Spinning The Myth

I see on page 98 of January's Accountancy that Clive Parritt (ICAEW Vice President) is still spinning the myth (first espoused by Anstee - "Mr Anstee said the two-thirds voting threshold had allowed 'the minority to hold back the majority' and it was 'not beyond the bounds of possibility' the institute would ask its 127,000 members to amend the constitution to lower the barrier.") that the majority of ICAEW members voted in favour of a merger with CIPFA in 2005.

Parritt is quoted:

"...within a members' organisation, a small but determined minority can sometimes frustrate the majority."

Clearly time has dimmed the ICAEW's memory, only 29% of the ICAEW membership voted in favour of the merger.

As I noted at the time, 29% is not a majority!

Which part of the word "No" don't the ICAEW understand?

Scum of The Earth

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.

Not unsurprisingly the ICAEW recognise that there may be some opposition to this (eg from the Association of International Accountants and Institute of Certified Bookkeepers).

ICB chief executive Garry Carter is quoted in Accountancy Age:

"Our members are highly qualified, they are not the scum of the earth."

It seems a very odd "accident" to publish this, given that the membership of the ICAEW are never allowed to read on the ICAEW site about what their illustrious members of council discuss or do.

I must ask why did the ICAEW publish this on the site, before they had finalised the plans?

I trust and assume that an investigation is being carried out by the ICAEW.

Needless to say, the ICAEW have now taken down the document from its site. However, I am pleased to say that I have a copy. Here it is ICAEW Report.

I would note that it contains this rather revealing paragraph:

"ICAEW has adopted a policy of getting closer to IFA and other organisations. In turn that meant that David Hunt became the IFA President in January 2007. Eric Anstee became the IFA Chairman of Council in September 2007."

Are we heading for another merger attempt, this time by the back door, or is this a takeover of IFA?

I did warn people about this in three articles in 2005 and 2006:

- The Confidential Plan

- Supersize Me!

- IFA Rumour

A Contradiction In Terms

On the assumption that the Financial Reporting Council (FRC) really is the independent UK regulator responsible for promoting confidence in corporate reporting and governance.

How can Eric Anstee's (ex CEO of the ICAEW and newly appointed chairman of IFA) appointment as a non-executive director of the new board of the Financial Reporting Council provide a leg up for IFA, as IFA president Professor David Hunt states?

Independent bodies do not provide leg ups.

The Worst Kept Secret

The ICAEW have now officially confirmed what everyone already knew, namely that Michael Izza will become CEO of the ICAEW:

"Michael Izza has been appointed as the next chief executive of the Institute of Chartered Accountants in England & Wales (ICAEW)

He succeeds Eric Anstee who announced his retirement earlier in the year. Izza will take up his role on 6 December 2006.

Michael Izza is currently chief operating officer, executive director and a board member at the ICAEW, the largest professional accounting body in Europe and a £62 million income organisation representing 128,000 members.

Amongst his many achievements, Michael has played a major role in the development of the Institute's current strategy as well as driving forward the operational plan. Michael has also been responsible together with other executive directors for the day-to-day running of the ICAEW. Since January 2004 he has acted as deputy to the chief executive."

Judging from the above, it seems that there will be no change to the current course that the ICAEW embarked upon under Eric Anstee. I will watch developments with interest.

To read the full release go to ICAEW CEO Appointed.

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?

Absent Minded Anstee

The ICAEW has announced that new group will be formed to support over 8,000 of its members who work, or have an interest, in the public sector.

Seemingly the ICAEW will pay CIPFA to provide these services. Eric Anstee is quoted by Accountancy Age as bemoaning the fact that if the merger had gone ahead:

"we would have kept the qualification separate and made cost savings".

In other words, he is blaming the failed merger for the costs of this project.

The trouble with this argument, is that it conveniently ignores the £1.42M of our money that the ICAEW bunker wasted on the failed merger attempt.

Funny he forgot that!

The Succession

Much like the speculation within the Labour Party over the successor to Tony Blair, the ICAEW also has been dealing with succession issues.

Those of you with long memories may recall that way back in June, Eric Anstee announced that he would be stepping down and that the ICAEW would begin the search for a replacement.

Some three months have passed, and as yet the ICAEW has made no official announcement as to the progress of their search.

However, Accountancy Age report today that some 10 interviews have taken place with a number of candidates. The upshot being, if the report is to be believed, that the ICAEW are "playing safe" and going for an internal candidate Michael Izza (currently COO).

It will be interesting to see if the ICAEW update council, and indeed the membership, on the progress being made at the council meeting scheduled for 4th October.

Does the slow pace of progress and lack of information indicate that there are problems wrt filling the role?

