years we go through the motions of "restoring trust", yet somehow or another never manage to achieve that "trust"!

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

Big Four To Have Their Wings Clipped - Nothing New Under The Sun!

 

Proposals to reduce the dominance of the "Big Four" accountancy firms and scrap the industry regulator have been unveiled by the government.

The theoretical aim is to improve regulatory standards after high profile corporate failures such as Carillion and BHS.

Also, company directors will face more responsibility to ensure accounts are accurate, or face tougher penalties.

Business Secretary Kwasi Kwarteng said the changes would help restore confidence in business.

There will now be a 16-week consultation on the proposals.

The BBC reports that the business of auditing companies' accounts, and ensuring they are a fair reflection of their financial health, is dominated by four accountancy firms: KPMG, Deloitte, PwC and EY.

However, there is concern that providing both accountancy and auditing services creates a conflict of interest.

Under the new rules, large companies would be required to use smaller auditing firms to conduct part of their annual audit, in an attempt to dilute the Big Four's dominance.

The new proposals would require KPMG, Deloitte, PwC and EY to make their audits more rigorous.

They could face a cap on the number of companies on the FTSE 350 index they may audit, if those improvements don't go far enough.

The government said last year almost a third of audits inspected on the FTSE 350 were in need of improvement.

All of this is rather amusing, given that when I was studying to be an FCA (back in the late 80's) these issues were very much "hot topic" issues at the time.

Seemingly nothing changes, no matter what regulatory shake-ups occur!

Tax Investigation Insurance

Having a Solar Protect Tax Investigation Insurance policy at your disposal means that should you be one of the many 1000's of businesses or individuals that are selected by HMRC each year to look into your tax affairs your own accountant (your tax return agent) can get on and defend you robustly.

You have the peace of mind knowing that your accountant's (your tax return agent) fees will be paid by the insurance without any Excess for you to find.

Tax Investigation Insurance is an insurance policy that will fully reimburse your accountants (your tax return agent) fees up to £100,000 if you are subject to enquiry by or dispute with HMRC.

A Solar Protect policy will enable your Accountant (your tax return agent) to:

• Deal with any correspondence from HMRC
• Attend any meeting with HMRC
• Appeal to the First-tier Tribunal or Upper Tribunal
• Having the security of knowing that fees will be met in full will enable your Accountant (your tax return agent) to defend your position robustly

Please click here for details.

The Carillion Clusterfuck - When Will The Profession Ever Learn?

 
The Carillion clusterfuck has brought well justified criticism and condemnation down upon the heads of both the board and the accounting/auditing profession, with calls for the Big Four to be broken up.

FFS, has the profession learned nothing from Enron, Parmalat, Polly Peck, Marconi etc etc?

WTF Is "Seriously Poor Audit Work"??

"seriously poor audit work" wtf does that mean? Either the audit is professional or it isn't?? https://t.co/GspJf0YCCJ

— Ken Frost (@ken_frost) April 9, 2018

Flexible Ethics For Bankers

One in eight banks say it is difficult to progress in their careers without "flexing ethical standards": https://t.co/U8kH7Hnktc via @FT

— Sally Percy (@SallyPercy) March 14, 2017

Seemingly, in the banking profession, ethics are to be flexed!

Bank auditors take note!

ICAEW Withdraws Audit Qualification of 713 Members

As per Economia there has been a wee bit of an administrative snafu within the ICAEW, that will negatively impact 713 members erroneously given an audit qualification since 2008:

"More than 700 ICAEW members are to have their audit qualification withdrawn after the discovery of an administrative error in the ICAEW Learning and Professional Development department.

This resulted in their receiving the qualification although their audit experience did not match the eligibility criteria. The error does not affect their ACA qualification or their ICAEW membership.

Letters are on the way to the 713 members who were among 28,000 members given the qualification over the past four years on the basis of their audit experience. This was part of an initiative, launched in 2008, that was designed to ensure that ICAEW-registered audit firms were helped to maintain compliance with EU legal obligations which require them to be controlled by qualified auditors.

