CIMA Explores Routes To Membership With ICAS and CIPFA

AccountancyAge reports that CIMA is in discussion with ICAS and CIPFA about offering routes to CIMA membership and the CGMA designation.

The institute said it will discuss how it can co-operate with CIPFA to strengthen public sector financial management. CIMA will also discuss routes for senior members of ICAS as well as other ways in which they can work together for the benefit of their members and the profession, it said.

ICAP Fiasco Rumbles On

It seems that ICAP's decision to ban foreign accountancy students has stirred things up in the UK.

Yesterday I asked:

"Does this ruling apply to ICAEW students?"

By all accounts the ICAEW is also wondering this.

PQ Magazine reports that three UK-based accountancy bodies are seeking clarification from ICAP as to exactly what is going on.

The ACCA is looking for a formal meeting the ICAEW "is seeking clarification from ICAP as to what the implications are for ICAEW students", whilst CIMA said "we are fully aware of the situation and remain in regular discussions with ICAP."

It is unclear what ICAP's response, if any, has been.

It is possible that ICAP have realised that their decision may have been taken in haste, and that they now don't know how to respond.

Gilding The Lilly

Five days ago I wrote about my surprise that Michael Izza had not commented on the potential £40M pension deficit in the ICAEW's 2011 accounts:

"for reasons that are unclear he does not say a word about the pension deficit of £40M that completely undermines that finances of the ICAEW, and is the tail that is wagging the dog of the ICAEW's drive for new members via its international "strategy".

How very odd that he doesn't mention it? "

It seems that I am not alone in believing that such a significant potential shortfall deserved more prominence. Kevin Reed is also of that view:

"MAKING FINANCIAL REPORTING more relevant and easier for to stakeholders to understand has been a long-running issue. 

Let's face it - when things go wrong there will always stakeholders up in arms as to why they'd not been able to predict such a terrible moment by reading the accounting runes. Conversely, there will be some clever sausage that looks in hindsight at the statements and figures to highlight that the problem's been clear all along.

As a non-accountant of the most severe kind - but as a journo with an interest in these issues - a couple of areas within the latest annual reviews from ICAEW and CIMA left me slightly perplexed.

Firstly, the ICAEW's pension scheme financial position has been valued by actuaries as in deficit of £40.1m at 31 December 2011, compared with the triennial valuation measured in 2010 at a deficit of £19.9m. This has the potential of forcing the ICAEW to stump up another £5m and review its pension funding plan. A fall in gilt yields is the main culprit behind the deficit's degradation.
Having traipsed up and down the pension schemes numbers - which spread across four pages - I admit to originally missing out the figure, which was included within the narrative section of the notes.

The deficit is mentioned twice within the institute's financial statements - in the review pages and again in its notes to financial statements. The ICAEW's summary of its position, the review, is online where the deficit is again flagged up.

The ICAEW told me that it is satisfied about the coverage afforded to the deficit, and its potential ramifications, within its year-end statements. Note the ‘potential', as the valuation itself was a ‘desktop' valuation, or estimate.

While I don't pretend to be able to pull out the institute's various pension scheme calculations through its statements of financial position (or balance sheet as I'd know it), particularly as ICAEW stakeholders are - let's face it - accountants, it still irks.

As a journo I'm not owed anything by the ICAEW. But maybe in the context of its members, and its role in making reporting as clear as possible, perhaps such an important ‘number' deserved more pronounced presentation.

And while on the topic, it also seems strange that CIMA feels it can't specifically reveal chief executive Charles Tilley's pay packet.

CIMA's annual review 2011 reveals its water consumption (3,400 cubic meters), but not the salaries of its senior management.

Some details are contained within the financial statements, but these are anonymous. We know that the highest paid executive's dosh has moved from the £210k-£220k bracket to £220k-£230k between 2010 and 2011. Is that Tilley? Dunno, assume so. Has ‘his' pay gone up from £220k to £220.1k, or £210k to £230k? A 100 quid or twenty grand? Dunno.