Anstee Steps Down

Even the most glittering and majestic of reigns must come to an end.

The above sentiment will doubtless be disseminated by the ICAEW executive as they seek to put a positive spin on the departure "leaked" yesterday, and due to be formally announced today, of Eric Anstee the first ever CEO of the ICAEW.

Anstee presided over the latest (sixth in 35 years) failed merger attempt of the Institute of Chartered Accountants in England and Wales. The timing of the announcement is hardly propitious, coming as it does in the middle of the ICAEW Council Conference which is trying to clear up the mess resulting from the Durgan Debacle.

I do not intend to dwell on Anstee's triumphs and failures; nor indeed do I intend to worry about whether he resigned, retired or was sacked.

However, I would note that Anstee, earlier this year, indicated that he would be in favour of trying to place a merger vote before the membership again. It will be interesting to see if his departure marks the death knell for any future foolish time consuming and money wasting merger attempts.

It should not be forgotten that the last attempt cost us £1.4M, plus untold damage to our brand value.

The departure of Anstee does not let the ICAEW off the hook, with regard to its operations and structure:

• Council needs to be cut from its current absurd level of 90 plus, to a more manageable and effective size of around 6-12 people



• The questions raised earlier on this site, in relation to the Durgan Debacle need to be addressed openly



• The selection of the next CEO will be "interesting", both in terms of who applies and who is finally selected by the ICAEW



• It should also be noted that Anstee intends to stay on his role, until a successor is found. It will be interesting to see if any new "initiatives" are announced during this period

Finally, as a minor matter of curiosity, it would be interesting to know how/why the story about Anstee leaving was leaked a day early and by whom. It is worth noting that the "leak" was well timed enough to enable Accountancy Age to put together several reports on the matter, in time for publication early this morning.

It should also be noted, that the timing and professionalism (Accountancy Age were well primed with several articles and a podcast-which would have taken 24 hours to arrange) of the "leak" means that Council's attention will be distracted from discussing/focusing too hard on the Durgan Debacle.

Who would gain from that?

Maybe though, I am just too cynical?

The future direction of the ICAEW will be decided over the coming months, it will be a very exciting period indeed. I will be following developments very closely.

A Confused Message

There seems to be some confusion as regards the tendering process used by the ICAEW, in relation to the Russian and Chinese training contracts that caused the implosion of Graham Durgan's bid to become President and the ongoing media relations debacle.

Accountancy (June 2006 page 5) state:

"The ICAEW says the work was awarded on an 'open tender' basis..."

Yet an article (Misrepresentation and Shabbiness) was posted on this site (18 May), which Accountancy read, that stated:

"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."

Additionally, Dr Jeff Wooller, wrote in the comment section:

"The Institute of Professional Financial Managers was not asked to pitch. We have a good reputation for courses in Eastern Europe and our own website in Russian."

So, is that open tendering or not? It doesn't sound very open to me.

I have sent this to Accountancy asking them to clarify their report.

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?

Distasteful

Those of you who wish to take lessons in the fine art of "winning friends and influencing people", and of building good working relationships with other professional bodies, may be well advised not to follow the example set by Eric Anstee CEO of the ICAEW.

That is if the report in today's Times is anything to go by.

It seems that the ICAEW is now trying to poach other institutes' members. Prompting Charles Tilley, chief executive of the Chartered Institute of Management Accountants, to say:

"I question whether it is professional."

Size, in Anstee's view, is everything.

In my view, it is quality not size that matters.

However, the views of the membership of the ICAEW are ignored by the current "leadership"; as such my views, and your views, don't count.

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.

The ICAEW Annual Review

The ICAEW published its annual review for 2005 on May 8.

In it Eric Anstee talks about formalising the working relationship with CIPFA, he goes on to say:

"So we are exploring options for a closer working relationship with CIPFA on policy issues such as pensions as well as offering member and student benefits in learning and professional development.

We remain committed to the principle of consolidation of the UK profession in the long term."

It is clear that the ICAEW is determined to try to push the merger through again. Lessons have not been learned.

The review also notes, as one of the ICAEW's achievements in 2005, the restructuring of the ACA and training framework. This is patently untrue, or let me say a gross exaggeration, the new syllabus which was due to be launched in 2006 was put back to 2007 becuase of internal problems within the ICAEW (see Chaos at The ICAEW).

Anstee goes on to say:

"We have begun exploring routes to qualification to increase access to the profession, setting an ambitious target of doubling student numbers by 2010.

Equally, we have looked at wider avenues of increasing membership, for example, with the membership and co-operation agreement with the Hong Kong Institute of Certified Public Accountants announced in 2004.