As firms had widened their interests into other, non-audit areas, it became more difficult to ensure that 51% of the partners were audit qualified. However, there were plenty of ICAEW members who met the eligibility criteria, even though they no longer worked in straight audit.

To save the members having to write an extensive and time-consuming narrative detailing all their audit experience, and obtain fresh counter-signatures, ICAEW drew on its records for evidence of eligibility. The problem arose because members who trained outside the UK or in a crown dependency were mistakenly included when they shouldn’t have been. Strict restrictions set by UK company law require members to have gained their key experience for the audit qualification in UK statutory audit work.

“As soon as we became aware of the anomalies, we contacted the FRC and set up an internal inquiry,” said Mark Protherough, ICAEW executive director for learning and development. “We have now restructured the department to ensure that the right oversight is in place and that this sort of administrative mistake does not happen again.

“We apologise to those members who were awarded the audit qualification when they shouldn’t have been.” 

Those affected members who believe they do in fact fulfil the eligibility criteria should get in touch with ICAEW.

The institute thinks it unlikely that firms will find they do not comply with the 51% rule as a result of the mistake. However, if they are concerned, they should also get in touch."

Oops!

How is it this error has taken four years to surface, and has only now been discovered?

NAO To Audit HMRC's Service Commitments

As I noted on Friday, HMRC have with great fanfare and naive approval of the ICAEW attempted some diversionary tactics by announcing a reallocation (HMRC calls it "investment") of "up to" £34M and a possible extra 1,000 personnel into their call centres.

Whilst the above may satisfy the ICAEW and some naive taxpayers, the NAO are not going to sit idly by. As I note on my HMRC site, the NAO is looking at commitments made under the HMRC’s change programme and will report "in winter 2012" on the service that HMRC’s "customers" receive over the phone, online and in writing.

ICAEW Launches True and Fair Updated

The ICAEW has launched a new website "True and Fair".

"This site is here to help you find out anything you would like to know about the process known as audit - or to use its full title 'Audit of Financial Statements'....

....www.trueandfair.org was created by ICAEW, a world leader of the accountancy and finance profession, as part of its public interest charter to advance the theory and practice of accountancy, finance, business and commerce."

Fair enough, but why not launch this as a CCAB initiative, given that CCAB is meant to "provide a unified voice on matters of common interest"?

FYI, the CCAB website is currently "under construction".

By the way, the ICAEW have not used the domain names www.trueandfair.com or www.trueandfair.co.uk, because they are owned by Omkar Joshi who is CEO of Company Reporting Ltd (a publishing business focused on financial reporting practices of public companies).

"Omkar's recent venture TrueandFair was acquired by Company Reporting Limited, a pan-European information service which reports on constantly changing corporate financial reporting practice; identifying actual year on year changes in the reporting practice and governance procedures of Europe's leading companies."

The March of The Technocrats

Could it be that assurance reviews are no longer the "enjoyable" experience that they once were for the reviewees?

According to Accountancy Age it would seem not.

They quote one senior member of the profession as saying that:

"They [those who have passed the assurance visits] are not given positive reviews unless they are so technically competent that they speak in a technical way all the time. There’s a difference between being technically competent and knowing what the standards say and being able to apply them. But applying the rules requires judgment.

But they [the QAD inspectors] just talk in the standards..if you can't reply in a similar vein, they think you’re an idiot.

Perhaps this is why people are no longer enjoying audits at smaller firms. But we still need a balance between small and large firms."

Could it be that the ICAEW is allowing itself to continue to drift apart from its real world members, and only feed the needs of the large firms?

Why do individual accountants need to belong to the ICAEW, aside from the rule that states you cannot call yourself an FCA without belonging to the ICAEW (and paying the annual subscription)?

What do the ordinary members actually get for their money, aside from a nice certificate in a cardboard tube?