The average CIMA staff salary (wages + NI) fell to £33,349 from £36,224, with total staff numbers up to 426 from 369.

And of course, you're dying to know, the ICAEW does state their executives' pay. Chief Michael Izza earned a total of £477,000 - £372,000 in salary and £105,000 in ‘deferred variable pay', or performance-related pay."

My thanks to Kevin Reed for his Tweet following my publication of this article:

"Kevin Reed ‏@Goonerreed

Hat tip to Ken for flagging up the #icaew pensions data in 1st instance. Will add to my copy"

Izza Rules Out CIPFA Merger

ICAEW CEO, Michael Izza, has ruled out a merger with CIPFA.

He is quoted by Accountancy Age:

"There are no formal merger plans in the short, medium or long term."
 
He also expressed hope that one day CIMA would return to the Consultative Committee of Accountancy Bodies (CCAB).

Given that CIMA left CCAB because they feel that the fees charged to belong to CCAB were disproportionately high, it is unlikely that they will return to CCAB anytime soon.

CCAB will need to demonstrate that it is doing something useful.

Carry On CCAB

Accountancy Age reports that the Consultative Committee of Accountancy Bodies (CCAB) will continue operate without CIMA.

The ICAEW, ACCA, ICAS, CIPFA and Chartered Accountants Ireland will remain in it.

As I noted in March 2011 CCAB has been rather quiet,  not having issued a press release since 2009; yet still charging fees to its members!

However, Michael Izza (CEO of the ICAEW and CCAB secretary) has stated that it will "provide a unified voice on matters of common interest" he went on to say that the the institutes took a "hard look" at whether it was worth continuing as the CCAB.

"Having soul-searched, we decided to carry on."

Does this mean the same frequency of press releases?

Why Do We Pay Fees To CCAB?

It seems that, if Accountancy Age is correct, CIMA left CCAB because they feel that the fees charged to belong to CCAB were disproportionately high.

"CIMA explained that its members were paying a "hugely disproportionate amount" towards the body. However, CIMA's request to renegotiate the fee structure through an arbitrator was turned down by the other institutes: the ICAEW; ACCA; ICAS; ICAI; and CIPFA.

Given that CCAB appears to have done nothing (that it is proud to tell the world about) since December 2009, CIMA may well have a point about the fees.

What exactly are the members of the five remaining professional bodies paying their fees to CIMA for?

CIMA Displeased

Accountancy Age reports that CIMA are less than pleased with CCAB's decision to announce that CIMA were leaving, without first running that announcement past them:

"However, TS gathers that the CIMA bods were none-too-impressed at the CCAB press release announcing that the institute had buggered off.

With CIMA still technically a member of the CCAB (which will be reformed under a different moniker), the institute was 'very surprised' that the notice went out without its prior knowledge or signoff, catching them on the hop.

An administrative oversight surely, or the CCAB members making it clear that CIMA aren't part of the gang any more and can't have it both ways?"

Stand by for this to heat up.

Have CIMA Shot Themselves In The Foot?

Following the announcement by CIMA that they are to leave the seemingly moribund CCAB, there have been a number of comments posted on Accounting Web by members of CIMA.

Aside from the issue that none of them were consulted over this move, there is also the valid point being made that many accounting jobs require a CCAB qualification.

Now that CIMA have removed themselves from CCAB, does this not put their members at a disadvantage?

Have CIMA by their actions damaged their brand and made themselves and their members a lesser body or, does CIMA know that CCAB is about to implode and that this is in fact a canny move that ensures that they will avoid the chaos that will ensue?

CIMA Leaves CCAB

In 2005 I wrote:

"Eric Anstee is reportedly so incensed, by what he calls "spoiling tactics", that he has threatened to "realign" the ICAEW's funding of CCAB; he may even withdraw ICAEW from CCAB."

Yet, by 2008, the ICAEW had somewhat changed its views wrt CCAB:

"..It seems that the ICAEW, either via accident or design, has managed to stir up another major row with some other accounting bodies.

Accountancy Age reports that "private papers" (intended for council only) were "accidentally" published on the ICAEW website last week.