We are continuing to build such partnerships with premier bodies in other key markets."

I have made this point before, but it seems worthwhile making again, the size of the ICAEW is not the issue; it is the quality of the membership that is crucial to maintaining our brand value.

By opening the doors to other bodies, who do not have identical training methods or exam systems, the ICAEW are simply diluting our brand.

The ICAEW are seeking a 4% increase in subscriptions, given that they wasted over £1.4 million last year on the failed merger vote and that they are clearly seeking to try the same again in 2007, I have voted against the rise.

ICAEW Media Blitz

I read the various media placements from the ICAEW, published by Accountancy Age and Accountancy, over the last few days with interest. These placements were in the form of interviews with Eric Anstee (CEO of the ICAEW) and various other senior members of the ICAEW executive.

You will note that I have used the words placements. Although the articles were in the "form" of interviews, it is very clear by the timing and co-ordination that this is in fact part of a media campaign being waged by the ICAEW to improve their damaged image. There were no counterpoints presented, or indeed requested, by either Accountancy Age or Accountancy.

I think it fair to draw the following very general conclusions:

1 The ICAEW, by presenting other members of the executive, are trying to draw the sting from the regular criticisms leveled against Anstee that he is solely responsible for the merger debacle; and that the executive of the ICAEW is a one man band.

2 Anstee states categorically, when asked if the ICAEW will try another merger vote, "I hope so".

We can therefore expect to go through the whole expensive procedure again, before the end of next year.

3 The ICAEW will continue over the coming months to try to present a favourable media image. It is to be hoped that the media remember that there are two sides to the coin.

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.

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.

Name Change Aborted

In a remarkable volte-face, it seems that the ICAEW has abandoned plans to change its name to the Institute of Chartered Accountants.

A spokesman for the English institute is quoted in The Herald as saying that the proposal had been scrapped "after consultation with members."

This is odd considering the fact that Eric Anstee had announced that, despite the merger vote fiasco, he was going to go ahead with the change of name anyway.

I wonder if this particular U turn has more to do with the opposition from ICAS, other professional bodies and politicians, rather than the views of the members of the ICAEW?

Whatever the reason, it is yet another humiliating defeat for the current leadership of the ICAEW.

The Price of Failure

Eric Anstee, CEO of the ICAEW, gave an interview to Accountacy Age in which he "explained" the reason for the failed merger attempt with CIPFA last year.

He cited the findings of the recent MORI poll conducted by the ICAEW, and paid for by the membership, noting that 33% of the members who voted no did so because they knew that the value of their qualification would be diminished.

This finding is hardly surprising, given the fact that this was one of the arguments put forward against the merger time and time again.

I fail to understand why the ICAEW felt it necessary to pay for a poll to tell them what was already well known.

Anstee's conclusion is that the "message" that the ICAEW was trying to deliver to the members was not "getting across".

This being the case I would like to ask, who was responsible for delivering the message?

Answer: The leadership of the ICAEW.

Indeed I would note that they even hired Media Strategy, a controversial PR company that had left its own professional body, to get that "message across". This was of course at great expense to the membership of the ICAEW.

The merger vote cost the membership of the ICAEW £1.4M.

The leadership now claim that it failed because the message was not "getting across", despite the fact that they put a lot of effort and money into getting their "message across", it is still in denial.

Responsibility for this costly failure clearly lies with the leadership of the ICAEW.

The ICAEW does not need another vote, but a radical overhaul and change of the leadership; ie those who failed should go.

Here We Go Again!

It seems, that if reports in Accountancy Age are to be believed, Eric Anstee is preparing to make yet another merger attempt with CIPFA before the end of 2007.

It also seems, from the quote in the Accountancy Age article, that he wants to "service all the members".

One very literal interpretation of the word "service" is "f**k", I wonder if he is trying to tell us something?

Views anyone?

Financial Power List

I am sure that you will be as amused as I am to read that Accountancy Age have placed me on their Financial Power List for 2006.

I am 11th on their list of the top 50 of "The Ones To Watch". The list identifies the "most influential names to look out for" in the world of finance for 2006.

I stand shoulder to shoulder with such illustrious names as:

-Dave Hartnett HMRC Director (1st)
-Gordon Brown (6th)
-Eric Anstee CEO of the ICAEW (joint 11th)
-Sir Christopher Hogg Chairman of the Financial Reporting Council (17th)

I am sure that Eric is pleased to see that he tied with me:)

Quote:

"Frost, whose idiosyncratic blogs lit up 2005 when pooh-poohing ICAEW strategy, is expected to carry on with added zeal in 2006".

They aren't wrong there!