EC Books Failed For 13th Year Running

Accountancy Age reports that the European Court of Auditors has refused to sign off the European Commission's books for the 13th year in a row, citing a "lack of supervision" and "irregularities" in its accounts.

The audit did not unearth any major fraud case. However, it noted that some of the EU's farm subsidies and aid for development of poor regions had/may have gone to ineligible people.

Quote:

"The most frequent errors were claims for illegible expenditure and failure to carry out tender procedures as well as a lack of evidence to support the calculation of ... costs involved."

This humiliation could not come at a worse time for the EC.

Marta Andreasen, the former chief accountant of the European Commission, has said she is up against a "mafia" in the Commission whose aim it is to frighten off whistleblowers.

Andreasen lost her appeal against her dismissal by the EC last week, but that said she plans to appeal that judgment too.

Andreasen was suspended by the Commission in 2002, and was later sacked after exposing failures and weaknesses in accounting procedures.

As if by strange coincidence the ICAEW has invited Siim Kallas (Vice President of the EC in charge of administration, audit and anti fraud) to address a meeting at the ICAEW on 26th November.

The meeting is being organised by the ICAEW (co hosted by CIPFA) to promote "improved understanding of the Commission's accounting and auditing process".

The meeting also aims to:

• Consider objectively the progress made by the Commission in reforming internal accounting and auditing process



• Elicit an exchange of views on how public and private organisations deal with qualified accounts

It might prove to be an "interesting" event!

Given the ICAEW's current predilection for globalisation and co-operation with international professional bodies (despite an internal structure of governance that resembles a Victorian trading association) now would be a good time for the ICAEW to sally forth into Europe, and offer to train those in the EC who hold the purse strings, and have responsibility for spending our money, in the basics of accounting and financial reporting.

Congratulations

Congratulations to the students who passed the ICAEW December 2006 Professional Stage exams, with stunning results.

I used to mark the auditing PEII papers in the early 1990's, and the pass rates then were far lower.

Evidently, today's students are far brighter than those that I marked in the 1990's.

That can be the only explanation.

Frost Selected For Honour

My thanks to my ICAEW colleagues who nominated me for the AccountingWEB New Year's Honours awards for "services to the opposition".

"Qualified accountant and AccountingWEB member Ken Frost was recommended by some of his fellow members for an honour. With a degree in economics from Edinburgh University, Frost joined KPMG in 1984 where he gained his accountancy qualifications.

With several years audit experience in businesses including Philips and De Beers, Frost is best known for his outspoken comments on the ICAEW. He has been most vocal in his opposition to the institute's attempts to merge with other accountancy organisations.

In 2004, Frost set up the 'Stop the Merger' website where he regularly voices his opinion on the issue. Frost is currently seeking support to stand as a candidate for the ICAEW council.

Member's reason for award:

'Sir Ken Frost sounds about right. He has done the most for the ICAEW in recent times and his messages now command widespread support amongst its members and students'"

The Confidential Plan

You may recall that last November I wrote about rumours that the ICAEW were considering merging with the Institute of Financial Accountants (IFA).

It seems that these rumours had some substance to them.

I understand that in July 2005 there was a report to the members of council of IFA from Michael O'Brien Chairman of IFA, and in November 2005 there was a confidential report to IFA Council members about a meeting between Michael O'Brien, J Malcolm Dean (CEO of IFA), Eric Anstee (CEO of ICAEW) and Les Smith (Head of the Executive Office of ICAEW).

The subject of these two reports?

Progress on discussions on collaboration between the ICAEW, IFA and the International Association of Bookkeepers (IAB).

Seemingly IFA and IAB would agree to affiliate to the ICAEW (to be renamed ICA - post merger with CIPFA). IFA and IAB would then become subsidiaries of the ICAEW, and agree to a common management with the ICAEW.

IFA and IAB would morph into one organisation which would affiliate to the ICAEW. However, there would be two routes to membership (IFA and IAB) and a new class of membership of IFA "Bookkeeper".