The papers disclose a plan to rank accountants in terms of a hierarchy. The Consultative Committee of Accountancy Bodies would be the top, and book-keepers at the bottom.

The plan is part of the ICAEW's desire to formally recognise the term "accountant", and will be submitted to the Privy Council.

The ranking will be as follows:

- CCAB
- financial accountants
- accounting technicians
- book-keepers..."

Given that the plan then was to make CCAB numero uno, the decision by CIMA to leave CCAB is a tad odd, is it not?

What is the reason for this decision?

Could the reason be that CCAB appears to have died (no press releases since 2009), and CIMA wants to leave before the ship sinks and drowns all those left on board?

No To Merger

CIMA CEO, Charles Tilley, has emphatically told Accountancy Age that there will be no further plans for a merger with any other accounting body.

Quote:

"That is absolutely a no.

There is no merger on the horizon."

It is good to know that the accounting bodies have finally got the message from their respective memberships that mergers are not wanted.

A Competitive Advantage?

The ICAEW launched its new advertising campaign this month.

The campaign underlines the value of chartered accountants to business for employers, training organisations and potential trainees.

The headlines used in the campaign, 'A Cut Above' and 'A Competitive Advantage', emphasise (in the words of the ICAEW) the benefits that the ACA qualification provides as a benchmark of the highest professional and ethical standards.

Does this mean that the ICAEW have finally accepted the argument that I have been making on this site, for almost three years, that a merger with a non CA body would dilute the brand?

It would seem that they have accepted that argument.

Otherwise, were they to try to foolishly push another merger attempt with eg CIPFA or CIMA, the words of their own advertising campaign would be thrown back at them.

The Numbers Game

It was reported last week that domestic ICAEW member numbers have all but stood still over the last year.

The Professional Oversight Board's recent survey, Key Facts and Trends in the Accountancy Profession, shows that domestic member numbers for the ICAEW grew by a mere 350 over the last 12 months or 0.3%.

However, ACCA membership rose from 56,837 to 59,059 over the same period, and CIMA grew from 51,386 to 53,697; growth rates of 3.9% and 4.4% respectively.

ACCA also trounces the ICAEW in terms of its age profile, with 70% of members under 45 years old, whilst the ICAEW and ICAS both have around 50% over 45 years old.

As we know, the ICAEW preferred method of addressing this stagnation in membership has been that of merging with other bodies. This method, because it dilutes the brand value of the qualification, was rejected by the membership last year.

However, I have been discussing with Dr Jeff Wooller (founder of the Ginger Group - not ICAEW approved) another solution.

We believe that we need to offer a solution which addresses both the needs of the market, and maintains the brand image of the ACA and FCA qualifications.

The ICAEW needs to offer the market what it wants, namely a tiered membership pitched at different levels. We should offer two additional qualifications, each with its own set of designatory letters:

• An accounting technician qualification, which would be very popular overseas and rival the CAT qualification of ACCA.



• A non practising qualification, at a higher level than technician, for those who do not wish to endure a training contract. This again would be very popular overseas, and would compete directly with the CAT of the ACCA. It would also be a cheaper and more practical alternative than MBA courses.

Thus the ICAEW could compete in the entire market place, without losing the brand value of its existing qualifications. Future growth rates in the ACCA and CIMA may plummet and the ICAEW would have a global qualification to rival the MBA.

However, we would first need to find out from leading ICAEW members, in business rather than in practice, what they would want from such qualifications. We believe that the ICAEW Faculties would be ideal vehicles for such research.

It will be interesting to see the reactions from the ICAEW competitors to our proposal, an attack would indicate that we have a winning proposal.

A Bold Prediction

Michael Cleary, the head of Grant Thornton, has made a bold call for unification of all six UK professional accounting bodies in a speech delivered to the Institute of Financial Accountants.

Cleary said that it is a "nonsense" for Britain to have more than six professional organisations.

He went on to predict that within a decade all the institutes will combine to form one nationwide institute.

Cairn Energy chairman Norman Murray, who is president of the Scottish institute (ICAS), disagrees:

"We have always said that consolidation is not inevitable.