The two brands within the new IFA would be controlled by the newly formed ICA council. The November report emphasises that the two brands were seen as "routes", or "qualifications", to membership of the one overarching organisation - the ICA and its affiliate IFA.

It is spelt out that:

"a student can qualify as a bookkeeper via IAB, and thus enter membership of the IFA, and can continue to increase their skills, experience and qualifications to the point at which they can become a full audit member of the ICA."

IFA would have acted as a "feeder body" for the ICAEW, it also seems that IFA/IAB would have pressed for IFA qualifications to be granted exemption for fast track entry to ICA.

All IFA and IAB staff would also have been offered a job within ICA.

I wonder when the ICAEW council were going to tell the membership of the ICAEW about this plan?

Needless to say, this is all past history now. The best laid plans of mice and men etc.

After all, there is no way that the ICAEW would try to foist another merger on its long suffering membership.

Is there?

The Unanswered Questions

The Durgan debacle refuses to die down, and there are rumours emanating from the ICAEW bunker relating to the how the Independent heard about the matter in the first place.

The post Durgan "clean up" by the ICAEW, in itself, has raised a number of questions which need to be answered:

• Why was Council (and apparently also the Board) not informed of the impending problem sooner? These contracts had been under negotiation for several months not mere days.



• Was it just coincidence that the issue was raised at the very last Council meeting before the new President took office? Earlier notification might have enabled the matter to be resolved without the need for Graham to stand down.



• The Independent article was virtually word-for-word what the Chief Executive said to Council on 3 May 2006. Any leak would, therefore, appear to be either internal or a Council member with perfect memory.



• Why is it necessary to have a single "preferred supplier" status, why not simply a quality threshold (a "kitemark") with anyone passing it awarded appropriate status? Had EWI been one of two or more such suppliers, there would have been no need for Graham to stand down. Again, a coincidence?



• Council opted for the Group of Past-presidents to look into the issue rather than commissioning an independent, external audit. Council expected the Group to report back rather than just providing an oral comment. An external auditor would, of course, have provided a full written account of the issues. Perhaps Council was steered towards the route it chose as this was easier to influence.



• An internal audit has revealed "some issues" - why hasn't this report been made available to Council?



• Who overlooked inviting ATC International to bid, and why?



• The Special Council meeting was called at very short notice and attended by only 41 Council members (out of 96). Why wasn't the date advised to Council members earlier so that they could pencil it in their diaries... just in case a meeting was required. Indeed, were any Council members advised to pencil in the date prior to the official announcement? If so, who was advised, by whom and why?



• Has this just been a momentous cock-up by a junior member of staff, or a very cleverly orchestrated conspiracy by someone much more senior?



• Was the leak deliberately designed to bring Durgan down? If so, who leaked the story and why?



• Why is it left to this site to expose these issues, is it not the role of the professional media to be investigating this?

I look forward to seeing the above questions answered.

Misrepresentation and Shabbiness

Today's Independent reports that the qualifications of the president-elect of the Institute of Chartered Accountants in England and Wales, Graham Durgan, were misrepresented on his company's website.

Seemingly Durgan was being passed off, on the Emile Woolf International College website (a company which he owns 60% of), as having both LLB and FCA qualifications.

The only trouble is, according the The Independent, he is neither a bachelor of law nor a fellow of the ICAEW. He is in fact a bachelor of sciences, and an associate of the ICAEW.

I recall Durgan teaching me at BPP, back in the 1980's (he was very good), and do not understand why he is not an FCA; given that if you keep up your CPD etc, you become one after a defined period of time should you choose to apply.

This news comes hot on the heels of the report in yesterday's Independent that revealed that Durgan's company has been named as the "recommended supplier" of training, for the newly won ICAEW contracts to provide training to Russia and China.

It is reported that this could generate contracts worth £200,000 a year to EWI.

Not surprisingly the Independent notes that Durgan's senior role within the institute and EWI has fuelled concerns over potential conflict of interest.

The Independent quotes one member of the profession as saying:

"It's a bit shabby that he was allowed to pitch. If you want to be a commercial business, then don't be president...It's a bit grubby."

Durgan's spokesman is quoted as saying:

"During his deputy presidency, Graham has stepped away from any commercial decisions by the institute that could benefit his firms. During his presidency, he will play no active executive role in his businesses."

An ICAEW spokesman is quoted:

"Throughout the process, the deputy president declared a financial interest in EWI which had been approached to do the work. He was not involved in any way in the evaluation process."

They don't get it do they?

It is not just a question of being independent, it is a question of being seen to be independent.

That is drummed into you from day one of your training contract, it is lamentable that the ICAEW who spend so much time lecturing others about ethics and independence cannot practice what they preach.

The story gets worse, the ICAEW are reported to have described the agreements with EWI as "non-exclusive". Yet this is contradicted by CEO Eric Anstee, who is quoted in the Independent as saying:

"We do not envisage working with further training firms until the volume of students in each location builds".

Indeed, as if to rub further salt into the wounds, ATC International told the Independent that it was not asked by the ICAEW to pitch for its contract for Russia.

Correct me if I am wrong, but based on my experience running fraud investigations, audit departments and companies, open tendering is the bedrock of an ethical and well run business. This is another area that the ICAEW is fond to lecture the world on, yet fails to practice what it preaches.

It now seems that the ICAEW has realised that is has got itself embroiled in yet another mess, that could have been so easily avoided. They have told the media that no agreements with EWI have been signed, and that a committee of past presidents will look into the selection process and will report in the next few days.

The phrase "shutting the stable door after the horse has bolted", springs to mind.

I assume that, depending on the level of outcry and damage to the brand that this sorry little tale produces, there will be some form of political fudge; ie Durgan will step aside, or the contract will be awarded to another supplier.

Too little, too late.

The damage has been done.

We should never have been placed in this position in the first place. The ICAEW claims that it is run by professionals, with industry and business experience. However, the leadership have succeeded yet again in damaging the brand value of our qualification.

This dismal story is another addition to the sorry tally of evidence, that has been building up over the past few months, that shows that the executive and council of the ICAEW are unfit to lead the ICAEW viz:

• The leadership of the ICAEW were trounced for trying to bully us into merging with CIPFA.



• Using the services of Media Strategy, a PR company that breached the Code of Practice of the Association of Professional Political Consultants which resigned its membership of that body rather than face an investigation.



• Damaging the ICAEW's reputation by delaying the introduction of the new syllabus, and most importantly the ethics module, for 2006.



• Wasting our money on a futile MORI poll asking us why we voted against the merger, don't they read or listen?



• Angering and alienating accountants around the world by trying to push through a name change, that ended up being blocked by the Privy Council.

Individually these points are damning enough, yet put together they speak volumes about the quality of leadership at the helm of the ICAEW.

I ask the following of the membership:

• When will we be rid of this shambolic leadership?



• When will the ICAEW learn that it is here to serve the interests of the membership, not the other way around?



• When will that Victorian anachronistic structure known as Council be removed from office?

Failure to address these issues will see the end of the ICAEW as a legitimate force, and respected brand, within the profession.

I don't want to see that happen, neither do the rest of the membership. The time for the membership to take control of the ICAEW is now.

I have voted against all of the proposals put forward by the ICAEW for the forthcoming AGM, as a protest about the way the ICAEW is being led.

I would recommend that, in order to send a clear signal to the leadership that we want change, others do the same.

If you cannot bring yourself to vote against all of the resolutions, then at least vote against the subscription rise (since it will only be wasted on yet another merger campaign next year), and the awarding of honourary FCA's (we are not a university).

The time for action is now.

£1.4M Wasted

According to today's Independent, the ICAEW has spent £1.4M on trying to win the merger campaign.