To demonstrate to our members that merging would be in their interests and in the public interest, we need to show that we can work together closely with other institutes first and foremost.

At the moment we see no need to merge."

The ICAEW president, Ian Morris, also spoke up about co-operation when he visited Edinburgh to address the 1300 members of the English institute who work in Scotland.

Quote:

"Our relationship with ICAS is one of partnership.

I value the long-standing and constructive working relationship that exists between (us)."

I agree that a merger with ICAS would be beneficial for both bodies, if the membership can be persuaded. However, last year's appalling public relations disaster wrt the name change foisted on the ICAEW members by the ICAEW leadership has not done the ICAEW's reputation in Scotland any favours.

Ian Morris is right to say that we should value a long standing and constructive relationship with ICAS. Unfortunately, last year the leadership of the ICAEW did its very best to destroy the relationship.

As regards Michael Cleary's desire to merge all bodies, a merger should only be sought between similar bodies of equal standing in respect of qualifications and prestige. ICAS and ICAEW are two such bodies; CIPFA, CIMA et al are not.

That is why the merger with CIPFA failed last year, until the leadership of the ICAEW get that message we will not be able to move forward and engage in constructive dialogue with ICAS.

The Backdoor Route To Membership

It seems that the backdoor route to membership of the ICAEW, via one exam for members of other bodies, has been exposed as the sham it is; namely a quick and dirty way of increasing the membership of the ICAEW by diluting the quality.

The Telegraph reported yesterday that the Financial Reporting Council (FRC) has been asked to intervene by CIMA, and investigate the backdoor entry system devised by Eric Anstee following the merger failure last year.

It seems that not only is the ICAEW intent on diluting the brand, and offering a backdoor qualification, they are also reportedly overstepping the bounds of ethics in respect of cold marketing the ICAEW to members of other bodies.

Another example of the ICAEW not practising what it preaches when it comes to ethics.

Maybe Council and the executive should take some time out to read the ethical guidelines of the ICAEW?

Charles Tilley, the chief executive of the Chartered Institute of Management Accountants (Cima), is quoted in the Telegraph as saying:

"Both qualifications are high-quality but the Cima qualification is founded in business and the ICAEW one is founded in practice. Offering the qualification this way is not in the public interest.

The approach they are adopting, I question how professional that is.

I am aware of at least three of my members who have been cold-called on behalf of the ICAEW."

I wonder how much more damage the Executive of the ICAEW will do to the brand value of our professional body and qualification, before the membership finally reacts and kicks them out?

The Global Accounting Alliance-Updated

Proving that the ICAEW and ICAS can work together they have announced, together with ICAI and six other accountancy bodies, the formation of the Global Accounting Alliance (GAA).

Quote:

"Representing over 700,000 of the world's leading professional accountants, the Global Accounting Alliance will promote quality professional services, global membership support, share information and collaborate on important international issues.

The Alliance will work with national regulators, governments and stakeholders, through member-body collaboration, articulation of consensus views, and working in collaboration, where possible, with other international bodies."

If we can work together in this manner, why did we need to merge?

Unfortunately, Eric Anstee current head of the ICAEW, is still trying to flog the "dead horse" of merger. He is still interested in consolidation with CIPFA and CIMA.

However, he told Accountancy Age that he would have to speak to GAA members about merger plans.

Have I missed something here?

Surely the merger plans were rejected by the membership of the ICAEW last year?

Precisely why should he hold discussions with the GAA about merging?

What part of the word "No" does he not understand?

Update 17:15 27 April 2005

If you look up the registration of www.globalaccountingalliance.co.uk, you will see that it was registered on 15th September 2005 by the ICAEW.

This was before the merger motion was defeated in October 2005. This implies that the wheels were already in motion for the creation of the GAA.

Why then, if the ICAEW was working towards a global alliance at that stage, did they persist in telling the members that the most effective way of making our voice heard on the world/national stage was via merging with CIMA/CIPFA?