I would suspect that the figure excludes the fees paid to Media Strategy, the PR firm hired by the ICAEW to persuade us.

However, the article also notes that the ICAEW is preparing itself for an embarrassing climb down; as private polls show that it might lose the vote.

I would like to make this observation, the vote is not over until the polls close; as such it is vital to ensure that everyone votes on this issue.

Please make sure that everyone you know votes.

Thanks for your help and support.

Ken

Just in case you have forgotten, here are a few reasons as to why you should vote against the merger.

I have recorded a short video outlining my personal views about the ICAEW merger proposal.

Please click the following link to watch the video ICAEW Video 10MB.

I also have a "high quality" 22MB version, which you can view here ICAEW Video 22MB.

Reasons To Vote No

• The merger will dilute the brand



• Merging CIPFA and the ICAEW is not a merger of equals, we should be merging "like with like"



• The merger will increase the size of Council, from its current unwieldy and inefficient size of 90, to 115 members



• A two tier membership, as promised by Council, will be confusing to the membership, the outside world and impractical to administer



• Council will renege on its promise to run a dual qualification system



• To hand over control of the governing council of the ICAEW, to a new body, will denude the current membership of its right to veto who can become an accountant



• We should be talking to ICAS about merging, not CIPFA and CIMA



• The ICAEW have mismanaged the merger proposal from day one, by talking to the wrong bodies and by antagonising ICAS over the choice of name



• The Audit Commission has noted that 25% of submitted local council accounts have to be resubmitted, because of significant errors and "significant" departures from UK GAAP



• The mixture of qualifications that the merged body would embrace, would mean that it could not accurately claim to be called The Institute of Chartered Accountants



• The proposal to takeover CIPFA will add only another 13500 members to our numbers, that represents a mere 11% of our current membership. This will not alter the status quo, or increase our standing within the financial community



• If the merger were truly "revenue enhancing", as the ICAEW would have us believe, why did they raise subscriptions by 9% for 2006?



• The ICAEW is meant to represent the interests of its members, yet it is ignoring the membership and wasting our money on trying to convince us of the need to merge with CIPFA

Parliamentary Motion Tabled Against Name Change

Motions are to be tabled at Westminster and the Scottish Parliament, opposing plans by the ICAEW and CIPFA to change their name to 'The Institute of Chartered Accountants'.

The name is the preferred choice of the two Institutes if their consolidation vote is successful.

The moves come after the First Minister of Scotland, Jack McConnell, announced his intention to officially object to the Privy Council about the proposal.

The Deputy Leader of the Scottish Liberal Democrats and ICAS member, Michael Moore MP, is tabling an Early Day motion at Westminster, calling for the ICAEW and CIPFA to maintain the unbroken convention that Chartered Accountancy Institutes carry a geographical designation in their name.

Mr Moore added:

"The change of name should not be approved. There are many 'Institutes of Chartered Accountants' around the world. It would be quite wrong to allow one body to give the impression that there is only one, or that they were the first."

Brian Monteith MSP, the Conservative member for Mid – Scotland and Fife and also convener of Holyrood's audit committee, has tabled a motion which he is confident will attract cross-party support.

He said:

"This proposal is against the interests of ICAS and similar bodies across the globe. The Privy Council should not approve a Royal Charter change that would assert a false sense of superiority to the new body".

ICAS President, Mike Hathorn, welcomed the support:

"This backing at Holyrood and Westminster is an important endorsement for our arguments against this proposal. We continue our ongoing discussions with both the ICAEW and CIPFA to find alternatives to this increasingly unpopular choice of name."

Source ICAS

There is already an Early Day Motion against Media Strategy (the PR advisers to the ICAEW, paid for by the membership).

It is quite clear that this badly thought through, and badly managed, merger proposal is doing untold damage to the name, brand and reputation of the ICAEW.

Those responsible will have to resign once the vote goes against them.

Reasons To Vote Against The ICAEW Merger Proposal

I have recorded a short video outlining my personal views about the ICAEW merger proposal.

Please click the following link to watch the video ICAEW Video 10MB.

I also have a "high quality" 22MB version, which you can view here ICAEW Video 22MB.

Reasons To Vote No

• The merger will dilute the brand



• Merging CIPFA and the ICAEW is not a merger of equals, we should be merging "like with like"



• The merger will increase the size of Council, from its current unwieldy and inefficient size of 90, to 115 members



• A two tier membership, as promised by Council, will be confusing to the membership, the outside world and impractical to administer



• Council will renege on its promise to run a dual qualification system



• To hand over control of the governing council of the ICAEW, to a new body, will denude the current membership of its right to veto who can become an accountant



• We should be talking to ICAS about merging, not CIPFA and CIMA



• The ICAEW have mismanaged the merger proposal from day one, by talking to the wrong bodies and by antagonising ICAS over the choice of name



• The Audit Commission has noted that 25% of submitted local council accounts have to be resubmitted, because of significant errors and "significant" departures from UK GAAP



• The mixture of qualifications that the merged body would embrace, would mean that it could not accurately claim to be called The Institute of Chartered Accountants



• The proposal to takeover CIPFA will add only another 13500 members to our numbers, that represents a mere 11% of our current membership. This will not alter the status quo, or increase our standing within the financial community



• If the merger were truly "revenue enhancing", as the ICAEW would have us believe, why did they raise subscriptions by 9% for 2006?



• The ICAEW is meant to represent the interests of its members, yet it is ignoring the membership and wasting our money on trying to convince us of the need to merge with CIPFA

A Poor Choice of Adviser

We are now approaching the last few weeks of the merger campaign, being mounted by the ICAEW.

As I have noted in an earlier post, the ICAEW are hosting a series of roadshows and mounting a publicity campaign; under the direction of their PR firm Media Strategy (perversely enough paid for by us, the membership), brought in to swing the vote of the membership in the favour of the ICAEW.

Unfortunately, those of us who oppose the merger do not have the resources to be able to afford to hire Media Strategy (Media Strategy list the ICAEW as a client); even though we will, via our subscriptions, be paying for Media Strategy's involvement.

I am therefore very grateful to an anonymous visitor to this site who has drawn my attention to the following Early Day Motion (EDM), filed on the 13th of July 2005, by Paul Flynn MP.

The EDM (number 581) concerns the activities of Media Strategy, and urges:

"..all Right honourable and honourable Members to have no contact with the clients of Media Strategy until this matter is resolved; and believes that it is inappropriate for public sector organisations such as the Audit Commission, the Police Federation, Southwark Council, Westminster City Council, The Royal Parks, The Environment Agency and others to retain the services of a company that behaves in this manner.."

It seems that Media Strategy breached the Code of Practice of the Association of Professional Political Consultants (Lord O'Neill had joined their advisory board) and, as a consequence, resigned its membership of that body rather than face an investigation.

The Association of Professional Political Consultants issued a public statement about the affair, on the 11th of July 2005.

Here is an extract:

"..It was agreed by the APPC Management Committee at its meeting on 8th July that there was sufficient prima facie evidence to show that Media Strategy had breached Clause 8 of the APPC Code of Conduct by employing Lord O'Neill to justify referring the issue to our Professional Practices Panel. Media Strategy's early resignation from the APPC means that this course of action is not open to the Association (resignation is not, of course, permitted after a complaint has been referred to the Panel).

The APPC Management Committee was also disappointed by Media Strategy's readiness and happiness to resign from the APPC and therefore its' Code of Conduct. The Committee felt that Media Strategy had dismissed the seriousness of the complaints made against them, and the importance of the Code of Conduct to the industry as a whole. This is unwelcome and inconsistent with the commitment and compliance of APPC member companies to the Code of Conduct and its underlying principles. The Committee felt it inappropriate for any member company to treat membership of the APPC in a similar vein whereby a member would rather resign than sort out the problem or comply with the Code..."