FYI, I have registered www.globalaccountingalliance.org.uk in my name, and will ensure that it redirects to this site in the next 48 hours.

The Dying Institute?

Accountancy Age report that ACCA has 73,839 students in the UK and Ireland, CIMA has 57,106, while the ICAEW has 8,560.

The article also notes that the growth of ACCA and CIMA is outstripping that of the ICAEW.

Whilst it is true to say that size of itself is not an indication of quality, the ICAEW should be concerned that the number of people wishing to join the ICAEW is, on the face of these statistics, declining.

Yet, last year, the ICAEW wasted time and money chasing the false solution of a merger with lesser bodies.

The ICAEW needs to identify and address the "internal" issues that are putting potential new members from joining, and not waste its time and members' money on further merger votes.

Issues that need to be addressed include:

-The exam syllabus

-Ethics in the profession

-The size and structure of Council

-Value for money in respect of subscriptions

-Working more closely with CCAB

-Improving relations with ICAS

CIMA Steals a March on The ICAEW

In January I noted that ACCA had pipped the ICAEW to the post by a year, by introducing an exam on ethics.

It seems that CIMA are also going down the same route. The Chartered Institute of Management Accountants has launched revisions to its qualification, the Certificate of Business Accounting, which is designed to develop the fundamental skills and techniques.

This includes modules ranging from business economics and financial accounting through to ethics, corporate governance and business law.

Robert Jelly, Director of Education, emphasises the focus on ethics.

The ICAEW were to introduce their new syllabus this year, which included a separate exam on ethics, unfortunately owing to unspecified problems the new syllabus will not go live until 2007.

The Logical Paradox

Last year the leadership of the ICAEW were trying to persuade us that members of CIPFA and CIMA were our professional equals, and that we should merge into one body.

Having failed to push the merger vote through, this year they announce a new initiative to enable members of the ACCA, CIMA and CIPFA to qualify for membership; provided that they have at least five years of professional experience, and pass an entrance examination equivalent to the advanced case study set for ACA finalists.

Do these two policies not strike you as being somewhat contradictory?

How can in 2005 the ICAEW push for members of CIPFA and CIMA to merge with the ICAEW, without the need for an exam, yet this year they need to sit an exam?

CIPFA and CIMA Secret Discussions

I understand that, contrary to the media spin being pumped out by the ICAEW that merger plans are for the moment not being pursued in the immediate future (taken to be up to the end of 2007), Eric Anstee has already had meetings with both CIPFA and CIMA over the last few weeks with a view to restarting merger negotiations.

Any further information on these meetings would be much appreciated.

Supersize Me!

The front page of today's Accountancy Age again reports on that most well publicised, and poorly kept, secret namely that the ICAEW are pressing ahead with plans to integrate with the Institute of Financial Accountants (IFA).

IFA have only 9000 members, and are allegedly embroiled in something of an internal spat amongst themselves over accusations of disciplinary issues within the upper echelons of their leadership.

Needless to say, if the documents that Accountancy Age claim to have are anything to go by, the ICAEW are not put off by the damage to our reputation and credibility that the association with IFA will do to us.

They appear to be carrying on "full steam ahead" to bring IFA on board.

Their rationale being that size matters, and that the integration will address the falling student and membership numbers.

When will the ICAEW realise it is not size that matters, but quality?

Additionally, does it not occur to the ICAEW that the reason for the falling student numbers is the fact that they are unable to provide a syllabus that is relevant to the 21st century?

In fact, as their botched introduction of the 2006 syllabus shows, they are not able to provide a syllabus at all!

We kicked the absurd idea to merge with CIPFA into touch, and we will most certainly do the same with this ridiculous plan.

One small thing that the leadership of the ICAEW seem to have forgotten, is that they have yet to tell the membership of their plans.

This despite the fact that the talks, allegedly, have been going on for at least six months.

Indeed the plans allow for IFA becoming a "fallback" body for failed chartered accountants, especially CIMA and ACCA failures, under what the ICAEW term a "confederation".

Star Trek this is not!

Happy with this?

Proud of your institute?

I am most certainly not!