The association of the ICAEW with a body whose reputation is being questioned in this way, does our brand value and image no good whatsoever; it also brings into question the judgement of the ICAEW, in using the services of Media Strategy.

The ICAEW continue to mishandle the merger issue, and their judgement is questionable.

Please vote against the merger.

I reproduce the full text of the EDM below:

EDM 581

ASSOCIATION OF PROFESSIONAL POLITICAL CONSULTANTS AND MEDIA STRATEGY

13.07.2005

Flynn, Paul

That this House notes with profound concern that the public affairs consultancy Media Strategy, which represents a wide range of public sector and commercial organisations, has been forced to resign its membership of the Association of Professional Political Consultants after a flagrant breach of the Association's Code of Practice; further notes that the breach involved a contravention of Clause 8 of the Code, which prevents the employment of any honourable Member or Peer, or the payment of money or other awards to such honourable Members; is shocked that Media Strategy's response to the investigation of this complaint was to resign from the Association to prevent a formal inquiry rather than to put its house in order; is appalled at the flippant comment of the Media Strategy Director, Charles Lewington, that although Lord O'Neill was indeed to be paid for services to the agency 'he won't be doing much given the money'; welcomes the statement by the Association that the appointment compromised the profession's integrity; urges all Right honourable and honourable Members to have no contact with the clients of Media Strategy until this matter is resolved; and believes that it is inappropriate for public sector organisations such as the Audit Commission, the Police Federation, Southwark Council, Westminster City Council, The Royal Parks, The Environment Agency and others to retain the services of a company that behaves in this manner.

Source Parliamentary Information Management Services

Reasons To Vote No

We are now approaching the last few weeks of the merger campaign, being mounted by the ICAEW.

They are hosting a series of roadshows and mounting a publicity campaign, under the direction of their PR firm Media Strategy (perversely enough paid for by us, the membership), designed to swing the vote of the membership in their favour.

Unfortunately, those of us who oppose the merger do not have the resources to be able to afford to hire Media Strategy; even though we will, via our subscriptions, be paying for Media Strategy's involvement.

Therefore I ask you to help me out in the last few weeks of the campaign, by emailing this post to as many members of the ICAEW and of the media that you know.

Please can you ask them to

-Visit this site

-Forward this post to their friends and colleagues in the ICAEW

-And, most importantly of all, vote against the merger

Reasons To Vote No

• The merger will dilute the brand



• Merging CIPFA and the ICAEW is not a merger of equals, we should be merging "like with like"



• The merger will increase the size of Council, from its current unwieldy and inefficient size of 90, to 115 members



• A two tier membership, as promised by Council, will be confusing to the membership, the outside world and impractical to administer



• Council will renege on its promise to run a dual qualification system



• To hand over control of the governing council of the ICAEW, to a new body, will denude the current membership of its right to veto who can become an accountant



• We should be talking to ICAS about merging, not CIPFA and CIMA



• The ICAEW have mismanaged the merger proposal from day one, by talking to the wrong bodies and by antagonising ICAS over the choice of name



• The Audit Commission has noted that 25% of submitted local council accounts have to be resubmitted, because of significant errors and "significant" departures from UK GAAP



• The mixture of qualifications that the merged body would embrace, would mean that it could not accurately claim to be called The Institute of Chartered Accountants



• The proposal to takeover CIPFA will add only another 13500 members to our numbers, that represents a mere 11% of our current membership. This will not alter the status quo, or increase our standing within the financial community



• If the merger were truly "revenue enhancing", as the ICAEW would have us believe, why did they raise subscriptions by 9% for 2006?



• The ICAEW is meant to represent the interests of its members, yet it is ignoring the membership and wasting our money on trying to convince us of the need to merge with CIPFA

Thanks for your help and support.

Ken Frost FCA

www.stopthemerger.org